Millicom International Cellular SA (TIGO) 2015 Q4 法說會逐字稿

Good day to all and thanks for joining us here today. Before we get started, this presentation is covered by the Safe Harbor Statement that's up on the screen. I'm here today with Tim Pennington, our CFO, whom you all know, and a few other members of our Senior Management team, whom I would like to introduce to you. Xavier Rocoplan, our CTIO; Rachel Samren, our Head of External Affairs; Cynthia Gordon, our Division Head for Africa; and of course you all know Nico.

Before we get started, I imagine that many of you would like an update on the status of the investigation into the potential improper payments on behalf of our joint venture in Guatemala. In a nutshell, there are really no developments to report. The matter remains under review with the authorities. We remain fully committed to cooperating with them, as requested, and we'll update you whenever possible. But no news is really all there is to say on that matter at this point in time.

So let us now focus on our results. Our key messages are what we would like to start, as always, with. No doubt we are facing strong macroeconomic headwinds. Markets are down, currencies have weakened, and the economic growth is slowing down. Nevertheless, we need to focus on what's going on in an underlying business and keep the eye on the ball to properly execute on our long-term strategy.

With that in mind, this is, in a nutshell, what we would like you to remember from our call today at a high level. One, we delivered strong organic growth. Said differently, we hit our numbers in local currency. Two, we generated positive, growing and very strong cash flow in 2015, strong enough to cover our dividend. Three, our operational momentum continued with strong underlying service revenue growth.

Four, our strategy, as we laid it out to you early in Q2, is working and we have some early indications to demonstrate that. Mobile date is being monetized, cable is being built faster than ever, and subscribers are coming in with good data rates. Five, we're taking decisive steps in capital allocation, as you will have seen with the sale of our DRC business. And six, we are pretty positive on our 2016 and long-term outlook.

Let me now give you some details on each of these key messages. The first key message is that we delivered strong organic growth. It's up there on the chart. In 2015 we delivered $7.7b (sic - see slide 5 "$6.7b") in revenue. This is up 7.4% year on year on an organic basis. Our adjusted EBITDA was $2.3b, at 9.2% year-on-year growth, again on an organic basis. There's pretty good operating leverage there as well. And we held CapEx at $1.3b.

As a result, we delivered operating cash flow of just shy of $1b or 10% better than last year in dollar terms. These are strong results any way you look at them, with accelerated growth all the way from revenue to cash flow.

We're sticking to the plan. 2015 results put us on a good path towards our stated cash flow model. You may recall this slide from our Q2 call. That is our long-term cash flow model that we manage the business towards. We've added our 2015 results to it. Top growth at 7.4%, operating leverage at 46% already, EBITDA margin, close to 34% already, and OCF margin now up to 15%, all of which put us on track towards that stated long-term cash flow model. We're making steps along the right way.

The second key message for today is that we generated positive, growing and strong cash flow in 2015. This is not a small point, by the way. Our 2015 equity free cash flow was positive, and strongly so, at $235m. That is $278m up from 2014, when our equity free cash flow was negative at $43m.

This actually provides for a 90% dividend cover for 2015. Pro forma for the sale of DRC, dividend cover would have actually been higher than 100%. Our Board of Directors, based on our recommendation, will recommend to the General Assembly, a dividend payment of $2.64 per share.

Our third key message today is that our operational momentum continued with strong underlying service revenue growth. There are three points I would like to make on this slide. One, our growth momentum remains robust. We actually ended up Q4 with a bit of an uptick at 5.9% growth.

The second point is the UNE, our cable and B2B business in Colombia, delivered strong contribution to the Group growth and is actually underpinning this pickup in underlying service revenue growth.

And the third point on this slide is actually a bit of a word of caution. In 2015 we did face very tough macroeconomic environments in Colombia, very strong FX devaluations across our main currencies as well. And this will continue for some time into 2016. Therefore we're squarely and must squarely be focused on executing a very, very solid long-term strategy.

Now, let me just address that then as our fourth key message. Our strategy is working. If you recall, our operational strategy is pretty simple. One, we monetize data, mobile data. And two, we build and monetize cable. As simple as that.

Let me address mobile first. Our strategy is paying off and we got some early numbers to show. I'm going to focus on Latin America to demonstrate this. If you look at box one on this page, we increased data users by 19%, reaching 2m -- 12m at year end. And on box two, you see that we increased data mobile ARPU by 3% in constant dollars. We're increasing the base and we're getting the pricing right at the same time, and I'll address that in a minute, later.

As a consequence of that, on box three, you see that our data revenue in Latin America increased by 37% or an additional $280m. Note that we have actually now exceeded the $1b mark in terms of mobile data revenue in Latin America.

