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Executives

Mikael Grahne – President and CEO

François-Xavier Roger – CFO

Analysts

Cesar Tiron – Morgan Stanley

Ric Prentiss – Raymond James

Lena Osterberg – Carnegie

Sven Skold – Swedbank

Kevin Roe – Roe Equity

Bill Miller – JM Hartwell

Andreas Joelsson – SEB

Thomas Heath – Öhman Equities

Peter Nielsen – Cheuvreux

James Rivett – Citi

Luigi Minerva – HSBC

Justine Dimovic – EXANE

Jan Dworsky – Handelsbanken

Stefan Gauffin – Nordea

Martin Mabbutt – Nomura

Millicom International Cellular, S.A. (MICC) Q1 2011 Earnings Conference Call April 19, 2011 9:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Millicom’s Q1 2011 results conference call.

For your information, this conference is being recorded. May I also remind you that this call is being audio streamed over the web and is accessible at www.millicom.com together with a presentation summarizing the key features of the results.

I would now like to hand you over to the host of today’s conference, Mr. Mikael Grahne, President and CEO; and François-Xavier Roger, CFO. Please go ahead, sir.

Mikael Grahne

Thank you, operator, and welcome to you all. As usual you can find the slides for this call on our website.

Please go to slide number three. In Q1, we recorded a growth of 12.7% in local currency. The highest growth rate achieved since the beginning of 2008. We are particularly pleased to see double-digit growth for Latin America as a whole and a 5% growth in Central America, which confirms our value creation strategy and its effective implementation in our markets.

Despite accelerated commercial investment in 3G and services, we reported a strong EBITDA margin of 47.1%, supported by a combination of VAS development, tight cost management and the benefit of asset sharing.

Our focus is on attracting higher value customers which has been key to the improvement of our ARPU in South and Central America and to the growth of our overall business. Normalized EPS increased by 33% year-on-year, due to careful management of our capital structure and focus on tax planning.

We have also announced an increase in our share buyback program to $800 million for the full year, which together with the proposed dividend of $1.80 a share means we could once again return close to $1 billion to shareholders this year.

Slide four. Now, let’s look at the financial highlights for the quarter in more detail. We ended the quarter with almost 40 million customers, up 13% year-on-year. Revenues increased by 12.7% local currency to $1.08 billion and EBITDA for the quarter was $509 million, producing an EBITDA margin of 47.1%. This strong margin is due to our strategy and actions to develop best in innovation, our improvement in asset utilization and the careful management of our cost and returns.

CapEx for the quarter was slower than a year-ago at $81 million or 7% of revenues. But this lower level is only the result of facing issues and our CapEx should be significantly higher in H2. Operating free cash flow $249 million or 23% of revenues was similar to last year.

Slide five. On slide five you can see how our focus on higher value customers is being reflected in our subsidy cost which are 30% higher than in Q1 ’10 in absolute terms as we aim to support data development. This strategy of accelerated investment in 3G and services aim to address increase in demand for new services and to sustain around double-digit growth in the medium term for the Group.

Slide six. On this slide, we have set out our local currency mobile revenue growth over the nine quarters. Here you can see at 12.7% local currency revenue growth for the first quarter was 1.2% points higher than the average for 2010, demonstrating that our increased commercial investment is already being reflected in stronger growth. There were some exceptional items in both Q1 ’11 and Q1 ’10. But excluding these growth in local currency is still a solid 11.9%. We are confident of maintaining top line growth of around 10% in the local currency for the Group in 2011.

Slide seven. ARPU erosion continues to improve as you can see on slide seven. As a result of our focus on higher quality customers and our non-voice revenue streams. In Central America, we have recorded a year-on-year increase in ARPU based on recurring revenue for a long time, up 1% and in South America local currency ARPU which has developed positive for a year now was up 3%. For the Group as a whole, the ARPU declined based on mobile recurring revenues worth 2%, demonstrating that we are moving closer to stabilization.

Slide eight. On slide eight, you can see the distribution of customers by ARPU level. We have used Latin America for this analysis as this is where our focus on higher value customer is most applicable, given that the 3G services in Africa are still very limited. At the end of the first quarter, 37% of our customers generated an ARPU of more than $10, up 1.3 points year-on-year.

We expect a greater proportion of our customers in Latin America to fall into this category over time as we accelerate investment in 3G and other value-added services. It also worth adding that around one-third of our customer base has an ARPU has less than $1 and accounts for less 1% of our revenues. Clearly, therefore, our total customer number is much less relevant as a KPR for Millicom than our revenues and ARPU.

Slide nine. Once again the voice revenues grew by 7% in the quarter for the Group as a whole, which is evidence that our smart pricing, branding and distribution focus are contributing to fight voice commoditization. VAS growth continued to be strong, up by 33.4%, and we are seeing an increasing momentum in non-SMS VAS which grew by 62% in local currency, the highest level since 2009. We still greatly value peer-to-peer SMS, which grew by 4% as a highly effective way of introducing customers to a new range of new non-voice services.

