Millicom International Cellular SA (TIGO) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Millicom Q1 2011 results conference call. For your information, this conference is being recorded. May I also remind you that the call is being audio streamed over the Web and is accessible at www.millicom.com, together with a presentation summarizing the key features of the results. I would now like to hand you over to your host -- the hosts of today's conference, Mr. Mikael Grahne, President and CEO, and Francois-Xavier Roger, CFO. Please go ahead, sir.

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 three.

In Q1 we recorded a growth of 12.7% in local currency, the highest growth rate achieved since the beginning of 2008. We are particularly pleased to see double-digit growth for Latin America as a whole, and a 5% growth in Central America, which confirms our value creation strategy and its effective implementation in our markets.

Despite accelerated commercial investment in 3G and Services, we reported a strong EBITDA margin of 47.1%, supported by a combination of VAS development, tight cost management and the benefit of asset sharing. Our focus is on attracting higher value customers, which has been key to the improvement of our ARPU in South and Central America, and to the growth of our overall business.

Normalized EPS increased by 33% year-on-year due to careful management of our capital structure and focus on tax planning. We have also announced an increase in our share buyback program to $800m for the full year, which together with the proposed dividend of $1.80 a share means we could once again return close to $1b to shareholders this year.

Slide four. Now let's look at the financial highlights for the quarter in more detail. We ended the quarter with almost 40m customers, up 13% year on year. Revenues increased by 12.7% in local currency to $1.08b, and EBITDA for the quarter was $509m, producing an EBITDA margin of 47.1%. This strong margin is due to our strategy and actions to develop VAS and innovation, our improvement in asset utilization and the careful management of our cost and returns.

CapEx for the quarter was lower than a year ago, at $81m, or 7% of revenues. But this lower level is only the result of phasing issues and our CapEx should be significantly higher in H2.

Operating free cash flow at $249m, or 23% of revenues, was similar to last year.

Slide five. On slide five you can see how our focus on higher value customers is being reflected in our subsidy cost, which are 30% higher than in Q1 '10 in absolute terms, as we aim to support data development. This strategy of accelerated investment in 3G and services aimed to address increasing demand for new services, and to sustain around double digit growth in the medium term for the Group.

Slide six. On this slide we have set out our local currency mobile revenue growth over the last nine quarters. Here you can see at 12.7% the local currency revenue growth for the first quarter was 1.2 percent points higher than the average for 2010, demonstrating that our increased commercial investment is already being reflected in stronger growth. There were some exceptional items in both Q1 '11 and Q1 '10, but excluding these growth in local currency is still a solid 11.9%. We are confident of maintaining top-line growth of around 10% in local currency for the Group in 2011.

Slide seven. ARPU erosion continues to improve, as you can see on slide seven, as a result of our focus on higher quality customers and our non-voice revenue streams. In Central America we have recorded a first year-on-year increase in ARPU based on recurring revenue, for a long time, up 1%. And in South America, local currency ARPU which has developed positive for a year now, was up 3%. For the Group as a whole, the ARPU decline, based on mobile recurring revenues, was 2%, demonstrating that we are moving closer to stabilization.

Slide eight. On slide eight you can see the 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 the 3G services in Africa are still very limited.

At the end of the first quarter, 37% of our customers generated an ARPU of more than $10, up 1.3 points year on year. We expect a greater proportion of our customers in Latin America to fall into this category over time, as we accelerate investment in 3G and other value-added services. It is also worth adding that around one-third of our customer base has an ARPU of less than $1, and accounts for less than 1% of revenues. Clearly therefore our total customer number is much less relevant as a KPI for Millicom than our revenues and ARPU.

Slide nine. Once again, voice revenues grew by 7% in the quarter for the Group as a whole, which is evidence that our smart pricing, branding and distribution focus are contributing to fight voice commoditization. VAS growth continued to be strong, up by 33.4%. And we are seeing an increasing momentum in non-SMS VAS, which grew by 62% in local currency, the highest level since 2009. We still greatly value peer-to-peer SMS, which grew by 4% as a highly effective way of introducing customers to a new range of new non-voice services.

Slide 10. We crossed the 25% landmark for VAS this quarter, recording a 4 percentage point increase year on year. VAS is delivering a robust revenue stream that generates greater customer interest and loyalty. Non-SMS services, our main area of focus, have increased from 11% to 15.7% over the last 12 months.

In Latin America VAS now exceeds 30% of both our mobile recurring revenues with non-SMS VAS now contributing 18.9%. In Africa, VAS now represent 9.9% of revenues in Africa, down marginally from last quarter. But here too the non-SMS VAS segment is growing faster, up 0.4 percentage points quarter on quarter to 5.5% of revenues, and showing attractive potential while looking after VAS performance in Latin America. We believe that VAS in Latin America and Africa can reach respectively 50% and 25% of recurring revenues by 2015.

