Millicom International Cellular SA (TIGO) 2004 Q1 法說會逐字稿

Ladies and gentlemen, welcome to the Millicom International Cellular earnings conference call for the first quarter of 2004. [Operator Instructions]

May I remind you that this conference is being recorded today. May I also remind you that this call is being audio-steamed 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 the conference 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 us today to discuss the results of the quarter end of March 31, 2004. There are new members with me here today, and we will be happy to answer any questions you may have after the comments we will be making shortly.

Before I highlight the results of the past quarter, let me say a few words about the changes in the quarterly reporting we are introducing as of the quarter end of March 31, 2004. We are no longer reporting on a continental basis, but on a cluster basis. Cluster is a group of countries in a region where the main companies are at a similar stage of mobile technology development.

The five clusters are, first of all, South East Asia, our most profitable cluster, with countries like Vietnam, Cambodia and Laos. Secondly, South Asia, our most populated cluster, with Pakistan, Sri Lanka, and also the start up in Iran. Thirdly, Africa, our fastest growing cluster with countries like Senegal, Ghana, Sierra Leone, Antonia and Mauritius.

Central America is today our largest cluster from a revenue point of view, with countries such as Guatemala, El Salvador and Honduras. Of course, South America is our smallest cluster today with Paraguay and Bolivia.

So let’s look at the highlights of the quarter ended March 31, 2004. During the first quarter 2004, MIC was able to focus entirely on delivering growth. The increased capital expenditure, combined with the improved distribution of our pre-paid products is allowing us to tap into the largely under-penetrated mobile telephony market in the emerging countries. This growth has been achieved without eroding the EBITDA margin of 50%.

It is driven by continued strong subscriber uptake, resulting in a 39% increase in total cellular subscribers, year on year, to just under 5.9 million at the end of March 2004. The total cellular subscribers also increased by 39% to 4.1 million.

The sustained increase in minutes of use has continued with total cellular minutes for the three months ended March 31, 2004 increasing by 57% from the same quarter of 2003.

Revenue for the quarter was $213.9m, up 54% from March 2003. EBITDA increased by 55% to $106.8m. The EBITDA margin was 50%.

At our AGM held in February, MIC’s shareholders approved a stock split of the issued shares of the company, by which each share with a par value of $6 was split into four new shares with a par value of $1.50.

The stock split was made possible by our share price performance in the year 2003, and combined with our listing on the Stockholmsborsen, the Swedish Stock Exchange, at the end of last month this resulted in improved liquidity in the Millicom shares.

Moving on the general operating and financial overview of Millicom, I would like to cover four areas – subscriber growth, revenue growth, EBITDA growth and financing.

Let’s start with subscriber growth. During the twelve month period ended March 31, 2004 MIC’s worldwide cellular subscriber base grew by 39% to 5.9 million. Total subscribers grew by 39% on an annual basis to 4.1 million, 88% of whom are pre-paid. Some 206,000 net new total cellular subscribers were added in the first quarter.

Secondly, revenue growth. Millicom produced total revenues of just under $240m for the three months to March 31, 2004 - an increase of 54% from the first quarter of 2003, reflecting the increase in transit growth in our operations.

MIC’s operations in Africa reported quarterly revenue growth of 76% from the first quarter of 2003, with Ghana producing growth of 153% over the same period. The equivalent increase from MIC Asia from 34%, and in Latin America revenue increased by 76%, or by 13% with El Salvador stripped out, pointing to a definite upturn in the region.

Thirdly – EBITDA growth. EBITDA for the first three months ended March 31, 2004 was $106.8m - an increase of 55% from March 2003. Quarterly EBITDA for Africa was $13.3m, increasing by 92% from the first quarter of 2003.

Latin America reported EBITDA growth of 74%, to $43.5m. Asia recorded growth of 37%, to $50m. The Group EBITDA margin was 50%.

Lastly, let’s turn to the financing. In January 2004, Millicom’s registration of its 2% senior convertible PIK notes, due 2006, was declared effective by the US Securities and Exchange Commission. Millicom has since issued a Redemption Notice on those notes. This will increase the equity base, and reduce the debt and the interest costs for the company again.

Let’s look at the results of each region, starting with Asia. Year on year growth of proportional cellular subscribers was 45% in Asia, which contributed to the region’s increase in revenue of 34%, to $86.4m, and an EBITDA of 37% to $50m.