Slide 10. We crossed the 25% landmark for VAS this quarter, recording a 4-percentage point increase year-on-year. VAS is delivering a robust revenue stream that generates greater customer interest and loyalty. Non-SMS services, our main area of focus, have increased from 11% to 15.7% over the last 12 months. In Latin America, VAS now exceeds 30% of total mobile recurring revenues with non-SMS VAS now contributing 18.9%.

In Africa, VAS now represents 9.9% of revenues in Africa, down marginally from last quarter. But here too, the non-SMS VAS segment is faster, up 0.4 percentage points quarter-on-quarter to 5.5% of revenues, and showing attractive potential when looking at the VAS performance in Latin America. We believe that VAS in Latin America and African can reach respectively 50% and 25% over recurring revenues by 2015.

Slide 11. From now on, we will be disclosing revenue by our four customer offering categories as well as by region, and this set out on slide 11. These categories include both mobile and cable revenues. Communication which is defined as voice; peer-to-peer SMS and roaming accounts for 76% of total revenues; information or access to data generated revenues of $106 million in the first quarter, already accounting for 10% of the total; entertainment or access to music and video content generated $77 million in Q1, accounting for 7% recurring revenues; and solution or access to mobile services generated $24 million or 2% of revenues and is growing very fast.

As you can see we are seeing the strongest growth in the information and solution categories and we expect this to remain the case as we expand our 3G capacity and coverage this year as well as roll out Tigo Cash and other mobile financial services. The entertainment category experiences lower growth as it’s driven primarily by specific promotional activities which have limited timeframe.

Slide 12. On this slide you can see the penetration levels or the main VAS products in each of our four categories. SMS is obviously the most important value-added service in the communication category with the penetration of over 52% of our customer base. Ring back tones in the entertainment category are enjoyed by 27% of our total customer base. In the information category, data services have a penetration of 22%. Lastly, in the solutions category, Tigo Lends You is currently our star product with the total penetration of 34% and increasing by almost 20 percentage points year-on-year.

Other significant balance transfer services as Give Me Balance and Gift and Collect, both of which have penetration of more than 23% in Latin America. It is important to consider all our three lending products collectively as customers can now borrow airtime from Tigo so they are less likely to ask for airtime loans from their friends. As you can see from looking at the delta between the highest and lowest penetration figures, there is still room for further growth through increased penetration of all these products and services.

Slide 13. Let’s look at the data bit more closely. Data usage continues to be a rear success story for our Latin American business. And, today, 2G and 3G data revenues combined represent 9.4% of all recurring revenues in the region. Data use has totaled over 7 million at the end of the quarter, up 2% quarter-on-quarter and 1.9 million of this were 3G data users.

Slide 14. On slide 14, you can see how data revenues have grown over the past nine quarters. There has been an acceleration over the last quarters since we have increased our commercial investment. Given the sense of demand for affordable data services, we see this as the largest growth opportunity for Millicom in the next three years. Our expectation for a data growth in Latin America exceeds our expectation for voice growth in Africa, which is why we are increasing our investment in this area.

Slide 15. In the solutions category, Tigo Cash is our newest service. The service was first launches in Paraguay in Q3 ’10, and while it’s too soon to start reporting any definite trends, we have certainly started to see some interesting results in this market as you can see on the slide. We are steadily gaining traction. And in the month of March, we recorded 120,000 separate money transfer transactions with a 58% increase over Q4 ’10. We are gaining value insights into the perception and the take up of the services that will be applicable when we roll out this service into new markets in the coming months. This products may take time to grow as we are introducing new concepts of electronic money in countries where most customers are familiar with money only in the form of bank notes and coins.

Slide 16. Our market share increased by 0.1 percentage points quarter-on-quarter to 29.9% on a weighted basis, with nine markets gaining share and four markets declining. In Africa, we saw a 0.3 percentage point decline. This could reflect the change in customers’ usage patterns in DRC and Tanzania rather than a loss of actual share. The reduction in the delta between on-net and cross-net tariffs in this market has led to more incoming calls to our network, replacing the use of multiple SIMs. In the short term, we expect continued volatility in markets here in Africa driven by promotional activity.

Light customer intake, overall market share is becoming a less relevant indicator of performance as we can only measure overall consumer market share and we are putting more emphasis on growing our share of higher value customers. We would prefer to report market share by revenue, but unfortunately this data is not readily available.

Slide 17. On slide 17, you can see that on a Group basis, we have seen 0.2 percentage points quarter-on-quarter decline in churn to the declines in Central America and Africa supported partially by the success of our product and services designated to increase customer loyalty. And in Africa due to mandatory registration which reduces the number of multiple SIMs. We saw an increase in churn in South America during the quarter due to seasonality and a loss of temporary connections made in December.