Slide 11. From now on we will be disclosing revenue by our four customer offering categories, as well as by region, and this is set out on slide 11. These categories include both mobile and cable revenues. Communication, which is defined as voice, peer-to-peer SMS and roaming accounts for 76% of total revenues. Information, or access to data, generated revenues of $106m in the first quarter, already accounting for 10% of the total.

Entertainment, or access to music and video content, generated $77m in Q1, accounting for 7% of recurring revenues. And Solution, or access to mobile services, generated $24m or 2% of revenues, and is growing very fast.

As you can see, we are seeing the strongest growth in the Information and Solution categories. And we expect this to remain the case as we expand our 3G capacity and coverage this year, as well as roll out Tigo Cash and other mobile financial services. The Entertainment category experiences lower growth as it's driven primarily by specific promotional activities, which have limited timeframe.

Slide 12. On this slide 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 52% of our customer base. Ring Back Tones in the Entertainment category are enjoyed by 27% of our total customer base. In the Information category, Data Services have a penetration of 22%. Lastly, in the Solutions category, Tigo Lends You is currently our star product with a total penetration of 34%, and increasing by almost 20 percentage points year on year. Other significant balance service, balance transfer services, Give me balance and Gift and collect, both of which have penetration of more than 23% in Latin America.

It is important to consider all our three lending products collectively as customers can now borrow airtime from Tigo. So they are less likely to ask for airtime loans from their friends.

As you can see from looking at the delta between the highest and lowest penetration figures, there is still room for further growth through increased penetration of all these products and services.

Slide 13. Let's look at the data a bit more closely. Data usage continues to be a real success story for our Latin American business. And today 2G and 3G data revenues combined represent 9.4% of all recurring revenues in the region. Data users total over 7m at the end of the quarter, up 2% quarter on quarter and 1.9m of these were 3G data users.

Slide 14. On slide 14 you can see how data revenues have grown over the past nine quarters. There has been an acceleration over the last quarters, since we have increased our commercial investment. Given the pent-up demand for affordable data services, we see this as the largest growth opportunity for Millicom in the next three years. Our expectation for data growth in Latin America exceeds our expectation for growth -- for voice growth in Africa, which is why we are increasing our investment in this area.

Slide 15. In the Solutions category, Tigo Cash is our newest service. The service was first launched in Paraguay in Q3, then, and while it's too soon to start reporting any definite trends, we are certainly starting to see some interesting results in this market, as you can see on the slide. We are steadily gaining traction, and in the month of March we recorded 120,000 separate money transfer transactions, with a 58% increase over Q4 '10.

We are gaining valuable insight into the perception and the take-up of the services that will be applicable when we roll out this service into new markets in the coming months. These products may take time to grow, as we are introducing new concepts of electronic money in countries where most customers are familiar with money only in the form of banknotes and coins.

Slide 16. Our market share increased by 0.1 percentage points quarter on quarter to 29.9% on a weighted basis, with nine markets gaining share and four markets declining. In Africa, we saw a 0.3 percentage point decline. This could reflect the changing customers' usage patterns in DRC and Tanzania, rather than a loss of actual share.

The reduction in the delta between on-net and cross-net tariffs in this market has led to more incoming calls to our network, replacing the use of multiple SIMs. In the short term, we expect continued volatility in market share in Africa driven by promotional activity. Like customer intake, market share, overall market share is becoming a less relevant indicator of performance as we can only measure overall consumer 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 17. On slide 17 you can see that on a Group basis we have seen 0.2 percentage points quarter-on-quarter decline in churn due to declines in Central America and Africa supported partially by the success of our products and services designated to increase customer loyalty, and in Africa, due to mandatory registration which reduces the number of multiple SIMs. We saw an increase in churn in South America during the quarter, due to seasonality and a loss of temporary connections made in December.

Slide 19. We turn now to the regional clusters, starting with Central America on slide 19. As announced last quarter, we are now reporting the results of our cable operations together with results for Central America, as our cable and mobile businesses are becoming increasingly integrated.

We are very pleased to report that revenues in Central America increased by 5% year on year on a like-for-like basis, reflecting the success of our efforts to drive growth by focusing on higher value customers and by offering tailored packages for products and services to suit their specific needs. The inclusion of cable revenues does not materially affect the growth trend of the business, as Central America would have grown 4% in the quarter excluding cable.

We have seen improvement in the revenue trend in El Salvador. And in the first quarter the local currency revenue decline was in the low single digits. We expect El Salvador to return to positive trend in the next few quarters, all else being equal. And we should -- it should contribute to further improvement in revenue growth for the region as a whole.

Our strategy of shifting resources from 2G customers 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 a 22% increase in the numbers of 3G data users over Q4.