In South East Asia, which comprises of our operations in Cambodia, Laos and Vietnam, the total subscribers grew 53%, it was recorded. In South Asia, comprising of Sri Lanka, Pachome in Pakistan, the increase was 39% in the first quarter of 2003.

Revenues for South East Asia and South Asia were $55.7m, and $30.6m respectively, and EBITDA was $33.1m and $16.9m respectively. The EBITDA margin for Asia as a whole was 58%.

On February 4 we announced the signing of a Memorandum of Understanding with the authorities in Vietnam to continue our co-operation beyond 2005. The final details of this agreement will be worked on during 2004, and the first part of 2005, and we have high expectations of this market going forward.

In Pakistan, Millicom has been building out a GSM network for its car-phone business, and this is expected to be fully operational in June of this year. This market is growing strongly, and with the benefits of GSM infrastructure, we expect to add an additional 1 million customers within a year of this GSM launch.

Last week it was announced that Cellinor Space Telecom will be entering the cellular market in Pakistan, paying $291m each for their new licenses. These just confirm our valuation for the two Millicom licenses, and the early mover advantage that MIC has achieved in Pakistan and other markets.

For Millicom and the other incumbent operators, the price of operating in Pakistan has gone up, and the license fee will have to be paid. At the moment we do not know how much this will be, although our expectations are that the payment will be less than $291m for us, and that the payment terms will be advantageous compared to those applicable to the new entrants who have to pay 50% of their fees upfront. Our negotiations with the government are ongoing, and we will inform the market of the revised plans once they have been agreed. However, we expect the license fee to be paid out of cash flow of our businesses in Pakistan, as those businesses are generating strong cash flows and have EBITDA margins of over 50%.

Let’s go to Latin America. Revenue in Latin America for the first quarter increased by 76% from March 2003 to $93.8m. With El Salvador stripped out, the quarterly growth rate is 13% relative to the first quarter of 2003.

South America continues to demonstrate recovery, with Bolivia and Paraguay reporting their highest year on year quarterly increases in revenue of 6% and 4% respectively.

The Central American market continues to perform strongly, showing the highest growth in proportion of subscribers for all clusters at 136%, leading to an increase in revenue of 135% from the first quarter of 2003.

EBITDA increased by 74% to $43.5m for the first quarter of 2003, or by 17% if El Salvador is stripped out. Guatemala showed a particularly strong increase in EBITDA, growing by 37% from the first quarter of 2003. The EBITDA margin was 46% for the region as a whole, 49% for Central America, and 39% for South America.

Our planned migration to GSM services have continued at pace in Latin America. Last quarter we selected our suppliers to overlay existing CDMA networks in Guatemala, Paraguay and El Salvador, and the CDMA network in Honduras with GSM 800 networks, which will become operational at the end of the second quarter of 2004.

The reconciliation of El Salvador, which happened in the first quarter of 2003, is very encouraging for our Central American operations, as it facilitates further operational synergies across the region. These are exciting businesses, and we anticipate further strong growth from them in the future.

Africa. In the twelve months to March 31, 2004, MIC Africa added 316,000 proportional subscribers - an increase of 113%, contributing to an increase in revenue of 76% to $31.7m, and an EBITDA of 92%, to $13.3m. The EBITDA margin was 42%, up from 39% for the first quarter of 2003, and we will work towards bringing this up to the 50% level in 2004.

Let’s look at the outlook. MIC has had a brilliant start to the year 2004, building on the growth seen last quarter by adding nearly 207,000 net new total cellular subscribers in the first three months, and producing increases in revenue and EBITDA of 54% and 55% respectively, over the first quarter of 2003.

So, going forward, MIC will focus on firstly, increasing the top-line growth by increasing the margins. Growth will come from the low-penetration regions of Asia and Africa, and from the continued recovery in Latin America. We will focus on consolidating our positions in these markets through a combination of organic growth and opportunistic buy-outs of local partners.

Secondly, we will be focusing on stronger cash flow generation, and stronger free cashflow generation, so that thirdly, we can evaluate opportunities to develop new and adjacent markets, which offer the potential to strengthen our groupwide synergies.

This concludes my comments, and we will now be happy to take your questions, so Operator, may I ask you to have the first question?

[Operator Instructions]. Your first question comes from Adrian Dawes of Hartwell. Please ask your question.

Marc?

Hi, there.

Hi, there, Bill Miller, actually. Great quarter. Congratulations. I’m curious about the expected EBITDA margin improvement in Latin America. With El Salvador or whatever, with El Salvador and those synergies that you’ve commented upon, can you give us an idea of when we can expect to see a better EBITDA margin there, and what are the areas we’d look to have increased potential for improvement?

