Nicolas Didio - IR Mauricio Ramos - CEO Tim Pennington - CFO

Stephen Bechade - Citigroup Thomas Heath - Handelsbanken Luigi Minerva - HSBC JP Davids - Barclays Nick Brown - Goldman Sachs Stefan Gauffin - Nordea Bank Lena Osterberg - Carnegie Bill Miller - JM Hartwell

Thank you, and welcome, everyone, to the Millicom 2015 first quarter results presentation. Today’s presentation materials can be found on our website, www.millicom.com.

Before we start, I would like to remind everyone that the Safe Harbor statements apply to this presentation and the subsequent Q&A session. With me today on this one-hour call are our new CEO, Mauricio Ramos; and Tim Pennington, our CFO.

I will now hand over to Tim to give an overview of our Q1 ‘15 results and operational performance, after which, we will take you through the financials, and we will finish with a Q&A session. Tim?

Thank you, Nicolas, and welcome to our Q1 earnings call. I think actually before I’m going to go through the call, I would like to ask Mauricio just to say a few words.

Thank you, Tim. Good morning to all and thank you for joining us today.

Let me start by thanking Tim on behalf of the board and all our shareholders as well as the management team at Millicom for steering the company successfully over the past few months. The strength of our first quarter result is a testament to this leadership and the driving commitment that our management team across all the countries we operate in, has shown over the last few months.

I imagine that many, if not, all of you would like to hear about my take on our strategy going forward. It is of course early days for this management and I as a team, and thus I do not want to go too deeply or with too much detail into that, but I am ready as is the team to underscore today four key messages for you.

The first of those four messages is that Millicom is essentially its core a growth story. I'm more convinced now than I was some weeks ago, when I decided to join Millicom.

Mobile business will continue to be fuelled for quite some time by the way by smartphone penetration and by the continued adoption of data usage on those smartphones. Note that only 28% of our subscribers now have a smartphone, up from about 20% a year ago.

And more importantly, note that about 80% of new sales are smartphone sales with increasing levels of data usage. That is a very strong wave of growth to be riding on top of.

And it is also very early days for us and B2B, cable and MFS. B2B represents today less than 10% of our income.

Fixed broadband penetration sits at only 25% in the Latin American markets we operate, and yet we now have over five million homes passed in those markets and we continue to grow that footprint aggressively. And of course, MFS adoption is only just beginning to reach scale in many of our countries.

The second key message that we want to deliver to all of you today is that our job however is to convert this top line growth into cash flow growth, something that we’re squarely focused going forward. So do expect us to focus on; A, maximizing the monetization path of this growth as we drive up smartphone and data usage, both in fixed and in mobile.

Monetizing data is the key to offsetting the declining voice usage. There is no magic there that Millicom has indeed the market position and the fixed networks to do just this.

Bear in mind that speeds and usage levels across our footprint are still very, very low. And expect us to focus on operational efficiency quite a bit.

Now note already how our first quarter results already reflect our focus on this. We indeed are focused on using three levers to do just this.

The first of course is to rebase our absolute existed cost-base downwards and Tim and the group has been doing - have been doing a tremendous job of just that. The second lever is to drive the Colombia margins north, as the synergies kick in and as we drive the scale that we have in that operation into higher margins for the new revenue.

We do operate in a business with scale economics and driving those scale economics means that our operational level rate should drive our margins up, and that is precisely our third lever, operational leverage. The third message that we want to deliver to you today is that we will focus going forward on execution, execution and a little bit more execution.

There is already a very strong alignment with the entire team on that, and I will give you some color on that in a minute. What’s important however is that the stated vision of providing our customers with a digital lifestyle is something that we will not be changing.

I guess, this is a pretty bold statement and I do not hesitate to make it. A digital lifestyle is a good vision.

It’s consumer-centric. It speaks well to our communities and it's something that rallies the organization towards a common goal.

But note that I'm referring to it as we do as a team to it as a vision, not as a strategy. Our focus will therefore be in the immediate term to fine-tune and execute the operational strategy that will underpin this vision.

By that I mean the nuts and bolts, the network strategy, the product strategy, the consumer strategy. And do expect us to give us a little bit of color on that operational strategy during our Q2 session.

And expect us of course to be very focused on allocating capital to those areas that have showed the most growth. And by that, I mean the data usage opportunity that arises from our subscribers enhancing data.

The fourth message and the last message that I want to convey to you today is that we are confirming our 2015 guidance. This is an important message, and Tim will give you more detail on that.

Not only that we have spent some time as a group reviewing our 2015 budget, our 2015 forecast and the specifics over this Q1 results and we feel pretty upbeat about confirming that guidance today. I know that many of you will have questions beyond these key four messages.

Of course you should. And we will be happy to have those and take those after the call.

Be mindful however that I have been on the board formally only for a few weeks, even if I started working with the team a few weeks before that. With these key four messages, I will now hand it over to Tim to walk us through our strong first quarter results.

