Millicom International Cellular SA (TIGO) 2013 Q4 法說會逐字稿

Good morning and good afternoon, ladies and gentlemen, and welcome to the Millicom Financial Results Conference Call. Today's call will be hosted by Hans-Holger Albrecht, President and CEO; and Marc Zagar, Interim CFO.

Following the formal presentation by Millicom's management, an interactive Q&A session will be available. This conference will last for approximately one hour. I would now like to hand the call over to Justine Dimovic, Head of Investor Relations. Please go ahead.

Welcome everyone to the Millicom Fourth Quarter Results Presentation. My name is Justine Dimovic and I'm the Head of Investor Relations.

Today's presentation materials can be found on our website www.millicom.com. Before we start, I'd like to remind everyone that the Safe Harbor statements apply to this presentation and the subsequent Q&A session.

With me today on this one-hour call are our President and CEO, Mr. Hans-Holder Albrecht; and Mr. Marc Zagar, our interim CFO. Some of you know, we had planned to have Arthur Bastings, our EVP for Africa, but unfortunately he's been held back in Africa, so he won't be with us today. We will be covering his parts.

I will now hand over to Hans-Holger to give an overview of our Q4 and full year 2013 results and operational performance; after which Marc will take you through the financials and we will finish with a Q&A session.

Thank you, Justine; and hello, everybody and welcome to our conference call. I am pleased to be with you again here and this time as well with my colleague, Marc Zagar.

Before we get into the presentation and the slides, let me give you some highlights of the results. As you see, today we published a set of results showing progresses in the execution of the strategy we outlined last March, as we surged past the 50 million customer milestone in the last quarter and achieved over 7% growth during the year.

2013 was the first year of our transformation into a digital lifestyle company and this shift has been accelerating in recent months with initiatives such as the unique partnership with Facebook in Paraguay. That means that users can use the social media service free on their mobiles.

Our music service, for example, has hit new highs, too, with nine out of ten tracks streamed in Colombia now coming from Tigo music.

Such initiatives have driven the extraordinary growth of data take up with over 100,000 new users a week and more than one in five now taking data. This is up by 50% compared to 2012.

The pace of changes is continuing this year. This month we launched the 24-hour Tigo sports channels in Latin America. It's another big step for us in the content play that provides live and exclusive local sports and it will be rolled in a number of other markets where we have Tigo operations in the coming months.

And in a few days, we'll also launch Tigo Star in LATAM. This is a new brand and (inaudible) branded service that exploits in the investments we have made in the past in cablevision and Multivision in Paraguay and Bolivia and will also become part of our lineup for our cable and broadband and entertainment outlets.

This means that by the end of this year, in every market in LATAM where we have a mobile service, we will also be able to offer a bundle of cable and broadband services.

We have seen good growth when it comes to the subscriber side as well. We gained 7% more customers overall, including 11% of customers in Africa.

I would like in particular to highlight the extraordinary achievement of adding a half a million customers in the war-torn Kivu of region of DRC, in the six months since the end of the fighting there last July.

In the next few weeks, we will be launching MSS and sending out to and announcing another significant social media initiative, this time for African continent.

Those kinds of progresses symbolizes our agility, drive and determination the transition of the Company is happening, while we focus on executing within the investment targets we have said in public a bit more than a year ago.

So this is the kind of overall impression from my side when it comes to the Q4 results. Let's turn to the first slide and we'll start with slide number five.

Before we go through the results of the quarter and the full year in 2013, let me start by taking a slightly closer look at our growth plan and see where our focus is when it comes to executing on our strategy.

You all know we set ambitious targets for ourselves of doubling our revenues over five years, by focusing on five strategic pillars. In 2013, we have been investing and laying the foundation for this future growth and are going forward as saying it's important for us that we start to execute on those targets.

If you go division by division, in our Mobile business we're going to focus on driving data penetration and bundling services to increase loyalty and brand affinity. At the end of 2013, over 20%, 22.2% of our mobile base was accessing data and there's a lot of room I believe, to grow, by continuing to invest into these kinds of products and offer our customers the kind of relevant products they would like to get through those kinds of services.

On the Cable side, [we see] increases in homes passed, we will also be able to push up the addressable market to which we then offer our more and more attractive pay TV portfolio to get over to our aim of creating a $2 billion business, as we said at the Capital Markets Day, last time. We will continue to cross sell in the Cable segment; bringing in two new customers with triple-play and quadruple-play bundles, offering fixed broadband, telephony and mobile.

And we may see again some good progress in the quarter which will—I'm going to come back later during this kind of presentation.

And as mentioned earlier as well, we take a big step in creating the kind of digital lifestyle company we want to be. This month, as I mentioned, we launched Tigo Star in Latin America, our new brand for cable, broadband and entertainment; and we start to invest into new brands like Tigo Sports, sports channel.

When it comes to the next pillar, MFS, it's all about increasing penetration of this service that we'll build the scale we need in order to increase transactions on services such as payer-to-payer and merchant payments, which will take us to the more attractive margin business over time.