Yes, we would expect to get El Salvador up to the Millicom average by the end of this year. So we have been doing a number of things, including bringing down costs. We also expect that the GSM migration will further fuel the top-line growth, and will allow us to bring down costs, and those things, combined, should allow us in the first quarter, to bring El Salvador in line with the other countries in the region that are both reporting EBITDA of over 50%.

Thank you.

Thank you, Bill.

Your next question comes from Richard Curumgie of ING. Please ask your question.

Hi Marc, great quarter.

Thank you, Richard.

You talk about three growth opportunities, being new markets, buying out JVs, and expanding in Pakistan by investing in these licenses. Now, you have a pretty mean balance sheet as it looks like now. How do you plan to finance this growth, and where do you want to take your balance sheet in three year’s time?

Well, let me first say about Pakistan, as I said on the call. We expect that we will be able to generate the costs of the license fee out of the cash flow generated by the businesses, the two businesses. So that’s not going to eat into our corporate cash flow.

Talking about our corporate cash flow, we are generating a lot of free cash flow nowadays, and that will allow us to go into new markets and we are looking at a few markets which of course, I will not be able to give you any names, but these are markets that are adjacent to markets, countries, or regions where are currently operating businesses.

We will be able to do quite a lot out of the cash flow that is generated, out of the businesses, and you can see with the top line growth we experience, you know, and the EBITDA growth we experience, we are going to be producing more and more free cash flow.

For your information, for instance, this quarter, the first quarter 2004, we up-streamed almost $45m of cash. To be precise, $44.98m of cash, up to the holding companies.

That’s fantastic.

Thank you.

Let me put the question in another way. If you were to come back to the capital markets, which side would you go to, debt or equity?

We don’t have any plans coming to the capital market at this point in time.

Okay, thanks Marc.

Your next question comes from Barry Fearstine of Fearstine Capital Management. Please ask your question.

Hi, I just wondered if you can give us some more details about Iran? Is it operating now? How many subscribers does it have? Does it have an EBITDA? Could you give us some information about that?

The situation in Iran, Barry, is that we are currently running the procurement process as well as doing the network planning and we hope to be able to finalize that process shortly. We are doing that in the framework of our management contract with the Rathbone Giant Group. So, they expect to start operating this business in the fourth quarter of this year.

The impact on us, you know, for Millicom in 2004, is going to be fairly small, because as long as we have not exercised our option to acquire 47% of the company that is going to be running this $2m prepaid subs network, we are only going to be entitled to a management fee which is a percentage of revenue.

So the effect on our P&L, subscriber numbers and balance sheet is going to be minimal, and it will only come off as certain sizes and when we exercise the options, and we will let the market know when we are planning on doing so.

Your next question comes from Steve Flynn of Morgan Stanley. Please ask your question.

Thank you. So $47m was upstream for the [indiscernible]. Do you have any closing cash balance of the whole scale?

I think it’s just under $100m right now.

And could you give us the CAPEX number for the quarter, and then also talk about what your CAPEX expectations are for the year? I think on a proportionate basis, you were looking for about $140m, or so. I just wondering if anything has changed, given the growth that you’re seeing, and the opportunities that are you are seeing with regard to the capital expenditure.

No, we are sticking to the $150m of CAPEX for the year, and the CAPEX for the first three months was $61m. That is as a result of the accelerated build-out that’s currently doing for the GSM networks, both in Latin America, and in Pakistan, as you know. So there is a lot of CAPEX coming in.

Okay, great, thank you.

[Operator Instructions]. Your next question comes from William Kadak of Capital Equities. Please ask your question.

Hi, good afternoon to all of you. Congratulations, by the way, that’s first. Just a question, because South Asia is supposed to have become so promising, is there any reason why South Asia only grew by 60,000 subs in the first quarter? That’s one.

Secondly, I mean, there are some brokers who are, in terms of CAPEX in Indo-China are talking about numbers of say, $60m this year. That’s an assessment from Lehman, and there are now new competitors in Pakistan who talk about $500m from next year. Is it still okay for Millicom to work this assessment that with $60m CAPEX you’re basically excluding some funny things there, that you can build a base of 2 million subscribers?

Let me first answer the first part. The 50,000 subscribers in South Asia is as a result of the fact that we’re not booking things very hard at this point in time in Pakistan, because we’re just two months away from the change to the GSM network, so we don’t want to make additional investments in the CDMA network. So we’re not booking as hard as we could be pushing if we had the GSM network already today. So we’re sticking to the 1 million new subscribers from the launch of the GSM network, from the first year, from the launch of the network.

