Millicom International Cellular SA (TIGO) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Millicom Q4 2010 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 band and is accessible at www.millicom.com, together with a presentation summarizing the key features of the results.

I would now like to hand your call over to your hosts today, to Mr. Mikael Grahne, President and CEO, and Francois-Xavier Roger, CFO. Please go ahead, gentlemen.

Thank you, operator, and welcome to you all.

As usual, you can find the slides for this call on our website. Please go to slide number 3.

Turning to the quarterly highlights, you can see the execution of our value-creation strategy continues to deliver good results. Revenues were close to $1.1 billion, increasing organically in local currency by 10%. We have sustained double-digit growth over the course of the year with an evolving distribution of that growth by region. There has been a deceleration in Africa towards the end of the year and a return to growth in Central America in Q4.

Our focus today is on attracting higher-value customers, and we have accelerated our commercial investments in 3G data and value-added services in order to sustain double-digit top line growth in the medium term as we have announced a few months ago. We now have more than 1.7 million 3G customers using data services, and we have seen further ARPU improvement as a result of this focus.

Slide 4 -- we see more results from our value-creation strategy if you look at the year as a whole on slide 4. Over half of all our new customers added in Latin America in 2010 are using 3G data services. We sustained double-digit revenue growth every quarter and added 2.5 percentage points of growth over 2009 on average. We have continued to generate significant amounts of cash and year-on-year the level of cash repatriation from operation has increased.

In the area of asset optimization, we have created three joint venture tower companies in Africa with Helios, which together create more than $400 million of value through cash and equity and expected future cost savings.

We have improved the efficiency of our balance sheet by replacing our corporate bond with cheaper tax efficient debt at operating level. And finally, we returned close to $1 billion to shareholders in 2010 through a combination of dividends and share buybacks.

Slide 5 -- now, let's look at the financial highlights for the quarter in more detail, as shown on slide 5. We ended the quarter with 38.6 million customers, up 14% year on year. Revenues increased by 10% on both reported and local currency basis to $1.07 billion, and EBITDA for the quarter was $497 million, producing an EBITDA margin of 46.5%. The slight erosion of the margin is a result of greater investment in 3G and value-added services as we focus on sustaining good top-line growth.

CapEx for the quarter was $272 million or 25.4% of revenues bringing total CapEx for the year to $688 million, excluding the capitalization of tower leases. Operating free cash flow at $310 million or 29% of revenues was brought in line with last year.

Slide 6 -- on slide 6, you can see how our focus on higher-value customers is being reflected in our commercial costs, T&E and sales and marketing, which are 23.1% of sales in Q4, up by 1.1 percentage points year on year with telephones and equipment costs increasing by 23% and sales and marketing costs up by 14%. This strategy of accelerated investments in 3G and services aims to address rising demand for new services and to sustain around double-digit growth in the medium term.

Slide 7 -- now, let's look at the results for the full year on slide 7. Revenues were $3.9 billion, up 13% year on year, and EBITDA was $1.8 billion, up 15%. The margin for the full year was 47%, exactly in line with our guidance. CapEx for the full year was $688 million, and cash flow generation was strong with over $1 billion of operating free cash flow generated, giving a margin of 25.9%.

Slide 8 -- on slide 8, we have set out our local currency mobile revenue growth over the last 8 quarters. Real growth in Q4, excluding one-off adjustments, were actually 10.4%. While there has been some volatility quarter on quarter, the average for all of 2010 as a whole at 11.2% is 2.5 percentage points higher than the average for 2009. We produced double-digit local currency growth in every quarter in 2010, which we did not receive in any quarter in 2009.

Slide 9 -- ARPU erosion continues to improve, as you can see on slide 9, as a result of our focus on higher-quality customers and on our non-voice revenue stream. In South America, local currency ARPU was up year on year for the third quarter in a row. The ARPU erosion in Central America improved very significantly at minus 2% versus minus 6% a quarter ago and minus 20% a year ago. Also, the decline in blended Group ARPU continues to be down to regional mix, impacted with lower ARPU Africa growing faster. If you exclude the impact of country mix, the decline in APRU was 3.7%, demonstrating that we are moving closer to stabilization.

We no longer see a full correlation between customer number growth and future revenue growth, especially now that 3G is bringing in a larger number of higher ARPU customers into the mix. Mandatory registration also continues to cause volatility in net additions in Africa.

Slide 10 -- on slide 10, you can see our distribution of customers by ARPU level. We have used Latin America for this analysis, as this is where our focus on higher-value customers is most applicable given that 3G services in Africa are still very limited. At the end of the fourth quarter, 39.1% of our customers generated an ARPU of more than $10, up 0.8% -- up 0.8 points year on year, and 60.9% of our customers generated an ARPU of less than $10, down 0.8 points year on year. We expect a greater proportion of our customers in Latin America to fall into the first category over time as we accelerate investment in 3G and other value-added services.

