Millicom International Cellular SA (TIGO) 2004 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to today's Millicom 2004 Fourth Quarter And Full Year Results conference call.

For your information this conference is being recorded. May I also remind you that this call is being audio streamed over the web, and is accessible at millicom.com, together with a presentation, summarizing the key features of the results.

I would now like to hand you over to your host today, Mr. Marc Beuls, President and CEO of Millicom International Cellular. Please go ahead sir.

Thank you operator and welcome to everyone who has joined me today to discuss the results for the quarter and year end at December 31, 2004.

Bruno Nieuwland is with me, and we will be happy to answer any questions you may have, after first making some brief comments.

Before commenting on the operating results, I would like to point out, that the year 2004 was 1 of, if not the best, in the Company's history.

We started harvesting the results of the restructuring of 2003, which allowed us once the technology upgrades were completed, to grow at least at the speed of the market.

All of our regions performed well in 2004, which allowed us to grow our subscriber base faster than ever before, with revenue growth tracking subscriber growth, and the EBITDA margin being kept close to the record level of 2003.

Millicom has laid the foundations for continued growth in the years to come, now that we have removed the financing risk in the fourth quarter of last year, by raising approximately $400m, to finance our growth and license costs.

Let me now move to the operating results, starting with subscriber growth. The strong subscriber uptake, which we saw early in the year, continued in the fourth quarter, resulting in a record quarterly increase for the third consecutive quarter.

As we announced in January, just under 860,000 net new total cellular subscribers were added in the fourth quarter, representing a 79% increase in subscriber additions, from the previous quarter, as the result of the launch of GSM services in Latin America and Pakistan. At the end of January, we reached a total of 8m subscribers.

A 36% increase in total cellular subscribers year-on-year, led to, led to a total of over 7.7m subscribers at the end of December 2004. Proportional subscribers increased by 32% on an annual basis, to 5.3m, and 89% of whom, are prepaid.

The sustained increase in minutes of use has continued, to a total cellular minutes for the 3 months ended December 31, 2004, increasing by 37%, from the same quarter of 2003.

Move to revenue growth. The strong subscriber growth translated into total revenues from Millicom of $255.7m for the 3 months to December 31, 2004, an increase of 27% from the fourth quarter of 2003, reflecting the trend of increasing growth in our operations.

For the full year revenue, excluding divested operations, was $919.3m, an increase of 44% from 2003. The highest annual revenue growth, excluding El Salvador, was recorded in Laos.

EBITDA for the 3 months ended December 31, 2004, was $123.8m, an increase of 33% from December 2003. And EBITDA for the full year, excluding divested operations, was $455.3m, an increase of 43%. Millicom's annual EBITDA margin was just below 50%.

Before moving on to review the results of each cluster, I would like to say a few words about our operations in Vietnam and Pakistan.

In the fourth quarter, Millicom successfully raised some $400m, split even, split evenly between equity and convertible debt, and the proceeds of this funding will be used primarily for funding our business in Vietnam and Pakistan.

Negotiations for an extension of our co-operation with VMS in Vietnam are going well, and we expect to be able to give more details on the future operating structure, in the second quarter of 2005.

In Pakistan, Millicom extended Paktel's license, and is waiting to be offered formal terms by the Regulator, the PTA, to extend Pakcom's license.

Verbally, we have been informed that the extension of Pakcom's license should happen at similar times to Paktel's license. We will take a final decision on the future of Pakcom, once the license terms are known to us.

Let's look at the results for each cluster, starting with South East Asia, which is Millicom's second largest region, comprising our operations in Cambodia, Laos and Vietnam.

Proportional subscriber growth, of 66%, was recorded from the fourth quarter of 2003, bringing the proportional subscriber base to a total of 1,125,000 after December 31, 2004.

Revenue for South East Asia was $64.6m for the fourth quarter, and $231.8m for the full year, increasing by 29% and 32% respectively.

EBITDA was $40.3m for the fourth quarter, an increase of 65%, from the same period in 2003. And EBITDA for the year was $141.3m, up 37%. EBITDA margin was 62% for the fourth quarter, and 61% for the year.

The strong performance was partly the result of a series of tariff reductions, introduced by the Vietnamese Post & Telecom Corporation in Vietnam, during the year, which effectively lowered the barriers to entry in this market. Further tariff reductions were introduced on the February 1, 2005.

November 2004, our Vietnamese subsidiary, Comvik International Vietnam AV, signed a second Memorandum of Understanding, with the Vietnam Mobile Telephone Services Company, or VMS, expressing the wish of both parties to continue working together in the future, in the form of a Joint Stock Company, following the expiration of the existing business co-operation contract later this year.

As I've already mentioned, negotiations for an extension of our co-operation with VMS in Vietnam, and the terms associated with it, are going well, and we expect to announce news on the future operating structure, in the second quarter of 2005.

