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, Deputy CFO. Following the formal presentation by Millicom's management, an interactive Q&A session will be available. I would now like to hand the call over to Nicolas Didio, Head of Investor Relations. Please go ahead.

Thanks, so welcome everyone, to Millicom first quarter results presentation. My name is Nicolas Didio, and I'm the new head of Investor Relation. Today's presentation materials can be found on our website, on 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 1-hour call are our President and CEO, Mr. Hans-Holger Albrecht; and Mr. Marc Zagar, our Deputy CFO. I will now hand over to Hans-Holger to give you an overview of our Q1 '14 results and operational performance. After which, Marc would take you through the financials, and we will finish with the Q&A session.

Thank you, Nicolas. And hello everybody, and thank you for joining us on today's conference call. Marc and I will shortly take you through the highlights of today's results. After which, there will be time for you to ask questions. But before we come to the presentation, let me first give you an overview of the business. I will start in Rwanda’s capital, Kigali, where we launched a tech incubator earlier this month. It may not be a big investment, but recognition of our confidence in the digital opportunity and symbolic of our determination to find solutions relevant to the fast growing markets, in which we operate. After Kigali, I personally crossed the border to go Goma for the first time myself in Eastern Kivu region of the Democratic Republic of Congo, which was recently, as you may remember, a war zone. Since we went back there last summer, we have added more than 1 million customers at the rate of 80,000 per week. I met people from our team, who had watered through unbridged rivers to get our networks towers working. Again, it's not a very significant number of all, but another symbol of our results to reach new markets wherever they may be, and the kind of spirit you'll find the Tigo people. More recently as well, I was traveling to El Salvador, where I saw how our newly launched Tigo Star brand highlight in a fresh, and in my view a very inspiring way the distinctive content on our TV platform and broadband services. And in Columbia, if you go there, you can feel the buzz created by the Tigo Music, which is now the country's leading music platform. It's this kind of content that gives us the edge, I believe, in the future and helps to…

Thank you, Hans-Holger. I'll turn to Slide 17. First let's look at the developments in the revenue drivers and our progress in subscriber acquisition across the 3 business areas: Mobile, Cable and Digital Media and MFS. We added 1.6 million mobile subscribers in the quarter, taking the total to 51.6 million. Homes passed by our cable business grew to over 3 million in the quarter 1, and we gained nearly 1.1 million new MFS customers, taking our total to over 7.3 million. These 3 business divisions enjoyed strong year-on-year revenue growth. Mobile delivered 6.6% year-on-year growth. Cable and Digital Media 12.8% and MFS 48.6%. Turning to Slide 18, you can see that we generated total revenues of in excess of $1.4 billion in the quarter, up 8.5% year-on-year in local currency, and 4% on a reported basis in U.S. dollars. We saw less impact from regulatory headwinds than in previous quarter, with like-for-like organic growth of 9.4%. EBITDA was $478 million in the quarter post corporate costs, down from $498 million in Q4, 2013, with a margin of 34%. As mentioned by Hans-Holger, the EBITDA margin is in line with our guidance, which is around the mid-30s range for the full year. The EBITDA is declining by 3.7% in local currency year-on-year, and the decline is only 1.1% in local currency if we exclude corporate costs. CapEx expenditure was down from Q4 at $163 million or 11.6% of revenues, but 20% over the last 12 months excluding spectrum. In Q1, we did not have spectrum CapEx, and our full year guidance of around 19% of revenues, excluding spectrum and licenses, remains unchanged. On Slide 19, you can see that the revenue growth continues to be driven by South America, delivering $81 million in the quarter. Africa's contribution continues to increase…

Thank you, Marc. To sum up, the growth pattern experienced in the first quarter is in line with our expectations. The trends we've seen in the first quarter underscore the importance of digital and validate our strategy to be a rapidly transforming company that helps customers adopt new products and enjoy a digital lifestyle. We have been investing for growth in the long-term and are confident that we now have strong foundations in place from which to exploit new digital opportunities. This sums up our presentation of the results, and we're happy now get your questions. So operator, could we have the first question, please?

[Operator Instructions] The first question comes from Stefan Gauffin from Nordea.

I would like to dwell upon the net financial costs in the quarter, which was fairly high. I know, there is cost for the redemption of the bond in El Salvador, but if I look at the increase in net -- if you look at the increase in interest expense, it goes from the $69 million in Q1 last year to $104 million this year, and excluding the El Salvador it's $92 million, but if I look at the cash flow statement, the increase is only from $55 million in cost to $58 million in cost, so what should we expect going forward, why is it such an increase in net financials, and what sort of interest expense should we calculate on -- for the gross debt?