Slide 11 -- voice revenues grew by 7% in the quarter for the Group as a whole, and encouragingly we saw a faster rate of growth in voice in Latin America than in previous quarters, which is evidence that of our branding and distribution focus are helping to resist voice commoditization. VAS growth continues to be strong, up by 25%, with non-SMS VAS growing by 45% in local currency. We still value peer-to-peer SMS, which grew by 4%, as it is a highly effective way of introducing customers to a new range of non-voice services.

Slide 12 -- VAS now represents close to a quarter of both our voice and VAS revenues, delivering a robust revenue stream that generates greater customer interest and loyalty. Non-SMS services, our main area of focus, have increased from 10.8% to 14.3% over the last 12 months. We are now providing a revenue split by category for our two main geographic regions of operation and details are available in the appendix.

VAS now represents close to 30% of total voice and VAS revenues for Latin America, and the weighting towards non-SMS VAS has increased over the last 12 months, with these services now contributing 17.4%. VAS now represents over 10% of revenues in Africa, and here SMS and non-SMS VAS are more evenly weighted, contributing 4.9% and 5.1% respectively. But, the non-SMS VAS segment is growing faster, up 1.1 percentage points year on year. We believe that VAS can reach 50% and 25% of recurring revenues in Latin America and Africa respectively within 5 years.

Slide 13 -- on slide 13, you can see the penetration levels of the main VAS products in each of our four categories. SMS is obviously the most important value-added service in the communication category with a penetration of over 75% of the customer base. Ring-back tones in the entertainment category are enjoyed by over a quarter of our total customer base. In the information category, data services in Latin America have a penetration of 23% and today are most widely used in Colombia, which is our highest GDP market. You can see the growth potential of 3G data, which still has a low penetration, but is growing fast. Lastly, in the solutions category, Tigo Lends You is currently our star product, with a total penetration of close to 40%.

As you can see by the range in the penetration of these services between our highest and lowest markets, there remains considerable potential for these existing value-added services to be rolled out further.

Slide 14 -- let's look at 3G a bit more closely. 3G data continues to be a real success story for our Latin American business, and today 3G revenue is less than 5.3% of all recurring revenues in the region. 3G data users accounted for half of all new customers added in Latin America in 2010 and total over 1.7 million at the end of the year, up 15% quarter on quarter.

Slide 15 -- on slide 15, you can see how data revenues have grown over the past 8 quarters. Given the pent up demand for our portable data services, we see this as the largest growth opportunity for Millicom in the next three years. Our expectations for data growth in Latin America exceed our expectations for voice growth in Africa, which is why we are increasing our investment in this area.

Slide 16 -- our Tigo Lends You service, whereby we lend airtime to customers when they are unable to top up, is a great example on how we are successfully developing solutions to meet our customers' specific needs. We lend on average $0.45 per transaction, and we recover the airtime plus a small fee for this service the next time the customer reloads, with a low default rate of around 1%.

The service, which has a penetration rate of close to 40% of our pre-paid customer base, has to be reciprocal trust between Tigo and the customer and to strengthen the brand equity and has a positive impact on both churn and revenues.

Slide 17 -- this relationship of trust that we are building with our customers is crucial when it comes to our more sophisticated value-added services in the solutions category, and in particular Tigo Cash, our in-market money transfer service. We have launched this service in Paraguay, Tanzania and Ghana, and we've introduced it in Guatemala and Honduras in Q1 with more markets to follow later in the year.

As our Tigo Cash customers trust us with their money and the recipients of the transfer rely on service to deliver cash to them when they need it, it's vital to ensure there is sufficient liquidity, as well as security in the system, and that there are enough distribution points equipped to participate. It will therefore take some time before we're in a position to launch the service in all of our markets. These services are also more complex to market, again because they deal with trust, and they represent a totally new concept for customers in emerging markets who are not familiar with electronic money.

Slide 18 -- our market share was stable quarter on quarter on a weighted basis at 29.8%. We recorded a gain in South America of 0.7 points, and our market share in Central America has stabilized. In Africa, average market share declined by 1 percentage point. Please note that we have restated historical market share base for Africa taking into consideration in DRC only the KBC region where we operate.

Like customer intake, market share is becoming a less relevant indicator of performance, as we can only measure customer market share, and we are putting more emphasis on growing our share of higher-value customers. We would prefer to report market share by revenue, but unfortunately this data is not readily available.

Slide 19 -- on slide 19, you can see that we saw the flat -- a decline in churn in all regions supported, but partially by the success of our products and services designed to increase customer loyalty. Churn is also likely to have been positively impacted by mandatory registration in some markets since the registration process reduces multiple SIMs.