Slide 19. We turn now to the regional cluster, starting with Central America on slide 19. As announced last quarter, we are now reporting the results of our cable operations together with the results for Central America as our cable and mobile businesses are becoming increasingly integrated.

We are very pleased to report that revenues in Central America increased by 5% year-on-year on a like-for-like basis, reflecting the success of our efforts to drive growth by focusing on higher value customers and by offering tailored packages or products and services that suit their specific needs. The inclusion of cable revenues does not materially affect the growth end of the business as Central America would have grown 4% in the quarter excluding cable.

We have seen improvement in the revenue returned in El Salvador. And in the first quarter, the local currency revenue declined was in the low single digits. We expect El Salvador to return to positive trend in the next few quarter all else being equal and it should contribute a further improvement in revenue growth for the region as a whole. Our strategy of shifting resources from 2G customers retention to 3G customer acquisition is particularly relevant for the maturing markets of Central America, which explains why total customers increased by only 5% year-on-year, while we saw 22% increase in the numbers of 3G data users over Q4.

We also recorded the first ever increase in local currency ARPU for the region as a whole, driven by significant commercial investment in 3G and services. Central America generated $130 million of OFCF or 21% of revenues in Q1.

Slide 20. In South America, revenues increased by 20% in local currency. All three markets reported a strong performance with ARPU up 3% year-on-year, demonstrating the success of customer segmentation and of our smart pricing of data and voice services. EBITDA for Q1 was up 21% in local currency and the EBITDA margin was 42.6%, down 1.3 points quarter-on-quarter as a result in part of increased handset subsidy to drive further growth. Operating free cash flow generation for South America was $102 million or 26% of revenues.

Slide 21. Revenues for Africa were $239 million, up 15% in local currency year-on-year. Revenues continued to be impacted by the market price reductions that were introduced in the second half of last year, but we are encouraged by the fact that there has been no further significant pricing activity in the first quarter of this year. We are, therefore, seen a slowed down in the rates of ARPU decline to minus 6% year-on-year compared to minus 11% for Q4 ’10.

EBITDA for Q1 was $98 million, up 23% year-on-year in local currency and the EBITDA margin was 40.9%. We are likely to favor revenue growth of our margin improvements in Africa in 2011. CapEx in Africa in the quarter accounted to $26 million or around 11% of revenues and the region generated $33 million of operating free cash flow or 14% of the revenues.

Now, I would like to hand over to François-Xavier, who will take you briefly through the financials.

François-Xavier Roger

Thank you, Mikael. Slide 23. Our effective tax rate for the quarter was lower at 24.3% as we start to see the benefit of our tax planning and of the push down of debt from the corporate to the operating level. We expect the tax rate for the full year to be below 30%.

Slide 24. We are pleased to see a 33% increase in the normalized EPS for Q1 to $1.91, excluding exceptional items such as a disposal of our operation in Laos. Some months ago we highlighted our increased forecast on EPS now that we are paying dividends and we are starting to see the initial reserves off of capital restructuring and of our tax planning.

Slide 25. Our operating free cash flow for the quarter was $249 million, roughly equivalent to last year.

Slide 26 shows our free cash flow for the quarter of $191 million or 17.7% of revenues.

Slide 27. Our cash up-streaming continues to improve with $305 million repatriated in Q1 which is an increase of 28% over the same period of last year.

Slide 28. Today, we have announced a total share buyback program for the full year of $800 million which demonstrates our commitment both to enhancing shareholder returns and to improving the efficiency of our capital structure. We have not made any share purchase in the first quarter, but we still intend to be active in the market before the AGM as previously announced. The consolation of the 3 million shares that we acquired in 2010 and of the share that we will purchase up to the middle of share will be proposed at this year’s AGM which takes place on the 31st of May.

Slide 29. At the end of Q1, our cash position was $1.3 billion and our leverage ratios to that 0.5 times net debt to EBITDA. We have now low leverage and as we have focused on shareholder remuneration, we have significantly raised our share buyback program.

Slide 30. Turning to our debt maturity. We see that the average maturity of our gross debt is at 3.4 years and that 38% of the debt is at fixed rates.

Slide 31. Given our strong performance in Q1 and our confidence in the business outlook for 2011, we are raising our EBITDA margin guidance to above 45% of the full year and our operating free cash flow margin guidance to the high teens. We have also fine tuned our CapEx guidance to around $850 million, excluding any potential new spectrum or in Greenfield cable operations and capitalization of leasing cost from towers we already own as it is a noncash item.

Slide 32. I would like now to say a few words regarding the announcement of our intention to consolidate our listing onto Nasdaq OMX Stockholm. In today’s increasingly globalized trading environment, equity investor can access any international stock regardless of where it is listed, which means that it is not a necessary for Millicom to maintain its dual listing. The demands for maintaining a US listing and registration also plays significant demand on Millicom, especially in terms of fund commitment. And by maintaining a single listing we will be able to simplify our listing obligation and to focus even further on developing the business.