The South Asia -- comprising of Sri Lanka, and Paktel and Pakcom in Pakistan -- proportional subscribers increased by 25% from December 31, 2003 to 1,246,000 at December 31, 2004, which is the largest subscriber base of all Millicom's clusters. Revenue for South Asia was $24.9m for the fourth quarter, and $113.2m for the full year.

EBITDA for South Asia decreased by $4.9m in the fourth quarter and to $49.2m for the full year. The quarterly EBITDA margin was 20%.

As you are aware, our business in Pakistan was disrupted in 2004 by our dispute with the PTA, with regards to Paktel's rights to switch on its GSM network.

This dispute was resolved by October, when agreement was reached, and the PTA also brought forward our license renewal negotiations and we agreed to extend Paktel's license for 15 years, the payments spread over time.

The effect of this dispute, however, was to delay the launch of our GSM services by 4 months. And this, together with the effects of a reduction in long distance and international call charges in Pakistan, have impacted on our results in South Asia for the fourth quarter of 2004.

The launch of Paktel's GSM services has gone well, and we are on track to add 1m new subscribers in Pakistan within the 1 year of the launch of GSM Services. Paktel added 275,000 new subscribers in the first 3 months since launch.

Success that we have seen in this market, is a result of an aggressive marketing campaign to establish Paktel as a price-leading brand.

However, there is an upfront sales and marketing cost, which has impacted EBITDA margin in the fourth quarter and is likely to take until 2007, before Group average margins can be re-established in Pakistan.

The Central American cluster, comprising of operations in Guatemala, Honduras and El Salvador, continue to perform well, showing a 19% growth in proportional subscribers to 1,149,000 at December 31, 2004.

Revenue grew by 30% from the fourth quarter of 2003, to $87.9m for the fourth quarter of 2004, and by 84% to $305m for the full year.

EBITDA for Central America increased by 40% to $44.7m for the fourth quarter of 2004, and by 81% to $155.6m, for the full year. The EBITDA margin for the fourth quarter and year to December 31, 2004, was 51%.

Strong growth in Central America was driven in part by the reconsolidation of El Salvador in September 2003, but predominantly by the roll out of our GSM services, during 2004, under the common brand, Tigo.

Millicom is committed to providing its customers with the most advanced technology, the best services and the widest regional coverage at the lowest tariffs, and the valued added services offered by Tigo, have enabled our operations to attract more affluent customers with greater spending power.

Moving to South American cluster, which comprises our operations in Bolivia and Paraguay. Proportional subscribers reached 916,000 at December 31, 2004. Revenue for Q4 grew by 24% to $32.3m relatively to the fourth quarter of 2003.

And Paraguay and Bolivia produced revenue increases of 27% and 20% respectively over the same period, demonstrating a significant improvement for this market. EBITDA increased by 37% from the fourth quarter of 2003 to $12.9m for the fourth quarter of 2004 and by 19% to $44.6m for the year.

The EBITDA margin for the quarter was 40%, and for the year ended December 31, 2004, it was 39%.

In our Africa cluster, which comprises our operations in Ghana, Mauritius, Senegal, Sierra Leone and Tanzania, 431,000 proportional subscribers were added in 2004, resulting in a 93% increase in subscribers for 463,000 at December 31, 2003 to 894,000 at the end of 2004.

This was the strongest subscriber growth of all clusters and it contributes to an increase in revenue of 63% to $44.4m for the fourth quarter relatively to Q4 2003, and up 77% year-on-year to $150m.

Tanzania performed particularly strongly, producing revenue growth of 85% for the fourth quarter relatively to Q4 2003.

The fourth quarter EBITDA was positively impacted by settlement on interconnect tariffs in Mauritius. EBITDA increased by 90% from Q4 2003 to $21.8m for the fourth quarter, and by 85% year-on-year to $65.8m.

In December 2004, Millicom won a tender for a 10-year license to operate a GSM network in the Republic of Chad in Central America. Winning this new license is in line with our strategy to widen our portfolio of countries in Africa, and enhance the synergies in the region. Chad is at an early stage in the development of its telecoms infrastructure, and we look forward to providing a range of services, at competitive prices in this market, from the third quarter of 2005 onwards.

That concludes my review of operations. So, let me summarize.

Millicom had a strong year, with increasing growth in subscribers quarter-on-quarter, and a total growth in revenues for the year of 44%.

Today Millicom has reached a total of 8m subscribers across its operations. This excellent momentum has been created by a combination of additional investments in GSM and price elasticity in our main markets.

In 2004, Millicom rolled out GSM across Central and South America and we have rebranded our GSM offering under the Tigo brand. Tigo has enabled Millicom to capture higher spending customers, particularly in Central America, which is our largest region in terms of revenue.