Please turn to slide 21. We turn now to the regional clusters, starting with Central America on slide 21. Encouragingly, revenues in Central America, which have been improving quarter on quarter, reverted to a positive both in local currency and on a reported basis in the fourth quarter. Revenue growth in El Salvador was still affected by the reduction of interconnect rates and increased tax on incoming international calls, both of which were introduced in December 2009.

We also had a deferred revenue adjustment of close to $4 million in El Salvador, which adversely affected revenue and EBITDA for the quarter. We expect El Salvador to return to positive growth in the next few quarters, all else being equal, in the same way that Honduras has now been positive for two quarters in a row.

Our strategy of shifting resources from 2G customer retention to 3G customer acquisition is particularly relevant for the maturing markets of Central America, which explains why total customers increased by only 5% year on year, while we saw an 18% increase in the number of 3G data users over Q3.

We also recorded a significant slowdown in the rate of local currency ARPU decline for the region as a whole, driven by significant commercial investment in 3G and services. This increased commercial investment meant margins were lower quarter on quarter at 51.8%. Central America has generated $179 million of operating free cash flow or 46.2% of revenues in Q4.

Slide 22 -- in South America, revenues increased by 19% in local currency and by 22% on a reported basis, with the strong Colombian peso once again providing the tailwind. All three markets reported a strong performance with ARPU up 11% year on year and growing for the third quarter in a row, demonstrating the success of customer segmentation and our smart pricing of data and voice services.

EBITDA for Q4 was up 22% in local currency, and EBITDA margin gained 0.9 percentage points year on year to reach 43.9%, once again driven mainly by increasing scale in Bolivia and Colombia, where our product mix is proving very successful. Operating free cash flow generation for South America at $69 million was lower due to seasonality of payments.

Slide 23 -- revenues for Africa were $239 million, up 12% in local currency year on year. Increased pricing pressure in Africa has brought the slowdown in revenue growth and the steeper decline in ARPU in the fourth quarter. We have adjusted some of our tariffs in Africa, mostly cross-net through headline price reductions or promotional activity, and we will monitor closely whether elasticity will follow in the coming months.

In Senegal, revenues were down 2% year on year in local currency following the introduction of new taxes on incoming international calls and on the increase in excise tax in August.

EBITDA for Q4 was $100 million, up 20% year on year in local currency, and the EBITDA margin was 41.7%. We are likely to favor revenue growth over margin improvements in Africa in 2011.

CapEx in Africa in the quarter amounted to $78 million or around 32% of revenues. Africa generated $72 million of operating free cash flow or 30.3% of revenues in Q4.

Slide 24 -- our combined cable business continued to grow well reporting local currency revenue growth of 7% and EBITDA growth of 6%. As in our mobile business, we are concentrating on the higher-value customer, who in the case of Amnet are broadband Internet customers rather than the cable TV customers. And we saw an encouraging 5% increase in the average revenue per RGU or customers during the year as a result.

Our aim is to continue to increase the take up of services by our customers by market in bundled services, and multi-play offers -- again, in scale as our cable and mobile businesses are being increasingly integrated. From Q1 2011, we therefore will be reporting the results of our cable operations as an integrated business line in the results of Central America.

Now, I would like to hand over to Francois-Xavier, who will take you briefly through the financials.

Thank you, Mikael.

Slide 26 -- our effective tax rate for the quarter was 23.1%, as the traditionally lower cash repatriation in the second half of the year means less withholding tax. The tax rate for the full year was at 28% versus 27.4% in 2009, the marginal increase being the consequence of increased cash upstreaming year on year, and therefore higher withholding taxes.

Slide 27 -- adjusted EPS for Q4 was at $1.59, up 4% year on year. Net finance costs have been impacted by the booking of some of the remaining costs associated with the redemption of the high yield bond, as well as some costs associated with the El Salvador bond issue.

Slide 28 -- the adjusted EPS for the full year, excluding the gain resulting from the revaluation of Honduras, was at $5.61, up 15%, illustrating our stronger focus on finance costs, depreciation and management of taxes. The change in the non-controlling interest line is due to lower losses in Colombia, which became EBIT positive in Q4.

Slide 29 -- our operating free cash flow for the quarter was strong again at the same level as last year. The key deliverable is the total amount of operating free cash flow for the year, which crossed the $1 billion mark. We'll generate less cash flow in 2011, as we will spend more on CapEx.

Slide 30 shows our free cash flow for the quarter of $221 million or 20.7% of revenues.

Slide 31 -- our cash upstreaming continues to improve with $819 million repatriated in 2010, representing an increase of 77% of the total amount for 2009. We are happy to report that we have been able to upstream more cash than we actually generated in our operations, therefore increasing our local debt and reducing our country exposure.

Slide 32 -- we redeemed our 2013 notes on the 1st of December, 2010, for a total consideration of $419 million. This comprised $460 million for the principal, $23 million for the interest and almost $8 million as a penalty for early redemption. This will be accretive to EPS in 2011.