The implication of Nasdaq OMX Stockholm will become our primary and only listing and that we will delist from Nasdaq in the US. Holders of ordinary shares are invited to convert their shares to SDRs in order to continue to take advantage of the regulated and liquid environment on Nasdaq OMX in Stockholm. We have set out detailed instructions on the website for shareholders and brokers as to how to effect the conversion. The consolidation of our listing will not alter our underlying operations, our ability to grow the business, the level of our internal controls or governments, the way we run the company, and how we communicate to the markets.

Slide 33. In terms of timing, we expect the delisting from Nasdaq in the US to become effective on May 30th or thereafter with the last day of trading in the US on May 27. We expect Nasdaq OMX to become our primary listing on May 30th or thereafter. In order to deregister from the SEC, we have to meet certain criteria and comply with US rules regarding the deregistration of foreign private issuers. The earliest time by which would could achieve a deregistration assuming all the criteria are met is approximately 15 months after the delisting, meaning not earlier than the beginning of September 2012. Until deregistration, we will continue to comply with SEC reporting obligations.

I would now like to hand over to Mikael, for his final comments.

Mikael Grahne

Thank you, François-Xavier. I would just like to close with a quick summary. The results that we have achieved this quarter are evidence of the successful implementation of our value creation strategy in our markets. Our results for Latin America proved that we can still enjoy good growth from our most highly penetrated markets by focusing our value-added services and these are also becoming an increasingly significant part of the product mix in Africa.

Our focus is on stretching our brand and extending our range of services in our existing markets and we are interested in the potential to acquire skills and knowledge that are complementary to ours so that we can continue to offer increasingly sophisticated products and services over the mobile phone. We are confident of achieving top line growth of around 10% in the local currency for the Group in 2011.

We would now be happy to take your questions. Operator, may we have the first question, please?

Question-and-Answer Session

Operator

Thank you very much. (Operator Instructions). Our first question comes from Cesar Tiron of Morgan Stanley. Please go ahead.

Cesar Tiron – Morgan Stanley

Hi, everyone. I have two questions actually, if I may. The first question would be, if you can please tell us if you see elasticity improving in Africa. You said on the last earnings call that there wasn’t any elasticity at all on the cross-net calls, but it seems that your revenues – your revenue growth is doing there still very well.

Second question; it seems that you stopped disclosing revenue country-by-country. Can you please explain us why you’re doing this and also if you can tell us what was your revenue growth in Colombia in local currency on a year-on-year basis? Thank you very much.

Mikael Grahne

Yes, I’ll start with elasticity. Year-to-date in the quarter we have said only limited elasticity on our cross-net calls. So it’s still at the very low levels. Part of the growth we have there is basically driving more on-net calls.

François-Xavier Roger

Regarding the revenue, in terms of the revenue growth by country we used to report that information, but we have noticed that this information was used against us by some of our competitor, which is the reason why we have decided not to report it anymore. By the way, none of our competitors is providing the information.

Regarding your question on the growth in Colombia, it is fairly close to the average of South America.

Cesar Tiron – Morgan Stanley

Thank you very much.

Mikael Grahne

Operator, are there any more questions?

Operator

Yes we have. Our next question comes from Ric Prentiss of Raymond James. Please go ahead.

Ric Prentiss – Raymond James

Thanks. Hi guys.

Mikael Grahne

Hi.

Ric Prentiss – Raymond James

Couple of questions, if I may. First, some impressive growth on 3G. Can you talk to us a little bit about where you see handset prices going over the next couple of months to quarters, where are the magic point is, where are the inflection might ramp up significantly as far as adoption of 3G handsets? And you mentioned that you think it’s the largest opportunity for the next three years, wondered – what was the trigger for the three years. Is that how long it will take to really materialize or is it just going to – why the three years?

Mikael Grahne

Okay. There is nothing magical in the three years. It’s just looking ahead and sort of trying to look at what kind of a penetration rates we could achieve, hence the timeframe there. The handset pricing are constantly moving. At this stage we don’t really know what is the magic price point.

If I would speculate I think a fully fledged smartphone at $150, probably it would be a first set of price targets. But handset prices are coming down. And one of the reasons that we have quite strong growth behind 2G data that we disclosed in this quarter is also driven by the fact that some of the 2G smartphones are still cheaper than the 3G smartphones in the market today.

Ric Prentiss – Raymond James

Okay. And when do you think you’d have that $150 cost for you on a 3G phone?

Mikael Grahne

That’s something you would have to ask the handset vendors.

Ric Prentiss – Raymond James

Okay. And then a final question, I think François you mentioned there were no stock buybacks in the first quarter, but there will be some before the Annual General Meeting. How do you look at timing of the stock buybacks and then also the M&A environment out there as far as licenses or other strategic acquisitions in your new businesses?