In 2013, in our elite markets, where penetration is reaching 50% like in Tanzania for example, we are already seeing this kind of starting to happen in these kinds of product lines.

On the Online business, with the agreement with MTN, we are I believe as well, in a very good shape to bringing online retail services in full force to Africa with a gap between and demand and offer in the retail and service sectors remains important.

We can accelerate take up of services by taking advantage of the existing infrastructure we have put in place- internet connection, payment platform and distribution, whether it's in all markets or it is in the MTN markets.

In 2013 we have seen the first of those synergies implemented and we should expect more to come during 2014.

And last, our focus on cost and CapEx optimizations will continue. It should peak in 2013 and gradually decrease during this year and the next coming years, even if for instance in Africa, we still need to invest the next two to three years in order to bridge the coverage gap we had with the competition; and in Latin America where we invest heavily on cable coverage and new TV services.

If you then move on and let's go to the results of the quarter and the year. If you turn to slide number six; just a note that these figures still follow the same reporting as the rest of the year with Guatemala and Mauritius proportionately consolidated and Online fully consolidated.

Our revenue grew a total of 7.3% for the full year and totaled at $5.159 billion. In Q4, revenues grew almost 10% in local currency and making it the fourth consecutive quarter of increasing revenue growth.

This acceleration resulted from an ongoing turnaround in Africa where we turned to a high single digit growth in the fourth quarter and a very strong performance once again in Colombia, where our growth exceeded 20%.

The year 2013 was marked by an acceleration in penetration of growth and of mobile data. At the end of the year 20.2% of our Mobile customer base was using data services. And during the last quarter we converted, as I said earlier, 100,000 customers per week to data, which is a pretty strong number.

The penetration on Mobile financial services business reached 15.8% across our footprint, growing steadily again this quarter. We now have three well-established markets and four countries as runners-up growing penetration fast.

And finally, our EBITDA margin for the year, excluding corporate costs online and one-offs was 39.2%, which is within our published guidance, although at the lower end. The margin was 38.2% for Q4 in the wake of the commercially active year and festive season.

Now let's look at Q4 performance in more detail on slide seven. Total revenue for the three months ended December 31, 2013 was $1.365 billion, which is up 9.7% on local currencies.

Overall in Q4 our Mobile business again proved resilient, reaching revenues of $1.1 billion for the quarter.

On a regional basis, contribution to revenues were again led by South America this quarter, with revenues of $589 million. Central America generated revenues of $481 million, while we are very pleased to see Africa returning to high-single-digit revenue growth with revenues now of $268 million.

If you then please turn to slide eight for a look at revenue growth and contribution to recurring revenue growth; as said, the total group revenues grew by 9.7% or 11.4% on a like-for-like basis, versus 10% in Q3 2013; marking another quarter of accelerated growth.

Our Mobile growth accelerated nicely to 5.5% in local currency, versus 3.3% in the third quarter.

Looking at the contribution of the four strategic pillars to group recurring revenue growth; in Q4 we generated 61% of group recurring revenue growth for Mobile, 11% from Cable & Digital Media, 10% from Mobile financial services, and 18% from our Online division; in a fourth quarter marked by intense commercial activities around the year end.

On slide nine, you have an overview of our growth quarter by quarter and the 2013 reporting perimeters for pro forma for 2014 changes in our consolidation perimeter.

At the end of the quarter, our revenue growth excluding regulatory pressure was 11.4%. In local currency terms, the growth was 9.7%. And if you look at the new reporting perimeters, the growth would have been 8.2%.

In 2014, we are guiding for mid to high single-digit growth at constant exchange rates.

If you then move to slide 10 and the big achievements of 2013; I think firstly, we passed, which is a big moment obviously for the Company- we passed for the first time ever, the 50-million customer mark in the fourth quarter.

Secondly, the appetite for upgrading to smartphones in our countries has grown. We have seen a clear acceleration in smartphone sales during last year with sales growing 81% year on year in the fourth quarter.

Additionally, there has been a significant shift in the device mix, with 34% of smartphones sold in December coming from the entry-level segment as opposed to 9% in January 2013.

There's also a strong appetite for higher quality TV content and high-speed broadband access. Double- and triple-play bundles were up 80% in South America.

On Mobile financial service, increase in the volume of transaction will be the key revenue drivers going forward. In Q4, transactions were up 56% compared to a year earlier, with the actual amount transferred through our service increased by 42%.

Now let's to move to the operational performance on slide 11 and 12; starting with the Mobile business. Growth in Q3 accelerated to 5.5% in local currency from 3.3% in Q3, 2% in Q2. Excluding regulatory pressure, growth was up 7.4%

Like in previous quarters, this growth came from new Mobile customers, 1.7 million this quarter; and growth in the Mobile data revenues of 29.1%.

We converted over 1.2 million customers to data again this quarter. Good revenue growth was also aided by the stabilization of the regulatory pressure which this quarter impacted 1.7 percentage points of the revenues and 0.7 percentage points of the EBITDA.