But more importantly, and this is the key point here, in box four you see that in Latin America our data revenue is now more than compensating for the decline in the legacy business, voice and SME. This means that our mobile service revenue is growing, albeit still slowly, at 1.5%, as you can see on box five. But the growth I strongly believe will increase as every day we are actually sharing more and more of the legacy business, while the new mobile data business is growing strongly. It's a game of math.

In slide 10, for 2016 you see that we expect to push even further our data monetization strategy by pivoting our pricing model. As of today, we are, as most operators do, selling megabytes, yet consumers do not value megabytes. They value content and they value applications and they want all-you-can-eat products.

This actually presents us with a pretty interesting opportunity to improve our strategic pricing. Instead of selling megabytes, we have now started to sell time-based application packages. You can buy all-you-can-eat access to Facebook or YouTube or the application of your choice for a day or for an hour. It's time based. This is a strategic shift in pricing data.

And here's why. One, it increases data penetration because it allows for a lower entry point for consumers that have not tried mobile data before. Two, early results show that it actually increases data ARPU because consumers perceive a higher value proposition, can exercise choice. Three, because pricing is all you can eat, which is key, but it is also key that is limited in time, which effectively means that we remain in control of the pricing on an all-you-can-eat model. And fourth, it is also strategically important because it is driving traffic to our Tigo Shop app on our phones, which is where you can buy these applications. And I'm sure that you all realize that that real estate on the phone has strategic long-term value.

We used this pricing model for the first time in our Christmas promotions and resulted in an increase in price per gigabyte of 10% against a control group. These are the kind of things that we can do to help monetize data and demonstrate that our runway is pretty positive in that regard.

In cable, second pillar of our long-term strategy, we can also show that our strategy is indeed working already in 2015. 2015, we added about 550,000 homes passed to our footprint. That means that our network already covers 7.6m homes, which shows you that we are well on our track to deliver our target of 10m homes in the mid to long term.

In our subscriber bases we added about 140,000 new subscribing homes and we now connect in excess of 3m homes across our footprint. More importantly, cross selling between fixed and mobile is working. We have now increased our bundling ratio to 1.88 revenue-generating units or services per each home that we connect. That's a pretty good best-in-class bundling ratio.

As a result, we grew ARPU per household, in dollar terms, from $23m to $26m in 2015. And all of this compounds in a home business that is growing at 18% in Q4. And Tim will give you more detail on that. Suffice to say that the strategy is working.

And this slide is just a reminder of why we're doing this. Current penetration levels for both broadband, fixed broadband, and pay TV in our markets are well below those of the more advanced Latin American economies. We have plenty of room to grow here and we mean to take advantage of that. And be mindful that this is the same network upon which we can also service small offices and medium-sized businesses with B2B services.

Now I would like to give you a bit of a snapshot on our Colombian operations. In a nutshell, we can now say that our merger with UNE is delivering. Four key points here. First, in mobile, the market in Colombia is indeed very challenging and has actually been declining. You already know this and you've already seen the reports from some of our competitors. We expect that 2016 will continue to be a tough year in mobile in Colombia.

The good news here, however, is that we are outperforming our peers by a significant margin. That's because we have a superior brand and we have a superior service. So that is actually my second point. We have increased our revenue market share in 2015, now sitting at 18%.

And the third key point here is that we now have a very balanced and better growth profile to face the challenges in the mobile space in Colombia. Remember, in Colombia somewhere around 50% to a little bit north of that of our business is actually a fixed business. And UNE, that fixed-cable and B2B business, is contributing strong growth to the Group as a whole, leading the merged entity in Colombia to grow revenue 5% year on year.

And the last point, which should not be a surprise to you, is that we, happily, have increased profitability in Colombia, with EBITDA margin increasing by about 300 basis points in the year and now sitting just shy of 30%. And, as you can expect and as we progress through the integration process, we will continue to extract further synergies and we will continue to extract EBITDA pickup.

Our fifth key message today is that we are taking decisive steps in capital allocation. We have announced recently that we signed an SPA with Orange for the sale of our DRC operation for a total cash consideration of $160m. Quite frankly, we were sub-scaled in the DRC and we seized the opportunity to sell to a buyer with in-market synergies for a pretty good price. That is just good capital allocation.

Our last key message is that we're very positive on our long-term outlook, and there's a few reasons for that. First, you've already realized that we believe that our future lies in mobile data. We're monetizing data, but we're expanding our 4G coverage and our capacity in order to further monetize data. By the end of 2016, by allocating our CapEx to 4G, we expect to cover about 40% of our Latin American footprint with 4G coverage.

Second, for the same reasons, we will continue to increase our cable footprint throughout Latin America. And by the end of 2016 we expect to be just a little bit north of 8m homes passed, again on our way to grabbing that opportunity in the region.

Then third, we will expand our successful DTH service into Colombia and to Paraguay when and if we get a license there.