We also recorded the first ever increase in local currency ARPU for the region as a whole, driven by significant commercial investment in 3G and services. Central America generated $130m of OFCF, or 21% of revenues in Q1.

Slide 20. In South America, revenues increased by 20% in local currency. All three markets reported a strong performance with ARPU up 3% year on year, demonstrating the success of customer segmentation and of our smart pricing of data and voice services. EBITDA for Q1 was up 21% in local currency. And the EBITDA margin was 42.6%, down 1.3 points quarter on quarter, as a result in part of increased handset subsidy to drive further growth. Operating free cash flow generation for South America was $102m, or 26% of revenues.

Slide 21. Revenues for Africa were GBP239m, up 15% in local currency year on year. Revenues continued to be impacted by the market price reductions that were introduced in the second half of last year. But we are encouraged by the fact that there has been no further significant pricing activity in the first quarter of this year. We have therefore seen a slow-down in the rate of ARPU decline to minus 6% year on year compared to minus 11% for Q4 '10.

EBITDA for Q1 was $98m, up 23% year on year in local currency. And EBITDA margin was 40.9%. We are likely to favor revenue growth over margin improvements in Africa in 2011.

CapEx in Africa in the quarter accounted to $26m, or around 11% of revenues. And the region generated $33m of operating free cash flow for 14% of the revenues.

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

Thank you, Mikael. Slide 23. Our effective tax rate for the quarter was lower at 24.3% as we start to see the benefit of our tax planning and the push down of debt from the corporate to the operating level. We expect the tax rate for the full year to be below 30%.

Slide 24. We are pleased to see a 33% increase in the normalized EPS for Q1 to $1.91, excluding exceptional items such as the disposal of our operation in Laos. Some months ago we highlighted our increased focus on EPS now that we are paying dividends. And we are starting to see the initial result of our capital restructuring and of our tax planning.

Slide 25. Our operating free cash flow for the quarter was $249m, roughly equivalent to last year.

Slide 26 shows our free cash flow for the quarter of $191m or 17.7% of revenues.

Slide 27. Our cash upstreaming continues to improve with $305m repatriated in Q1, which is an increase of 28% over the same period of last year.

Slide 28. Today we have announced a total share buyback program for the full year of $800m, which demonstrates a commitment both to enhancing shareholder return and to improving the efficiency of our capital structure. We have not made any initial purchases in the first quarter, but we still intend to be active in the market before the AGM, as previously announced. The cancellation of the 3m shares that we acquired in 2010, and of the shares that we will purchase up to the middle of May, will be proposed at this year's AGM which takes place on May 31.

Slide 29. At the end of Q1, our cash position was $1.3b, and our leverage ratio stood at 0.5 times net debt to EBITDA. We have now low leverage, and as we are focused on shareholder remuneration, we have significantly raised our share buyback program.

Slide 30. Turning to our debt maturity, we see that the average maturity of our gross debt is at three years and four months, and that 38% of the debt is at fixed rates.

Slide 31. Given our strong performance in Q1 and our confidence in the business outlook for 2011, we are raising our EBITDA margin guidance to above 45% for the full year, and our operating free cash flow margin guidance to the high teens. We have also fine-tuned our CapEx guidance to around $850m, excluding any potential new spectrum or investment in greenfield cable operations and capitalization of leasing costs for towers we already own, as it is a non-cash item.

Slide 32. I would like now to say a few words regarding the announcement of our intention to consolidate our listing onto Nasdaq OMX Stockholm. In today's increasingly globalized trading environment, equity investors can access any international stock regardless of where it is listed, which means that it is not necessary for Millicom to maintain a dual listing. The demands for maintaining a US listing and registration also placed significant demands on Millicom, especially in terms of time commitment and by maintaining a single listing we will be able to simplify our listing obligation and to focus even further on developing the business.

The implication that Nasdaq OMX in Stockholm will become our primary and only listing, and that we will delist from Nasdaq in the US. Holders of ordinary shares are invited to convert their shares to SDRs in order to continue to take advantage of the regulated and liquid environment on Nasdaq OMX Stockholm. We have set out detailed instructions on the website for shareholders and brokers as to how to effect the conversion. The consolidation of our listing will not alter our underlying operations, our ability to grow the business, the level of our internal controls or governance, the way we run the Company and how we communicate to the market.

Slide 33. In terms of timing, we expect the delisting from Nasdaq in the US to become effective on May 30 or thereafter, with a last day of trading in the US on May 27. We expect Nasdaq OMX to become our primary listing on May 30 or thereafter. In order to deregister from the SEC, we will have to meet certain criteria and comply with US rules regarding the deregistration of foreign private issuers. The earliest time by which we could achieve a deregistration, assuming all the criteria are met, is approximately 15 months after the delisting, meaning not earlier than the beginning of 2012 -- of September 2012. Until deregistration, we will continue to comply with SEC reporting obligations.