Subsidy grew 28% year on year in Q4 with the device mix migrating, as I mentioned already, to what's lower-cost devices.

Moving then to slide 13 and the Cable & Digital Media business unit; we have been preparing there for a new launch taking place this quarter of Tigo Star and Tigo Sports. Revenues grew 10% year on year with the focus on cross-selling of our services. We gained new customers both for pay TV and fixed broadband, and at the end of December fixed broadband customers amounted to 42% of our pay-TV customer base.

We had over 2.5 million homes passed at the end of 2013.

If you look at Mobile financial services, net additions grew by 50% in the fourth quarter, compared to the average addition in the first nine months of the year.

Penetration reached nearly 16% of our Mobile customer base in the markets where the service has been launched, and 12.4% for the total group.

MFS ARPU in Q4 was at $1.35; up 3.2% in local currency year on year.

Penetration growth remained very solid in our three leading markets of Tanzania, Rwanda and Paraguay and clearly accelerated in El Salvador where it passed the 10% penetration mark in the fourth quarter.

We see the momentum as well when it comes in Ghana, Honduras and Chad; in those three markets we expect to break the 10% penetration level during 2014.

And last, we will be launching the MFS service in Senegal in March this year, so in a couple of weeks.

Later this month as well, Millicom will launch the world's first international MFS service, featuring integrated currency conversion. This pioneering service between Rwanda and Tanzania will enable individuals and business to make simple cross-border transactions from their handsets without needing to go to a bank or a specialist provider. This is one of the many products we will roll out in the future when it comes to our MFS business.

If you then move to slide 15, the Online business; as anticipated, growth in our Online division accelerated in the fourth quarter, while losses remained under control. In 2013, the Online division generated revenues of $83 million and EBITDA losses of $61 million, in line with our previously revised guidance.

In December, we welcomed MTN to the partnership to build online ventures in Africa, subject to regulatory approval, obviously. But we expect this to further boost obviously the venture, given the very complementary footprint of the Millicom and MTN business in Africa.

Our partnership with Rocket Internet in Latin America was reviewed in light of these developments and as we do not anticipate to exercise our control before the earliest end of 2016, our agreement was partially amended and we will not consolidate LIH going forward.

Before we look then at the financials, I'm going to run you briefly through the slides which my colleague, Arthur Bastings, was supposed to run through. But as you can see, he's very active in Africa, so he didn't make it out of DRC early enough to talk to you. I'm sure he will come back one day and then he will be able to answer questions directly.

But let me just give the highlights of this business. I think the African business, the momentum, is strong currently. Q4 revenues reached $268 million, as I mentioned, growing 9.2% in local currency.

And this is a considerable acceleration compared to where we started the year, with hardly any growth. Revenue growth recovery is fueled by an increasing subscriber base, combined with sustained and stable ARPU in this region.

The quarter the addition was led by Chad, Tanzania and Senegal. In the DRC, following our launch in Kivu, growth continued as a steady pace as before.

ARPU was supported in Africa by important gains in mobile data. In 2013, Africa went from a low penetration of mobile data at the beginning of the year, to nearly catching up with South and Central America in customer number. Now over 50% of our Mobile customers access mobile data services in Africa at the end of 2013.

And if you go to slide 18 you can see it has been clear for some time that we needed a new approach in Africa to reverse a trend in revenue we saw in previous years. It will not happen overnight. It will take some time, but we can see or we are pleased at least that we see first developments and things start to move in the right direction.

What is the strategy for Africa? Obviously we're going to come back more in details at the Capital Markets Day we're going to have in a couple of months, but let me just give you some highlights. I think the first step is about investing in our leadership and management in the countries to motivate and drive the changes needed to execute on our strategy.

We have a new CEO for Africa, Arthur Bastings. Obviously he was not here. But we have a new team as well, based in London, supporting the local teams on the ground and making sure that we have the right people in the countries to execute on this kind of strategy.

This is very important for the markets and has been kind of a key feature for us in the last couple of months, to strengthen that side in order to have the kind of execution skills on the ground.

Secondly, we are putting a lot of emphasis on the Tigo brand and trying to get it up to the standards and the level we want to have it, and we're seeking to have a kind of differentiated approach when it comes to our customer. We want to have a more customer-centric approach than just a product approach.

We have a good team in place, I think, to get better insight into our customers' needs and understand where we have to improve and respond to them better, whether it is with our product offering, or customer service, or supporting them to understand new services.

Again, this shift will take some time. But we have a clear plan and at least, as I mentioned, the first signs are very positive.

The investments we have seen in brands and marketing are designed to make Tigo a mass-market franchise, but at the same time obviously trying to capture the kind of future business in terms of data and digital services in Africa.

And certainly as you have seen in our CapEx figures, $333 million for the year, we're investing in closing any gaps in our coverage, increasing capacity to respond to the growing data demand, and focusing on extending our geographical footprint in each market, region by region.

And last, we are putting a mobile financial service at the center of our digital lifestyle strategy in the region. There's a huge opportunity, we believe, as management for the convenience that the service is bringing to our customers. And it allows us to tap into a completely new revenue stream in Africa and add maybe over time, other services on top.