And fourth, we will continue to move into next-generation TV services, which will combine linear TV channels with OTT apps, both on TV and on mobile. And this will keep our innovation edge in our markets.

And finally, and this is my key point, we will continue to strengthen our B2B business, which is growing at double-digit rates across our entire footprint, Latin America and Africa, and today accounts for only about $1b or just 15% of our total service revenue. Another opportunity for growth.

And just to close, we recognize that the short-term conditions are difficult and we are prepared to deal with those by focusing on cash flow generation in 2016. But, with a longer-term outlook, we must be cognizant that, one, our operational strategy is working; two, we have demonstrated a strong focus on equity cash flow and we will continue to be focused equally so, which is allowing us to cover our dividend; and three, there are large pools of opportunity that we can tap into for further growth.

And with this, I will hand it over to Tim for our financial review.

Thank you, Mauricio. So let me take you through the Q4 numbers now. I think Q4 was a pretty tough quarter in the global economy, but our business is pretty resilient and we continue to post decent organic growth, on revenue, on EBITDA, and particularly on cash flow.

In 2015, we saw some extreme currency volatility. We were particularly affected in Colombia, Paraguay and Tanzania. They dampened the reported numbers. Our revenues were close to $1b lower in 2015 than they would have been had we used 2014 FX rates. But as Mauricio has just outlined, we ended the year inside our currency-adjusted guidance range.

And furthermore, our Q4 adjusted EBITDA margin improved by 90 basis points. That delivered on one of the key focus areas for us during this year. And so with better underlying EBITDA, strong working capital management and capital discipline, our cash flow has shown good signs of improvement.

And in Q4 we did prepare the business for the future. We've taken restructuring charges in several markets. We've tidied up a number of historic issues. It has been painful for us, but it leaves us very well positioned to go into 2016 to reduce our leverage and improve the dividend cover.

Okay. Let me start by looking at the revenue picture in Q4. Organic revenue did slow to 4.4%. That brought the full year to 7.4%. We saw a little bit of slowdown in Central America, but the major impact came from Colombia, where our mobile service revenue was 1% down on last year. But this is a market where we're seeing negative revenue growth from all our major competitors, as Mauricio has just said.

And once again, FX has played a big part in reported earnings, pushing reported revenues for the Group 10% lower in the quarter compared to the same quarter of last year. And this is the biggest single currency impact we've seen so far.

But let me look at a bit more the drivers of our revenue growth. On the next slide we -- on the whole, we see -- we continue to see robust growth in service revenues. This excludes handset revenues and equipment sales and it gives us a better picture of the underlying trends.

It's worth touching on Colombia. Underlying the 5.4% service revenue growth in Q4, we saw strong growth in the fixed business as we benefited from, amongst other things, price increases, offset by mobile, as we've just mentioned. And we expect to see a continued weakness in the mobile market. The currency devaluation is beginning to affect,00 impact on purchases. Our sales were 26% lower than a year ago. And of course, this has been compounded by regulatory changes in FX. So although we continue to gain share, this is in a sharply weakening market.

We saw a welcome return to double-digit growth in our cable-only business in Costa Rica. Bolivia also had another good quarter, driven by some extraordinary strong data performance. However, in Paraguay it slipped back into negative growth on widespread flooding, compounded by an already weakened economy. And in El Salvador the security situation has dampened some of that revenue growth.

Across Africa, service revenue continued to improve, 13.5% versus 11.3% in Q3. And we saw a welcome return to growth from Chad.

So building on what Mauricio said, on this slide we've got a few of the drivers, what we see as key drivers for our revenue growth during 2015. Mobile, we continue to see strong subscriber uptake. We had net $1.1m additions in Q4. Good growth in Guatemala, Colombia, Tanzania and Chad. And in fact most of the businesses picked up subscribers in the quarter. Our total subscriber count now stands at 63m.

This is an important driver of our data revenue, which is on the next slide -- the next chart, sorry. And you can see that data revenue growth has remained very positive, up 39%, driven by that rapid adoption of smartphones, plus data ARPU increasing as we continue to innovate services like exclusive sports content or free Facebook campaigns.

Our cable business performed exceptionally well last year. Revenues grew by 24%, driven by RGU growth. We now have 5.4m RGUs, and that's been supported by some very strong and stable ARPUs for home.

Finally, to highlight the B2B performance, and this has been hidden a little bit in our numbers historically. But as the chart at the bottom shows, we've had a pretty strong business here, up 16% in 2015. And with the UNE contribution, this is rapidly going to be a $1b business for us. And this is a business that you'll hear us talking more about in forthcoming quarters.

Okay. So let me turn our attention to EBITDA. As I said, adjusted EBITDA, good progress, up to $551m in the quarter, a margin of 9%, up 90 basis point, driven by Latam and corporate cost reductions.