Thank you, Mauricio. Let's start on Slide 3 of the presentation.

And before I go into the numbers, let me highlight a couple of features of the quarter. Obviously, Mauricio’s appointment was of immense important.

However, we also continued the momentum we started in 2014. In February, we capped off a growing relationship with Facebook, and we've now launched our fourth collaboration with Facebook in Guatemala.

And we've found this to be one of the key services our digital customers want. And most of them - nearly a third of them convert to paying customers after the free promotion period is finished, accelerating the adoption of data usage in these markets.

We also achieved a significant milestone of full interoperability for mobile payments in Tanzania. And for those of you who followed us recently, you’ll know that this is one of the key conditions we see for the liftoff of this product.

So we'll a keep a close eye on how that develops. And finally, we've made Music one of the center pieces of our digital lifestyle, and that's what customers want.

In Latam, we have now had more than one million customers use Tigo Music. And so we're delighted to have launched Tigo Music in Africa, first in Ghana and now in Tanzania.

So Slide 4. The key themes for Q1 are continuous momentum, progress in Colombia, lower cost and FX.

And overall, we saw a strong commercial performance across most of the businesses. In local currency, we were nearly 10% up organic revenue growth, and a corresponding 9% organic EBITDA growth, I think which underlines the strategy.

In Colombia, we are moving quickly with the integration. We've also affected realignment of our Corporate Centre and see further reductions in the corporate costs.

But all of this is being partially offset by FX movements. The quarter was framed by considerable strengthening of the U.S.

dollar against the emerging market currencies, and in particular, the Colombian peso devalued by 25%. And as that business now represents nearly a third of our revenues in the quarter of EBITDA, that has limited some of the headline growth.

Okay, so let me go to the operations. Let's start on Slide 6.

In the Latam region, we saw revenues of just under $1.5 billion. That's an 8.6% like-for-like organic growth, and with EBITDA at $565 million and operating cash flows of over $400 million.

And it was made up of Central America, where we saw 5.2% organic growth. And we also saw very well committed double-digit growth in Honduras, and in fact we saw growth in all of our Central America businesses.

And benefiting from some of the efficiency programs, we also maintained a strong margin at over 46%. The only operation sliding behind our expectations was Costa Rica.

But we're now expecting the acquisition of Telecable to complete during Q2 and so we would expect Costa Rica to return to high levels of growth in the second half of the year. Revenue growth in South America was a little lower than we’ve seen recently, but it still hit 12%.

It’s dominated by what happened in Colombia and I'll address that separately. But I thought Paraguay had a decent quarter.

We talked about the challenges faced by Paraguay in recent calls. Last quarter we saw 1% organic growth.

And we saw a pretty good growth in Cable and MFS. I think in Africa, we had a better quarter.

This was the fifth quarter of double-digit organic revenue growth. And finally allow me to take the Corporate Center costs in a couple of slides.

So Slide 7. Before I do any of that, I just want to spend a second - few minutes on FX.

The chart on the left shows the depreciation against the U.S. dollar for nearly all of our operations compared to the rates a year ago.

And as you can see, we’re seeing very significant devaluation in Ghana, Colombia, Tanzania and the African and Euro-linked currencies. And the right hand side of this chart shows the impact during Q1.

Overall, our currency basket that is based on revenue share fell by 5 percentage points in 2014 and has fallen by a further 2 percentage points in Q1. So turning to Slide 8 and Colombia.

We saw very good progress on the integration of the two businesses. For example, we changed the process of installation and repair reducing average times by up to 16%.

In transmission, we saved roundabout $8 million annualized by leveraging our complementary fiber and microwave links. We've notched up savings on content acquisition, optimization of long-distance and of course in our organization.

These are just part of the synergy savings we're beginning to see. As I said in Q4, we expect around $30 million to $35 million worth of benefit in 2015.

So far, I think we've comfortably got $10 million of that under our belt. And so far we've incurred $4.5 million of integration costs.

We still expect total integration costs for 2015 to be around $50 million. I think in the fixed business, UNE saw another quarter of sequential revenue growth, just in 4% in local currency.

Still very early days for us, but I think we've made good progress. We've changed the commercial offer.

We've put out new packages and we've increased some prices. In the mobile markets, we’re seeing some changes in customer behavior following the ending of term contracts announced by regulators last year.

And as a result, we have seen a slowdown of mobile service revenue growth as customers have started to trade down on some service packages. But that said, we continued to see very strong data metrics and in particular our data offer.

So we now have quarter of the market in 4G. However, perhaps the biggest challenged we faced in Q1 was from currency.

The mobile business, we saw strong organic revenue growth of 20.8%. But this was pretty fully offset by FX headwinds.

And most of the costs are in pesos however, so we did see some relief in EBITDA, and the Colombian group margin was relatively strong at 27.7%. And that’s a 1.2 percentage point increase on Q4.

And on a recurring margin basis, it was up 31.9%. All right, let me turn to Africa.