For the same numbers in the new network, I can only say that we are paying exactly $42m in 2004. $1m in overlay of the GSM network in Pakistan, and the reason why we can operate at those low costs is that don’t forget that we have been operating in that country almost 14 years, so we have been building a very sizeable network. When we move technologies, we only have to add some radio equipment on the existing infrastructure and add a switch, because we have all the microwave, air conditions, battery back ups, you know shelters and God knows what, you know, already available, which other countries don’t have, of course, and have to start building from scratch.

That’s why I’ve been saying probably that it’s going to be an uphill battle for the new entrants in Pakistani market, because the four established operators have very well built up networks already today.

Okay, I understand that, but say, for instance, as of June, I mean, what’s going to change? I mean, you intend, basically, to generate 80,000 or 90,000 subs per month. Is there going to be major marketing campaign, or are you going to do it on price? I just want a bit of color on it.

Yes, so what we have in place is the distribution network. We have just under 20,000 outlets where we are selling our products today already. Secondly, we just brushed up our local Pactel in Pakistan, so we will be organizing a campaign around that new logo, and that will all start from June of this year. So we had a board meeting in Pakistan, which I attended myself two or three weeks ago, where we discussed all of these things, and so we are ready for this, yes.

Okay, great. I mean, I could ask some questions about the renewal of the Pakistani license, but my guess is that it’s going to be all in your hands and we basically are the same as with religious people, we’ve just got to pray. Is that it?

Well, we do that when we can, but we just work hard, and we negotiate well, and that’s how we tend to get good deals. So, I think the situation is better than it was before, because we know how the process works. We know there’s a price, and we’re convinced that we’re going to get a lower price, and that we don’t have payments over time, which will allow us, you know, to pay additional costs of the license and all the additional costs of operating both companies in Pakistan out of the cash flow of the companies.

Okay, great. Thanks very much.

Your next question comes from Mr. Peter Earl with Deutsche Bank. Please ask your question.

Yes, hi, this is Peter Earl from Deutsche Bank. Can you hear me?

Hi, Peter.

Hi. On the Pakistan issue, that is of course a very popular topic, but if I may ask another couple of questions. I mean, given that the benchmark for the license fee now is basically double what expectations were, obviously it will be difficult for you to maybe meet your original budgets on that matter. That’s at least what I would have thought.

Could you explain to me what is your business strategy is now in Pakistan given that you have two licenses, and one of them, Pactel, seemed to have a very promising future, whereas Pachome seems to me difficult to justify a substantial license fee if you don’t plan to expand that operation further?

I can tell you that all businesses have a good future ahead of them. For Pactel, I think it’s obvious with the GSM migration, and you’re right in saying that of course the bottom line in them will be smaller with this license fee. I think that speaks for itself, but we have been running our business plans and according to our calculations, those businesses will be bottom line positive from the first year of operations, including the higher license fee, based on certain assumptions we’ve made which I will not disclose on the call here.

As far as the second company, Pachome, we’ve always had the intention to have a two-tier strategy in Pakistan. Pactel would be what I would call the premium brand with GSM who has the functionality of roaming and other functionality, and then use Pachome that is currently running at CDMA end network at the lower end of the market, eventually migrating that to technology, like for instance, CDMA, whereby we could have, you know, offer services with lower functionality, lower service, that’s more attractively priced so that we cover the higher end to the middle end of the market with Pactel, and then Pachome would be the lower end of the market, so that they’re not competing with each other in the market.

Judging from what other people have paid for licenses, I guess they’ve done their homework, and it looks like they’re convinced that there’s a huge amount of demand of subscribers in Pakistan, and it’s something that I’ve been saying for the last couple of quarters.

So you still see a viable business model for Pachome, regardless of if the license fee payment is, let’s say $200m? You still see that as a viable business?

Correct, yes. I don’t see why we wouldn’t have a business model that works, and the new entrants would have one. We have the advantage of Pachome which is the biggest of the two businesses by the way that we have. We have a very well established brand name and [indiscernible] and has a very good distribution, so in that sense, what we just need to do is do the technology upgrade and changes in order to make sure that we can continue to sell products aggressively in the market. I think for Pachome, it speaks for itself, and the GSM migration will take care of that.

Finally, on Pakistan, would you expect your payment terms to be – I mean, not the actual amount, but the actual sort of distribution of the payments, to be similar, i.e. 60% up front, and the remainder over the last 10 year period, or do you see a different payment structure?