To date, Millicom's entire debt is at the operating level which improves our tax efficiency and mitigates our country risk. Recently, Moody's has upgraded our credit rating to be A1, now one notch below investment grade.

Slide 33 -- by the end of the year, we had completed our $300 million share buyback program as planned. In 2010, we acquired over 3.2 million shares at an average cost of $92.21, representing 3% of the total equity. The cancellation of these shares will be proposed at this year's AGM.

Slide 34 -- the Board will propose to the AGM a regular dividend of $1.80 per share for 2010 payable in June, subject to the approval of the final 2010 accounts. This represents a 29% year-on-year increase in the dividend in absolute terms. The increase in the dividend reflects Millicom's continued focus on shareholder returns.

We also intend to review the share buyback program in 2011, and the Board has authorized the acquisition of up to $300 million of shares before the next AGM in May. The strong [incentive] on cash flow generation of the Company leaves appropriate room for external growth opportunities that could arise in the future.

While we see limited value in acquiring other mobile assets at double-digit EBITDA multiples, we are interested in the potential to acquire skills and knowledge that are complementary to ours. Our focus is on stretching our brand and extending our range of services in our existing markets.

Slide 35 -- at the end of Q4, our leverage ratio stood at 0.6 times net debt to EBITDA. Our balance sheet restructuring has created more cost-efficient leverage.

Slide 36 -- turning to our debt maturity, we now see the average maturity of our gross debt at 3 years and 3 months. Our funding strategy is based on four elements -- risk and maturities, to lower the net debt of costs, to secure sufficient liquidity, and to push down debt to operating level for tax efficiency and to mitigate country risk. We have achieved all of these objectives during the year through our capital restructuring initiatives, with both the early redemption of the corporate bond and with the raising of additional cheaper debt at operating level. We now have more than 40% of our total debt at fixed rates, reducing our exposure to volatility in interest rates.

Slide 37 -- during the year, we formed three tower companies with Helios in Ghana, Tanzania and DRC, and we now have almost 2,500, or two-thirds of towers in Africa, committed to be outsourced. The value created from this deal exceeds $400 million through a combination of more than $180 million of cash received or to be received for the sale of towers, the 40% stake that we have in each tower company, as well as expected future cost saving and no further CapEx on towers in these three countries.

In 2011, we expect that this transaction will bring an additional point of EBITDA in Africa, which could be reinvested in sales and marketing. The reduction in book CapEx will be limited in our 2011 accounts as IFRS requires the capitalization of these three leases. We will incur less depreciation, but more finance costs as a consequence of these transactions.

Slide 38 -- in 2011, as in 2010, we aim to achieve the right balance between top line growth, profitability and cash flow generation. We expect the EBITDA margin for the Group to be in the mid-40s. We expect CapEx to be above $800 million, excluding any potential new spectrum or investments in greenfield assets, as well as excluding capitalization of leasing costs for towers, which is a non-cash item. And we expect operating free cash flow to be in the mid-teens as a percentage of revenues.

I would now like to hand over to Mikael for his final comments.

Thank you, Francois-Xavier.

I would just like to close with a quick summary. We are pleased with how we have executed our value-creation strategy and with the results that it has delivered. While the profile of our growth has evolved during the year, we have produced 11.2% local currency growth in 2010 driven by our focus on innovation and on attracting higher-value customers. Our progress towards ARPU stabilization has been evidence that this is the right approach.

We aim to maintain top line growth of around 10% in the medium term, as we continue to invest in value-added services, which we see as the most important growth driver for Millicom going forward.

We would now be happy to take your questions. Operator, may we have the first question, please?

(Operator Instructions) Michel Morin, Barclays Capital.

Two questions, actually, if I may. Firstly, when thinking about the outlook for 2011, one of the themes that has been increasingly on investors' minds these days is the nascent inflation that we're seeing in some countries, especially in terms of some of the food products. And given that you do sell to some of the lower-end segments of the population, I was wondering if you could share with us any anecdotes that you might be seeing in some of your countries, where perhaps this is something that you are looking at or perhaps you are seeing some impact from inflation impacting disposable income and spending at the margin?

And secondly, in your guidance, you do mention that the CapEx excludes spectrum and greenfield cable. And I was wondering if you could talk about what the plans might be? I think I've seen some headlines about the greenfield cable in Paraguay, for example. Thank you.

Okay, let's start with the food inflation. Many of our countries where we operate actually produce quite a lot of food, so they tend to be self sustained in that respect. Year to date, we haven't really seen any major impact, neither is there any really reliable data in these markets to sort of show that progression. So, year to date, we haven't seen an impact of this.

In addition, our focus on the value-added services means that we are appealing, maybe, to the slightly higher end of the low-end income level, and that could also offer somewhat of a protection if the food inflation actually would accelerate.