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. The results that we have achieved this quarter are evidence of the successful implementation of our value creation strategy in our markets. Our results for Latin America prove that we can still enjoy good growth from our most highly penetrated market by focusing on value-added services. And these are also becoming an increasingly significant part of the product mix in Africa. Our focus is on stretching our brand and extending our range of services in our existing markets. And we are interested in the potential to acquire skills and knowledge that are complementary to ours, so that we can continue to offer increasingly sophisticated products and services over the mobile phone. We are confident of achieving top-line growth of around 10% in local currency for the Group in 2011.

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

Thank you very much. (Operator Instructions). Our first question comes from Cesar Tiron of Morgan Stanley. Please go ahead.

Hi, everyone. I have two questions, if I may. The first question would be if you can please tell us if you see elasticity improving in Africa? You said on the last earning call that there wasn't any elasticity at all on the off-net calls. But it seems that your revenues -- your revenue growth is doing still very well.

Second question, it seems that you stopped disclosing revenue country by country. Can you please explain us why you're doing this? And also, if you can tell us what was your revenue growth in Colombia in local currency on a year-on-year basis? Thank you very much.

Yes, I'll start with elasticity. Year to date in the quarter we have said only limited elasticity on across-net calls. So it's still at the very low levels. Part of the growth we have there is basically driving more on-net calls.

Regarding the revenue, the revenue growth by country, we used to report that information but we have noticed that this information was used against us by some of our competitors which is the reason why we have decided not to report it any more. By the way, none of our competitors is providing the information.

Regarding your question on the growth in Colombia, it is fairly close to the average of South America.

Thank you very much.

Operator, are there more questions?

Yes, we have. Our next question comes from Ric Prentiss of Raymond James. Please go ahead.

Thanks, hi guys.

Hi.

Couple of questions, if I may. First, some impressive growth on 3G. Can you talk to us a little bit about where you see handset prices going over the next couple of months to quarters, where the magic point is, where the inflexion point might ramp up significantly as far as adoption of 3G handsets. And you mentioned that you think it's the largest opportunity for the next three years. I wonder, what was the trigger for the three years? Is that how long it will take to really materialize? Or is it -- just why the three years?

Okay. There's nothing magical in the three years. It just -- looking ahead and trying to look at what kind of a penetration rates we could achieve, hence the timeframe there.

The handset pricing is constantly moving. At this stage, we don't really know what is the magic price point. If I would speculate, I think a fully-fledged smartphone at $150, probably would be our first set of price targets. But the handset prices are coming down. And one of the reasons that we have quite strong growth behind 2G data that we disclosed in this quarter, is also driven by the fact that some of the 2G smartphones are still cheaper than the 3G smartphones in the market today.

Okay. And when do you think you'd have that $150 cost to you on a 3G phone?

That's something you would have to ask the handset vendors.

Okay. And then a final question, I think, Francois, you mentioned there were no stock buybacks in the first quarter, but there will be some before the Annual General Meeting. How do you look at timing of the stock buybacks? And then also the M&A environment out there as far as licenses or other strategic acquisitions in your new businesses?

Regarding the share buyback, as I said earlier, we did not do any acquisitions since the beginning of the year. But we can resume on next Monday. And we intend to do -- to be active in the market before the next AGM. We will propose to the next AGM the cancellation of the shares, of the 3m shares we already have, plus whatever we will buy between now and May 12, the time that we will submit the agenda for the AGM.

Regarding the opportunity for external growth, we have indicated to the market for some time that we are really focusing on the organic growth because we see a lot of opportunities, for -- with data and 3G in the short to medium term, and then with services in the medium to long term. That being said, it doesn't mean that we don't want to go for external growth. But prices are high. We don't see really what we could contribute to many of the targets in the market, or what they could contribute to us. So the risk is fairly high of acquiring another company in another country, or a new license as well, with limited benefits, while the risk profile of leveraging on our brand, leveraging our distribution network, our knowledge of our market, by introducing new products in our existing market, is much lower and we have more likelihood to be successful there, because we have already a proven track of success there.

Great, thanks, guys.

Thanks.

Out next question comes from Lena Osterberg from Carnegie.

Yes, congratulations on very good numbers. I was just going to ask you, what has made you change your margin guidance? Previously you talked about having to make significant investments to grow value-added services. And obviously this quarter you have very strong growth and you did not have to make the significant investments. What has changed compared to Q4 in your view of that? And what do you see going forward?

Yes, I think it's simply a higher confidence on the bits of our strategy working very well including VAS, asset utilization and strong cost focus. And we just felt that we needed to have one quarter in our belt. And then -- and that's clearly starting to work.

As you can see, we accelerated our subsidy in Q1 versus a year ago quite substantially, up 30%. We'll see that we continue to accelerate that going forward. So that could have some impact on the margins. As well as if we start gaining scale on our solution products, like Tigo Cash, that in its initial stage will have slightly lower margin. Or actually quite lower margin than our Group average.