François-Xavier Roger

So regarding the share buybacks, as I said earlier, we did not do any acquisition since the beginning of the year, but we can resume on next Monday, and we intend to be active in the market before the next AGM. We will propose through the next AGM the consolation of the shares – of the 3 million shares we already have plus whatever we will buy between now and the 12th of May at the time that we will submit the agenda for the AGM.

Regarding the opportunity for our external growth, we have indicated to the market for sometime that we are really focusing on the organic growth, because we see a lot of opportunities for with the data on 3G in the short-to-medium term and then with services in the medium-to-long term.

That being said – then it doesn’t mean that we don’t want to go for external growth. But prices are high we don’t see really what we could contribute to many of the target in the market or where they could contribute to us. So the risk is certainly high of acquiring another company in another country, our new license as well, with the limited benefits, while the risk profile of leveraging and our brand leveraging distribution network, our knowledge of our market by introducing new products in our existing market is much lower and we have more likelihood to be successful there, because we have already a proven track of success there.

Ric Prentiss – Raymond James

Great thanks guys.

François-Xavier Roger

Thanks.

Operator

Our next question comes from Lena Osterberg of Carnegie.

Lena Osterberg – Carnegie

Yes, congratulations on very good numbers. And I was just going to ask you what has made you change your margin guidance and previously your talks about having to make significant investments to grow value-added services, and obviously this quarter you have very strong growth and you did not have to make the significant investments, or what has changed compared to Q4 in your view of that and what you see going forward?

Mikael Grahne

Yes, I think it’s simply a higher confidence on the bits of our strategy working very well including VAS, asset utilization and strong cost focus. And we just felt that we needed to have one quarter in our belt and that’s clearly starting to work. As you can see we accelerated our subsidy in Q1 versus year-ago quite substantially at 30%.

We will see that we continue to accelerate that going forward, so that could have some impact on the margins. As well as if this bargaining scale on our solution products like Tigo Cash that in its initial stage will have slightly lower margin or actually quite lower margin than the Group average.

Lena Osterberg – Carnegie

So should we assume you will keep sort of a similar level of subsidy? When you say you will financially accelerate it?

Mikael Grahne

We probably look at accelerating the subsidy level.

Lena Osterberg – Carnegie

From the 30%?

Mikael Grahne

Well, the 30% was a growth number. That was the growth versus – in Q1 versus year-ago. But we will probably look at accelerating the overall subsidy levels going forward.

Lena Osterberg – Carnegie

So should we expect lower margins or as you –?

Mikael Grahne

As we said, we have basically changed our guidance from talking about around 45% EBITDA margin to above 45%.

Lena Osterberg – Carnegie

Okay, thank you.

Mikael Grahne

Thank you.

Operator

Our next question comes from Sven Skold of Swedbank. Please go ahead.

Sven Skold – Swedbank

Thank you. Actually, I have a follow-up on Lena's question. There is a major swing in the margins for Central America from – if you look at Q3 at 56% for mobile, down to 52%. And if didn't change much in this quarter, it's back to 55%. What explains this drop? And then back to 55% margin in Q1. Is it only volume or I mean it’s a material change in Q4 and then back to Q1.

Mikael Grahne

Well, there are really many factors between a quarter that can have an impact, anything from promotional activity. In Central America, there is a market habit to offer – basically when you load you can have sort of double or triple or quadruple free loads today you load and that has an impact on the margin to certain extent. So there are many factors that can impact on the swing between the margins. We have had very strong focus on basically cost out that has helped us to basically hold on to those strong margins once we have increased the subsidy levels.

Sven Skold – Swedbank

But what you’re actually planning for is to keep this specifically in for Central America, this [inaudible] a little bit higher than in Q4 and approximately in the line with Q1 and for the rest of the year.

François-Xavier Roger

So then as you can see, our margin in Central America have been declining. It was the case in Q4 if you look at year-on-year there is a little bit of a seasonal impact as well, for example in Q4, because you have Christmas and the festive season. So you could see that in Q4 our margin year-on-year declined. It has been the same in Q1, which is something that we had flagged to the market for sometime, which is essentially driven by the fact that we are investing heavily behind 3G and data services. So we expect that to continue.

And as Mikael said earlier, we could even potentially invest more in subsidy, because – in 3G, because we see that there is a significant growth opportunity there and it is working well. I mean as you can see in the slide, in 3G, you can see that since we started investing behind 3G, you can clearly see on the graph that there is effect of 3G revenues. So it’s working.

Sven Skold – Swedbank

It’s working. Okay, thanks.

François-Xavier Roger

Which is slide 16, no 14, sorry.

Sven Skold – Swedbank

Okay, thanks.

Operator

We’ll take our next question from Kevin Roe of Roe Equity Research.

Kevin Roe – Roe Equity

Thank you. Great start to the year, gentlemen.

Mikael Grahne

Thank you.