In the guidance, we did not include the spectrum, the reason being that we have no visibility today on exactly what it could be. We know that the region something likely would -- that there could be some spectrum available. We are not exactly sure at this stage where and what could be the consideration to be paid. So, we thought to exclude it, but we don't expect that it would be a very significant amount anyway.

As far as the cable assets are concerned, we have obtained some licenses for some regions in Paraguay, and we may start with a greenfield project in Paraguay on cable, which would be a good complement of what we have in mobile in that country. Given that it is a greenfield operation, the costs would be limited -- we are talking about a small number. And we could acquire as well, maybe, on a more tactical basis some smaller cable operators as well in Central America, but once again, we don't expect these amounts to be significant.

Ric Prentiss, Raymond James.

Couple questions. First, I was very intrigued -- on one of your slides, you mentioned that the growth of data in Latin America could exceed the growth of voice in Africa. Can you talk a little bit about that? Is that on the revenue line? Is that on the EBITDA line? And over what timeframe are you thinking?

Yes, I think we meant on the revenue line, so we think that the absolute growth we can generate in Latin America in absolute dollars should be higher than the absolute growth we will generate in voice in Africa going forward.

Okay. And then, as far as on the EBITDA line -- obviously, in Latin America, you're managing the process of converting from 2G retention to 3G adds. The cost of sales and marketing was up, I think you noted, north of $20 million year over year on sales and marketing. Where do you think -- if revenue growth is in the double-digit or about 10% range in the medium term, where does EBITDA grow, given the shifting towards 3G?

Well, we have seen now very clearly, and it's in our guidance, that we expect EBITDA margin for 2011 to be in the mid-40s for the whole year of 2007 -- 2010, we were at 47%. So, the trend of investment, as you saw in Q4, we expect to continue to do that -- to just try to accelerate the growth of 3G services, which there is a great pent-up demand for.

So, moving into 2011, you will see continued investment in trying to drive that quicker acceleration of 3G services, hence leading to a -- on a mid-40s EBITDA margin.

The good news is that the gross margin we have on 3G is actually better than the gross margin we have on voice.

That's good. Speaking of 3G, where are handset prices right now? We've heard T-Mobile in the USA saying they hope to see even some 3.5G handset prices get down to the sub-$100 level to the consumer in the United States. Where are prices right now for datacards and Smartphones and 3G in your markets?

I think datacards are around the mid-30s, and a full-feature phone probably around $150 million -- $150 per phone.

That would be a good phone. Okay, great. Thanks, guys.

James Rivett, Citi.

My question's just on Africa. I'm just wondering, you said that you've put through a series of price cuts in the first quarter of this year. Do you feel that that is enough compared to where the competition is? And are you seeing any signs of that elasticity coming through yet because it doesn't look like your competitors are?

For the moment, we think it's enough. Our experience on elasticity in Africa and most of our market is that there is a very strong elasticity on net price cuts. There is less elasticity on cross net. Many of the price decreases that happened in Africa over Q4 were related to cross-net price decreases, a number of them which we followed.

So, we think we have to see over time how this elasticity develops. But, for the moment, we feel we have a competitive pricing position in our Africa markets.

David Kestenbaum, Morgan Joseph.

Can you talk about your 3G plans in Africa? I know, obviously, it's a big emphasis in Central America, but can you elaborate on that?

Yes, we still see lots of growth opportunity for non-3G VAS and voice in Africa, so we are rolling out some small-scale, I would call, tests in Dares Salaam and Accra sometime in -- towards the middle of this year simply to get started. But, short term, we don't expect a lot of 3G growth from Africa.

Okay. And then, can you update us on the regulatory front in Colombia, and has there been any new developments?

Not anything active that I'm aware of at this stage.

Sven Skold, Swedbank.

I actually have a follow up on a previous question, and it's about the model for data. If you add one subscriber for mobile Internet, how is the model changing? Is the ARPU diluted or is the ARPU improving compared to voice client? And second, how are margins compared to voice client? You mentioned that partially.

And second, if you add on a Smartphone subscriber, how does the model change? I think I have a good view on this in the Western world, but how is it in, for example, Central America?

We haven't provided a breakdown. We just have the total Latin America, but they are quite typical. So, as you can see there, on the datacard, we typically get about a $14 monthly ARPU. And on the handset on data alone, we get about a $4 ARPU.

On -- the way we measure a 3G user is any data usage in a month. And we don't separately measure the voice revenues because sometimes you have handover issues between 3G and 2G, so it's more difficult to follow.

But, typically, the people who take on a 3G phone tend to be more heavy users. So, as you can see from the South American ARPU growth, we actually in the last three quarters have added ARPU quarter on quarter. So, we seem to be able to attract the higher-end user who actually spend more.

Okay. And the margins, you mentioned something that it's --.

-- Margins on average are higher than voice.

Gross margins are -- since we invest heavily behind these products, you will see there will be a bigger margin for the time being that might be smaller due to the high sales and marketing investments that we are doing currently.