In Q4, we took a number of one-off charges. We took $60m in the quarter, which makes $87m for the full year. $33m of that was integration costs in Colombia, plus there was an $18m bad-debt charge in Guatemala in respect of a public contract. And I should make clear at this point that this contract is not part of the reporting the Group made to the US and Swedish authorities in October.

The balance has been incurred in Africa as we seek to position the business for a more successful 2016. We charged $15m to restructuring, plus as we continue to right-size several of the operations there for the future. And there was $17m relating to tax and some other adjustments.

So excluding these items, we saw a 4.3% organic growth in Q4, 9.2% for the year, driven by efficiency measures. In fact we brought our corporate cost down again for the quarter. Q4 corporate costs were nearly 30% lower than they were a year ago. And we're beginning to get back into line with industry norms here.

Now, over the last 12 months we've been focusing on improving our capital allocation and return on capital for the Group. CapEx for 2015 landed at $1.27b, which was towards the lower end of our guidance range, although they still represented 19% of revenues given the FX impact.

Our investment is primarily directed to where we see the best returns on capital. The CapEx looks higher in 2015 than it was in 2014, but that's simply because of UNE in 2015 for a full year. Ex-UNE, we invested over $1b in Latam, down by 5%. And in Africa, investment down by 23%, despite higher investments in Tanzania.

We also spent $47m on spectrum and licenses in Bolivia and Paraguay, which, at around 0.7% of revenues, this is the lowest investment in spectrum we've had for some time. 2016 could be higher if 4G spectrum in Colombia and Guatemala is issued.

And then investment in M&A is also being tightly controlled. We invested less than $200m in the year. It was mainly focused on in-market consolidation, particularly Tanzania, with Zantel, and cable infill in Latam.

Now, before going onto the cash flow I want to quickly address a number of non-cash items that appeared in the P&L. The biggest item booked was in other non-operating expenses. We took a charge totaling $411m for the quarter, $624m for the full year. And of this, roughly $400m related to the deconsolidation of Guatemala and Honduras, effective on December 31, whilst a further $300m related to FX losses.

In addition, in the joint ventures and associates line we booked revaluation gains of $147m on the flip-up of Helios Towers Africa.

And finally, in other operating income there's a charge of $57m, most of it relating to a write-down in the value of the Senegal business.

I want to emphasize that all of these are non-cash items and they're taken out of our adjusted EPS.

Yes. Let me turn to the cash flow. Familiar structure here showing the cash flow, down to equity free cash flow that is pre-dividend. It excludes spectrum and license fees and M&A. This is the full year. You can see that EBITDA, pre-one-off charges of $2.3b, 7.4% up on 2014.

So after CapEx, working capital, which was pretty much in line with last year, left us with OCF of $1.1b.

Cash taxes were below last year, on lower cash taxes in Colombia as we utilized some overpayments in prior years.

Interest's a little bit higher on high levels of debt, whilst dividends, to minorities a little lower.

This left equity-free cash flow, $235m, as Mauricio said. 90% dividend cover. And on a pro-forma basis, ex-DRC, the dividend cover would have been positive.

Net debt, it increased in 2015, largely as a result of capital items, namely M&A and spectrum. This slide shows the net debt progression. As you can see, that after dividend, M&A, spectrum and licenses, we ended up at $4.3b. And this is the third quarter we've kept the level of debt around about this point.

Leverage ended the year 1.97 times, and this is consolidated basis, including Guatemala and Honduras. We'll continue to show that leverage on that basis going forward as well. And on a pro-forma basis, pro forma for the sale of DRC, leverage was 1.87 times.

So now there's been a lot of discussion around emerging market debt, debt risk, so I wanted to take the opportunity to outline our position, which I think is pretty solid. Fitch has recently reconfirmed our BB+ rating. We've got a very good maturity profile. Our average life is just under six years. We only have $225m of debt maturing in 2016 and it remains at fairly low levels for the following three years, so well within our capacity to refinance business. And further, we've got undrawn credit facilities of $500m.

Around a third of our debt is in local currency, and we'll aim to move that to around 40%. Just under two-thirds sits at the country level, and three-quarters is in -- is fixed, is fixed rate.

So in short, we remain comfortable, but not complacent about our debt structure. We're comfortable with our leverage targets of between one and two times EBITDA on a fully consolidated basis as well.

So that brings us to the end of our Q4 results presentation. In summary, the last quarter of the year was undeniably tougher than the preceding quarters, a weaker macro environment, environmental and political factors and some aggressive competition in some key markets, all compounded by adverse currency movements. And plus we had a number of one-offs, which constrain the reported numbers.

