Good morning and good afternoon, ladies and gentleman and welcome to the Millicom Financial Results Conference Call. Today's presentation will be hosted by Chief Executive Officer, Mauricio Ramos; and Tim Pennington, Chief Financial Officer. 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 Michel Morin, Millicom's Head of Investor Relations. Please go ahead.

Thanks, Hana, hello, everyone and welcome to our third quarter 2018 results conference call. Before we begin, as usual let me draw your attention to the Safe Harbor disclosure on Slide 2 of the presentation, which is available on our website. And with that, let me hand the call over to our CEO, Mauricio Ramos, for his prepared remarks. Mauricio?

Good day everyone and welcome to our third quarter call. As always, I'm here today with Tim Pennington, our CFO. Once again, we had excellent results this quarter. The key highlights are on Slide 4. One, the strong operating momentum that we saw in the first half of the year continued into this third quarter. Two, Colombia had another very, very good quarter; cable is working there and so is mobile. Three, our Home business continues to perform exceptionally well. We continue to grow about 12% this quarter, again. And four, the integration of Cable Onda is actually already underway. So let's get to the details beginning on Slide 5. We continued to perform very well this quarter. Our LatAm service revenue grew 4.7%. We have anticipated a bit of a slowdown in the second half, but as you can see we delivered another quarter of growth above the top end of our revenue guidance. We're pleased with the results for sure, but what is really important is that this growth fueled healthy long-term data driven businesses by cable, mobile data, and B2B, the stuff that we have been focused on for the last three years. All of our three businesses as you can see on Slide 6 had positive growth yet again in Q3. B2C mobile continued to grow fueled by 4G and mobile data. Home had another exceptional quarter; it is now showing its true anticipated potential with sustained growth of 12% again. And B2B continued to deliver mid-single-digit growth in line with recent trends. All growth engines are now delivering, but cable leading the way as we had anticipated it would. Now let's take a look at some of the KPIs starting with Mobile in Slide 7. On Mobile, as you can see on the left, we…

Let me start as usual by setting out the key financial highlights on Slide 17. So picking up from Mauricio, we have significant KPI led growth which is clearly driving revenue growth. Basically as we set out in the strategy LatAm's 4G network grew, the migration of mobile subscribers to 4G, the accelerated homes passed build, and the increasing rate of homes connected and this is driving not just service revenue but also EBITDA. And this is tough, an increased network brings increased cost, increased customer acquisition brings more cost as well and servicing these customers brings more costs. But our EBITDA is up as well all of our profit metrics and cash flow also ended the quarter well better than last year leaving us in a better balance sheet position to ensure, we are well on track with our 2018 guidance. So let me turn now to the key financial metrics on Slide 18. Well Group service revenue grew by 4.2% with most driven by LatAm, there was a decent performance in Tanzania but overall Africa was slightly down. Even so our EBITDA was up 2.6% to $564 million and OCF which is our EBITDA minus CapEx remained above that 20% target once again. Speaking of the recently announced acquisition, Cable Onda does not included these numbers and as Mauricio said we expect to be able to close by year-end. So let me take a close look on the Group EBITDA on Slide 19. In this quarter, FX impact was moderate despite the currency volatility around us. The Group EBITDA grew by 2.6% organically and most of the pick-up was from LatAm as you see on the slide $22 million of the pickup and slightly from Colombia, Guatemala, Paraguay and Bolivia. In corporate, we have an adverse movement which…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. We'll now take our first question from Julio Arciniegas from RBC. Please go ahead.

Good afternoon. Thanks for the question. So Mauricio postpaid penetration in Colombia is very low it only has nearly 10% of its base in postpaid however the company launched few weeks ago a new postpaid portfolio which are fully HFC that is very competitive versus the prepaid product. Can you give us some color on the acceptance of the market to this new portfolio and do you see an acceleration of prepaid to postpaid migration in this market? And my second question is also regarding Colombia, broadband speeds in Colombia actually they are -- and they are actually quite lower than the other countries in the region however it seems that consumer confidence in Colombia is improving, are you seeing a higher demand in the market for higher bandwidth that at the end is going to have a positive impact in I don't know ARPU? Thank you.