Okay. And just a second question. Anything new on Senegal?

No. There is -- I think the next hearing is scheduled for December 11.

Soomit Datta, New Street Research.

Yes, can I ask a follow-up question on Africa, please, just so I can understand the pricing dynamics there? Have you been reducing your on-net prices to reflect the cross-net price reductions? So, do you think the discount of your on-net prices to off-net rates has broadly stayed the same or do you think that discount has narrowed over the last 3 or 4 months?

And then, secondly, just a quick question on the corporate costs in the P&L, which were again quite high in Q4. I think there was a one-off in the numbers in Q3 for the long-term incentive plan. Were there any one-offs in the corporate costs in Q4, please? Thanks.

Yes, the pricing situation market by market is very different competitively driven. I don't have up-to-date information, incidentally, between the on-net and the cross-net [change]. But, we've done a series of pricing actions depending on the competitive situation and the consumer appeal we can do with this pricing. So, I don't have the data on that one.

The corporate cost in Q4 has been highly impacted by the LTIP, the long-term incentive plan, for executive account managers because we know usually at the end of the year if we are going to meet the KPIs.

Would you -- is that a number which you can say is unlikely to be repeated going forward?

Well, it depends if we manage to meet the objectives, and it depends on the objectives for each of the years. But, usually, I mean, there is -- it's difficult to say because we have to meet the KPIs for the year.

Bill Miller, J.M. Hartwell Investments.

I'm curious about whether there are additional value-added services you can discuss? And secondly, since Colombia's your highest per capita country, do you -- have you not introduced any of the money services there? And can you give us some color on how that money service rollout is progressing? Obviously, it's been well or you wouldn't be introducing it. But, is it beyond your expectations? Is there a criteria that you still have to meet in order to implement it in other countries or could you just give us more color on that, as well as particularly on the possibility of Colombia?

Secondly, historically, you've said that you need $500 million of working capital, so to speak -- cash on the balance sheet. Has that been revised in any way, shape or form or do you have a target for your debt equity?

Okay, let me start, Bill, with Colombia. We have not launched the Tigo Cash product yet in Colombia. The Tigo Lends You is just also a quite recent introduction in Colombia, so we're still underpenetrated there.

So, basically, we have all the value-added services, except Tigo Cash, in the market, but Tigo Lends You, which we think has a great potential, is still underpenetrated. We think that that will close quite quickly.

The net debt to EBITDA ratio, we finished the year 2010 at a ratio of 0.6. We have said constantly that we were targeting a 1 -- a net debt to EBITDA ratio of 1 where would be comfortable and that we would not like to exceed 2, so -- which seems to imply that we are, maybe, under-leveraged. But, I mean, that's -- 0.6 is not so far away from 1, either.

And we can, anyway -- we have -- as you know, we have decided to pay dividends and to start again the share buyback program, which should address part of the under-leverage.

Jean-Charles Lemardeley, JP Morgan.

Yes, just a few questions. First of all, Central America, you -- two things. It looks like Guatemala is weaker in the fourth quarter if I look at local currency revenues. It seems to be down 2% and was up in the third quarter. And also, in general, just if you could comment on your value share in Central America versus AMX, since they reported quite strong numbers in the fourth quarter. And it looks that you might be losing some value share in that market, although not [comp] subscriber share.

Second question would be, how much cash do you think you're getting for those tower deals in 2011 and how much you got in 2010? And then, finally, on those skills and knowledge that are relevant to you and you're thinking of maybe acquiring, could you elaborate a little bit on that?

We don't have an accurate reading on our value share in Central America, but we believe on average it is somewhat higher than our customer market share, given that we have a higher proportion of value-added services in our customer mix in comparison to our competitors.

Regarding the cash for the towers, we got back close to $50 million of cash, essentially, in Ghana from the deal. So, we expect the rest of it -- we are talking about $180 million in total. So, the rest of it should come between the second half of 2011 and beginning of 2012, depending on the time that it will take to close the deal because there are several phases in the closing. So, later part of 2011 and early 2012.

The skills and knowledge that we were referring to are very much leaning to the different types of services that we are entering into. For example, since we are entering more into banking services, we need more expertise there. Then -- which means, maybe, we could -- people who the industry.

We are talking of insurance -- for example, we are testing some insurance products in Africa. We have no experience whatsoever in underwriting, so which means that we may partner with outside parties who know that industry.

Okay, thank you. Just going back to Guatemala, that market went into a bit of a reverse in the fourth quarter if I'm not mistaken.

Sorry, can you repeat that?

Did you say Guatemala was weaker in the fourth quarter than the third? Is there anything happening there or is it --?

-- Oh, I don't think there is anything to read into that. I don't think there's anything to read into that.

So, you'd expect positives on -- you'd expect positive growth in 2011 in Guatemala?

Yes, we would expect positive growth in Guatemala in 2011.