Kevin Roe – Roe Equity

A few questions following up on Central America. Since we don’t have the revenue granularity by country, could you give us some color on what’s driving the revenue and EBITDA reacceleration there, meaning which countries are the primary driver. Is it all Guatemala and El Salvador and Honduras are dragged on that trend?

And, secondly on Central America, how do you think the competitive landscape will change when Digicel exits El Salvador and Honduras? And then I have two after questions.

Mikael Grahne

Okay. I think as you can see from our last Q4 announcement where we still had a split on the three markets, Guatemala was enjoying the strongest growth there as a trend that we saw continuing in Q1. But also we had of an improved performance from El Salvador and Honduras. Given that Guatemala is their biggest economy and the best functioning economy, it’s fair to assume that that kind of a trend would continue.

In terms of competitive scene, we actually look at this positively. I mean we rather have a very strong number two competitor than a weak number two and an even weaker number three there. So we think this is positive for the market.

Kevin Roe – Roe Equity

Okay. On Africa, we wanted to have big turnaround in sub growth there in your business. Can you give us an update on Rwandatel and the status of their license and what the opportunity for subscribers from that business would be. Senegal also was a big turnaround in sub growth. Are you still just maintaining the network as it is? What accounted for that turnaround in Senegal and how do you see that market evolving this year?

Mikael Grahne

I will start with Rwanda. Basically the customers at Rwanda Tel were extremely low ARPU at very low pricing, so we don’t really see a massive uptick for that. That was really the low-end customers against not too good service. So we don’t think it’s going to bring us a materially increased subscribers.

Kevin Roe – Roe Equity

Did that or did that – I’m sorry – did that already happen, the network shutdown or –?

Mikael Grahne

I think it has gone through. I think they’ve been cutoff. The service has been cutoff. As far as Senegal is concerned, so we see a takeoff in terms of net ads, but we are not especially pleased by it, because the ARPU is really going down sharply, not only for us I mean it’s a general trend of the market. And we can see that the entire market apparently in value has been shrinking over a last couple of months from the estimate that we have. So we believe there is a significant pressure in terms of processing power on consumers and that with the certain number of factors. And as a consequence, in spite of the increase of net ads, we see the ARPU falling down the market even shrinking in value.

Kevin Roe – Roe Equity

That’s helpful. Thanks guys.

Operator

We’ll take our next question now from Bill Miller of JM Hartwell. Please go ahead.

Bill Miller – JM Hartwell

Congratulations. Really a great quarter. Could you give us some color on why Paraguay has such a wonderful March and when you were going to be rolling out the services you now have in Paraguay, a low per capita incomed country to other countries and when you have all those services available in your – at least your Latin America and Central America?

Mikael Grahne

Okay. We already – the Tigo Cash is live in Honduras and Guatemala, but at the very early stages. We hope to be live in the rest of the Latin American markets by the end of Q ’11. As you know, Paraguay is our test bed for new products and we are really encouraged by the progress there we have with Tigo Cash.

As we said before, the Tigo Cash will take quite sometime to build, so we think this is a product that if you look three to five years ahead this is going to bring us substantial amount of revenues and give us an opportunity also to add other financial service products on top of that.

In Africa, we are already live in Tanzania and Ghana, and we hope to be out in the balance of the markets by the end of 2011.

Bill Miller – JM Hartwell

That’s great. Thanks very much. Could you also tell us why, in fact, you didn’t buy any stock in the first quarter? Was there some constraint on that?

François-Xavier Roger

No, there were not really any constraints. I mean it’s – we did the same last year by the way. We bought the bulk of what we did last year in the later time phase of what we have given to the market that there were no specific reason. And as I said, that we expect to be active in the market, most probably from next Monday.

Bill Miller – JM Hartwell

Great. Thanks very much.

Mikael Grahne

Welcome.

Operator

Our next question comes from Andreas Joelsson of SEB. Please go ahead.

Andreas Joelsson – SEB

Good afternoon. And maybe sort of a technical question, but have spoken to any US investors about the delisting in New York? And also, will the buyback as before only take place on Nasdaq?

François-Xavier Roger

We could not talk to any investor regarding the project that we had been looking at lately. Also, I mean as you can understand, we did some comprehensive analyses with external advisor, who are very knowledgeable about it in order to understand what could be the impact for all of shareholders, not only the US shareholders.

Regarding the share buybacks, we intend to continue carrying out the share buyback in the US until the delisting, which means until the end of May at the earliest. And do the share buyback in Stockholm after delisting which means from the beginning of June.

Andreas Joelsson – SEB

Perfect, thanks.

Operator

Our next question comes from Thomas Heath of Öhman Equities. Please go ahead.

Thomas Heath – Öhman Equities

Thank you. Most of my questions have been answered. Just a follow-up, is it correctly to understand that you will have rolled out Tigo Cash in all of your markets by the end of 2011?

Mikael Grahne

That is our intention. Market-by-market, there are some regulatory issues that have to be sorted out. Some markets don’t really have a regulation that can cope with this kind of a service and so that might cause a fine delay. But our intent is really to be out fully in Latin America as well as fully in Africa, possibly excluding Senegal and DRC.