Whilst Africa now only represents around 15% of group revenues and 10% of EBITDA, it is a market we see as potentially being extremely fast growing. And indeed, we have seen a steady acceleration in the revenue growth in Africa.

In Q1 last year, we grew by nearly 12% in local currency. In Q4, we are growing by just under 13%.

This quarter we grew by 16%. But again once again currency took its toll and our total revenue growth in U.S.

dollars was just 1.6%. I’m not ashamed because we saw some good underlying organic growth, particularly in Ghana and DRC, which were growing above 20%.

In Rwanda, Senegal and Tanzania, we grew in the high-teens. And it's only been in Chad where we faced a tougher macro environment, so we saw some flat growth there.

Also I think the EBITDA, Africa posted $57 million, and that was all businesses with the exception of Chad delivering year-on-year growth. But we had Chad and Tanzania, both our margins about 35%.

And we saw some welcome margin improvement in Senegal and Rwanda. And had currencies remained stable in the quarter, this would have represented 24% uplift on Q1 last year.

As it was, we had to make do with an 8% increase, which is still higher than we've seen in the previous quarters. All right, so moving to Slide 10.

And I just want to highlight central costs. During the quarter, we undertook a reorganization, really aimed at aligning accountability of the centre.

So we’ve more closely aligned the central costs with the operations, and we feel this alignment will improve our efficiency. And indeed, we started to see some progress in reducing these costs, for instance with the closure of our ventures [ph] division in Stockholm.

We've also trimmed some of the MFS and factory headcounts to better align with the business needs. So over the last three quarters we have seen our corporate center cost reduced from a run rate of $292 million to the current run rate of $236 million.

That's back to the level we saw in the first quarter of 2014. And this is an area that we will continue to monitor closely.

Okay, so let me look at the financial results of the quarter. On Slide 12, we set out the key metrics.

We set out to the Capital Markets Day, revenue, EBITDA and EBITDA minus CapEx, what we call operating cash flow. We've also set out the targets for leverage previously.

So how have we done in Q1? I think we've had a decent quarter.

Overall as I said, organic revenue growth strong, 9.7% before the impacts of FX and the consolidation of UNE. On a reported basis, our Q1 revenue was $1.7 billion.

On an FX adjusted basis, this is in line with the run rate for our 2015 guidance. EBITDA for the quarter was a little better than we had expected.

CapEx typically is back-ended, so it's a little early to talk about OCF. But our debt ended at just under $4 billion within our current leverage range, and again, a little bit better than we had expected.

Okay. Let me talk about the - okay we talked about most of the drivers of revenue in Q1 so Colombia, DRC, Ghana growing in excess of 20%.

Honduras, Bolivia, Rwanda, Senegal and Tanzania are all growing double-digits, and every country posting positive revenue growth with the exception of Chad. So important to note also our service revenue growth, this excludes handsets of other non-recurring revenue.

And this held fairly steady just under the last quarter of 5.6%. Slide 14.

And as I mentioned we've realigned our structure a little bit to better reflect operations. So here, we’re looking to regions; Latam and Africa, and hence break-down on the chart.

Just we have continued to give the reasonable granularity that we did previously, but it’s just now that we've realigned some of the business unit there to reflecting geographic performances. First thing to note on this graph is the FX, reduced reported revenues by nearly 6% in Q1, and that's a bigger impact than we saw in Q4.

On a product basis, we now have data revenues offsetting declining in voice and SMS in two markets. That’s in Honduras and Bolivia.

And Guatemala and El Salvador getting pretty close. Overall in Q1, we saw our organic mobile revenues grow by 3.6% and data grew by 38%, and our smartphone penetration now just under 28%.

Cable, good story in the quarter, growing at 18%, with increased network by more than 120,000 homes in the quarter. And also MFS, strong trends in Tanzania which is behind the 43% growth in the year-on-year growth.

And also I think in the first quarter, we began to see some decent trends out of El Salvador and Honduras, building up on their rapid subscriber growth in the end of 2014. So turning to the EBITDA evolution.

We saw like-for-like EBITDA 3% higher than Q1 2014 or 8% at constant FX. And with UNE, we recorded quarterly EBITDA of $565 million, up 18%.

Strong performance from Guatemala again, despite some revenue weakness, EBITDA was 7.4% higher than last year, and as we count the benefits of smartphone growth and the efficiency activities started last year. Bolivia, we saw a strong EBITDA growth and that was up 8.7% again on strong data.

I just want to flag again Africa because $57 million in EBITDA for Africa, 8% up on last year, 24% in constant FX. And important to know we did not take any restructuring charges in Q1.

And I suppose the final point to make is FX, $45 million of EBITDA for the quarter. So picking this up a bit further, I'm looking at the margin progression on Slide 16.

Headline EBITDA margin, 33.1%. But if we exclude UNE, it would have been 34.2%, and that's a 20 basis point progression on Q1 of the prior year.