Yes, when it comes to the increase in the interest cost, I mean, this is primarily driven by the increase in the net debt, which we highlighted. If you are comparing to the cash flow statement, I mean, there is not a perfect match there because the coupons on the bonds are not necessarily following the same timing when it comes to cash. When it comes to the -- we're not guiding on financial costs going forward, but what we've said before is that we expect our net debt to increase after we close UNE transaction because obviously, the impact which was flat before of equalizing our contribution in this merger. From this level of 1.34x, our net debt we expect to rise towards the top end of our previous net debt limits, which we flagged for a long time as 2x. So that obviously, will have a continuing negative impact on the financial cost that the business is bearing.

But if we look at your financial cost for the bonds that you have outstanding, what's the average interest rate cost for the group?

For the group, we're looking at a cost approximately of 6%.

The next question comes from Sergey Dluzhevskiy from Gabelli Company.

Couple of questions. But first on the satellite, on DTH launch in Bolivia, if you could talk a little bit about this launch and about your DTH strategy in general, because I think you have mentioned that you're going to be launching DTH in other markets, and also are you working independently in terms of DTH or are you working with a partner? And finally on DTH, who are you leasing satellite capacity from?

If I talk about the strategy, I think the opportunity for us, when it comes to DTH in our markets is that, although we are focused out on the cable rollout and cable footprint, there is always a big part of the population, which doesn't get cable. Hence you can't serve our TV products to them. And DTH, as you know is a very cost-effective and a good way in doing it. Particularly from a basis that with the cable business we have in our markets, we have already many of the infrastructures in place, you need to know to run a DTH platform, like the playout center, you have a customer service center, you have the kind of technical platforms and support and so forth. So it is not a major investment you have to undertake in order to reach those kind of markets and it gives a perfect footprint to cover the whole country. The second reason why you have to do it from kind of strategic standpoint, is that, as you know, sports rights and content rights are sold on a country level, and in order to compete in the future for those kind of rights, you have to have a kind of nationwide offering. So if you're just a regional player or local player in the cable segment, you may face disadvantages towards other DTH players or OTT players in the long term future. When it comes to how we do it, we do it ourselves. As I said, it is not a major investment. So we don't have any partner in the business in itself. Obviously, we team up with all different kinds of content suppliers, may it be on sports, may it be on the movie side, may it be on the channel side. But the business operation in itself, we do so far on our own. And the satellite provider, I have to come back to it, it's a local one, but I don’t have the name right now in my head.

Okay. Are you going to be using the same one in other markets, or it's going to depend on the market?

Yes, the choice, of course, was to do it as cost-effective as possible. Hence, we were trying to use satellite, which covers our regions and our footprint in Rango [ph].

And one more question, kind of bigger scale on M&A. Global wireless M&A has been picking up pace over the last year or 18 months. Obviously, your focus is on cable, but, if you could talk a little bit about your thoughts or vision on becoming a larger mobile operator, whether focusing on existing markets where potentially, it could drive consolidation or on adjacent markets. For example, in Panama, which [indiscernible] lies next to Columbia and close to a cable market in Costa Rica, there is a company called Cable & Wireless, I don't expect you to comment on specific companies, but this would be an example of an adjacent market, maybe you could talk a little bit about your thoughts on acquisitions in-market and outside-of-market, and adjacent markets in wireless?

Well, as you know, we are big fans of the combination of cable and mobile in-market, which is one of the kind of the key focuses we have, hence where we operate with mobile, we believe as well there is cable opportunity. We should look at and vice versa. Right now the main focus is on executing and operating the assets we have. As we -- it's going to get the approval by the end of the second quarter for UNE. We have done [ph] just approved one of the biggest transaction the company has ever done, and it has a lot of management time to be devoted and a lot of financial resources to be devoted to as well. So that's the main focus. And we feel fine with the markets we have grown. So we see good growth opportunities, and we see good opportunities to build the business forward. In market consolidation, we obviously, would always look as a first choice, in case it would come up, but we can't see any on the horizon right now. And when it comes to outside or countries nearby to our operations, it's not on the agenda as the first go right now. So currently the focus is closing UNE and integrating that one correctly and then rollout the kind of tools gradually [ph] mobile, cable in the existing markets we have.

The next question comes from Lena Osterberg from Carnegie.