But despite that, we saw sound operational momentum. Mobile data is growing strongly, as is cable, as is B2B. Margins are improving and we've been more disciplined on our capital allocation.

Visibility on 2016 is not as clear as we'd like it, but we expect our organic service revenue to grow in mid-single digits. And by vigorously pursuing the cash flow model that Mauricio underlined, we see our adjusted EBITDA growing in mid to high single digits. CapEx will be lower than 2015 by some $50m to $100m. So we expect our operating cash flow to be stronger in 2016 than even it was in 2015.

Overall, whilst 2016 will be a challenge, we believe the Group is very well positioned to meet that challenge. Thank you and we'll now take some questions. I think if we start with questions from the room and then we'll move to the line and ask Chris to take the first question.

Sure. Thanks guys. It's Chris Grundberg from UBS. Just a couple if I may. Just on the guidance, I just wonder if you can flesh out on the biggest drivers of the leverage you're implying there. Clearly, the DRC will help, but what are the other factors that you've got in there?

Secondly, on the CapEx where are you planning on making the savings, especially given the depreciating FX, the lower dollar number? Just curious to get your thoughts there.

And then lastly can you give an update on your percentage ownership of African Internet Group and also just on the African tower portfolio as well as any views there on whether there might be an opportunity to crystallize value in either asset any time soon?

Did you get number one?

Yes, the guidance, what's driving our guidance and the improvements we will see in EBITDA.

So luckily we have some of our team members here who can give you a lot more color on some of these. I'll take a crack and I think I'll need some help from Xavier and the team to provide you more color. Let's start from the bottom up. It's probably easier to address the less conceptual ones.

On HTA which is our tower portfolio in Africa, we hold 24% on a fully diluted basis. And we [lift up] as you may recall sometime this last year into a liquid position which holds 24% of that tower portfolio. And we view that position as non-core to our African business or to our Millicom business. Our percentage of the Africa Internet Group is around 8%.

No, it's about 14%.

14%, thank you.

There's already been a capital raising in the last couple of days actually, so we're now at 14%.

I was actually confusing that with the 8% stake that was recently taken by Axa which effectively valued the company at around $1b making it according to the Financial Times as the first African unicorn, if you will. We hold 14% of that and of course this is an asset that we don't classify as core.

When and how and if we may move to monetize these two assets is really just a consideration of our ability to maneuver through tactical moments appropriately. And you've seen us do that with the DRC.

On the CapEx question, I welcome the question because I think our presentation may have suggested that we are saving on CapEx and we're not. We're actually more efficiently allocating CapEx. The truth of the matter is that we have unused capacity in our network that has resulted from investment in prior years. So before we go and invest further in new capacity, we need to make sure that we're using the existing capacity to its full potential. And Xavier will give you a bit of a granularity on that.

And also going forward, our CapEx is very strictly allocated to the three buckets that make up our strategy. Monetizing data, so it's about LTE or 4G coverage, increasing that in capacity. Two is about building a fixed network footprint. And three, it is about B2B, both in Latin America and to some extent in Africa. So that makes for a very, very laser-focused allocation of capital.

The two things put together mean that on that terms as Tim was saying we can actually reduce CapEx, without actually saving. And why don't you give it a shot with some more details, Xavier if you have a --

My name is Xavier Rocoplan. I'm the CTIO of the Group. I think the first message on CapEx, which is really important is that there is no change in scope compared to 2015. In other words we're really driving the strategy that we've been pursuing in 2015 in 2016 as well which is the rollout on mobile and home or cable that are really, really similar.

I think the efficiencies come essentially from three levers. There's been a big procurement exercise and rationalization over the last two years that is paying off at Group level because we're now procuring a lot of these items centrally.

I think the second lever is indeed we have a utilization opportunity on networks, in 3G in particular and most of our 4G rollout is not building through new sites actually, it's done through co-locations on our sites or on our competitors' sites.

And then most of our CapEx or a big chunk of our CapEx now, about 40% is cable and B2B. And there is a nice upside to this because there are a lot of installations that are actually paid in local currency now in home and B2B. So that is also helping driving the CapEx in dollar terms.

Thank you. Glad we had you here for that additional granularity. And I think Tim will take the first question on the guidance.

Yes, in terms of our guidance and why do we think that our EBITDA will grow at a faster rate than our revenues. I think that has been the focus on efficiency measures that we have been communicating over the last few quarters. In 2015, we gained about 100 basis points of margin improvement out of the corporate center. We've done a lot of work there but there's a little bit more we can do there.

In all of our businesses, during our sort of general budget round we talked about, we have instituted efficiency programs to make our business, position it for the future. As you saw, we've taken some restructuring charges at a number of African businesses for instance in order to right-size those businesses and get them positioned well for what we'll see in 2016.

So I think all of these matters when you add them together, give us the comfort on the guidance.