In November, we also launched a GSM network in Pakistan and this has led to rapid growth, so that by the year-end we had more than 1m customers in this market and Paktel had added 275,000 subscribers in the first 3 months of operating GSM services.

The other key driver to growth in 2004, has been the price elasticity we experienced following tariff reductions from customers, particularly in Vietnam, which has driven minutes of use for our existing customers, as well enabling us to penetrate these markets more rapidly, as cellular services become more affordable.

The strong growth was achieved whilst operating at an annual EBITDA margin of just below 50%. The margin in the fourth quarter was 48% and was impacted by the launch of GSM services by Paktel in Pakistan.

It will take Paktel more than 3 years to reach the margins it was experiencing prior to the launch of GSM. This will erode Millicom's overall margin somewhat over that period of time.

This concludes my comments, and we will now be happy to take your questions. Operator may I have the first question, please.

Thank you. [OPERATOR INSTRUCTIONS]. And we take our first question from J M Hartwell and [Adrian Jones]. Please go ahead.

Congratulations on a good set of numbers.

Thank you Adrian.

I wonder if you could elaborate a little more on the successes you've been having in Central America and with the roll out of the Tigo brand and how much additional growth can come from that single brand? That's question 1.

2, if you could talk a little bit about the evolution of the Iranian market and what you see for that in 2005? Thank you.

So, Central America has been an extremely good experience in 2004, the second part of 2004, when we launched our GSM network there.

Unfortunately the launch was a little bit delayed, as you know, but that was compensated by liquidated damages that were paid by the supplier, which are not 1-offs because they are compensations for revenue.

We think that this year, revenues are continue going to be strong in Central America, because the region, as such, is doing very well. There's still good demand for telephony services and mobile telephony services, in general.

And with Tigo, which is a brand now that is in 3 markets today, where not only we can save a lot of cost by having a common brand and common merchandizing material, common promotions, advertising and stuff like that, but also that when people travel around the 3 countries we operate in, operate in our bordering countries, people see a brand so there's a very, very, good brand awareness there. So, we're extremely happy with Tigo as a common brand.

As a matter of fact, we are now considering introducing a common brand in Africa, for instance, as a result of the successes we have seen in Central and Latin America. So, I think Central America is going to continue performing very well this year.

As far as Iran is concerned, I think we are approaching the days of the launch of the network there by Rafsanjan. Just remember we are only managing that project, we are not owning anything at this point in time. But we expect that the network is going to be switched on shortly.

But we know that there's a huge pent up demand for mobile services. Some people say it's up to 5m people who would like to get a mobile phone. We have a project to manage that will allow Rafsanjan to build 2m prepaid lines in the country and we expect that that will be finalized by the end o this year.

Thanks.

Thank you Adrian.

And our next question comes from Andreas Ekstrom of Handelsbanken. Please go ahead.

Hi Marc. It's Andreas Ekstrom at Handelsbanken.

Hello.

Just 2 short questions. Maybe 1, guidance, what you expect for CapEx next year in 2005.

And the second question, I see that you have decided to shorten your amortization period and what does that mean for depreciation in '05 versus 2004? Thanks.

Guidance for CapEx this year, if the growth is in line with what we expect it, what we expect, we should be looking at a CapEx similar to what we spent last year. So, it was around, just under $240m.

The accelerated depreciation is not depreciating, shorting the depreciation in a period by an awful number of years. It's just that given that we had launched GSM in most of the markets now. The only exception is Bolivia, where we will be going GSM in Bolivia also this year.

It means that I think we need to shorten the life of that equipment a little bit. How big the impact is going to be on the P&L? It's not going to be a huge impact, but I don't have an exact number for you.

I would like, however, to point out that in countries -- and I think Sri Lanka's the best example -- where we did technology changes, we experienced the network, sorry, yes, the old network was always kept alive much longer than what we anticipated. But we are taking a cautious approach here by shortening some countries to 2007, some others to 2008.

Okay. Thank you.

Thank you.

We take our next question from Erwin van Zuidan of Aster-x Capital Management. Please go ahead.

Yes. Good afternoon. This is Erwin van Zuidan speaking. I have a couple of questions.

First of all Central America. You have some kind of 1-off, which is of course paid by the supplier of your equipment.

If you exclude from that, I think EBITDA margins declining, from 52% to 47%. Had it also to do with the 1-off being delayed, or could you comment on the cost structure? Why is the reason why the margins are not corrected for that 1-off lower?

And second question about the whole region. Subscriber intakes grow in double-digit again. Have you seen this as temporary here slow down and can you expect this kind of growth going forward? And how do you explain this growth? Is it just for you turning to GSM or is it just economy or do you also see this kind of growth at competitors at this moment?