What about Africa -- because you mentioned investing or prioritizing revenue growth over the margin in 2011. Is that -- I mean, 12% local currency is still very decent, but it's quite a step down from what you were posting in prior quarters. Would you think you'd be able to go back up?

Like we've said, it's very difficult on this cross-net tariff decreases to fully understand the long-term elasticity effects of that. And many other price decreases that we put through were sort of end of October, mid-December, and whenever, so we have a price early stage on that, so that's something simply that we have to learn.

I think we are confident on our mid-term objectives still to develop, as a Group as a whole, double-digit revenue growth. And that's what we feel that we are capable of.

Stefan Gauffin, Nordea

A couple of questions, please. The first one relates, again, to the balance sheet. With continued expected strong cash flow generation, you will most likely be in a similar financial position at the end of 2011 in terms of net debt to EBITDA. Could you say anything about if we could expect further share buybacks during the year or if you intend to come back with a similar arrangement for next year or going forward looking at the combination of the dividend and share buybacks?

Secondly, you still lose some subscribers in Senegal, and it seems to be that you have some capacity constraints, and you're not really willing to push more money into that market. The hearing in Senegal seems to be first in December 2011, and do you expect that you will continue to suffer in this market? And do you believe there is a risk for both market share and brand being hurt?

Well, let me start with the Senegal question first. We are continuously investing in capacity upgrades, so our objective in Senegal is to keep the customer base and the brand equity intact. So, that's our aim. So, we think we will be able to drive a sustainable business going forward with required smaller skill capacity investment.

We are foregoing some business growth opportunities, though, by not spending, perhaps, the CapEx that the market potential would warrant.

Talking about the balance sheet, you saw that in 2010 we did not hesitate to do fairly massive returns to shareholders because we returned close to $1 billion to our shareholders last year. We have just taken a position for the time being regarding part of H1 -- not even H1 fully. We have decided to raise the dividend, as you saw, by 29%, so which is a consideration of close to $200 million to start with. Then, we have announced that we -- our intention to raising the share buyback until the end of May with the possible acquisition of shares up to $300 million. So, you can see that it's already a fairly strong move, I would say, even for H1.

After that, okay, we have -- we are not communicating for H2. There are other ways to use the cash, be it external growth, share buybacks, capital restructuring, whatever. But, for the time being, we are taking care of H1.

Okay. Just a clarification on Sven's question regarding data and ARPU. In the report, you say that in South America, 10% of subscribers have 3G, and they represent 4% of revenue. Is this only the data portion of --?

-- Yes, it only relates to the data portion. We are not measuring the voice revenues.

Kevin Roe, Roe Equity.

A couple of Africa questions. On the Bharti Airtel call last week, the company said that their tariffs in Africa were now competitive and that going forward, they'd be a follower in tariffs. What are you seeing from them in the new year here in terms of any tariff changes?

And secondly, on Africa, you've spoken in the past about a desire for in-market consolidation. Vodacom is looking at a possible sale of their DRC business. I think there's still anticipation for Ghana in market consolidation. Could you update us there?

Okay, I -- as I've said before, I believe at some point of time we will see in-market consolidation in some Africa markets. There are too many operators. In our industry, normally they -- number 1, 2 and 3 can get return. If you are fourth or fifth, it becomes more difficult. So, that's something that probably will take place over the years.

In terms of Airtel's pricing, we have not seen any move lately. I believe they went through a big series of adjustments from November through December, and I think since then it's been relatively static. But, we have seen signs that they basically -- if an industry operator moves, they will move too.

Francois, when can the new share repurchase begin?

Technically, we can start next week.

Next week.

We have the authorization to do it, which doesn't mean that we are going to start from next week. But, let's say we can technically start next week.

And the authorization that we got from the Board is valid until the next AGM, which is at the end of May.

And lastly, on guidance, a lot of questions on 2011 margin guidance. And it's interesting, the mid-40% range guidance is the exact same guidance that you gave one year ago when you reported fourth quarter 2009 results. And of course, we all know you posted 47% margin for 2010.

Yes, we -- I think we know from now the experience of driving that 3G growth that we will increase our market investment. So, we will not see a repeat of the 47% margin most likely.

Thomas Heath, Ohman.

A few questions, if I may. First, on your language on acquiring complementary skills to grow value-added services, I was just wondering if you could elaborate on your thinking there a little bit. Given that value-added services are relatively easy to copy, does it makes sense to develop these in house or are you really targeting very small consultancy-type of businesses? That's my first one.

And my second one was just a follow up on incentives to your management. You had -- a few years back, I think, you changed your incentive structure to focus more on cash flow, and I was wondering how that looks today. Thank you.

Okay, let me comment on both. Basically, when I talk about complementary skills -- and for competitive reasons, I don't want to go too deep in this -- but you have read, for example, Telefonica has done a joint venture with MasterCard, just as an example. Maybe if you look at health services, there are some kind of a competencies. We would either recruit in or do some kind of a partnership with [Vidia], for example.