I think there are polls that are ongoing in various countries as to how many times I will mention the word operating leverage in any given day.

Another question. Get the mike over here.

Andreas Joelsson, DNB. A couple of question. First on Colombia, you mentioned that there is an upside in the margin. How quickly can you move in Colombia do you think? And is it possible to have the same margin in Colombia as the Group level so to say?

And then on taxes and perhaps dividends to minorities, what should we expect for 2016 on paid taxes and minority dividends?

I'll take the first one and I'll let Tim address the second one. We've done the [hard] integration in Colombia and kudos to the group there, with a well-managed integration process, with cultural uplift, well-managed with the stakeholders and you're beginning to see the EBITDA come through.

Going forward, we do intend to continue to drive that up higher as I said. And over the long term I do expect the margins in Colombia will rise up to the levels of the Group margin. But we will continue to make that bar higher for Colombia as the Group also continues to become more efficient.

I think in terms of where we'll be in fixed charges, minorities dividend, tax and interest. Minorities probably will be a little lower in 2016 than in 2015 in the sense that we took some capital dividends out of Guatemala, in particular in 2015, which obviously won't get repeated because we've now put about $1b of debt on our balance sheet. So we'll just get normal dividends.

We -- on interest it will be a little bit higher on sort of higher average debt through the period. And on tax, tax was a positive surprise for us. It will get a little bit higher in 2016, simply as we get back to a normalized tax charge. In 2015 we had some overpaid taxes in -- in Colombia that we used to offset current taxes.

And margin, Colombia was that for --

I addressed a little bit of it.

I haven't got anything to add.

Other than message we just gave to our GMs, our GM in Colombia.

Gonzalo.

Hi. Gonzalo from RBC. I've got two questions. One on Africa, could you give us a bit more color on the decision process for the disposal? Could we start seeing that in places where you're losing a lot of money, 1 times rev, 1.5 times rev is a number you'd be willing to exit the market at?

And secondly, on the data monetization is it mostly prepaid base or is it postpaid base? Or how are those subscribers evolving, what's the churn on them? Could we get a bit more color there?

Sure. Thank you for both questions, they're actually very good. Listen on Africa, the overriding point that we keep making which is very important and most of you have heard us say this throughout the course of my eight or nine months in the job. Our plan A with regards to Africa is the one we're squarely executing and that is continuing to improve on our market position and on our financial performance. That is Plan A and will continue to be the plan that we drive in Africa.

We've stated a goal of making Africa as a division operating cash flow breakeven in 2016. I have no doubt we're going to meet that goal. Cynthia, our new Head for the Africa division is squarely focused on that. That's our game plan with regards to Africa and will continue to be our game plan. And we are beginning to see improvement in our operations. And I say that because we have certainly a commitment to remain very focused on good capital allocation. That's very good.

The second point is specifically on the DRC situation. The DRC situation was, if you will, a Plan B, an in-country market solution that provided us with a better outcome than Plan A would, specifically for the DRC.

Why is that? Because we were able to strike a deal with a world-class buyer that has in-market synergies and as a result of that we were able to strike a price that is pretty good for us, but also pretty good for them. And those are the kind of capital allocation decisions that indeed we're paid to make. That's the rationale behind the Africa decision.

Anything you want to add?

And then on the data monetization, you may need to remind me your question because I don't --

Let me pick it up then. You're talking about what's driving it and whether it's prepaid and postpaid. I think the answer is both, it is driven by both. Bear in mind in our markets postpaid is very often hybrid postpaid. That is you have a base level tariff and then if you go over then you top up, so it's not postpaid as you might sort of understand it. And we're seeing pretty good traction in that.

Churn relating to that, obviously our metrics are fantastic when we sell the customer music or he takes mobile financial services or he's involved in our sports products. And the more applications he takes, the more our churn reduces [per month].

We have a very developed program of high value churn management and so to some extent the churn numbers that you'll see from us don't show the true underlying picture of how we manage the revenue churn. Our focus really is on revenue churn rather than subscriber churn. In the markets we operate in, subscriber churn is just a fact of life.

What is very important to us is revenue churn and high value revenue churn which we manage extremely carefully and data migration has done nothing but good things for us in terms of that.

I think your question is very good because strategically for us the markets we operate in and the type of models that we've been suggesting over the last few months to you do allow us to be well positioned for data monetization.

Whether it's prepaid or postpaid, the key difference between the voice, old voice world and the new data world that we are beginning to experience in Latin America is that mobile is -- mobile data is always on. In a top-up world, prepaid or in a postpaid world, you cannot sit back and take that phone call and not give your service provider any revenue. That's the old world.