And then I have a question concerning the discount rate you use to capitalize your obligations for the payment of the license in Pakistan.

What kind of discount rates do you use and, of course, a related question, what kind of impact will it have on annual interest costs going forward?

Okay. Maybe Bruno you could answer the third question on the discount rate for Pakistan?

Okay. The Pakistan impact on the interest rate for this year, for the year 2004, was $2.3m, and we used market rate plus a risk premium, and that's around 7% for the discount rate on the Paktel license.

Okay. So, I would like to point out that the $2.3m is not an interest cost. That comes on top of the $291m. This is just the way this is accounted for in our books. Okay?

Yes. I understand.

So, the cash outlay over 15 years is only $291m.

First of, to go back to your first question, Central America. First of all, I would like to underscore, this is not a 1-off. This is a compensation for lost revenues.

If we had been able to switch on our networks 3 to 4 months earlier, we would have had the higher revenue with a similar, with a more or less similar cost base, so the margins would still have been the same at 51%. So, this is not a 1-off. Let's make that very clear.

But it is, again, the way we need to account for it and there's going to be other adjustments in this first and the second quarter of this year, once the equipment will be installed by our operations there.

So if everything had been delivered as planned, our revenue would have been higher than what it is today, and our EBITDA would have been more or less at the same level than it is today.

In terms of the subscriber growth. I don't know whether you were pointing at Central America or whether you were pointing at the whole of Latin America? Could you maybe clarify that?

Yes. At the whole of Latin America.

Latin America. Clearly of course, Latin America, as I said earlier, the impact of GSM, the introduction of GSM in Central America did very, very good things for us.

Because it not only allowed us to tap into, what I would call a new market segment, but it also allowed us to move some of our customers from the fairly congested TDMA networks in some of the countries, which improved the quality of the TDMA almost over night. And which allowed us to not only to take more minutes, but also allowed us to keep the customers on the network, probably more than what we have anticipated.

The other part of course of Latin America, of course, is South America where we see that the economic growth, especially in Paraguay, following the positive things we have been seeing in Brazil and Argentina, is coming back, be it modestly. But at least it creates a better environment for us to operate a network there, and allows us, again, to increase subscribers, and also to increase our revenue and EBITDA. You might have noticed that our EBITDA margin is going up in that part of the world.

Bolivia, we've done a real turnaround. Not only did we resolve this default we had on the loan there, but we also managed to substantially increase, especially in the fourth quarter, our revenues there, thanks to a very competitive offerings, targeting certain market segments ahead of the GSM migration, which we will be implementing in the course of 2005.

Okay. And I have an additional question on Pakistan. Can you mention or give us an idea about 1-off costs you incurred in Q4? I mean additional marketing campaigns, start up costs, these kinds of items. Could you give us a feeling about these kinds of additional costs?

No. I don't have a number for you there because it is a mix. It is a mix of, there is a drop in the EBITDA in the region there in the fourth quarter.

It's a mixture, as I said, of call charges for long distance and international calls coming down, the fact that, of course, on our TDMA networks we had not been really been promoting those services very aggressively. So, that means that we see high-end customers leaving there.

And that combined with the start of the GSM subscribers, or GSM service, which has cost us money in terms of launching offers, giving, especially at the end of last year, some free minutes to new subscribers, that has impacted our margin.

The margin will start going up in the course of this year, but there will be an impact into, as I said, probably beginning of 2007. And it will take us more or less 2 years before we get back to the 50% EBITDA margin we were experiencing before the GSM launch.

Okay. Thank you very much.

Thank you.

Our next question comes from [Lena Austerberg] of Enskilda Securities. Please go ahead.

Yes. I have a question on Mauritius and what the margins would have been on Africa, if you exclude the interconnection settlement there? And also I'm wondering sort of curious who supplied the network in South and Central America?

I'd rather not answer the second part of the question.

Right

But I think some people know that anyway.

So, in terms of Mauritius, and Africa in general, I think the margin for the fourth quarter, I think, would have been 44%, I think, versus 49% if you exclude this 1-off settlement on interconnect charges in Mauritius.

So, there was still an improvement in the margin in Africa, and as I said on earlier calls, we remain committed to reaching the 50% EBITDA margin in the course of 2005 in Africa.

Thank you.

Our next question comes from Sundeep Bihani of Lehman Brothers. Please go ahead.

Hi Marc. Thanks for the call. My first question is regarding the taxes in quarter 4, which has dropped roughly like 50% compared to the running rate in quarter 3 or quarter 2.

And my second question relates to the Pakistan 1m net subscribers guidance for 2005. Is it exclusive of any sort of migration of subscribers from TDMA on to the new network, or do you expect this 1m on top of any growth on TDMA network subscribers? Thank you. Hello? Hello?