Yes, thank you, Julio. I think you read it well with regards to the opportunities in Colombia. And what we're doing is precisely taking advantage of those on the postpaid question indeed for a market like Colombia which has a relatively high GDP per capita growing middle cloud a young population and where demand for mobile data and Big Data is on the rise indeed there is a tremendous opportunity to drive migration from prepaid to postpaid. And that is exactly what we're doing. That's exactly what this product is all about, we developed driving precisely the move from prepaid to postpaid and we think we have hit it right on the spot on the way to do it because we're seeing quite a bit of interest in not only from our own prepaid subscriber base but also from different elements of the postpaid subscriber base that are seeing a much cleaner better products. I can't really speak too much as to the take up on demand on the market because it's just extremely competitive product out there and we like what we're seeing so far in the mobile. We think it just adds to everything that we've been doing in Colombia and on Colombia now on to the fixed broadband state again you've seen us consistently bring up speed everywhere we operate but also in Colombia and we do that and this is a good old cable -- cable we do that as we take out the advantage of bringing prices up. So it’s a combination of higher ARPU in return for higher speed and a better product. And in Colombia we've been doing just that combination of building the plant, articulating the networks, inclusion of some of the copper, moving the subscribers from copper to HFC that gives…

I think if I could just add, I mean it’s interesting to look at that, Julio I can just add it’s interesting when we look at Panama, I know the business we're buying back where they do have similar GDP, higher speeds and significantly higher ARPUs and I’m not saying we will get to those levels of ARPUs but it's a interesting comparison to make.

We will now move to our next question from Stefan Gauffin from DNB Bank. Please go ahead.

Yes, I have a question on El Salvador where we saw already last quarter that the business was deteriorating in terms of service revenue and you stated that you are taking action and expected that improving trend coming quarters, we see service revenue continue down this quarter, can you just explain a little bit more what actions you are taking and why you are confident that you will turn this around in 2019? Thank you.

Thanks Stefan and thanks for that. I'm actually in El Salvador right now. So if you see some improvement I will take credit for it, if it doesn’t then unfortunately you cannot blame it on me and all on me. Listen, I like your question because when I think about these, I think of the way I talk to my kids when I get their report card I have B on kid and I usually tell them it's got to be all As and every now and again there is a B there or B minus and I think that’s what we have in El Salvador, a whole bunch of As and then one B minus, that I’m using American terminology but I’m sure you can figure out that we’re not happy with that B minus in our school card, it is the only black spot. Yes, we are disappointed. Some of it just to blame on being macro and the industry it is a whole player industry, mobile in El Salvador, so it is a little bit more difficult than it is everywhere else, a little bit of it is political, there are gang wards going on and as you can see they’re making the news these days quite a bit. We’ve also been very transparent as some of it are actually self inflicted boons, execution issues which we like being very transparent. So we built credibility and those came about from migration of TS platforms. So what we've been doing is a) we have been successful in sticking out there and that requires a lot of work to get them but I think it had those nailed. But you are seeing in the result is a little bit of rearview mirror on the effect the past few days have had, so you’re not able to see into the future of the correction which basically have to do with stabilizing the subscriber base and letting read the bad debt that resulted from it wash away. So you will begin to see those improvements because of that but also because we changed management and I alluded to that and I'm pretty pumped about the team that we put in place -- we put in place a top notch team here in El Salvador. And I can see that we’re slowly but surely recouping some traction with subscribers and you can already see that in our operating metrics. Having said all this and how should the credibility that we’ve had in the past of turning every operation around I encourage to not to look at our report card for Q4 I would rather look at it as a 2019 recovery because timing the exact moment of this recovery is little difficult and with the credibility that we hope we're building we're pretty bullish that we will do that in 2019.