So should we assume that you will keep a similar level of subsidy? When you say you will -- financially accelerate it?

We would probably look at accelerating the subsidy level.

From the 30%?

Well, the 30% was a growth number. That was the growth versus in Q1 versus a year ago. But we will probably look at accelerating the overall subsidy levels going forward.

So should we expect lower margins then, or -- as you -- ?

Well, as we said, we have basically changed our guidance from talking about around 45% EBITDA margin to about 45%.

Okay. Thank you.

Thank you.

Our next question comes from Sven Skold from Swedbank. Please go ahead.

Thank you. Actually, I have a follow-up on Lena's question. There is a major swing in the margins for Central America from -- if you look at Q3 at 56% for mobile, down to 52%. And if (inaudible) didn't change much in this quarter, it's back to 55%. What explains this drop and then back to 55% margin in Q1? Is it only volume or -- it's a material change in Q4 and then back to Q1.

Well, there are really management factors between a quarter that can have an impact. Anything from promotional activity, in Central America there is a market habit to offer basically when you load you can have double or triple or quadruple free loads the day you load. And that has an impact on the margin, to a certain extent. So there are many factors that can impact on the swing between the margins.

We have had very strong focus on basically cost out, that has helped us to basically hold onto those strong margins whilst we have increased the subsidiary delivers.

But what you're actually planning for is to keep this specifically for Central America, this margin a little bit higher than in Q4 and approximately in line with Q1, then, for the rest of the year?

So Sven, as you can see, our margins in Central America have been declining. It was the case in Q4, if you look at the year on year, there is a little bit of a seasonal impact as well, for example, in Q4 because you have Christmas and the festive season. So you could see that in Q4 margin year-on-year decline. It has been the same in Q4. For -- which is something that we had flagged to the market for some time, which is essentially driven by the fact that we are investing heavily behind 3G and data services.

So we expect that to continue. And as Mikael said earlier, we could even potentially invest more in subsidy, because --- on 3G, because we see that there is a significant growth opportunity there. And it is working well. As you can see on the slide, in 3G you can Eastern Europe that since we start -- we started investing behind 3G, you can clearly see on the graph that there is a take-off of 3G revenues. So it's working.

It's worth, okay. Thanks.

Which is slide -- 16, no, 14, sorry.

Okay, thanks.

We'll take our next question from Kevin Roe of Rowe Equity Research.

Thank you. Great start to the year, gentlemen.

Thank you.

A few questions. Following up on Central America, since we don't have the revenue granularity by country, could you give us some color on what's driving the revenue and EBITDA reacceleration there, meaning which countries are the primary driver? Is it all Guatemala and El Salvador and Honduras are drags on that trend?

And secondly on Central America, how do you think the competitive landscape will change when Digicel exits El Salvador and Honduras? And then I have two after questions.

Okay. I think in -- as you can see from our last Q4 announcement, where we still had a split on the three markets, Guatemala was enjoying the strongest growth there. That's a trend that we saw continuing in Q1. But also we had an improved performance from El Salvador and Honduras. Given that Guatemala is the biggest economy, and the best functioning economy, it's fair to assume that that kind of a trend would continue.

In terms of competitive scene, we actually look at this positively. We'd rather have a very strong number-two competitor than a weak number-two and an even weaker number-three there, so we think this is positive for the market.

Okay. On Africa, Rwandatel, a big turnaround in sub growth there. Could you -- I'm sorry, in your business. Can you give us an update on Rwandatel and the status of their license, and what the opportunity for subscribers in that business would be? Senegal, also, was a big turnaround in sub growth. Are you still just maintaining the network as is? What accounted for that turnaround in Senegal? How do you see that market evolving this year?

I'll start with Rwanda. Basically, the customers that Rwandatel had were extremely low ARPU, at very low pricing. So we don't really see a massive uptick for that. That was really the low-end customers against not-too-good service. So we don't think it's going to bring us materially increased subscribers. (multiple speakers)

Did that -- I'm sorry, did that already happen, the network shutdown, or --?

I think it has gone through. I think they have been cut off; the service has been cut off.

As far as Senegal is concerned, so we see a takeoff in terms of net adds. But we are not especially pleased by it, because the ARPU is really going down sharply; not only for us, it's a general trend of the market. And we can see that the entire market, apparently, in value, has been shrinking over the last couple of months from the estimate that we had. So we believe that there is a significant pressure, in terms of purchasing power, on consumers, and that's with the certain number of factors. And as a consequence, in spite of the increase of net adds, we see the ARPU falling down and the market even shrinking in value.

That's helpful. Thanks, guys.

We'll take our next question now, from Bill Miller, of JM Hartwell. Please go ahead.