Ladies and gentlemen please stand by while we re-establish our speakers' line. Thank you.

Once again ladies and gentlemen, please be patient for a moment. Thank you. Mr. Beuls is rejoining us on the conference. Thank you.

Hello?

Sure. Sure.

Hello? Operator--

Hello?

Can I have the next question?

Yes.

Mr. Beuls, Mr. Sundeep Bihani is going to repeat his question. Thank you.

Okay. Hi Sundip.

Hi Marc. How are you?

Good.

Marc, I just had 2 quick questions. 1 was on the taxes. The tax for quarter 4 has dropped by about 50% compared to the running rate in quarter 3 or quarter 2 before. And should we expect it to continue in 2005 given that now you are accelerated the depreciation?

And secondly is on the Pakistan guidance of 1m new subscribers on the GSM network. Is it on top of any sort of growth in TDMA, or does this 1m include some sort of migration from the TDMA to the GSM network. Thank you.

Let me first take Pakistan and then Bruno can answer the question on taxes.

Pakistan. No. The 1m are 1m GSM subscribers. At this point in time we see some churn on the TDMA networks, but how many of those, exactly, come to us and how many go to others ,we don't know.

But what we see is that he new subscribers we get have higher ARPUs than the TDMA customers we have. And what is very important, is that we see a much higher percentage of outgoing calls, which are the calls with the higher tariffs, compared to incoming calls. So, the developments we see in Pakistan are, on the Paktel GSM network, are very encouraging.

So Bruno could you answer the question on taxes?

Yes. We had an impact of, a change in tax law, tax regime, in Guatemala where our [indiscernible] up an income, taxation relief of 5% of net revenue, as opposed to an income tax regime of 31% on net profit before tax.

And due to timing differences, Guatemala had recorded deferred tax liabilities, which will not materialize any more. We were able to [reverse] that deferred tax liability, leading to tax profit of $9.5m.

Looking at our [indiscernible] Q4 tax impact and going forward, we would expect a slight reduction [indiscernible] taxation, because tax law depends on the profitability of the sales to different regions.

As I said before, the depreciation, the accelerated depreciation of our TDMA equipment is not fundamentally changing the taxation and the depreciation. It's just a slight acceleration we are doing.

Okay.

But there might be some tax savings there. Okay?

Okay. Just 1 more question. In terms of Vietnam, how much was the CapEx contributed in 2004?

From what I understand is that most of the commitment on the [VCC] is completed, therefore you are no longer required to contribute any CapEx to the [indiscernible] VCC.

We have committed more or less everything. Not everything is installed yet. There's still some things that are in the process of being installed.

But we have reached our quota in terms of CapEx for the current VCC. And that will allow us to continue growing the business until the end of the VCC.

Okay. Thank you.

Thank you.

We now take a question from [Willem Kadake] of Kepler. Please go ahead.

Yes. Hi. Good afternoon, Marc.

[inaudible].

Well done. A few questions.

Thank you.

Although some have already answer certain things. Okay. I understand somewhat about the margin pressure impact is strong. But how come that in the South East, effectively, also the top line essentially came down, with 3m compared to the third quarter? Is that all full charges etc? That's 1 question.

And a second question is on the website of Paktel you can see you've got extremely attractive price offers etc. Do you expect when the other entrants come in that you will have to further, make the packages more attractive?

Third question is, you mentioned, again, in February a lowering of prices in Vietnam. Could you give a rough idea how much it's going to be?

And then lastly, your earlier assessment of Pakistan, you expected to move back to the 40% plus margin, you normal business model. Do you expect that to go linear or like a curve, it's just a bit flatter, that most improvements will come so late '06? Thanks.

Okay. First of all, yes, the top line growth in Pakistan was a combination of full charges but also, as I said earlier, when we were only running our TDMA network, clearly that network was not growing any longer. We no longer had the better customers and in that sense ARPUs were not very high.

Okay.

That has changed and so ARPUs are much higher because of a much higher percentage of outgoing calls.

Prices impact. I'll tell you, right, I've been twice in Karachi now over the last month and you drive through Karachi and you can see Paktel everywhere announcing prices of 375 rupees and our main competitors are at 475 rupees. That's what you can see on billboards.

We have a very attractive offer. We intend to make sure that we keep the best price or the best offer in the market.

At this stage, we don't know what the prices are going to be quoted, or the prices that are going to be quoted, by the new entrants. I think they're keeping that information very close to themselves.

But we are prepared, and that's what we have written in our business model, prices might come further down, so this should not be a surprise to us. It is written in the model. That model that, as you know, your fourth quarter, first question said, is going to get us back to the margins, prior to the launch of GSM.

And I think the increase is going to be linear, because it has to do with the economies of scale, the revenue we are generating out of GSM versus the acquisition costs of the new GSM customers.