We will take our next question from Johanna Ahlqvist from SEB. Please go ahead.

Yes, two questions if I may. First one related to corporate costs you mentioned has increased a bit year-over-year, what is the -- sort of how much should we see as run-off and how should we view corporate costs going forward? And then second question relates to the cable, also you touched on this subject before that higher seats has a possibility to translate into higher ARPU but do you foresee that I guess there are mix effects here but what are the likelihood for a continued growth ARPU is 1% and 2% in this quarter, what do you foresee going forward, is this for the delays forward or should we see -- what are the possibilities really for a continued ARPU in cable across the cycles. Thank you.

Yes, so I'll take the cable ARPU one first and then perhaps make a comment or two on corporate costs and I think that Tim can certainly help me there. And listen on cable ARPU, I’ve done these in every operation, cable guys know how this works, when you are sitting on relatively very low broadband penetration and high speed is the name of the game but in our case PayTV also have some room to manoeuvre, the name of the game is simply to give more for higher ARPUs and to a eight differentiated peers. So as you upgrade your band, you start giving higher speeds and you start moving the better subscribers and more bandwidth subscribers to higher tiers and that opens up the possibility for you to add new subscribers on your medium and lower tiers and the name of the game here Johanna is to basically create space with higher tiers, so that you can bring in new customers. And given the situation we’re in markets where we have very low broadband penetration, what we need to do is we need to continue to reach new subscribers, add volume while sustaining the ARPU. So as you look longer-term very, very matching to the future, the name of the game is sustaining ARPU, slightly picking it up but at the same time having a lot of volume and the way to do that is with higher speeds and on PayTV with high definition TV which is not completely launched in our market meaning there is still a lot of demand for it and of course next-generation TV products. And as cable one-on-one going on for decades. Now on corporate costs just big picture before I hand it over to Tim. I think on corporate costs you’ve seen us be very, very diligent, we've stopped doing all the stuff that not be done at the corporate but we’ve also been strengthening our corporate, we have a lot more of compliance, we have more of a lot of cyber security in our corporate and we’ve been taking advantage of all the savings to be part of some of the things that a corporate cost center needs to do including driving the business increasingly from an operation or on a CapEx point of view so that we get savings and procurement and streamline the operations also from the center. So it’s about doing a lot more with less. Tim?

Yes. I think there is a couple of technical issues as well, Johanna, and if you recall last Q3 last year we took an $8 million credit in the corporate costs, so actually when you take that into account plus we took a reorganization charge in respect of some wind down in London and Luxembourg and basically our corporate costs on a run rate were on last year and we are pretty comfortable with where they are.

We will now move to our next question.

Operator, next question please?

Certainly. The next question is from Kevin Roe from Roe Equity Research. Please go ahead. Your line is open.

Thank you. Mauricio, you raised your HFC homes passed guidance to 1.2 million from 1 million which is great you had previously talked about the 1 million being sort of the peak ramp all you could do and were 1.2 million, what's changed, how you have been able to squeeze out that additional homes passed target and which markets is that delta coming from?

Yes, so thank you for the question. It’s called you know this it's clustering, when you have such a big build-out, the only way to get better out is to try to cluster it more, that gives you the ability to go cluster in a given area. So back in days when I was doing single country build-out the name of the game was trying to create a even CD burst, that's how you get the construction fruit to be in a single place and you can go and cluster it. The name of the game for us is moved in country build-out is to cluster around countries and we’ve done a lot in Colombia this year and a lot in Bolivia this year so as you go through the numbers you see that coming through and we did quite a bit in Honduras last year and that’s why we’re bullish on the turnaround there and a little less in Guatemala. And on to take use of your question to just make a kind of a clean-up point on the math, this $15 million target of homes passed remains $15 million and that's as I said off and that's kind of what we see in the horizon, so it’s more an outlook than really is a filling and that number is actually now about 1 million higher because of Cable Onda, so the Cable Onda acquisition doesn’t change the target, so I'm confusing the numbers perhaps when I was to clarify. The number now is $16 million 1-6, it's $15 million from before is about 1 million from Cable Onda.