Lena Osterberg from Carnegie here. Sorry to go back to the interest rates, cost question, which was posted before. So basically, it's a little bit different. If you look at it quarter by quarter, you have the same level of gross debt in the fourth quarter, and still your interest costs are up. So I'm just trying to understand what's going on in the interest line? Why is it increasing so much, and what is the underlying costs for the debt, is it something else in this quarter compared to Q4? And then also your depreciation charges as you said are up and you say that part of this is due to the accelerated depreciation. So I was wondering how long will you be on an accelerated path and how much is this, what is the underlying run rate? And then also on the corporate costs, when you had your Capital Markets Day, you guided that, the corporate costs would decline to 2.5% of the group revenues by 2017. These currently, at least based my own consensus estimates, imply that the group costs will decline over the next few years. Is that a viable assumption while you're building up your group functions?

Okay. Going back to the interest. I mean, I can't give you the full detail on everything, but the big building blocks I would say, as you are comparing Q4 and Q1 are that, if you recall in Q4, we issued the bond for the financing of the UNE transaction that happened mid-quarter. And then, in the first quarter we issued the bond in Guatemala, also that happened towards the end of January, or right at the end of January. So the impact of these and the timing of those mid-quarter is certainly a factor explaining the change in these numbers. It's not a straightforward timing impact. We can provide you more detail [indiscernible].

Sorry, the bond was issued mid-October, not mid-quarter, I think.

Yes, correct. Yes

So you've pretty much had it in for the full quarter now?

Yes. Yes.

So that's why I'm -- you have pretty much the same gross debt for both quarters, but still your net interest costs go up quite significantly, so I'm just trying to understand what's going on and what we should expect forward? Because it makes a big difference on the EPS line.

Yes, sure. I think, one item we flagged before, was the cost we booked regarding the Salvador redemption, which we booked [ph] by part of the Salvador bond, and we booked some $12 million in cost in the first quarter.

Yes, but also adjusting for that, it's a very big step up.

Okay. Well listen we can follow that offline, if you want to provide you more than [indiscernible], okay? And your second point was....

On the depreciation.

On the depreciation. Yes, we're not providing any guidance on depreciation at this point, though.

But is there any, that you wrote there is an accelerated path of depreciation in the quarter, what is that related to and roughly how much is it?

It was roughly in the region of $20 million.

And is that sort of a one-off, or should we expect that into the rest of the year as well?

But again, we're not really giving any guidance on depreciation.

Okay.

And when it comes to the corporate cost the, I mean, if you're referring to the Capital Markets Day guidance, you should remember that these percentages we gave as a guide line were based on the revenues including UNE. So these will, obviously, have a dilutive impact on the corporate cost level. We do not expect the cost to go down in absolute terms, rather just out of line [ph].

Let me, maybe add one point to the corporate cost because it's important to understand. This is all based and part of the kind of change we have in the business model, so a lot of new functions we had to create on the corporate side, which we didn't need in the past, like when it comes to handset sourcing, handset subsidies, churn management and support and so forth. So this is one of the kind of key drivers we have, but as Marc said, it will stabilize in terms of absolute cost and since [indiscernible] goes up a percentage, a part of revenue should come down. And the second point, which is important as well to note is that many of the new development functions we have, like for example, our digital media business, is counted in the corporate cost as well, so it's a blended number where you have 2 additional corporate costs like legal or finance or whatever and you have the business development cost, which are a bit higher, which should be more moderate going forward as well. So overall I'm not too concerned about that part.

Okay. Can I also ask a final question, because you with your guidance you are sort of indicating that your margins will come up slightly over the rest of the year, could you maybe say something about what's going to drive that margin uplift and how you will do that without sacrificing revenue growth?

No, just to be clear we said our margins will be around the 35 level, and that we could also be confident. So we don't change any terms in terms of guidance or we don't say anything in terms of what kind of margins we can expect for the coming quarters, the full year guidance, that is exactly as it has been before.

The next question comes from Joseph [indiscernible] from Citi.

I have got 2 questions please. The first one on MFS. You've got a multiyear guidance to reach $600 million to a $1 billion of revenues, and what I to try to understand is, based on some of the information you disclosed in Slide 14, it looks like the ARPU you're getting out of Tanzania, which is one of your most advanced markets, is perhaps a bit more challenged than you expected. Do you still see room for the growth to pick up so you manage to reach your target in the medium term? And then secondly, on revenue growth, I think, you gave us a lot of information around the EBITDA development -- the margin development over the year, I was wondering, whether you can give us some clarity around how to think about the revenue performance. Your guidance obviously, is a range from mid- to high-single digit growth. You're at the higher end of that range at this point, but as the comps get tougher, what kind of exit rates do you expect for the year? And what kind of rate do you think is satisfying for you in the medium term?