Focus we are still on growing penetration I believe when it comes to MFS, which at the end of the fourth quarter stood at 23% for Africa.

So, so much about slides about Africa; as I mentioned, we're going to have a more detailed presentation probably at the Capital Markets Day. This is all I can say from my side when it comes to the operation. I'm going to hand over now to Marc Zagar, who will run you through the financial figures.

Thank you, Hans-Holger. So please turn to slide 20 for the financial highlights.

Firstly, let's look at the developments in the revenue drivers and our progress in subscriber acquisition across the three business areas- Mobile, Cable & Digital Media, and Mobile financial services.

Our Mobile customers passed the 50 million mark in the fourth quarter. Homes passed by our Cable business grew to over 2.5 million in the last quarter also. And we gained nearly 800,000 new MFS customers, ending the year with 6.3 million customers or a 59% year-on-year increase.

Our Mobile business continued to deliver solid growth on the back of good customer intake and mobile data growth, with revenues totaling close to $1.1 billion in Q4 or 5.5% local currency growth.

Revenues in Cable in Q4 were $116 million, up 10% year on year in local currency.

MFS revenue continued a steady quarter-on-quarter growth with revenues of $23 million for the last quarter of the year.

On slide 21; looking at the revenues in local currency, we had growth of 9.7% in Q4 or 7.3% for the full year. Excluding the contribution from the Online business, in Q4 we grew 8.4% and 5.8% for the full year 2013, still in local currency; making Q4 yet another quarter of accelerated growth.

Regulatory headwinds impacted revenues a bit less this quarter, trimming 1.7 percentage points, compared to 1.9 in Q3 and 3.2 points in Q2 2013.

EBITDA margin continued to evolve in line with our changing revenue mix and totaled $465 million in the fourth quarter, including Online and before corporate costs.

EBITDA losses from Online amounted to $23 million in the quarter. Excluding Online, underlying EBITDA margin in Q4 was 38.2%. We will look more closely at the EBITDA margin evolution a bit further in the presentation.

As expected and as we guided, CapEx expenditure was up in Q4. The full year 2013 CapEx-to-revenue ratio reached 19.4%, excluding Spectrum and licenses; in line with previous guidance.

We invested $564 million in CapEx in Q4, including $111 million in spectrum for Latin America. For the full year, we spent a total of $1.23 billion in CapEx, including licenses and Spectrum of $223 million for South and Central America.

Slide 22; if we look at the distribution of revenue growth in the quarter, growth was again driven strongly by South America which delivered $80 million growth. But we are pleased to see that the increasing contribution of Africa.

Central America was again relatively flat this quarter. Online contributed $17 million additional revenues, which would have been almost $20 million if we had consolidated AIH for the whole of Q4.

Foreign currency fluctuations mostly due to the volatility in Latin America, had a significant $27 million negative impact on revenues this quarter. So far in 2014, currencies have continued to impact negatively our reported growth, in particular with movements on the Colombian peso and the Paraguayan guarani.

Slide 23; looking at the evolution of revenue growth by BU; Mobile was again the strongest contributor of revenue growth this quarter, growing $58 million year on year. Cable contributed a strong $14 million. MFS revenue grew by $10 million year on year, on the back of steady progress in the penetration of the service this quarter.

We also saw growth of $29 million from other revenues, which included equipment sales as well as MVNO and roaming revenue.

Slide 24; taking a closer look at the EBITDA margin evolution, in this quarter our underlying EBITDA margin was 38.2% or 4.4 points lower than in Q4 last year. If we look in more detail at this 4.4 percentage points year-on-year decline, it has essentially been driven by two elements- regulatory pressure on the one hand and investments for growth.

The main change you will note compared to previous quarters is the stabilization of the regulatory pressure which reduced margin by 0.7 points at the group level.

Stronger investments for future growth in the form of commercial activities and subsidies and building of our categories resulted in a margin erosion of 3.9 percentage points. In Q4, investment in sales and marketing increased 15% or $38.6 million year on year, to capitalize on the end-of-year opportunity.

This is predominantly to support MFS and Mobile data, notably through subsidies which grew 28% year on year in Q4.

With the impact of these items we arrived at the underlying EBITDA margin of 38.2% for Q4. The margin was further pushed by one-off events, totaling $22 million for the quarter, for the most part related to taxes in Costa Rica. The one-offs shaved a further 1.7 percentage points of the margin.

Finally, counting in the diluting effect of the online losses, there was a further impact of 2.4 points to the margin, arriving to the final EBITDA margin in Q4 of 34.1%.

On slide 25 we look at the full-year EBITDA margin development. On the full-year basis, including Online and one-offs, the EBITDA margin 35.8%. The underlying EBITDA margin for the full year was 39.2%, within our previous guidance of around 40%.

For the full year, regulatory impacts on the margin was 1.1 percentage point. Commercial investments and investments into building our new categories further impacted 3.3 percentage points.