Okay. But for this year the incremental HFC homes passed that you will achieve this year in 2018 that incremental 200,000 that's primarily coming from Colombia and Bolivia?

Yes, Bolivia is just on fire. Colombia is working extremely well I mean we showed you the numbers. We are now certainly a net profit built-out in Colombia as a result of migrating from copper and as a result of just inventory [indiscernible] that we brought from Colombia.

Great. And a follow-up question on the new postpaid plans in Colombia, what is the hope for impact on ARPU, of course this is going to help you the expectation is you will gain gross add share hopefully it helps churn but how should we think about ARPU impact as these new price plans go through your base? And maybe a last one for Tim, the NASDAQ listing is there a timeline you can hope for a timeline you can share on the NASDAQ listing?

So on the first one and then I'll hand it over to Tim. The metric we look at in Colombia surely we look at net adds from our base, from outsider base that prepaid into postpaid migration, net ARPU et cetera but the key metric I'm looking at daily is net added revenue and we’re shooting for a positive net add revenue as a result of this. We’re also looking so that's clear to you, we also seriously focused on NPS pick-up and we’ve seen a tremendous amount of NPS pick-up even after just single month of operation and the region we’re so focused on that NPS pick-up is this is a long-term gain of making our prepaid subscriber base move to postpaid so that there is a more subscription prior or longer lifetime value and for us the ability to have a clean path to convergence. So this is connected to our long-term to our cable build. We want subscribers that are postpaid that are subscription so that half the convergence is paid as a result of this strategy.

Kevin, on the NASDAQ question currently I mean, we will be making really good progress with the SEC and sort of preliminary filing and it’s a process within our total control, I don't want to go into when we expect that to finish. But just to say that we’re being kind of really great happy with the progress we’ve made so far.

Just to say the obvious, it remains in 2019, Kevin, as we said from the beginning.

We will now take our next question from Greg Rusedski [ph] from Gamco Investors. Please go ahead.

Good morning. Mauricio, you mentioned that Bolivia has been on fire, I just really saw strong revenue growth and market momentum this quarter and last quarter. Could you talk a little bit about the drivers and how sustainable these trends are?

This is going to sound like a broken reference but it’s just -- it's the underpinning of our entire strategy, it is simply pent-up demand for PayTV and pent-up demand for high speed fixed broadband and mobile services. The minute we could build a new neighborhood with cable we’re selling it and the lead proposition there of course it is higher speed. The same has been true forever we have 4G network and we get to fix that in mobile data. Now there is couple of additional elements in Bolivia which help but they’re consistent with everywhere in our strategy and it's the combination of sales team both the mobile and fixed and the fact that in Bolivia we would add exclusive sports, high definition products. So in Bolivia, we will have now for two years of tiGo sports product which is exclusive local software produced with high definition and very high quality and that’s helping out with broadband pent-up demand. It is simple as that is demand for broadband and demand for high definition with pent-up.

And my second question is on your strategy in markets where you don't have a wireless business obviously right now it's just Costa Rica but soon you'll have Panama maybe at a high level you could talk a little bit about your strategy there and potential for wireless offerings in that -- those markets, when that makes sense from your perspective?

Yes, so this -- I often say that I’m perhaps a little uncomfortable being in a country when you are a mobile operator and you have no fact just having a strong fiber base B2C plan underneath you because it leaves you unprotected into the future. But I’m very comfortable with the situation which is sitting on nationwide cable plan that gives you optionality on mobile and that’s why we’re so comfortable with our position both in Costa Rica but most importantly in Panama which is much bigger and the situation there is simply the nationwide, state-of-the-art HFC plant with a significant market position and the rate I've seen. So we're basically in the driver seat there in terms of when and how and what are the economics of your moving to mobile. It’s a matter of time of course and it’s a matter of picking the right time and right economics to do that and it maybe the right economic is to do it with network economics, or it might be that the right economics is basically to do it with an MVNO until you build a strong subscriber base. We’re in the driver seat and you know there is four operators in Panama and is also a matter of public record, the regulator is happy with a see move from four to three being approved in legislation, so there is a meaningful opportunity that we could do, it’s just a matter of being in the driver seat, it’s early days for us, we are bullish as we are about the speed at which we’re incorporating Panama. We also want to be conscious of the fact that we kind of learn a lot more about that business when we hit the ground running in January of next year. That's what I can tell you about our moving to mobile in this market.