Then the other question was Vietnam and prices. The price cuts in Vietnam on February 1 was 7%. So, we know that last year we had 2 price reductions. 1 on April 1 and 1 on August 1 and a lot of people were very nervous about that. We were not.

And the result of all those price reductions was accelerated growth, good revenue growth, good subscriber growth and I would expect that this revenue, sorry, this tariff reduction will have the same impact, again, this year.

Okay. Great. And just maybe for a bit for the fun of it because nowadays in Europe you can also call for free, even sometimes on your mobile. What do you envisage yourself in some of the mobile market? Are prices going to go down to less than $1 or cents per minute or -- what's your feel? I know you're the most competitive in terms of cost, but how low can you go?

Well, the lowest we have, are currently at is probably $0.03 to $0.04 a minute an average outgoing and incoming. We know that we can go lower than that. But of course this is a mix. We have very low tariffs in the middle of the night in order to fill our networks up at the downtowns, times, sorry. So, it's a real mix.

Now, also the ranging of tariffs is pretty big in Millicom. We know that tariffs will come down and that's why we will have to keep our costs under control. But with the big economies of scale, we should be able to continue keeping our margins at a level where they are today.

Okay. Great. Thanks Marc.

Thanks Willem.

And now we move to Brian [Lowel] of Morgan Stanley. Please go ahead.

Hi. Good morning. I was just wondering if you could give the amount of cash upstreamed to the parent holding Company from the subsidiaries this quarter?

And also the ending cash balance at the holding Company?

The cash upstreams. For the full year I know it was over the target. The target was $160m. I think we reached $161m, $162m. I can't remember what the number was at the end of the third quarter. Do you have that number, Bruno?

Yes. For the quarter that was $62m--

So, we were a little bit slow in the third quarter but we catched up in the fourth quarter and we reached, or we out performed the target.

The cash at the Corporate level? Do you have that number, Bruno?

Yes. At year-end the cash at Corporate was approximately $316m out of the total $420m.

Does that answer the question, Brian?

Yes. Yes. $316m, correct?

$316m, yes.

Great. Thank you.

And that was prior to the proceeds of the convertibles not being paid, because they were only paid in the early days of January. So, today that number is approximately $200m higher.

Okay. Thanks a lot.

Thank you.

And now we move to Rhys Summerton of Citigroup. Please go ahead.

Yes. Hi. Good afternoon. Just a few questions. Firstly on Tanzania. What do you think's driven the growth over the last quarter in that market?

Second question is, could you give us some kind of indication of your new subscribers that you're adding, your incremental subscribers, what kind of ARPUs you're seeing coming in across the different regions?

And then thirdly, [indiscernible] question, we see reducing tariffs coming through in Pakistan and Vietnam. What kind of increased usage are we seeing at the same time?

So, what increase we see in tariffs?

No. Decrease in tariffs. What increase are we seeing in usage?

Okay. The growth in Tanzania is the result of, I think, us doing a somewhat better job than we were doing before.

I think we have lost market share in Tanzania, with additional investments, which we are continuing in 2005. A better offering. I think that made all the difference in Tanzania. So, I'm very positive for Tanzania, for the growth in Tanzania, in the course o f2005.

New subscribers. It really varies. If you go to the countries where we have launched GSM services, like Pakistan and Central America and South America and Paraguay in South America, we see that the new subscribers are bringing higher ARPUs because we tap into a higher market segment.

And that is also 1 of the reasons why for a number of countries we now introducing the 2.5G GRPS and stuff like that on our networks, because we see there is good demand for that kind of services, which will allow us to further increase the ARPUs for that market segment, which is the higher end of the prepaid market segment.

If you go to the low end of the prepaid market segment, by definition, you know their ARPUs per subscriber are lower. That is how this industry works and that's how it will continue to work.

Well, of course, with the tariff reductions -- and I'll get to your question -- the tariff reductions help us in order to grow that market segment. And we're going to see further tariff reductions in a number of countries.

That will enhance the usage. That will increase the number of subscribers. In other words, the price elasticity, will be as much, it's much higher than the 1 to 1. So we see that people call much more when we bring, than the percentage [inaudible] tariff reductions, which we introduced in the markets.

So, I'm very hopeful that that will continue to happen in 2005 and 2006 and that it will be beneficial to the Company.

Thank you.

Does that answer your question?

Yes. Thank you very much.

Okay.

The next question comes from Kevin Rowe of Rowe Equity Research. Please go ahead.

Thanks. A quick clarification then a Vietnam question. On Mauritius the interconnection settlement benefit, you said the margin would have been 44% instead of 49%, so that's approximately a $2.2m EBITDA swing?

That is correct, Kevin.