Adding some positives of 0.4 percentage points coming notably from savings in network maintenance, we arrive at the underlying EBITDA margin of 39.2% for the full year.

Adding the impact of one-offs for the full year of 0.9 percentage points and online dilution of 2.4 points, we come to the full year reported EBITDA margin of 35.8%.

Slide 26; normalized net profit reached $95 million in Q4, down 39% year on year with normalized EPS at $0.95 per share.

The movements are linked to lower EBITDA, following investments in category building, higher gross debt which increased by $900 million, and increased depreciation due to investments in our networks.

Slide 27; looking at the normalized net profit for the full year this time; this reached $465 million, down 29% year on year with normalized EPS at $4.65 per share.

Slide 28; free cash flow; operating free cash flow this quarter was $153 million, down 36% compared to one year ago, mostly due to the decrease in EBITDA.

Our interest payments were up following increased debt level, notably the $800 million bond we issued in October to finance the UNE merger in Colombia. This left the free cash flow at $80 million in Q4.

Slide 29; looking at our debt position, our gross debt increased by $800 million in Q4, as we issued a corporate bond to finance the UNE merger. The cash currently sits in escrow pending closing of the transaction.

Overall, our net debt position is stable quarter on quarter at $2.3 billion, pointing to a net debt over EBITDA of 1.4 times at the end of 2013.

We continue to extend the maturity of our debt to 4.8 years with the issuance of this new corporate bond, up from 3.4 years one year ago.

Slide 30; before we move to the guidance for the New Year or year 2014; we wanted to share with you the changes in reporting that will take effect in 2014.

From 2014 onwards, Millicom will fully consolidate the operation in Guatemala, an equity account for the operations in Mauritius and from the Online segment. Previously the accounts of the Guatemala and Mauritius businesses were proportionately consolidated and Online was fully consolidated for the most part of 2013.

Slide 31; 2014 guidance, under the new group reporting which I described and assuming constant currency, we are issuing the following guidance.

We expect revenue growth to accelerate to mid-to-high single digits from a level of 5.5% in 2013, calculated along this new perimeter.

At constant currency, we expect reported revenue growth to reach over 15% versus 2012. EBITDA margin; we expect to stabilize around the mid 30's; after corporate costs; with benefits from the Guatemala consolidation reinvested in growth opportunities in Africa and South America.

In 2014, we expect CapEx to revenue to decrease to around 19% for the year, after the peak in 2013 at 19.4%; that is excluding spectrum and license acquisitions.

So I hand back now to Hans-Holger for his concluding remarks.

Thank you, Marc. Maybe just a short, final summary; let me highlight again that our growth, as we have seen in the fourth quarter, is accelerating and we expect this to continue during 2014.

We will continue to invest to build the foundation to pursue our digital strategy and the digital opportunities for Millicom and all this with the kind of underlying idea to get the customer a more holistic view and allow him to live his digital lifestyle in those kinds of markets.

With these investments, we are holding on tight to the opportunity to double our revenues by 2017, as we have mentioned in the Capital Markets Day last year.

We are now looking for your questions, so Moderator, could we have our first question, please?

Thank you. (Operator Instructions) Sven Skold from Swedbank

Thank you and good afternoon. A question on the strong numbers from South America; Colombia, how is the margin performing in that market? I was also wondering about revenue, but I think you said 20% up something in Colombia in particular.

And second; can you also update us on the UNE acquisition; how is it going and if you could give us some numbers on UNE; I know it's not included in your numbers yet, but it's of interest of course.

Yes, hi Sven. The Colombian market obviously is one of the stronger performance we have seen in the fourth quarter and throughout the year. So the growth is over 20%, as I mentioned in the presentation.

If it comes to the margins, despite this kind of strong growth, they are more or less stable in the region as they have been before, so no change in that respect.

When it comes to the UNE acquisition, we are waiting final approval which we said will probably during the second quarter. It's not in our control. It's completely in the hands of the authorities. But we don't expect any kind of major issues or major delays going forward, so the kind of previous state, still says.

And when it comes to the number of UNE, we don't have any and we can't reveal any. Therefore, because as I said, we are in the process of getting the approval. Until then they are completely separated companies.

Okay, great. Thanks.

Thanks.

JP Davids from Barclays

Hi, good afternoon. I've just got some questions on Africa which hopefully you can answer in Arthur's absence and then one on group strategy.

Firstly on Africa, you mentioned you're rebuilding a mass-market brand. Two questions here; firstly, how are you going to change distribution to become more mass market, particularly in big markets like Ghana and Senegal where you're relatively subscale?

And then secondly on that, how will you position your tariffs? Will you be aggressive on voice to become more mass market or is the focus really on bundling?

And then moving away from Africa to the group strategy and specifically Online; can you talk about the importance you put on controlling these assets? Given it's one of your strategic pillars, I would have thought you would like to accelerate control of these assets rather than push it out. And I'm specifically talking about LATAM here. Thank you.