Underlying margin on service revenues, up 36.5%, just a little bit better than Q4. And overall we saw a bit of further gross margin dilutions from higher handset sales and the dilution from the inclusion of UNE.

But as you can see from this chart, it was offset by lower OpEx as a percentage of sales. Quick look at the full earnings for Q1.

I have no major surprises here. D&A, a little bit higher because of the inclusion of UNE.

Net finance charge are up, but they include $17 million of non-recurring items. And this relates primarily to the redemption of the El Salvador bonds which we called in March following the successful issue of new 10-year $500 million issue.

The other line is largely adverse effects charges, mark-to-market movements on the puts and call options and on swaps that we've got with our partners. Taxes, lower in the quarter, but this is largely timing differences and we continue to see our tax charge for the year around, sort of 350, 380 level.

This left us with adjusted EPS for the quarter of $0.26. Quick look at cash flow.

Group operating cash flow $187 million which was after an adverse working capital movement of $137 million. A number of factors that work here.

We saw $27 million build of an inventory, largely smartphones especially in Colombia pre-Easter. We had some prepayments to regulators in Honduras and Bolivia, which added about $40 million, plus we had a more general build-up in the receivables book, mainly again in Colombia, where we took more handset purchases onto our books.

Indeed, Colombia accounted for over 40% of the working capital swing in the first quarter. As noted, taxes paid were a little lower in the quarter, as were minority interests, although cash interest is a little higher for the reasons I just mentioned.

Left is with equity free cash flow of $34 million. After that we have some small amounts of M&A activity, which led to a further $44 million outflow.

So, on the next slide, Slide 19, you can see this left is with fairly small movements on net debt. The biggest movement actually was FX reflecting the natural hedge we have around - with around a third of our debt in local currency.

Our net leverage remains at 1.8x or 2.1x proportionate. During the quarter as I mentioned, we called our bond in El Salvador.

We issued a new bond to pay for it. No change in the currency mix, but we did pick up 200 basis points in annual service charge savings from that transaction.

We also amended the covenants on our Swedish bonds from 2.3x to 3x to conform with the terms of our new bond issue. So in conclusion, Slide 20.

The underlying trends remain strong, but we are factoring facing stronger FX headwinds we saw in 2014, especially in Colombia, and this will constrain our U.S. dollar reported numbers.

We are confirming guidance, but we ask investors to note guidance was based on the FX rates prevailing at the start of the year. We see the Colombia integration plans are moving extremely well, which we feel puts us in a very good underlying position to deliver our numbers for this year.

So on that, I will - we will now take questions. Thank you.

Hi, good morning. I've got three questions please.

The first one is to do with your partnerships with Facebook. My understanding was under these partnerships your customers got free usage of data through Facebook account towards the data usage in that contract or that they've paid for in prepayment.

How does that help you in the long-term with monetization of data usage for Facebook? It's going to be one of the key drivers of increased data usage in the future.

My second question is on Africa. And clearly most of the increase in EBITDA came from Tanzania.

What are the main impacts that caused the increase in Tanzania? And then finally on working capital.

Could you let us know what the regulatory payments consisted of, and also in terms of the movement in receivables you've indicated on page 25, but that’s to do with handset financing? Does that mainly being factoring some receivables before?

Thanks.

Thank you, Stephen. It’s Mauricio.

I'll take the first one, and then Tim will take the number two and number three. We think of - and me with my cable, the other world if you will, we think Facebook as a promotion, if you will.

It's using the premium service if you understand me when I use that analogy as a way to drive penetration of your basic service as a promotion. So we’re using it as a promotion service.

We give couple of months for free. And then after that, subscribers will stay on and buy our core service.

If you think of it in those terms, our conversion ratio of 33%, a third stay on is a fantastic conversion ratio for any promotion. That’s how we tackle and that's how we view this consistent with our long-term strategy to monetize data.

So it's just two months that’s given for free in terms of data usage?

Yes, correct. That’s correct.

Okay great. Thanks.

And yes, the Tanzania did drive the EBITDA in Africa. I mean, essentially it's our biggest business.

It's almost 50% of the EBITDA of the Africa business. So small improvements there have a big absolute level.

So we're happy with that. That's what drove - that was subscriber adoption and MFS.

MFS was particularly strong in the quarter. That said I was quite happy with the improvements we made in the other businesses and we did see some margin improvement.

We’re currently talking in the past about the other businesses. Our target is just to move the margins up.

Senegal, Rwanda, DRC, they're all pretty small in absolute terms, but we saw some good progress in all of those businesses in the quarter. So momentum-wise that was, if you like, as pleasing to us as the absolute growth that we saw in Tanzania.

And the working capital, it has got a little bit more complicated with Colombia as a part of the group. In receivables first, we saw that with the change in the way the contracts operated in Colombia.

What happens now is customers by their handsets and then they subscriber to service package independently. And we are providing some finance to support the customer purchase and that’s sort of increased our receivables by just sort of $30 million there.