The tender documents, which are the documents that were used for the two new entrants to submit that, it does say that the payment terms for the established operators are going to be different, okay. So that’s the proper information.

I would like to add to that, and this is not country-specific. This is general. That it is very unusual for governments for the newer licenses, to ask for upfront payment. It’s not unusual for governments to ask for upfront payment for new entrants because they’re never sure whether new entrants are going to stay in the country, and that’s why they want to get some of the money upfront. For established operators like Pachome and Pactel, who have been in the country for almost 14 years now, the chances that they are going to leave the country are fairly small, after the ups and downs we have had in the country.

So therefore, we are looking more at payment over the life of the license, but like I said, you know, I don’t want to speculate, you know, on what the exact terms of the conditions are going to be. We have resumed the talks with the government, and we will be awaiting the decision. We will inform the market at that point in time.

Could you just comment – I’m not quite sure if I remember rightly – but you don’t have to pay anything for the current license, do you?

Well, we’re paying some amounts, you know, for the user frequency, and some payments to the government, but they are fairly small, of course, compared to the $291m that is going to be paid by the new entrants.

Okay. Just one final question. On Vietnam, you said that you will be finalizing the terms, and they will be ready some time early in 2005. Will we be given any more information until then, or will it be radio silence until early 2005?

Well, I keep radio silence until such point where there are some major developments to be announced, as we did with the MRU in February, because I don’t want the whole world to feel like they are participating in the negotiation with the government in Vietnam. I think this is a very important negotiation for us, and we want to do this in a professional way, and in a confidential way. We will inform the market as soon as we have a result, but I remain very confident that we will get a good result at the end of the day.

Sorry, with just one more question, but what’s their incentive to continue the co-operation with you? I mean, what do you bring to the table, given that they can basically buy out the assets at a very favorable price?

The incentive for them, I think, you should probably ask themselves that question, but if I was in their shoes, I would answer that question as follows. That first of all there has been, you know, a very good relationship with our subsidiary, Combic International Vietnam, in Vietnam. It has been the best performing B2C in the Telecoms sector by quite a bit, and they also know the contributions we have been making, not only financially. We have been contributing over about $300m both in CAPEX and operational expenses. They also have been doing, and will continue to do so, a transfer of technology, and you know, knowledge when it comes to distribution, marketing, sales and stuff like that.

I think the Vietnam market still has a long way to go. We only have a 3% mobile penetration at this point in time, so there’s still a lot of work to be done. I think that’s the reason why the Vietnam government will continue to turn to foreign partners, especially the ones they have been successful with.

Okay, thank you.

Your next question comes from Irwin van Daldum of Asterisk. Please ask your question.

Yes, good afternoon. I have two questions, first of all about the interest costs, which seem pretty high compared with the last quarter, if you were correct, for the one-offs as a result of the pull-back of the 13.5% notes. Can you explain why interest costs are this high, and what you expect for the coming quarters?

Secondly, again about Pakistan, are you not afraid that this will be a trend for future deals? I mean, Vietnam could see the high licenses paid in Pakistan, and want to do the same trick in all countries as well. Are you afraid of that?

Okay, let me first answer the second part, and then Bruno will answer the first question. So, no, Pakistan is a unique situation in a sense that is a country with 150 million people. It has a very low penetration, 3%, and has a high kind of demand for mobile services, so I don’t expect this to become a practice.

As far as Vietnam is concerned, I think I’ve said publicly before that up to now that Vietnam has cost us $300m, and that I expect that there’s going to be a cost for us to renew that license going forward. We should not be surprised, because it has cost us for the first nine years, you know, almost nine years, almost $300m to date. Despite that, we still make good money in that country. No, I’m convinced that this is not going to spread like the bird flu in Asia to other regions, and secondly, as I just said, Vietnam had a cost, historically, and I expect it to continue having a cost. Like I said before, you know, it’s probably going to be higher than what we have paid, historically. So, Bruno, maybe you can give some clarity on the interest costs?

Yes, the interest expense let me give you some breakdown of that amount it’s composed of. It includes both the real interest expense and the default costs amortization, which explains the $27m. If we take the 5% notes, which are approximately $325m, divestment amount of $4m, of which we, on top of that had the deferred costs of amortization of approximately $2m.