Congratulations; a really great quarter. Could you give us some color on why Paraguay had such a wonderful March? And when you are going to be rolling out the services you now have in Paraguay, a low per-capita income country, to other countries? And when you'll have all of those services available in your -- at least your Latin America, Central America? Thank you.

We already -- the Tigo Cash is live in Honduras and Guatemala, but at the very early stages. And we hope to be live in the rest of the Latin American markets by the end of Q11. As you know, Paraguay is our test-bed for new products, and we are really encouraged by the progress there we have on Tigo Cash. As we said before, the Tigo Cash will take quite some time to build. So we think this is a product that, if you look three to five years ahead, is going to bring us a substantial amount of revenues and give us an opportunity, also, to add other financial service products on top of that. In Africa, we are already live in Tanzania and Ghana, and we hope to be out in the balance of the markets by the end of -- in 2011.

That's great, thanks very much. Could you also tell us why, in fact, you didn't buy any stock in the first quarter? Was there some constraint on that?

No, there were not really any constraints. We did the same last year, by the way. We bought the bulk of what we did last year in the later time phase of what we had given to the market, but there were no specific reason. And, as I said, we expect to be active in the market, most probably, from next Monday.

Great, thanks very much.

Welcome.

Our next question comes from Andreas Joelsson, of SEB. Please go ahead.

Good afternoon. Maybe a technical question, but have you spoken to any US investors about the delisting in New York? And also, will the buyback, as before, only take place on Nasdaq?

We could not talk to any investor regarding that project that we have been looking at lately. Although, as you can understand, we did some comprehensive analysis with external advisors who are very knowledgeable about it, in order to understand what could be the impact for all our shareholders, not only the US shareholders.

Regarding the share buybacks, we intend to continue carrying out the share buyback in the US until the delisting, which means until the end of May at the earliest, and then do the share buyback in Stockholm after the delisting, which means from the beginning of June.

Perfect, thanks.

Our next question comes from Thomas Heath, of Ohman Equities. Please go ahead.

Thank you. Most of my questions have been answered. Just a follow up, is it correct to understand that you will have rolled out Tigo Cash in all your markets by the end of 2011? Thank you.

That is our intention. Market by market, there are some regulatory issues that have to be sorted out. Some markets don't really have a regulation that can cope with this kind of a service, and so that might cause a time delay. But that's our intent, it's really to be out fully in Latin America, as well as fully in Africa, possibly excluding Senegal and DRC.

Perfect, thank you. That's it from me. Thank you.

Welcome.

And we will now take a question from Peter Nielsen, of Cheuvreux. Please go ahead.

Thank you. Just one question, please. You have also raised your outlook for operating free cash flow margin for the year. I was just wondering, in addition to the higher EBITDA level, if there are other items on the cash flow side where you now have a more positive view?

We give a guidance, at the beginning of the year, which was maybe a little conservative. But we always do that at the beginning of the year because there is one item that we do not always control one year in advance, which is working capital, which can introduce some volatility in the operating free cash flow, because we can move a couple of hundreds of millions of dollars at the end of the year, especially that we have a lot of CapEx which is back-loaded in the year.

So, now that we have moved further in the year, we have more confidence of controlling what the impact of working capital movement can be at the end of the year, which is the reason why we raised our operating free cash flow guidance to high teens. The more we move into the year, the better our forecasting ability will be, and then we can fine-tune this number. We have raised somewhat our guidance for CapEx as well, as you could have seen. We had prior -- at the beginning of the year, we indicated an amount of CapEx for the full year of around $800m -- above $800m, sorry, that we have fine-tuned to around $850m.

Okay, thank you.

Our next question comes from James Rivett, of Citi. Please go ahead.

Good morning, guys. Congratulations on the excellent set of results. Two things from me.

Thank you.

First of all, when are we seeing the benefits of the tower sales coming through in the margin numbers? Is there already any signs of that happening in the first quarter, or is that a benefit that we see later in the year?

And secondly, in Colombia, it's been rumored that one of your partners is looking to sell the business. Can you give us an update on what your intentions are, if that sale does go through, and whether we should think about you guys having to commit capital to that market? Thank you.

Okay. Regarding the tower sales, we have almost completed the tower transaction in Ghana. So we transferred something like 720 towers already, which means that we now have the full benefit of that deal, in terms of EBITDA on net profit, as far as Ghana is concerned. Tanzania and DRC, the transfer of the towers, and hence the benefit that we will derive from it, it will take some time before we complete the process. We do closing every three months, about, and so we will get the benefit during the year 2011. But you can assume that we will get the full benefit of these two transactions only from the beginning of 2012, even probably Q2 2012.