That isn't our long-term intention with that, long-term intention is that it’s sort of financed by a finance company and we are in discussion over that. But in the first quarter, we were financing as being old players [ph] were in the market.

The regulatory payments are really just standard payments that’s paid for license payments and microwave links payments. They just tend to be a little bit sort of concentrated in higher in the first quarter than before.

I mean, these were just aligned over time. So they are not particularly out of the ordinary.

Great. Thank you very much.

Thank you.

Thank you. Thomas Heath here with Handelsbanken.

Just two questions, if I may. Firstly, you may sense a positive trend in mobile financial services.

It’s been a rocky road there before particularly on the pricing side, but if you could give an update on the competitive environment on MFS, that would be really helpful, and also perhaps a few words on how you see the potential for MFS across your Latam footprint? Then secondly, given the dominance of Tanzania, how should we see Rwanda in adjacency for this market?

It's fully integrated, will synergies be greater over time, or how should we view that given that Tanzania is doing? Thank you.

Well, I don't think we have a [indiscernible] to the MFS will be a linear sort of growth. I recall on my first call saying that I expected MFS to grow in sort of pits and stops.

What we saw in the last quarter was relatively good performance out of particularly [indiscernible] our established businesses, but we saw some good momentum out of Honduras, El Salvador and we grew a lot of customers in 2015, but didn't drive lot of money. We're starting to see a little bit of monetization coming out of that and so generally sort of happy with it.

The competitive environment continues to be market-specific. We say some markets where competitors continue to give away price rates cheaply, the call sort of P2P transfers.

So those continue, and therefore I’d expect it to continue to be a little bit of sort of stopping and starting ups and downs. Sweet thing for us in this quarter is the interoperability which we got in Tanzania.

And again, I'm not expecting that to sort of kick-off massively straight away. It will take a little bit of time to build, but it means now that our customers in Tanzania can send money to anyone who has got a cell phone in Tanzania regardless of network.

And we think that, that will be a condition for further growth there. I think the second question on Rwanda.

I mean, Rwanda is a relatively small business for us. I don’t know whether the question was getting, can we sort of get cost synergies by using Tanzania’s neighboring county to support that operation?

And I think Rwanda actually has got a good market position. It's going very well.

There are some cost challenges in that business that mean that the margin could improve and should improve, and whether that will involve sort of sharing services, too early for me to say at this stage. But I think everyone’s certainly heading in the right direction.

That said, it's a fairly small part of the overall picture.

That was very helpful. Thank you.

Thank you.

Yes, good afternoon. The first question is maybe for Mauricio, if I may, and it's about the sort of lessons that he learned in his previous experience and that can be applied to Millicom.

So I’m thinking for example a parallel between Chile and Colombia. So in both markets you ran cable and mobile business.

What can we learn from Chile that can help Colombia achieving, for example, the margin expansion? And the second question is going back to Africa.

We notice for example on DRC in this quarter, a higher focus ARPU expansion rather than on subscribers. I'm wondering if it's one-off or if it's like the sign of a trend?

Thank you.

So I'll take the first one of course, Luigi, and I'll let Tim address the second one, and thank you. Lots of lessons that can be brought into Millicom.

I was, as you may be aware a strong advocate of convergence between fixed and mobile networks, and Millicom is well on its way to achieving that in its key markets. So our strategy at Millicom will be consistent with what I view of is the strategic opportunity which is to drive cost and still converge platform.

We do have the networks and we're doing the infill, organic growth and acquisitions that allow us to further complement our mobile networks with underlying, underpinning fixed networks. At the more financial level, the key lesson that can certainly be implemented here at Millicom is the perfect combination of top line growth with conversion of that growth into cash flow.

We have the ability to drive growth because there is growth embedded in the business, but if we focused on operational leverage going forward, driving more EBITDA out of the additional dollars into our P&L, then we will achieve margin expansion by managing in a very, very return-oriented way. The third lesson that I learned from my days over at Liberty is focus on total shareholder return.

And during my conversations with the board prior to joining and certainly during the negotiation of my own contract with the board, our conversations revolved around total shareholder return. That was key to me.

It was key to the board, and we drew up my compensation package along those lines. We are now well into our way of driving the compensation packages for the senior management team again linked to TSR.

And we are well on our way talking to our top management team around the concept of making TSR our key metric, and it's now well embedded into our language. Those are the three key lessons that I think implemented at Millicom will help us drive our equity story quite well.

And going onto DRC, Luigi, I think the negative subscriber growth was a little bit sort of a market phenomenon. That said, we are very pleased with the performance, 27% revenue growth.

We haven't seen that. We didn’t see it this time last year.

We haven't seen for the most of last year. And it's been driven by really a better focus of the business.

We’ve put two price rises through in the quarter and we've got a very strong market position in Chad [ph]. We’ve got a decent market position in rest of Congo, and just focusing on that and started to drive that.

So it's a bit of market focus and drive the business I suppose, that's driving that.