When it comes to MFS, I think it's a regular question because, indeed the guidance we had at the Capital Markets Day was the revenue between USD 600 million and USD 1 billion. We highlighted at that time as well that, it's a completely new business, so obviously, there will be changes or there will be adjustments in the kind of business model. But the underlying trend and the underlying number we have been giving out hasn't changed and we are so confident at this stage that we're going to get there. This is based on a very simple assumption: A, we have penetrated MFS to a very high level of customer usage in just 2 or 3 markets so far, so there is much more room for us to go in other markets. And as the penetration goes in the other markets, obviously slow [ph]. And we're not just depending on Tanzania for example or El Salvador. So the more we rollout the MFS model, which has been launched, in all countries, I think the more the growth should accelerate. And the second point is, as well, that we are still working very strongly on the -- we call it the financial ecosystem. So right now, we're mainly using it for the very simple services, our MFS services, but in the future you will move into other business areas like merchant payment, utility payment, insurances and so forth and so forth. I think connectivity, is the question of the ARPU, and yes, there has been a competitive pressure in Tanzania and Paraguay, which is our biggest market when it comes to first quarter, where one of our competitors was giving MFS for -- more or less for free. That has stopped now, and we see a kind of see a kind of return of the markets immediately. I think, it is unlikely that we will see those kind of competitive behaviors again, because it destroys new business model and ARPU driver for the industry. But, like always, there's also things we can't control in short-term and always create certain kind of pressure, but shouldn't change the long-term fundamental rule when it comes to MFS. When it comes to the revenue growth for -- I think it was for this year, how we see it, as we've said, I think we have laid out foundation for growth for the rest of the year, and we don't have to change our guidance as we've indicated earlier. We have seen strong performance, good performance in most of the countries, but there is still room for us to [indiscernible] this kind of momentum because not all of the countries have performed equally, some had regulatory pressure, some had pricing pressures, which we believe will ease. So therefore, the kind of guidance we have for the full year is intact. And we don’t have any concerns, we wouldn't achieve those kind of high single-digit within [ph] gross figures.

The next question comes from Erik Pers from Danske.

My first question is about your acquisition in Bolivia, how much revenue from Multivisión was recognized in the quarter, please? Secondly, customers in Senegal, came in massively in the quarter, what did they -- I mean what did the introductory offer look like, how much did these customers pay to be counted in as active customers in the quarter? And then thirdly, I want to just come back to -- Lena asked a question earlier about corporate costs, but just to clarify, you are still committed to this 2.5% target as corporate cost versus revenue.

Okay. if I start with the Bolivian piece, it was very small, so honestly we don't the figure here right now, it's not a kind of major driver, when it comes to Bolivia, I look to Marc.

$4 million.

$4 million, so it's very small, and didn't have a major impact. When it comes to Senegal, the offer -- we had a very strong customer intake, that's true. It was a combination of a good price packages we had to build and a strong marketing campaign. It's not the kind of model in terms of final offer we're going to run for the future. But the situation in Senegal was a bit different for us from a competitive landscape, because we had been facing 3 substantial issues, which we had to come over due to the -- as you remember, maybe the license dispute we had with the government for many years. So A, we had a brand drag, when it comes to the Tigo in Senegal. So we had to win back the confidence and the support of the customers. We had a major issue when it comes to network reliability and network quality, which was driving the customers out, and we had, as I said, not an unattractive pricing offer when it comes to the end consumer. And all this we tried to take tackle with an integrated campaign to grow on all these 3 elements and to bring customers back to see and test Tigo and get the kind of confidence back in the service and the brand. And that has resulted in a very strong subscriber intake, there's not a 100% correlation over the business subscriber intake and the revenue growth, but we believe after we rebuild our position as a good carrier that should come eventually as well. And when it comes to the corporate costs, at this stage, we confirm our guidance as no major change. Obviously, again, those things can sometimes move in terms of what kind of initiatives you put on the corporate side and what kind of functions you have. But it's nothing which we see is different from what we have announced earlier. We will have more priority as well because it's a bit a question of -- definition of corporate cost as well. We give you more credit probably during the Capital Markets Day, we intend to have in the fall, and in a nice location and then you will get the details about this one as well, but for the time being, it's the number we stick on.

Your next question comes from J.P. Davids from Barclays.

Two questions please. Firstly, given the rapid proliferation of smartphones that you highlight, are you comfortable that you've developed a pricing model, an adequate pricing model for bundled services and maybe you can provide some color on the recovery period for this margin investment that you flagged? The second question, just a quick one, on Paraguay, just give us any update there is on regulation there, I thought there was a risk of asymmetric mobile termination rates being introduced in that market?