Regarding Colombia, it is, indeed, public information that there is a possibility that one of our shareholder could be sold. There has been information in the market. This information has not been confirmed yet. Should it happen, we have a certain number of rights, along with the other partner, anyway, to acquire that stake. But, for the time being, there is no such plans at all, because there is no official information regarding the sale, in the market, of one of our shareholder -- minority shareholder. (multiple speakers).

Okay, that's clear. And just following up on the tower sales, is effectively what you're saying with your guidance that the benefit of -- sorry, the margin benefits will be reinvested back into customer growth? Or is there anything more fishy going on there?

We said that we could reinvest. No, there is nothing fishy. We could reinvest the benefit of it. We flagged, at the beginning of the year, that we expected to gain, for the total of Africa, not only for the three countries where we did that deal, a little bit more than a point of EBITDA margin in the year 2011, and probably between 2 to 2.5 points in 2012. We said that, depending on opportunities, mainly, obviously, on 3G and services again, if we were seeing opportunities with a good payback, -- we are always looking at a payback below one year for any commercial investments. That is different for CapEx. Then, as a consequence, if we were seeing those opportunities, we would reinvest those amounts.

Good, that's very clear. And congratulations again.

Thank you.

Our next question comes from Luigi Minerva, of HSBC. Please go ahead.

Yes, good afternoon. One question about your broad data strategy, maybe it's more relevant, for the time being, in Latin America. Now, if we look at developed markets, the operators have essentially lost the opportunity to monetize the applications, in favor of the big technology players like Google and Apple. Maybe this opportunity is still relevant in some small Latin American markets, where you are a leader. So, are you thinking about expanding your experience in data to actually get to the point of setting up a proper application store, similar to what we have in the more large developed markets?

And the second question is, again, on the tower sales. Can you give us a bit more granularity on what you expect to do in 2011?

Okay, I'll start with the application. I think we would see it a little bit -- not being very competitive, competing against the Google and Apples on application. Neither are many of those applications really relevant for our people in the developed market. We think there is an opportunity for local application development, and that's where our focus is. So we think there is opportunity, market by market, to invent application, small simple thing that make sense for our customers and bring value. So that's where our focus is.

Regarding the towers, so, last year we signed three transactions, in Ghana, in DRC and in Tanzania. One of them, as I said earlier, Ghana, is almost completed and closed. And the two other ones will be completed during the course of 2011 and beginning of 2012. In parallel, we continue pursuing additional work, in order to close other deals. We expect to announce other deals in the course of 2011, mainly in Latin America. I just [shared] whether these deals could have a different shape and form than what we did in Africa, given that we would prefer if we could make deals directly with one of our competitor.

And we may structure the deal in a different way. As you know, in Africa, we found the right balance between retaining an equity stake, getting cash up front and improving our EBITDA. We could, obviously, distribute the benefit of such deals in a different way. As far as Africa is -- Latin America is concerned, for example, we may favor less cash up front, given that we have less debt.

Okay, thank you.

Our next question comes from Justine Dimovic, of Exane. Please go ahead.

Thank you very much. A very quick follow up, on my side. I would like just to get your view on what's happening in the Central American market where there is going to be some consolidation. Are you seeing some increase in churn from the Digicel customers? And any potential activity that could -- that we could see in Q2 or Q3, in that respect, from your side?

As well, Telefonica has indicated, last week, that they would expect further local consolidation in Central America. I am wondering if you have a view on the markets where you operate in that cluster?

And another quick question on your Tigo Cash in Paraguay. You mentioned that you had 120,000 transactions in March. If you can give an indication as to the average demand that was transferred, just to get a bit of insight into how the product yield is working, that would be great. Thank you.

Okay. Let me just start with Tigo Cash in Paraguay. A typical average amount which is transferred is around $50. And actually we had, I think, 107,000 transactions in the month. But that's -- if you look at the African experience, they tend to be -- the typical average amounts tend to be around $50. We see the same thing happening for us in Latin America.

In terms of Digicel, I don't think we are seeing any Digicel customer churn to us of any magnitude, there. I think they are going through a consolidation process. We haven't followed, exactly, where we stand in terms of regulatory approval, so we don't have any focus there.

I think, in terms of consolidation, difficult to see further consolidation in the markets where you only have three players. I don't see those three becoming two very easily there. So I think that competitive scenario we have with the existing players are there to stay.

thank you.

Welcome.

Our next question comes from Jan Dworsky of Handelsbanken. Please go ahead.

Thank you. If you could just remind us on what level of net debt to EBITDA you are comfortable with, or how much growth cash you think you need? And then just a detail, on Central America, you highlighted operating free cash flow decline linked to timing of payments. Is that CapEx payments, or working capital?

Well, yes, it is mainly CapEx payments. Regarding the net debt to EBITDA ratio, we are at 0.5x today. We are (technical difficulty) the fact that we are under-leveraged. And we have always said that we would feel more comfortable with a net debt to EBITDA ratio of around 1x, and that we would not like to exceed 2, even in case of an acquisition.