Okay. Thank you both.

Good afternoon. I've got two questions on Colombia please.

The first one relates to AMX and regulation. It's been a little bit of news flow in that market around AMX not necessarily complying with some of the asymmetric regulation that's been imposed on it.

Maybe give a little bit more color around that, and I guess this is just a bit of a temporary thing and you expect it to unwind to the course of 2015, or is AMX going to sort of push for this to change and be your best? Second question again on Colombia.

Maybe just if you could provide me a little bit more color around the dynamic you're seeing between customers trying to buy more expensive handsets and then potentially sacrificing a little bit on the service packages that they are buying, because I guess ordinarily what we see is when guys upgrade their handsets, they tend to upgrade their packages along with it in terms of usage. Maybe if you can just provide a little bit more color around that?

Thank you.

So, I'll take first crack at it, and Tim will certainly complement what I say. On the attempts by our competitors to not comply with clearly define regulatory mandates quite clearly it's a strategy that will not work in the long-term.

It is against the desires of the regulators but it’s also - and this is more important and the reason why I say it would not work, it is not consumer-centric. It is not focused on the consumer.

It is alien to the consumer needs, so I don't expect that, that will have any traction in the long-term even if in the short-term, it's a fight that's been put up. On your second point, indeed the changes in the regulatory framework that have occurred in Colombia over the last few months are meaningful that mandated decoupling of the handset contract from the serving contract indeed is driving the very phenomenon that you suggest, which is indeed making it harder for us to sell higher ARPU plans as customers are focusing their purchasing decision on the price of the handset, and if you will, in the short-term, share of wallet is going towards the handset.

That is quite clearly the case. But as we look at the long-term implication of the regulatory changes that are ongoing in Colombia, because we are the challenger, we actually come out on the net positive side of that, because as a result of these decoupling of the two contracts, the subsidies are disappearing, slowly vanishing in the marketplace.

And that for us on long-term will alleviate a pressure on our balance sheet and more importantly, because we are the challenger and we are the high growth asset in the country is a net strategic possibility. I don't know, Tim, if you want to add something to - some color to that?

I don’t have anything.

Okay. Then we’re done.

Yes. Maybe just a quick follow-up from my side.

So just maybe a little bit more boring one for then for Tim, just in terms of the accounting at the moment, [indiscernible] presumably you sort of building up a little bit of receivable in terms of mobile termination rates that you expect to receive from them or vice-versa interconnect count I guess will look different in their balance sheet versus your balance sheet.

I can't comment on their balance sheet, but we build up and pay off receivable balances with parties we interconnect with. I mean look, I reiterate and agree with Mauricio’s view on this that the regulation is very clear and it's a consumer-centric regulation.

Got it. Thanks guys.

Thank you.

Thanks. Two questions please.

Firstly, may I just clarify, you said in aggregate you want to reduce the absolute level of costs faced downwards. Is the OpEx structure in Q1 reflection of what you think you can continue to do through the rest of this year?

And secondly, are there any parts of the portfolio up for review now? For example, would you still consider selectively exiting some of the African businesses that do not generate any cash, and given the online businesses that were loss-making, you considering allocating more capital here?

Thanks.

Thanks Nick. We've made a feature over last couple of quarters.

And I think Mauricio has really emphasize that in his opening statement that what is important to get both top line and the bottom lines so they’re heading in the right direction. I think one of the issues that we'd be focusing on in this last quarter is the central costs and just how the centre operates with the operations.

And one of the things we've done is align our shared service new business and regional activities with the profit centres that exist within regions and through that we've started to see some cost savings sort of benefits coming through. And I think you saw that in our central costs which were down 5% quarter-on-quarter.

And I see that as a good start but not the end of the journey on that one. In the countries it's a bit more complicated, generally how the FX all over the place, but you’ve being aware that we have started many of the countries efficiency operations and those take time.

There is a lot of programs in place now across the business focused on improving our overall levels of efficiency, whether that is focused on commissions or network operations or headcount or back-office. So there is lots of things.

Those will take time to come through. But I think we have the right focus now.

And in the first quarter, we saw sort of sales to revenue - sorry, our OpEx to revenue I think is coming down just over 100 basis points. I think we still feel we got plenty to go from that, and this isn't sort of more look forward story.

We'd expect to be focused on that going through the year.

And then, just you will curious speak and certainly that's the language that we are now certainly aligning with our general managers in the countries a lot about operational leverage as part of our desire to grow revenue and grow EBITDA in a consistent manner with cash flow generation. That is a key metric along with TSR that we are aligning our language around.

On your Africa question, Nick, just to answer that one. You are on spot in the sense that we are very capital allocation focused and then very disciplined in our use of capital.

On Africa specifically, it is showing strong revenue and strong EBITDA growth in the high-teens if not more locally. So we are very pleased to see that the business is positively on track with the goal that was set to drive or reach operational cash flow situation by 2016.

We are squarely focused on executing that. That is what we know how to do and what we can control.