Yes, when it comes to the smartphones bundle and the smartphone subsidies and smartphone offerings, obviously, the whole intention is for us to bundle it into data packages and add it like in the case of Colombia which works very well with additional digital services like such as the Tigo Music for example. The philosophy is that the return should be a maximum -- I mean, normally, of course, in the life cycle of a customer, but maximum 12 months, so it's a controllable investment you're doing. And more importantly, I think we have been becoming better and better in penetrating and pushing low-cost entrant's brand into the market, such as Huawei phones or tech phones or those phones which come at $15 or even less nowadays into consideration. So it's a goal to educate the customers to take low cost phones, penetrate the market and push those segments very aggressively. Bundle the services in order to increase loyalty and reduce churn. And have a return which as I said, maximum wise should be 12 months. And just to come back, because people always ask about corporate costs. This is for example, a completely new division we have on the corporate side, which is focusing entirely on exactly what smartphone you source, how you package them together and what kind of sales channel, because there's a big important cost there [ph] as well, even if it's only in order to get the returns corrected. When it comes to Paraguay, there is a -- right now there is a -- it's quiet, there is nothing to expect there from discussions. We don't have any kind of further indication or knowledge that another regulatory impact would come from this market at this stage.

The final question comes from Bill Miller from J. M. Hartwell.

Can you give us a little color on your operations in Colombia, how are your profit margins are improving or not improving? And where your -- how fast your operation is growing? Secondly, can you give us any benchmarks as we lookout not just this year, but at towards the '17 date that you've given us that is very important to you, can you tell us what '15, '16 or '17 will do for growth when you expect the bulge in growth to take place, so that we can measure not on a quarterly basis, but on a yearly basis, your progress?

Bill, regarding your first question for Colombia. I think, as we highlighted before, we've seen a very strong and continuing performance when it comes to revenue growth in Q1 again. And the -- and that's -- I'm referring to local currency, really driven by the inroads they are making when it comes to smartphone penetration and market share. So that's been very positive. Obviously, as you know also in Colombia, on a year-on-year basis, the currency was much weaker. So from the U.S. dollar contribution perspective, that shaved off quite a lot of that growth in U.S. dollar contribution terms. The margin in Colombia is at the lower end of our margins because obviously, Colombia is a country in LatAm where we've got the lowest market share, but obviously, where we are also growing and developing that market share significantly. However, from this low level, and despite the significant inroads we're making in terms of revenue growth, we're seeing some strengthening of the margin, which is a very positive factor.

Bill, maybe I answer the question, when it comes to the road to 2017, and as you know, we don't give kind of year-by-year or quarter-by-quarter forecast when it comes to 2017. As since on our operational side, there may be always issues you have to adjust, but the kind of big picture is intact, and just to highlight maybe, how we see the kind of key trends coming together in order to be there by 2017. The growth, as we can see in the figures, is coming back. Is actually accelerating quarter-by-quarter and it shows that once we do the right investment, and we do the right focus on the customer, the brand and network, we gain our market position and we're coming back and move forward. We see as well, that it's not one-sided growth story anymore, just mobile it's a equally balanced between voice data, it's cable, it's digital media and other places, and it's across all operation, not just Latin America for example, as it has been in the past. And the second point, of course, which will drive the growth even further is the merger, once is approved and executed between UNE and Tigo in Colombia. We are not going for growth only. We are going to go for profitable growth and we want to focus on returns as well. And therefore, the other elements you have in terms of the growth strategy, CapEx. We said it should come down after the peak towards 15% in 2017. We see it kind of start to decline as the percentage figure already. So again, I think we are on the right track. We have done a lot of operational points which will support this in terms of procurement, in terms of one network solutions and so forth, and so forth, and so forth. I think the indications are in the right direction as well. And on the EBITDA side as well, as you can see, we reconfirmed our guidance for this year and we see outside potential in some markets. Marc mentioned for example, one of our bigger markets like Colombia has lower margins than average. But over time, of course, realizing synergies with the cable and taking us from a market position. It should be upside there as well. So I think the indicators are going into the right direction. I am pretty confident 2017 figures are fine and the road -- sometimes you turn left, sometimes you turn right, but the fundamental direction is in place.

Thank you. This is all we have time for. So I would now like to hand the call back to Hans-Holger Albrecht. Please go ahead.

Yes. Thank you, everyone, for listening in and for all these questions. As usual, if there any kind of follow-up questions don't hesitate to contact me, Marc or our IR team. Otherwise, let's stay in touch and let us talk to you again at our second quarter announcement. Thanks and bye for now.

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