Yes, let me try in the absence of Arthur to answer those questions which I should normally. If it comes to rebuilding the product and becoming kind of mass market product; I mean these are the levels of course we are working on; I think the most fundamental point is that we have stopped the urban fortress strategy we had in the past and accept to kind of rollout of the network more aggressively into the region of each of the countries; i.e. not just trying to stay in the centers and be more active on a countrywide basis.

Because if you look at the kind of centers we operate in normally, we have pretty strong market share, so quite often it's not the kind of issue of the brand or the distribution; it's an issue of the penetration and the kind of market we are trying to tap in. And that is the kind of key point we do in all markets.

In Ghana, for example, we're doing the same. We are not as active outside Accra where we have a higher market share than our national market share or in Senegal it's (inaudible). Senegal is a special case because as you know, during the dispute over license, the level of investment was very limited, so it's a kind of catchup situation.

But even those two markets I mentioned, we have a decent number-three position in Ghana and we have a good number-two position in Senegal so it's a good platform to start from.

But the end of the kind of urban fortress strategy is one of the kind of key changes we have, amongst smaller one.

When it comes to tariffs, there are three factors. A, we do tariffs more segmented nowadays, so we're not going with the kind of one-price approach to the whole customer base. So customer segmentation and customer specification in terms of what kind of offer we do is one of the kind of key features which we, on the back of new billing systems and other things we have invested in last year, we should be able to do.

The second point is that we see that we test more the price elasticity; so bundling offers like with MFS or in the future with other digital services like we have in Latin America, is one of the kind of key functions and we know it has a positive impact on ARPU, but it's sort of positive impact on churn.

And certainly we can see that pricing in Africa, or pricing pressure in Africa has eased, so it's as not as competitive as it has been previously. That may change obviously again in the future, but that is grown to be a kind of positive trend.

And therefore we believe we see the kind of similar trend, like in Latin America and Africa, that you get a stabilization on voice prices and you have still the upside when it comes to data prices.

On the Online, I'm not sure 100% if I got the question exactly right. So you may interrupt me. I think you were talking about the Rocket investment; how we want to manage this one after we don't have control.

I think that was the question; wasn't it?

Yes, so just to follow up on that point again; it's really, this is a strategic pillar for the Company Online, and I just wanted to see how comfortable you were that you didn't necessarily control these assets whether it be Africa or Latin America and you're comfortable that you don't control these assets and yet it makes up one of your strategic pillars?

Yes, it's a fair question. I think we see MTN deal Africa and assuming it gets the necessary approvals, obviously we will have complete different governance structure in place with a Board and kind of at normal partnership levels, so the control level should improve clearly on that front.

And secondly, even in the past until now, until then, if we don't control formally the business, we have been working very closely with the founders and the people from Rocket and those kinds of things. So you had a kind of certain element of control in that respect.

But there's one other point as well which you tried to highlight is that those are not the only online ventures we are doing. As I said, we are doing more on the MFS side. We're doing more in terms of owned products we are launching, maybe on the music side; maybe cooperation with Facebook like we have done; so we try to diversify any of the portfolio of digital activities and owner activities in the companies, so not depending on just one pillar of potential growth.

Thank you.

Thank you. Nick Brown from Goldman Sachs.

Thanks. Two questions, please. Firstly, if I can follow up on your Rocket investment; are you interested in exploring similar partnership deals in Latin America as you've signed with MTN in Africa?

And secondly, if the UNE transaction proves successful and cash generation improves, would you like to make further acquisitions in the future or are you happy with the current set of assets as they are?

Yes, again the situation when it comes to Online, we have segment probably a bit more of these debates; which products we are talking on the Online side. There is ecommerce, there's the financial products, there are the service products and there are the classified products, for example.

But in general, the basic idea was, as we always said, is some of the kind of products have a very close link to our business; some are kind of an extension of business. But at the very end of the day, it's all about scale and how fast you can penetrate the market.

In Africa, we still believe the opportunity is very, very big. Nothing has changed in that respect. And there was simply a calculation; if you have MTN in as a partner, the potential going forward is significant, bigger than if you do it alone. They kind of bring a very good complementary footprint to the party. They kind of bring the same synergies in those markets like we can bring. And with the models where we have been launching, which have been pretty good, I think we should see an acceleration of those ones.

In Latin America, the situation hasn't changed for us, so we are still very committed to Latin America as well. But in both markets, and that's the only thing which is not that new; we have been always saying is we want to have other investments when it comes to online than just Rocket and so we're doing investment, as I said, in our own stuff and in other partnership models as well. And it remains a very important part of our business and strategy going forward.

When it comes to UNE and the acquisition, is there anything more afterwards? At this stage, we are very happy with the kind of footprint we have and the assets we work on. There will be a lot of management time and capital as well allocated to the UNE deal in order to execute it and get the benefits out of there.

But I don't foresee any kind of major transaction in the near term (inaudible) for the Company.

Thank you.

Thank you. Lena Osterberg from Carnegie

Yes. Hello. I was wondering a little bit about the online partnership agreement in Latin America, because you said that you'd changed that now and I think you changed the timing from 2015 to 2016 for the passive control. And I'm just wondering what has changed and why did you decide to do this?