You know that our strategy is to raise (technical difficulty) debt, if we can, at local level, and to push down the debt at operating level so as to make it tax-deductible, and to reduce our risk profile by reducing our exposure to some of our countries. So I think we have been executing that strategy, last year. And the fact that we have a low leverage today is the reason why we have decided to increase our share buyback program for 2011.

Okay, thank you.

Our next question comes from Stefan Gauffin, of Nordea. Please go ahead.

Yes, hello. Most of my questions have also been answered. Just something relating to this local sales that you have provided this for some time, and it has been very helpful for us to increase the visibility. And it was just right now that we could start to use the local sales as a forecast tool, and now you removed this. Could you just explain how this has been used by the competitors, and how this affects you?

Secondly, you now move over to provide revenue by category instead. Could you help us analysts by providing some historical numbers, so that we could start to use this, going forward?

Well, I just -- we don't want to comment on the competitor usage of our data. But if you look at the industry as a whole, we were one of the few people, really, to have that breakdown, and we took a decision to provide similar kind of data that our competitors do. We are very keen on highlighting the growth by category. In terms of historic data, some of the categories are so young that the data really would be a little bit meaningless. If you look at, for example, our solutions, that's 1,000% of the growth versus the previous quarter. So we think it's more a question of starting to provide that data, going forward.

Okay, thank you.

Welcome.

Our next question comes from Lena Osterberg, of Carnegie. Please go ahead.

Yes, I just have one question. I was wondering if you could give some input on what the movements will be, in terms of share flows. I assume some US investors will have to sell, following the delisting, and the Swedish investors indexed-buyers will have to buy. Do you have any more details on -- have you done any analysis on the share flows?

Yes, we have done some analysis with some advisors. We are aware of the fact that there are two categories of investors who may have difficulty to maintain their shareholding. The first one is index-linked, by definition. But we expect that, over time, should we be -- should we join some of the index in Sweden, over time, we expect that we should be able to recover, on the other side, what we lose on the one hand.

The second category of investor that we may lose, we are aware of the fact that there are some investors who have restrictions to invest only in US-listed stocks. For these investors, they can still keep their ordinary shares in the US. And it is likely that there will be an OTC market where these investors will be able to trade their shares in the future.

But have you got any net flows between the US and the Swedish investors?

We have done some analysis, indeed, yes.

And I assume that it's a negative; there will be selling pressure from the US side, initially?

If you can imagine that we made the decision to proceed with this project, is that we were confident that we could do it with full confidence.

Sorry, does that mean that you'll have initial selling pressure before you get the index? Or how --.

No, I didn't say that. I said that we are confident that, over time, this issue, if it happens, is fully manageable.

Okay. All right, thank you.

We have a follow-up question, from Bill Miller of JM Hartwell. Please go ahead.

When you have your value-added services, such as you have in Paraguay, do you clip a little bit off the number of transactions or the dollar amount?

Our focus is, of course, on the penetration side. So we are more interested in driving as many people as possible to use the services. That's the start of it. And then, naturally, when we start getting traction, we would like to then add other services that will drive up the ARPU there. But, initially, we are more penetration- and construction-focused than revenue-focused. That's typically how we build new products in the service category.

Mikael, what I was trying to get at, do you get revenue from the number of transactions or the dollar amount of the transactions?

Well, in a way both, because they are linked. When you -- a transaction is when you send money, and on that transaction we take a fee.

Okay, thanks very much.

You're welcome.

(Operator Instructions). We now have a follow-up question from Ric Prentiss, of Raymond James. Please go ahead.

Yes, hi. One quick follow-up question. Looking at below the reported EBITDA line to the corporate costs, and maybe including stock-based compensation, it was $22m, I think, of corporate costs, $18m if you exclude the stock comp. As you look at the progression in 2010 compared to 2011, should we expect those corporate costs to go up, or is this the new level we should expect to see?

I think we should expect the corporate costs to go up, because we are investing in building new skills. So we are basically investing in human resources to really drive, to be able to come up to world-class performance in the solutions category, or innovations, and entertainment and communications and so on. So, we are in the process of recruiting more people. We think it's the smartest investment we can do at this stage is really invest in people.

Okay, it makes sense. Thanks, Mikael.

Welcome.

Our next question comes from Martin Mabbutt, of Nomura. Please go ahead.

Oh, thanks. Just a very quick one. It was on the tax. When you guided for tax rate of less than 30% for the full year, is that including the Colombian one-off in Q1, or excluding it?

It is including it.

Thanks.

Welcome.

If there are no further questions in the queue, that will conclude today's Q&A session. And I would like to turn the call back to you, gentlemen, for any additional or closing remarks.

Well, I would just like to thank you for joining the call today. And we look forward to seeing you soon. Thank you.

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