Thomas Heath – Öhman Equities

Perfect. Thank you. That’s it from me. Thank you.

Mikael Grahne

Welcome.

Operator

And we’ll now take a question from Peter Nielsen of Cheuvreux. Please go ahead.

Peter Nielsen – Cheuvreux

Thank you. Just one question please. You’ve also raised your outlook for operating free cash flow margin for the year. I was just wondering in addition to the higher EBITDA level, is there are – are the items on the cash flow side where you have – where you now have a more positive view? Thank you.

François-Xavier Roger

We gave a guidance at the beginning of the year which was maybe a little bit conservative, but we always do that at the beginning of the year, because there is that one item that we do not always confirm one year advance which is working capital, which can produce some volatility in the operating free cash flow, because we can move a couple of hundreds of millions of dollars at the end of the year, especially that we have a lot of CapEx which is back loaded in the year.

So now that we have moved further in the year we have more confidence of controlling what the impact of working capital movements can be at the end of the year which is the reason why we raised our operating free cash flow guidance to high teens. The more we move into the year, better our forecasting ability will be, and then we can fine tune this number. We have raised somewhat our guidance for CapEx as well as you could have seen. We had prior – at the beginning of the year we indicated an amount of CapEx for the full year around $800 million – above $800 million that we have fine tuned to around $850 million.

Peter Nielsen – Cheuvreux

Okay, thank you.

Operator

Our next question comes from James Rivett of Citi. Please go ahead.

James Rivett – Citi

Good morning, guys. Congratulations on the excellent set of results. Two things from me.

Mikael Grahne

Thank you.

James Rivett – Citi

When are we seeing the benefits of the tower sales coming through in the margin numbers? Is there already any signs of that happening in the first quarter or is that a benefit that we see later in the year?

And, secondly in Colombia, it’s been rumored that one of your partners is looking to sell the business. Can you give us an update on what your intentions are if that sale does go through and whether we should think about you guys having some capital to that market?

François-Xavier Roger

Okay. Regarding the tower sales, we have almost completed the tower transaction in Ghana, so we transferred something like 720 towers already, which means that we now have the full benefit of that dealer in terms of EBITDA and net profit as far as Ghana is concerned. Tanzania and DRC, we transferred the towers and hence the benefit that we will derive from it, it will take some time before we complete the process. We do closing every three months about and so we will get the benefit during the year 2011, but you can assume that we will get the full benefit of these two transaction only from the beginning of 2012, even probably Q2 2012.

Regarding Colombia, it is indeed public information that there is a possibility that one of our shareholder could be sold. I mean there has been information in the market. This information has not been confirmed yet. Should it happen, we have a certain number of rights along with the other partner anywhere to acquire that stake. But for the time being, there is no such plans at all, because there is no official information regarding the sale in the market of one of our shareholder, minority shareholder.

James Rivett – Citi

Okay, that’s clear. And just following up on the tower sales, so it’s effectively what you’re saying with your guidance the benefits of – so the margin benefits will be reinvested back into customer growth or is there anything sort of fishy going on there?

François-Xavier Roger

What we said that we could reinvest. No, there is nothing fishy. There is – we could reinvest the benefit of it. We planned at the beginning of the year that we expected to gain for the total of Africa not only for the three countries where we did that deal a little bit more than the point of EBITDA margin in the year 2011 and probably between 2 points to 2.5 points in 2012.

We said that depending on opportunities are mainly obviously on 3G and services gain. If were seeing opportunities with a good payback, we are always looking at the payback below one year for any commercial investments that is different from CapEx. Then as a consequence we are seeing those opportunities, we would reinvest those amounts.

James Rivett – Citi

Great, that’s very clear, and congratulations again.

Mikael Grahne

Thank you.

Operator

Our next question comes from Luigi Minerva of HSBC. Please go ahead.

Luigi Minerva – HSBC

Yes, good afternoon. One question about maybe your broad data strategy, maybe it’s more relevant for the time being in Latin America. Now if we look at developed markets, the operators have essentially lost the opportunity to monetize the applications in favor of the big technology players like Google and Apple. Maybe this opportunity is still relevant in some small Latin American markets where you are a leader. So are you thinking about expanding your experience in data to actually get to the point of setting up a proper application store similar to what we have in the more large developed markets?

And the second question is on the – again on the tower sales. Can you give us a bit more granularity on what you expect to do in 2011?

Mikael Grahne

Okay. I’ll start with the application. I think we would see little bit not being very competitive competing against Google and Apples on application neither are many of those application really relevant for our people in the developed market. We think there is an opportunity for local application development and that’s where our focus is. So we think there is opportunity market-by-market to invent application, small simple thing that makes sense for our customers and bring value, so that’s where our focus is.