Also, if you could maybe give some indication of where you expect your 2014 sales and EBITDA for Online business to go; I understand you don't—will not report them separately anymore, but it's interesting to see if you still expect the business to trend the same way as you did for your longer-term guidance you issued before.

And then also one question on Mobile financial services net adds accelerated significantly in the fourth quarter which is very good. And I was wondering is this sustainable or is there some sort of seasonality in the fourth quarter.

Okay, if I work those kind of three points, on the Rocket deal and LIH, the only change we have made is that we don't see the kind of near-term consolidation of the business and integration of the business and we want to give it some time to see it performing. And as I said, we want to see what kind of opportunities we have in that market as well.

It doesn't change our view on the opportunity as such, it just reconfirms what I said earlier and in other calls that we take this kind of investment from a value perspective and we need to be pretty flexible in adjusting to other opportunities or new opportunities which are coming up.

In terms of the sales and the EBITDA, it's correct, we don't give any guidance, any forecast anymore. However, the underlying trend we anticipate will continue, so we're going to see probably strong growth momentum in both operations during 2014 as we have been seeing in 2013.

We anticipate as well that the kind of correlation between growth and cash burn will stay more or less exactly in same. And in terms of the financial numbers, nothing has changed really compared to what we guided earlier for example in the Capital Markets Day last year.

And one thing is always hard to predict of course, is how many new products do we launch and how fast are the products going to be rolled in other markets? So for example, the impact of MTN could be an acceleration of rollout of existing products, but it won't happen too much during this year and probably it will run into next year when the deal is approved.

When it comes to MFS in the fourth quarter, there is no special—I mean there are no special impacts or effects when it comes to penetration growth and revenue growth. The only thing which we have to keep in mind is that the fourth quarter seasonality, because the festive season is a bit stronger than for example the first quarter of 2014. But there may be on a quarter-by-quarter basis, there may be some slight changes. But I think on the underlying side and the kind of rolling view, it should be actually the same.

Can I have a follow-up question then on Online?

Sure.

Do you expect to reach a similar partnership in Latin America with another company as you did in Africa with MTN? Is that the reason why you've changed your accounting view?

No. At this stage, as I said, the MTN was a perfect match and in Latin America, as I said, we are very happy right now on how it goes. If there is an opportunity with a similar partner, we will evaluate it and see if there is a better equation for us or not and then decide, based on those things.

But at this stage, it's business as usual in Latin America.

Okay, thank you.

Thank you. Barry Zeitoune from Berenberg

Hi. Good afternoon. I've just got a few questions, please. First of all, in Bolivia I saw some news flow recently that the government was wanting Intel to cut prices, be more aggressive in the market. I was wondering if you could just give us some color on what the political situation is like in Bolivia and whether that's likely to have any influence on your business over the course of 2014?

My second question is on the change in consolidation for Guatemala. It was interesting, you've raised a new $800 million bond in Guatemala. That I'm assuming will partly be refinancing the current debt and partly be upstreamed to the shareholders of which you're one. But given that you're going to be fully consolidating it now, I'm assuming there's also going to be free cash leakage. Can you give us an idea of what the dividend leakage to minorities will be from your cash flow in 2014, given that it's likely to be larger than it was in 2013?

And then my third question is really on CapEx and on some of the comments that you made to JP about not just focusing on urban rollout now in Africa, but a more general rollout. Is that likely to impact your medium term CapEx expectations that you provided in your last Capital Markets Day?

And then final question is just on Rocket Internet; just as a follow up. You're talking about wanting flexibility to invest in other internet ventures outside of the Rocket portfolio. Is this something you've always been allowed to do or does not controlling LIH effectively give you more flexibility to make other investments? Thank you.

Good. I'm going to take three of the questions; the consolidation question can then be answered by Marc later on.

When it comes to Bolivia, it is like all of our markets we operate in of course, a market where you have to observe the kind of political situation with great interest and finesse. However, overall I would say you have to be careful, I'm afraid. Overall I think it is a pretty stable situation. It's a pretty stable market.

There's sometimes some noise coming up, but it never turns into too much real trouble. And last year we had some regulatory impacts which have been negatively affecting us but we don't see anything at this stage. So right now we believe the situation is more stable and things are not concerning us that much as it was previously. But obviously it is a market where you have changes once in a while which we then have to manage through.

When it comes to the second question, I can answer if it comes to the CapEx and the medium-term targets or the long-term targets of 15% in particular, I think CapEx ratio to revenues; the rollout of African network and the kind of investment into the regions of the African countries is not changing the kind of mid-term-long-term capital target at all.

We see kind of reallocation of more efficiency we are seeing in some markets like in America which we redeployed capital into Africa, and we see substantially more efficiency as well in the handling of the CapEx in Africa in itself by tighter control of procurement by kind of one-network design and by synergies we create between the countries. So it doesn't change fundamentally the picture in terms of CapEx and the ratio to revenues.