In the new world, you have to be topped up. You have to have some mobile data available to you in order to access or receive those interactions with your friends that you want. In order to do that, being prepaid actually allows you an interesting opportunity to be the provider of choice if you provide more stickiness to your consumer. Hence the need for a Tigo shop where you can buy data from us and that was the point I was making earlier. I hope that's clear.

Any more questions from the room?

Hi. Henrique from Aberdeen Asset Management. Congrats on the results. Two kind of boring questions from me. One is on the maturity profile, the debt maturity in 2017. If you could give us some detail on what cash you have at the holdco level and how you're planning to address the maturity.

And then the other question is I see that your CapEx figures exclude spectrum acquisitions. If you could give us some color on what kind of expectations you have for that expense and how do you plan to fund those?

So spectrum, we -- it's fairly light for us this year. I said in my presentation that it could be high next year depending on whether Colombia comes out with 4G with 700 spectrum or not. We don't know the answer to that at this point in time and therefore spectrum is always a very difficult sort of calculation for us to forecast.

As to funding that, we feel that our balance sheet is very strong. Certainly the balance sheet in Colombia is very strong, the balance sheet in Guatemala is very strong, the balance sheet in all the markets where we need access is strong. So we have no real concerns about funding. It's about getting the right spectrum at the right price at the right time.

So on spectrum, we think of spectrum as a long-term asset. That is exactly what it is. And we are laser-focused on our assessment of spectrum. We've renovated our licenses in Bolivia and we acquired some spectrum in Paraguay as well as in Bolivia. But in certain other markets, we actually passed on -- on 4G spectrum because the economics did not afford us with a good return. And we believed that we were better off driving returns on our existing 3G network for a long period of time.

So we view it with the same level of capital discipline as we view M&A transactions, which is what you would expect us to do.

On the maturities, our 2017 maturity is a Swedish bond, a Swedish kroner bond. And we'll refinance that well ahead of its maturity in actual fact.

It's Georgios from Citi. I have two questions please. The first one on Colombia. I believe during the mid-point of the year one of your competitors reacted to what was a consistent loss of share. Do you think as we move into 2016 and beyond -- I understand you're bound to do a bit better revenues than they given that they've cut prices. But are you seeing some of the market share gains you have achieved in the past as being harder to deliver especially with the [asymmetric MPRs] also eliminated over time.

And if that's the case, can you share with us -- I know there are synergies with UNE and other integration benefits. But are there any other actions you are taking to improve the mobile profitability there?

And then my second question is more around the balance sheet, maybe following on from the question that was just asked. At what level of payout ratio do you feel comfortable medium term in order to cover for the spectrum cost, maybe whatever you may have to pay in Guatemala and any currency headwinds you may have to face in a normal year? And I understand 2015 was excessive, but obviously in very normal years, there is some room for that. Thank you.

So I'll take a little bit of Colombia and perhaps a little bit of the dividend and Tim will complement that. It's no surprise to anyone as you well phrased it that some of our competitors are driving pricing in Colombia and making the mobile market growth difficult there. If that were to continue into 2016, we have prepared our budget and we have prepared our outlook with strong focus on EBITDA growth and cash flow growth to be prepared for that situation.

That is effectively what we are doing to address a situation that has been going on for a little time.

We also believe that some of the market anomalies will be corrected in the medium term. We believe that the ability to give the consumer choice in terms of acquiring a contract with a mobile operator will be put back in the market again. And as a result of that some financing will be put back in the hands of the consumer. And we also believe that over time, pricing will be made nationwide in order to avoid anomalies in certain regions of the country. That's with regards to Colombia. We're pretty well positioned and pretty well braced for a tough year.

And with regards to the dividend, as we looked into 2015, we basically looked at pretty strong cash flow; we looked at a pretty good position in terms of liquidity and we looked at a pretty strong outlook, medium to longer term for our business. And those were three key conditions for us to recommend the dividend payout that the Board has now recommended or will recommend to the general assembly. We think those things will be sustained in the future and we will address with that framework our decision making in the future.

Anything else, Tim, you want to add to that?

No, I think that covers it.

Let's take a question from the lines. Have we got any questions from the line?

Bill Miller, JM Hartwell.

Good afternoon. I'm curious to go back to cable for a second. Are you seeing any hope for benefits in the way of reduced churn and if you ever have a cable subscriber or a lot of churn in cable and does it also help you in your other assets like the mobile service? That's one.

Two is there a chance for a roll-up. You've just had Cable and Wireless take on -- to be sold to Liberty. Is there a chance for a further roll up by you, either in cable or mobile or in expanding the geographic footprint of your business beyond your existing countries?

I will -- so I'm going to try to go quickly here. Those are fantastic questions and we're a little tight on time here. Every subscriber that combines our fixed with our mobile subscriber -- our mobile services, immediately sees a reduction in churn. That is part and parcel of our strategy to provide a seamless connectivity.