Having said that of course, Africa is undergoing some consolidation and some rationalization, and if there were to be a situation that we would deem would improve our current situation, we would of course be negligent not to look at it.

So probably your question just on online, I mean we've got an obligation to put a final €5 million into the African internet holding. We've got no obligations for capital injection into a either AIH or LIH.

So can I just follow-up on the Africa point? So given those opportunities you’re saying with the market undergoing consolidation, would you look at expanding your presence in any of those markets or is it just about them scaling back?

Thanks.

It would be about basically being very, very focused on participating in that consolidation in the manner that is the most accretive to our shareholders. That’s where we will be focused on exclusively.

It is not a matter of size. It's a matter of accretion to our shareholder base.

Great. Thanks.

Yes, hello. I have a couple of questions.

The first one relates to Colombia. There you take select up on the EBITDA margin if you exclude UNE.

So I believe you report 30% EBITDA margin as compared to 27% EBITDA margin in Q4. What is driving this margin improvement?

Is this effect of the decoupling of the handsets, and should we expect this to be a temporary effect or something that you can build on going forward? Secondly, on with the re-organizational central activities.

Does this mean that some of the earlier central costs are being pushed out to the regions, or is it more that accounting why is that the regional offers are responsible for those kind of costs? And this should come down further into [Technical Difficulty].

Thanks Stefan. On Colombia, the mobile business, we did see some margin improvements.

Actually our first quarter EBITDA margin for the mobile business was 28.1%. That was 330 basis points better than the same quarter in Q1 2014.

And we had a recurring revenue rate of 35.7%. So it's been what I've been saying for a while now that we've got good underlying recurring margin.

It's been distorted by the handsets sort of sales that we've got that. And the decoupling, I don't think has affected too much.

The handsets sales has been extremely strong, and whereas we might have been expected those to slow down a bit, they didn't. So they were pretty strong.

So that's good. The final thing I'd say Stefan on this is, this will get increasingly difficult to sort of give you the sort of break-down as the synergies start coming through, they are, if you like, synergies for the group as a whole rather than the UNE business or the Tigo business.

So we are focused, if you like. But the price for us is to take that group Colombia margin of 27.7% and see that move up.

And happily in this quarter it was up 120 basis points, lots of different reasons for that, but it is driving in the right direction. And I think we were giving hopefully a lot of confidence that we see the integration and the synergies sort of beginning to come through, albeit the caution is it's still early days there and there is still lot moving and it's a big business.

But net-net, at the end of Q1, we're pretty comfortable with that. On the second question on the central costs.

We haven't pushed any costs down. What we've done is basically said, we've looked at every costs that fits in the centre that you either sort of add value to the Africa business, either you reduce cost to increase revenues or you add value to the Latam business.

If you don't add value to either, then you’re basically work in finance or you shouldn't be in the group. You're not adding anything to the group.

And we are putting pressure and responsibility for managing those costs to the heads of Africa and the heads of Latam. And as a result of that you are seeing, we started to do a few things up in Stockholm for instance, we've closed out of our digital ventures activities which has reduced sizable headcount actually and you see that going forward.

Now the thing I’ll just caution. We haven't reflected this allocation in the costs or the margins in Africa or Latam.

We hadn't done that because we don't have comparatives. So whilst we're looking at this internally in this way, we continue to report externally in exactly the same way we did last quarter and last year, but we will maintain this focus on the cost, and as a key metric we will continue to look at the absolute reduction quarter-on-quarter of our central costs.

You can think of it as an exercise on capital allocation discipline. In order for us to do that, we need to have clarity on what the costs associated with a given P&L is and we need this metric in order to allocate our capital obviously to the areas with the highest growth and highest return.

Then maybe a further question. In both Q3 and Q4, you have taken restructuring charges in Africa and this quarter no restructuring charges.

Should we expect you to continue to take restructuring charges in Africa to boost - to continue to boost margins, or are you more looking to drive that in other ways?

Well, just to clarify people on the call. We took restructuring charges in Q3 and Q4 because we had undertaken an outsourcing of our network operations, which took place over those two quarters.

And that involves the transfer of our network operation staff to third-party providers. That activity finished at the end of Q4.

So we've got no activity like that in Q1. I'm not ruling out that we wouldn't do similar types of outsourcing activities in the future which could give rise to restructuring charges, but at this point in time we don't have any on the horizon.

We don't expect to see any. But I can't rule it out totally, because we continue to look at the best most optimal way of operating our businesses, not just in Africa actually but also in Latin America as well.

Okay, thank you.

Thanks Stefan.

Yes, thank you. So I was wondering a little bit about this outsourcing to Ericsson that you conducted in Africa.

Did you see full benefits from that in this quarter? Next question I have is, I am wondering a little bit about your - sort of that strategy and the bond strategy.

Historically you strived for a while push down debt locally to, I guess a better tax shield and the Forex hedge. And now you seem to take more of the debt up to corporate level again.