Thank you.

I think I said this I think we had to call on Cable Onda or go back to that stronger.

We will now take our next question from Lena Osterberg from Carnegie. Please go ahead. The line is open.

Thank you. I was wondering as you made the comment anything on if you've seen any change in macro environment recently, somewhat your guidance has weakened but I think most of your countries are still holding up well and then I’m sorry as you come back to Africa, I know it’s a small portion of your business but do you have anything to say on the timing of the IPO in Tanzania?

So I will comment a little bit and I hand it over to you Tim. On market growth, I think you're generally right, we are in markets that have been very stable from a political point of view and also from an FX market point of view relatively high GDP growth than some of the bigger markets like Argentina and Brazil, certainly more stable FX than those markets like Brazil and certainly Argentina and even Mexico to some regard. We’ve been very stable on FX and anything Tim will hold onto Africa, do you want to comment on macro?

Oh that's great, I mean I think the FX has been the things respected [ph] in the past and I think kind of in contrast to what’s been happening around us, our FX rates have been relatively stable with a little bit of sell-off towards the end of the quarter for us, but essentially we're strengthening oil prices that's where Colombia's currency remains relatively strong. So I think the point with bringing Panama into the group, the amount of dollars, dollarized kind of revenues and EBITDA within our Group is increasing. So we have less and less exposed I would say to FX.

Right. And then I would remember that the remissness into Central America Lena, which are pretty meaningful.

But nothing no change in consumer sentiment or consumer demand that you've seen in any of your market?

Well, I think the big ones which is I think it’s a matter of a very public record is that consumer sentiment in Colombia in the last quarter, two quarters has kind of stopped going down and has began to recuperate and becomes slightly in the upward trend but I think that's easy. And on the Africa IPO Lena I think the key point is that we’re working very closely with the Tanzania government to comply with the law and to work with them on the timing and the way to do our IPO, very compliant and very matchable working with the Tanzanian Authority as we do everywhere and Tim much closer to this process perhaps.

Yes, I think we are expecting hit the timing and we’re working on that would be by the end of the first half of 2019.

We will now take our next question from Bill Miller from Hartwell. Please go ahead.

Thanks. Nice quarter. I’m curious about the three-year outlook you've got a great new cable acquisition, cable is growing faster than you expected, what do you think your growth rate you can put an EBITDA terms, you can put it in revenue terms whatever, what do you think your growth rates will be say three years now, three years too that's [indiscernible]?

Hi Bill, thank you. It's a great set of question but I think if I answer it specifically, I may end up in trouble with the SEC and that's the last thing I want because we as Tim said we got a pretty good dialogue with the SEC which is keeping our listing right on track. But I will tell you this, I'm particularly happy about the last two quarters when our Home business has begun to show it's true potential. We’ve been building cable, we’ve been adding next-generation TV, we've been raising speed, we’ve been working on the ARPU, we’ve been adding subscribers and we’re at a point where we’re getting momentum. But when I look at that home revenue growing double-digit and our mobile business driven by mobile data having been now for a number of quarters on possibly territories I become very excited about our future because I begin to see that we dreamed Millicom to be two years ago a high growth company with that has basically started to hit in all cylinders, whether it B2B, even mobile and certainly cable is right where we thought we would be. We are already a pretty meaningful cable operator, we will show those numbers, we got $2.2 billion of cable revenue and that cable business is growing extremely, extremely well. So I feel like a vision is beginning to show and going forward it’s going to be a lot more of that because we continue to build, we continue towards strategy, we continue to raise speed, we continue to manage our profile here and we continue to reallocate the capital to market and to organic growth in Latin America. Quite frankly I couldn’t be more bullish about our outlook.