When it comes to the Rocket investment and if we—never have been able to do those kind of outside investments; we have been doing those investments in the past as well. They have been sometimes maybe in the shadow of the Rocket point. But clearly we see, as I said, if you look at the partnership we have Deezer on the music side; it has been very, very successful for us.

If you look at the Tigo Sport launch in Colombia, it's been very positive for us. If you look at the currency exchange system we have now with MFS in Africa, it's a strong product as well. So we allocate capital in a kind of fashion where we see the best benefit for us which is partly in Rocket, but if we free up capital like we have done in Africa, and see other opportunities, we may redeploy it into those kinds of operations which are close to our core business.

So now the three ones I can answer and then I hand over to Marc for the consolidation in Guatemala.

Yes. So yes, to answer your question about the bond, we did raise the—the local operation raised the bond in January for $800 million. The first purpose of that is going to be to refinance the debt and CapEx. There will be some upstreaming opportunity, but in terms of details, we don't really disclose the dividends when it comes to our partners.

Can I just ask one quick follow up on Rocket? Does the agreement with Rocket restrict you from making certain kinds of investments in Latin America or are you free to pretty much invest in what you want to independently?

No, we're not going to give any details of the arrangement we have with Rocket, but obviously, as you have seen and I gave some examples, we're investing into other products and projects which are close to our business. So it's business as usual for us on that front.

Okay, great. Thank you very much.

Thank you. Stefan Gauffin from Nordea

Yes, hello. I have a couple of questions. First of all, you maintain stable dividend, but still have the ambition to grow the dividend; but how should we look upon this going forward? You seem to be focused on paying down debt going forward. So should we expect a stable dividend until you're down at close to 1 or even below 1 times net debt to EBITDA?

Secondly, relating to the cable operation; there seems to be a lumpy build-out of homes passed, so it's hardly been any geographical build-out within the cable division over the last couple of quarters. How should we look at that going forward?

And yes, actually that's the main questions.

Okay, let's start with the dividend. Obviously, this is nothing management has to decide or can decide. It's completely up the Board and therein the shareholders. Clearly the ambition of the Company is to get ourselves back on growth and in order to get growth, obviously we have to invest into the growth opportunities which is the current point which we're in. And therefore the dividend stays stable during for 2013.

Going forward, obviously as well there is the UNE transaction which is a pretty transformational deal for the Company and it will increase our debt ratio as well, which you have to take into consideration. And then when it's time for the next round to decide on the dividend, I think the Board will take the decision on that one. But clearly debt profile will change; keep that in mind. And the growth or the investments we have to do in order to get the growth back in the Company will take place as well, at least on the short-term side.

When it comes to the cable operation, I'm not 100% exactly what you're referring to, but the kind of rollout is depending on the kind of A, of course, the business opportunities and most likely what you were referring to is a kind of replacement of the kind of wireless connection we had towards the end consumer with the kind of fixed cable solution; and there, of course, you rollout then when you see the kind of customer profile and customer revenues which make it feasible. And this is the kind way you approach a cable rollout in the market.

Okay, thank you.

Thank you. We have time for one more question and the final question comes from Bill Miller J.M. Hartwell. Please go ahead.

Good evening. Is there anything in the growth rate in Colombia- your mid 20's growth rate or whatever it is, that would be applied to UNE that you can goose their growth rate as well? And how long, if there is, will it take to apply those same growth principles to UNE?

Yes. Everything I'm saying about is speculated because again, we are in the approval process so we can't speak about UNE too much. Clearly the starting point we have seen is this strong mobile growth, but again data sets a good platform for us to do further business once it is approved with UNE in terms of cross-selling and bundling the projects. And equally I think it will be beneficial for UNE of course in terms of growth rates going forward.

But to be very concrete on the figures, obviously we need to get the deal approved and then get to final figures and then we can be more precise when it comes to UNE. But the good thing is that we're merging a strong mobile business right now with the second-largest cable company which in itself should be a good starting part to do further business in Colombia.

I have another question. With the MTN affiliation in Africa, can you take MFS and put it over their mobile platform as well?

It's one of these—the MFS business as it is today is very linked into the kind of mobile business and needs close cooperation with the mobile business. Obviously this will evolve over time and the more financial products you're going to offer, of course, maybe the less mobile platform operator it is depending and then there may be room for opportunities in various fields.

But at this stage, I think the most important point for us is to focus on getting the penetration and the customer in and then see all the kinds of opportunities at the second phase.

Great. Thank you very much and nice growth.

Okay, thank you. That concludes the question-and-answer session. I would now like to hand the call back to Hans-Holger Albrecht. Please go ahead.

Yes, thank you very much, everyone for listening in. As usual, if there are more questions or you want to have a kind of follow-up discussion, Justine, myself and Marc are happy to take them. Otherwise, you'll see us at the first quarter call or latest I guess in the Capital Markets Day during the course of this year. Thanks a lot and goodbye.

Thank you. This concludes Millicom's Financial Results Conference Call. Thank you for your participation. You may now disconnect.