Okay. On Vietnam we're going to get clarification of the new agreement next quarter, which is at the end of the quarters when the first 10-year agreement expires, as you well know. So, it's coming down to the wire.

What are the top 1 or 2 issues that are still being hammered out between you and the Vietnamese authorities?

I'm going to stick to what I said before, Kevin, and that is that I'm not going to have a public debate on the negotiations in Vietnam.

What I have said before, and I can confirm this after a recent visit to Vietnam, is that we have the support from the highest levels in the country for a continuation of the co-operation between VMS and Comvik International Vietnam. That was again confirmed last November by the signing of the second MoU. And from what I heard in the country very recently, people want to stick to that.

There's still an awful lot of work to be done, clearly. Vietnam does want to become a member of the WTO. Secondly, Vietnam has signed agreements with the European Union, the head of the membership of the WTO.

That agreement has, amongst other language in there, that European telephone Companies should be allowed upon expiry of their VCC to see their contract extended at similar terms and conditions than the current VCC.

So there are a lot of indications that they do want to continue, or they do want see VSM and Comvik continue operating together.

Ultimately, that will take the form of a joint venture Company. There's no doubt about that. Whether that will take place already, at the end of the second quarter that is still a question mark. Because as you correctly said, time is running out, so there might be a need for a temporary extension of the existing contract in 1 way or another in order to lead to what everybody has committed to do, being setting up a joint venture or Joint Stock Company between VMS and Comvik.

And if that were the case, a temporary extension, it would be under the same economic terms as the first 10-year agreement?

There's no agreement on that at this point in time, so I can't give you a yes or a no or a maybe. It has to be a maybe, because we don't know today.

And a quick follow up on that. The EBITDA margin of Vietnam as you know is extremely attractive for Millicom. It's well above your Group average. Do you anticipate that to be, will there be a margin impact in '05/'06 from the various options that are being considered or could the, the same type of level that we've been seeing?

Clearly the, and I've said this before, if we move to a joint venture structure that will have a margin impact. It will not necessarily have an earnings impact. And the reason why this margin impact and not an earnings impact, is that today we have a higher share of CapEx than we have the revenue share in that VCC going forward in the form of a joint venture.

You get your share of everything, of revenues, of EBITDA, of CapEx, interest, costs and everything. And that means the margin will come down. But the earnings -- given that we then also will share some of the OpEx but less of the CapEx -- should be close to what we have today.

But again, we at this point in time don't know what the final terms and conditions of that Joint Stock Company or joint venture are going to be. So, I can't guarantee you anything as to what the margin is going to be in Vietnam in 2005 or 2006. Clearly if there would be an extension of similar terms then we have today then there would be no impact this year, but that is what is currently being negotiated with the authorities in Vietnam and with our partner there.

Great. Thanks Marc.

Thanks Kevin.

Our next question comes from [Ralph Heppermann] of [Happermann Font]. Please go ahead.

How are you Marc?

I'm fine Ralph thank you?

A quick question on Pakistan. I might have missed this but you mentioned what you think is a more ongoing, forward-looking margin in that region, leaving out what seems to be the 1-time expenses for this quarter?

In Pakistan it's not a 1-time expense. It's an ongoing expense in order to build back subscriber base. So, it's not-- It's going to take us, as I said, 2 years now, to get back to the margins we experienced before the GSM launch.

So, using this $4.9m or $5m cash, quarterly cash flow, you mean you're slowly going to build from this base level.

That's right. That's right.

Okay.

It's a matter of getting more subscribers, getting more revenues. As I said, we see good revenues coming in right now. So, it's a matter of how many subscribers are we going to be having in the next couple of quarters. And there's a cost associated to every subscriber that is being added.

I would like to point out, in general, is that, of course, we have introduced a number of , we have introduced 1 specific way of distributing our products, which is [E-PIN] the electronic, the top up, of your prepaid account over the air. That is now operating in a number of countries, including Vietnam. And that should allow us, going forward, to reduce our distribution cost. So, that might make it possible, when we launch it in some of the other markets, to improve our margins over time.

Okay. And just a clerical question, for Bruno I believe. Bruno, pro forma with the new shares, as well as the new debt, I was coming up with about $870m of debt, leaving out the Tele2 associated debt. Is that about right? As well as about $92m fully converted shares?

Your question is what the net debt could be or is [indiscernible]?

Net debt leaving out the Tele2 associated.

Well our net debt would be--

No. The net debt is not going to go up as a result of the convertible. Because the debt is going to be added and the cash is going to be added. So, that's a wash. So, the net debt number you saw at the end of December is going to stay the same.

I'm sorry. The gross debt. I was using about $870m in gross debt and about $620m of cash.

Net debt, if you take interest-bearing debt, would be $327m at the end of the year. So, if we add the cash and the convertible, that doesn't change the situation for net debt on interest-bearing debt.