Great. Is all this sustainable at a high rate when you say we've become a growth company, growth companies grow high-single or low-double-digits, is that feasible given the outlook for cable and how big will cable be, so three years from now, what percentage will it represent of your total revenues or EBITDA?

Yes, look. So when we look at that 4% to 5% service revenue growth that will kind of fit in these days, what I like about it now was the unlike what our growth was three, four years ago. This one is healthy and I use the word healthy, it is data driven, it is driven by real [ph], the businesses of the future, and the legacy part of the business has been left behind. So it's now fixed and mobile data, it's good B2B with almost 70% fixed improvement. So it is a high stable service revenue growth and I will take the opportunity to say something that I guess most of you said which is now that it was only about a year ago that we didn’t really have service revenue growth. So now we’re able at growth rates, which is now giving us the opportunity to focus on operating leverage which is another important part of us going forward. It is starting to turn that revenue growth into EBITDA growth which I think is something that we can afford too and should be focused on right now.

We will now move to our next question from Matthew Bloxham from Bloomberg Intelligence. Please go ahead.

Yes, hi thanks for taking the question. I think most of what I have been asked already but I guess just a follow-up on organic growth obviously Panama was pretty big, I think you have alluded in the past, there is a number of different options you’ve been looking at in the LatAm footprint, do you still have fill-in acquisitions kind of on your list of things that you would like to do and is any further move kind of contingent on getting some cash and EBIT from Africa or just organic de-leveraging? Thanks.

Yes, great question Matthew and thank you for that. I think in a sense despite the great opportunity that I’m happy we're able to finally having to with Cable Onda it actually doesn’t change one single bit of our strategic planning. Let me explain what I mean by that because I think the one thing we can count on is to be consistent and transparent and hopefully creditor which really IRR driven in everything we’re doing and we’ve said very clearly from the very beginning that we are all about reallocating capital from the low IRR, non-strategic areas like Africa to high IRR, high strategic areas like Latin America. And effectively what we’ve been doing for the last three years is just about that, we've been allocating capital to high speed data networks which are high IRR we just went through a massive cable and that has been basically organic reallocation of capital into broadband and Cable Onda is nothing but the same. It just happens to be inorganically but it’s reallocating capital from the free cash flow that we’ve been able to free up and from the transactions that we’ve done in Africa, did with a strong balance sheet into a high IRR country that tends to diversify in Latin America like Panama. So it's the same strategy simply adding a layer of inorganic element to it and that’s the point Matthew, that is a big picture focus, very clear move away from low IRR and low strategic focus like Africa into IRR strategic focus in Latin America where the opportunity to drive on revenues out of pent-up broadband low penetrations is very, very clear and whether we do it organically or whether we do it inorganically like we did with Cable Onda we will have a single common…

Thank you. Unfortunately that is all the time we have available for questions. I would now like to hand the call back to Mr. Ramos for any closing remarks. Please go ahead sir.

Thank you everyone for joining us today. I'm going to [indiscernible] a record but one that I like, we are very pleased. Our service revenue growth 4.7 for the quarter and 4.5 year-to-day is pretty healthy. All countries are positive and we’re working on El Salvador and that’s pretty positive as well. All three line of businesses are growing with mobile positive now consistently and Home certainly kicking high strides. Colombia is growing well both on mobile and on cable we finally I think we have that one right. Home growth is solid it’s double-digit. Our cable business is already pretty big just like we wanted it to be and it’s grown quite healthy. And we continue to focus on our growing equity free cash flow. Thank you for your support and we look forward to talking to you towards the year-end.

Thank you, sir. Ladies and gentlemen, this concludes Millicom's financial results conference call. Thank you for your participation. You may now disconnect.