But the benefits go beyond reduced churn for our subscribers that are either postpaid or prepaid in mobile that take up our cable, which by definition has a much lower churn and a much larger stickiness. The benefits go beyond that. In markets, where we've launched DTH, 70% of those subscribers are taking a DTH service because they can pay for it with our mobile Tigo Cash application.

So there's actually a synergy between our mobile financial services, our cable business if you will and our mobile business. That's part and parcel of the strategy.

On the roll-up opportunities, Bill, we don't spend a lot of time thinking about those but we spend a lot of time -- the Liberty question if you will we don't spend a lot of time thinking about one.

What we spend a lot of time thinking about is the fact that we have organic EBITDA growth that we squarely believe is in the high single digits going forward for us for quite a bit of time because broadband penetrations, both in fixed and in mobile sits below 40% in the markets we operate and because pay TV penetration sits below 40% in most of our markets.

And our industry structure allows us to capture that growth because we're the provider on mobile and the owners of the state of the art fixed network which we are improving. If you layer on top of that the ability with that fixed network to offer digital services to small offices and medium-sized businesses then our tremendous opportunity is one of organic growth.

And there are opportunities for the rapid expansion that we could ourselves conduct into adjacent markets. But we're squarely focused first on very disciplined capital allocation because infills carry better economies of scale and because our organic growth is something that we can focus on. I hope that gives you a complete picture of what our focus lies on.

It's a wonderful answer and sounds like a great opportunity. Thank you.

Thanks, Bill. Can we take another question from the line?

Michel Morin, Morgan Stanley.

Yes, hi, everyone. I was wondering if you could give us a bit more color on Guatemala and the relationship with your partner. And specifically, if as part of your guidance and outlook for 2016 what you're assuming in terms of dividends being upstreamed from Guatemala.

And I don't know if you can give us any qualitative commentary around how the relationship with the partner is going and whether or not there is any risk to that dividend from Guatemala and whether or not you're relying on that to fund your own dividend expectations. Thank you.

On the first part of the question, I appreciate and thank you very much because it's not related to the investigation, the question. So I'm happy to answer that. And I'll let Tim address the second half of your question.

Our relationship with Mario Lopez, our partner in Guatemala remains constructive. We have a constructive and open dialogue. I was there less than a month ago and we met for a long time and we talked healthily about our business. And you know, ever since we've been trading emails with regards to how do we best manage the business going forward.

With regards to dividend, Tim.

The first thing to say is that our guidance is not related to the dividend, the internal dividends we get. I mean our dividend is based on the Group revenue profile and the Group EBITDA profile and incidentally that includes Guatemala and Honduras and that doesn't change.

In terms of dividend upstreaming, we've had full upstreaming of dividends as normal in 2015. And going into 2016, I think I've said this to a few people before that Guatemala is becoming less important in terms of our internal cash flow. It'll probably be no more than about 15% of our internal cash flow 2016 as places like Colombia start to come on stream for us and start to provide cash flow for us.

So it really doesn't factor into our decision-making on guidance or indeed our decision-making on the Group dividend. Those decisions are fashioned by our view of the outlook for the business in terms of both its fundamental short-term opportunity and its long-term opportunities.

Great. Thank you very much.

Thanks, Michel. Can we just take one more question from the line?

Jacob Stamford, JP Morgan.

Hi. Thank you very much. I just had one quick follow-up on the question on dividends. What were your total amount of dividends that you received from upstream in 2015?

And then my second question is is the sale of the DRC part of a broader change in the allocation of resources away from Africa towards Latin America? Thank you.

Let me quickly deal with the first question. We had upstreams of roundabout $700m in 2015.

What was the second question? We couldn't hear you properly over here.

Sorry, the second question was is the sale of the DRC part of a broader change in the allocation of resources away from Africa towards Latin America.

I think across our portfolio we subject every one of our countries to a very strict view on how they participate in our portfolio allocation and capital allocation. So we demand from every country to have an outlook that provides us with the kind of return that we are looking for.

In markets where we are subscale, indeed it's easier to not have a long-term view of a fantastic return. That's actually what we saw in DRC a market which we were subscale in, despite a well managed, well run business, and a market in which we could sell to a buyer with synergies. That's what drove that decision and that kind of thinking is likely to inform our decisions going forward, whether it's Africa or Latin America.

We do want to operate in industry structures in which we can foresee a healthy return on capital going forward. And that in telecoms as you know very well, typically requires a healthy market position.

Great. Thank you very much.

Thanks, Jacob. We've run out of time I'm afraid. I'd like to thank Chris and UBS for hosting us today and appreciate everyone turning up in the room and those that were on the conference call as well. Thank you.

Thank you.

This concludes Millicom's financial results conference call. Thank you for your participation. You may now disconnect.