So I was wondering a little bit if you could say why you decided to do this. And also if you could say a little bit about the covenants on this bond in Sweden that you renegotiated from 2.3x to 3.0x.

Why did you need to go as high as 3.0x? If you calculate it in a different way than we used to see it or do you just see to do in the M&A?

Okay, first one on the outsourcing to Ericsson. We've outsourced network operations to both Ericsson and Huawei in Africa.

Its early days, but I think we are quite happy with what we are seeing in the initial period of this. We’d expect to improve both the operational efficiency of the business i.e., given by the service and also save money and certainly the start has been encouraging for us.

But I would say Lena it is pretty early days to call a success or to raise a flat on that one. I think on tax and debt, I don't think you should view what we did in the first quarter was anything more than tactical.

I mean, we basically substituted dollar debt to dollar debt except we paid 6% to the central [ph] compared to 8% down in El Salvador. There is no significant tax impact of that.

And we continue to have about third of our debt in local currency. And I forgot exactly what the majority, it’s probably less than two-thirds now, but the majority of our debt remains down in the operations .

So there is no real change in that if you like, it's just a bit of tactical housekeeping that we undertook. And then the Swedish bond again, it was the same type of thing.

We've been trying over the course of the last six months to try and conform all of our covenants to the sale sort of package, so we don't have different outlying covenants across the group. We've got lots of different covenants.

The Swedish bond was sort of out of line with our corporate and covenant levels, so we asked investors there just to realign it with covenants that we've got in the new bond for instance.

But why would you pay extra to do that if you don't have plans to go above the current level?

Well, it was a very minor fee that we paid for it, and it just sort of conforms the whole sort of covenant package and takes away any sort of concerns we might have. I would sort of take it offline with you, Lena, because the problem with the Swedish bond was there was a whole load of technical issues relating to that to deal with the way the bond was calculated vis-a-vis the bonds that we've got with the U.S.

investors. So we wanted to just sort of confirm that, and we apply the same headroom that we've got.

So we've got the same headroom across the group.

Okay, all right. Just trying to clarify the corporate costs that that you said.

You currently had a run rate of $237 million, and you expect to see them decline quarter-over-quarter going forward?

Well, that's what we are very focused on doing. I'm not making any promises on numbers but I think you’ve seen in the last three quarters we focused hard on bringing it down with some success.

And we're certainly going to be focusing hard in the future quarters to continue to bring it down.

Thank you.

Thanks.

Good quarter. Thank you very much.

Curious you're signing in Colombian now that you've had lot more time to work down there, is things are going better or worse than you expected? And when can we see the margins in Colombia for both UNE and your own regional operations get to the 35% or 36% level, EBITDA margin?

Well, thank you, Bill. Interestingly enough as many of you know I was born in Colombia.

I'm a Colombian, so I have a lot of affinity and understanding of that market. Not only that, but Stefan, our GM [ph] down there and I know each other from a prior telecom and cable life.

So we have a long good history together. So even before I started formally, I talked to Stefan [ph] and he invited me down.

I spent a very good week down there in Colombia in Medellín and Bogotá meeting with the team, with our partners, with our regulators and of course with external parties down there. And I did that to help full understanding of our business there and I came away from that very, very reassured, not only of our market precision, the strength of our management team but our growth prospects going forward.

The regulatory environment is a net positive to us. The relationship with our partners is very, very good and we will continue to work towards that end.

The management team, although its early days, is coming together quite well. The synergy plan is certainly on track, and does have upside for sure.

And the industry dynamics are positive to us. We are the challenger in a market that has growth and we have the ability to continue growing our fixed network down there to support our mobile, growing mobile business.

So overall a very strong positive moment there long-term, even with hiccups that may occur in the short-term. With that strategic viewpoint, the question around margins for Colombia is one that you should expect us to manage very, very well in the long-term.

It is a balancing act, as I think you suggest, because we have a fair amount of growth and we can invest in that growth. But at the same time we have today a margin level that is so part to our other operations and so part to what it should be in the long-term.

So we have to drive a balancing act between capturing that growth and investing in our growth and driving margins up. And that is the balancing act that we discussed with the management team that we need to maximize, not squarely focused on margin growth at the expense of losing volume for the future that would drive revenue, but not focused entirely on revenue and not driving that margin up.

And the way to make those two things come together is operational leverage. The key message to Stefan [ph] and the team is we want you to focus on operational leverage, so that every new dollar that you bring in from this growth comes in at a very high margin.

That would drive the margins up even beyond the synergy level that is already embedded in the business map. So those are the two levers that we are using in Colombia to drive margins up, the synergies and operational leverage on the new revenue.

Thanks. That's very helpful.

I appreciate it.

Well, thank you very much for joining us today. We’ve gone a little bit over time and we apologize for that, but we're happy to have had a chance to chat with you.

We look forward, Tim, and the rest of the management team and I, to meet all of you in person and continue our development [ph] in Q2. Thank you very much.