And regarding the incentives --.

Yes, on the incentive, the management incentive, 25% is revenue driven, 25% EBITDA and 25% operating free cash flow. And the final 25% is personal targets, which tend to be market and individual based.

Thank you. Just a follow up, then. It sounds more like it's joint ventures and partnerships in value-added services rather than acquisitions. Is that --?

-- It could be any form of that. It could be any form of that.

Lena Osterberg, Carnegie.

Yes, I was wondering a little bit -- I saw the numbers on data and 3G handset penetration in Latin America. I was wondering, could you maybe share with us what is your penetration level if you compare it to your peers? Do you have any insight to, for instance, where America Movil is in 3G handset penetration in Latin America?

Also, I was wondering what sort of subsidies you're looking at for datacards and Smartphones now that you push for 3G and what payback times you expect for those subsidies?

Yes, we don't have -- let me take the first one, Francois will take the other one. We don't really have data on that, I think, since all of us are selling BlackBerry products in the market where we compete. We have some data from BlackBerry that indicates that, on average, we are highly competitive on 3G penetration compared to our competitors.

Can I maybe then ask a follow-up question? Looking at America Movil's numbers for Central America, I know they're not comparable on a country-for-country basis, but they actually posted quite strong growth and data growth in the quarter, whereas you are at 1% growth. So, what is the main difference between them and you if it's not the handset penetration?

I think it's a country mix and product mix. And if you just look at the data growth, per se, in Central America, which we didn't break out specifically, that's still extremely strong.

Regarding the subsidies -- so we have never been really heavily involved in the subsidy business, but we do it on a selective basis, which is one of the reasons why we have enjoyed the high margins in the past. So, we don't intend to enter very heavily in subsidies, expect to create the initial take up in use of [features] which has data it makes sense, especially when the price of handsets are still high.

The type of payback that we get with this kind of promotional or commercial investment is usually below 1 year. It's a very attractive payback.

Are these then post-pay subscriptions, and how long do you tie up the customers in that case?

It's usually post-pay. The -- of under 1 year or 2 years maximum. But, on the topic, when we do subsidy, we usually don't do the subsidy for 100% of the cost of the handset. We do a partial subsidy.

For example, if there is a handset at $150, we may do a subsidy for only $50.

Miguel Garcia, Deutsche Bank.

I just wanted to get an idea or more color on the nature of the non-SMS value-added services you are selling. Is it a big chunk of this is data services coming from wireless broadband datacard type of services or the most important percentage comes from those in-house type of services you generated, like Tigo Lends and Tigo Cash?

The biggest revenue component and the strongest growth in Latin America is data. But, we've showed you here two other big products that are growing very strongly -- that's basically ring-back tones, where we have a 26% penetration among our customer base. But, the highest is 40%, the lowest is 8%, so we still think there is lots of room to drive that.

And then, Tigo Lends You, which is our latest product there, we have about a 39% penetration, split between highest at 5% and lowest at 7.2%, so again, there is lots of opportunity for growth.

And the reason I was asking this is because I want to make a relation between the type of service you sell with the handsets you're selling. Could you say that the product you are developing, like Tigo Lends and Tigo Cash, are they -- I mean, all of the base of handsets you have, are there most of them, like three-quarters of them, can they carry this --?

-- So, basically, these are services that work on any modern handset. So, you don't have to have a 3G handset for that.

Okay, exactly. That was the point. Thanks a lot.

Andreas Joelsson, SEB Enskilda.

First, a question on Latin America and value-added services, also. Do you think that an increase in disposable income is needed to get further growth in VAS without affecting or deteriorating voice or do you need a bigger share of wallet, so to say?

And secondly, on the minorities, I noticed that there is negative factor from the profit that you make in Colombia. Is that something that we should expect going forward as well?

I'll start with the share of the wallet. Naturally, an increased GDP is a help to drive any increased business, but we believe that the data business is a separate distinct expenditure for our customer, so -- and it doesn't deteriorate from the voice because that voice need is still there.

So, what we see happening is that people have to make different choices. Maybe if they are young, they buy less jeans or Coca Cola -- whatever else there. So, it's really -- what we really see is that people are prepared to open up a separate wallet for the data services.

Regarding Colombia -- so we are fully consolidated in Colombia, which means that in the past when we were making losses, and we were EBIT negative, we had a positive number in the minority interest. Now, the good news is that we are turning positive in EBIT, which happened in Q4, and we believe that it will be the case in the future. Then, as a consequence, the minority interest now becomes negative.

There are no further questions in the queue.

I'd like to turn the call back over to your hosts today for any additional or closing remarks.

Thank you -- I would just like to thank you all for joining the call today, and we will look forward to seeing you soon. Thank you very much.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.