But if you, on the gross debt, if you look at the gross debt of today is about $536 on the high yields and then there's another $140m. So that gets you to $680m. Plus $72m. So that's [indiscernible]. And then you add $200m of convertible debt. So, that gets you to about just $950m gross debt.

$950m. Would that be, that's without the Tele2 debt?

That's without the Tele2 debt, yes.

And of the $950m or so, how much of that is at the operating subs?

$212m is at the operating Company level.

$212m. Okay. And, again, you'll have about $620m of cash with the, with the new offerings?

In total cash, yes. That's more or less $428m at year-end plus the $200m, which we got on January 7.

Okay. Thank you.

And now a question from William Miller of J M Hartwell. Please go ahead.

[Wonderful quarter]. I'm going to return to Iran for a second. There have been a number of reports that your competitor, Turkcell, is having a trouble with the government. And the backlog figures or at least published hours. 5m in the queue. Something like that. And they paid $600 a piece.

Are you precluded from taking anything above $2m, and if so for how long? And given Turkcell's problems or issues, is there a chance that that $2m will become a floor rather than a ceiling? Or how, how are you looking at this terrible situation vis-a-vis Turkcell and your own opportunities.

And if, as you conclude that survey, could you give us some idea what the timing of your potential purchase of your 47% at book value would be?

First of all, let's look at the bird we have in the hand, Bill. And that is we want to build a network, as quickly as possible, to tap into this very lucrative market. And that's what we're concentrating on.

Whether this $2m prepaid contract is going to be increased to $4m or to a higher number, people [inaudible] at 1 time. There's no negotiation with respect to that issue. [inaudible] concentrating a 100% on getting that network being built.

[inaudible] there's no indication whatsoever when we're going to [inaudible] before we will take [inaudible] to exercise that. So, there's no data at this time. [inaudible], get the network going, build as much [inaudible] as we can.

Thanks Marc. And the othe,r your part is obviously, what's your strategy for rolling the network out and how soon will you turn on even a portion of it?

We hope that we're going to be able to switch it on very shortly. I think by the end of this month, early next month, we should be covering the greater of Tehran.

But it's not our decision only to switch on that network. So, but I think we will be able to switch it on or Rafanjan will be able to switch it on, I would say, sometime next month, I think.

And finally, in looking at the ARPU or expected ARPU that you might have from Iran, can you comment on what you think the major variable will be? Obviously, you've got a tremendous demand for your, or for cellular service in general, and Iran's a relatively rich country.

What do you look for in the economic situation in Iran, that would lead you to conclude ARPU are going to be 1, or ARPU are going to be 30?

What we know, what we know from information we've got from the incumbent is that ARPUs today are around $14 on the network, on the existing mobile network.

That's the only information we have, and that's also the information we have used in our business plan.

So, the proof will be in eating the pudding, and that's why, as I said before, we will only consider exercising our option once we will know what the real numbers are, in terms of revenues, costs and stuff like that, moving upwards.

Terrific Marc. Thanks a lot.

Thank you.

[OPERATOR INSTRUCTIONS]. And we take a follow up question from Erwin van Zuidan of Aster-x Capital Management. Please go ahead.

Hi. It's afternoon, good afternoon again. A quick question on your working capital. Working capital has improved quite considerably during 2004.

Do you expect that you can keep it on this level, now that roughly $32m of license payments are scheduled in there? So, your working capital's roughly -$110m. Do you foresee any changes in the coming year or not?

Wel,l we are in the process of trying to, especially reduce the time it takes to recover money from incumbents, in a number of our countries. So, that should allow us to slightly increase, improve our working capital links.

But the business is growing very rapidly. It's a prepaid model so I don't really see any major changes there, going forward.

Okay. Thank you.

Thank you.

And a follow up question from Willem Kadake of Kepler. Please go ahead.

Yes. 1 quick question, Marc. In the press release you make the point that as of today Millicom has 8m subscribers, but I do recall that in the speech, you basically made the point, 8m subscribers at the end of January. So, what's true, because it makes a tiny bit of difference on monthly subscriber intake?

No. I said 8m at the end of January. 7.7m at the end of December. 8m at the end of January.

So, that's 75,000 a week, yes? Or 70,000, something like that?

Well you can [inaudible].

Okay. It makes some difference. Okay. Great.

Okay.

[OPERATOR INSTRUCTIONS]. Mr. Beuls it appears there are no further--

Okay.

Questions at this time.

Okay. Thank you operator.

Once again I would like to thank you all 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 1 to 1 basis, if you wish to contact us directly, or alternatively you can call Shared Value at +44-207-321-5010.

Thank you very much and goodbye.

Ladies and gentlemen that will conclude today's conference. Thank you for your participation. You may now disconnect.