Then, there is the $550m 10% note, which brings, on a quarterly basis, approximately $14m. On top of that there is a small amount regarding the 2% notes of a little bit higher than $1m, and then the bit at the operating companies level, around 10% of the $236m that you see as debt, give us in total around $27m. So I just recap the different components. We have the 5%, with the amortization of deferred expense which gives around $6m, plus 10% of the $550m, which gives us $40m. The 2% notes around $1m, and the operating interests around 5.5% on a quarterly basis.

Okay.

Okay?

Yes, thank you.

Your next question comes from Ann Dyers of Aragon Global. Please ask your question.

Yes, hello, it follows on the Pakistan question. Would you exclude, because there are two different standards, actually merging the two operations to save on the license fee, or is that not possible?

No, not at this point in time. I think people think that we are [indiscernible] quite a lot of money at things, would be the worst time to give up any of that, so we continue to operate those. I’ve been presented business plans by my general managers in the country, that’s justified continuing operating all of them.

Thank you.

But I would like to add that from an operational point of view, we are fully merged, and we have all the synergies. We have synergies as many as you can have, or as much as you can have, so that’s also the reason why we are today operating at healthy margins in Pakistan.

Your next question comes from Kevin Rowe of Rowe Equity Research. Please ask your question.

Hi, Marc. Believe it or not, another Pakistan follow-up.

I don’t believe you, Kevin.

Your expectation, that you’ll pay less than $291m for the license fee there, is that merely a function of the fact that your license is a smaller license, I believe the 20 megahertz versus the 25 sold, or do you actually expect to pay a less price on a per megahertz basis?

No. I think that is definitely one of the elements, and like I said tonight, I don’t want to speculate as to what the ultimate amount is going to be. It’s going to be up to the government to decide that for all operators, but that clearly is going to be an element in the decision process.

So it’s possible that you could pay a smaller amount on a per megahertz basis?

Like I said, I’m not going to speculate, Kevin, so we will let the market know as soon as we have news for them.

Okay. A quick question on Vietnam. I believe the regulator there approved Vodafone’s request for 30 second billing. When does that begin, and how do you expect that to impact margins going forward?

I think it’s a positive element that’s going to be implemented from May 1 of this year. It’s positive because you know the new operators, you know, were given that privilege already and the existing ones not. So now we operate on a similar basis on the same times. It will not have a margin impact on the country because we expect also some reduction on at leased line costs which might in fact slightly increased the gross margin in Pakistan. It could have a temporary flat effect on revenues, although I expect that with the elasticity and also the fact that the subscription fees – and this is very important, you know – will be brought down in Vietnam. That’s a hurdle or a barrier for entry for subscribers, and it’s going to come down substantially, and that is going to fuel growth.

So I think, depending on what assumption you make on the elasticity, no, I would say the worse case is flat next quarter, this quarter, the second quarter, and continues growing again from the third quarter onwards. So that’s the worst case. I think it’s probably going to be better than that.

Great, thanks, Marc.

Thanks, Kevin.

Your next question comes from Mark Whitman of Triage Capital. Please ask your question.

Good morning, gentlemen. A quick follow-up on Kevin Rowe’s I think, question. I think you guys have 10 megahertz per license, and they auction 15. Is that correct, so it’s 20 versus 30?

We have 10, and operating 2 x 10, yes.

And they auction 15 each, right?

I think so. I’m not sure 100%. I think it might be, but I’m not 100% sure.

Okay, and I missed the CAPEX question, sorry, if you could just repeat what you said about CAPEX.

It was just over $60m for the first quarter, but we stick to $150m for the year, because there is a build up now, you know, of expenses that were the result of the GSM migration, of course.

Very good, thank you.

Thank you, Mark.

You have a further question from Adrian Dawes of Hartwell. Please ask your question.

Can you give us any update on how the Honduras buy-out is coming, and whether there is a particular geographic area where you try to pay licenses for contiguous areas?

There’s no movement in Honduras, so no, we’re not [indiscernible] the situation there. We’re still waiting for approval from the government.

Secondly, in terms of where we are looking for opportunities, it’s clearly Africa and Asia, around the countries or the regions where we are currently operating businesses. Unfortunately, I will not be able to share any names of the countries with you because I don’t want to wake up any of our competitors there.

Thanks very much.

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

Okay, thank you, Operator. Once again, I would like to thank everybody for participating on today’s conference call. If there are any further issues that you wish to discuss, I would be happy to deal with those on a one-to-one basis, and if you want to contact us directly or alternatively you can call Andrew Best and Emily Groening at Shared Value on 44-207-321-5010. Thank you very much, and have a great day. Goodbye.