François-Xavier Roger

Regarding the towers, last year we did – we signed three transaction in Ghana, in DRC and in Tanzania. One of them as I said earlier, Ghana is almost completed and closed, and the two other ones will be completed during the course of 2011 and beginning of 2012.

In parallel, we continue pursuing additional work in order to close other deals. We expect to announce other deals in the course of 2011 mainly in Latin America. I just shared whether these deals could have a different shape and form than what we did in Africa, given that we would see if we could make this directly with one of our competitor.

And we may structure the deal in a different way. As you know in Africa, we found the right balance between retaining an equity stake, getting cash upfront and improving our EBITDA. We could obviously distribute the benefit of such deals in a different way as far as Africa is – Latin America is concerned, for example, we may favor less cash upfront given that we have less debts.

Luigi Minerva – HSBC

Okay, thank you.

Operator

Our next question comes from Justine Dimovic of EXANE. Please go ahead.

Justine Dimovic – EXANE

Thank you very much. Very quick follow-up on my side. I would like just to get your view on what’s happening in the Central American market where there is going to be some consolidation. Are you seeing some increase in churn from the Digicel customers? And any potential activity that could – we could see in Q2 or Q3 in that respect from your side?

As well, Telefonica has indicated last week that they would expect for the local consolidation in Central America. I am wondering if you have a review on the markets where you operate in that cluster. And another quick question on your Tigo Cash in Paraguay, you mentioned that you had 120,000 transactions in March. If you can give an indication as to the average demand that was transferred, just to get a bit of insight into all the product is working. That would be great. Thank you.

Mikael Grahne

Okay. Let me just start with Tigo Cash in Paraguay. Typical average amount which is sort of transfer is around $50 and actually we had I think 107,000 transactions in the month. But that’s – I think if you look at the African experience that tend to be sort of – the typical average amount tend to be around $50. We see the same thing happening for us in Latin America.

In terms of Digicel, I don’t think we’ve seen any Digicel return to us or any magnitude there. I think they’re going through a consolidation process. We haven’t followed exactly where it’s done in terms of regulatory approval, so we don’t have any focus there. I think in terms of consolidation, difficult to see further consolidation in the markets where you only have three players. I don’t see those three becoming two very easily there. So I think that’s sort of competitive scenario we have with the existing players are there to stay.

Justine Dimovic – EXANE

Thank you.

Mikael Grahne

Welcome.

Operator

Our next question comes from Jan Dworsky of Handelsbanken. Please go ahead.

Jan Dworsky – Handelsbanken

Thank you. If you could just remind us on what level of net debt to EBITDA you are comfortable with or how much gross cash think you need in them? And then just a detail, on Central America you highlighted operating free cash flow declining to terminal payments, is that CapEx payments or working capital?

François-Xavier Roger

Yes, it is mainly CapEx payment. Regarding the net debt to EBITDA ratio, we are 0.5 today. We are – as a fact that we are under leveraged we have always said that we would feel more comfortable with a net debt to EBITDA ratio around 1, and that we would not like to exceed 2 even in case of an acquisition.

You know that our strategy is to raise more debt as we can at local level and to put down the debt at operating level so as to make it tax deductible and to reduce our risk profile by reducing our exposure to some of our countries. So I think we have been executing that strategy last year and the fact that we have a low leverage today is the reason why we have this idea to increase our share buyback program for 2011.

Jan Dworsky – Handelsbanken

Okay, thank you.

Operator

Our next question comes from Stefan Gauffin of Nordea. Please go ahead.

Stefan Gauffin – Nordea

Yes, hello. Most of my questions has – was been answered. Do you have something relating to this local sales that you have provided this for some time and it has been very helpful for us to see – increase the visibility, and it was just right now back to – we could start to use the local sales as forecast tool and now you removed this. Could you just explain how this has been used by the competitors and how this affects you?

Secondly, you now moved over to provide revenue by category instead. Could you help us analyst by providing some historical numbers that we could start to use this going forward?

Mikael Grahne

Well, just we don’t want to comment on the competitor usage of our data. But if you look at the industry as a whole we were one of the few people really had to have that breakdown and we took a decision to provide similar kind of a data that our competitors do. We are very keen on highlighting the growth by category.

In terms of historic data some of the categories are so young that the data really would be [inaudible] if you look at, for example our solutions, that’s like a 1000% of the growth versus the previous quarter. So we think it’s more a question of starting to provide that data going forward.

Stefan Gauffin – Nordea

Okay, thank you.

Mikael Grahne

Welcome.

Operator

Our next question comes from the line of Lena Osterberg of Carnegie. Please go ahead.

Lena Osterberg – Carnegie

Yes, I just had one question. I was wondering if you could give some sort of input on what the movements will be in terms of share flows. I assume some US investors will have to sell following the delisting and the Swedish investors index [inaudible] have to buy, do you have any more details on – have you done any analysis on the share flows?

François-Xavier Roger

Yes. We have done some analysis with some advisors. We are aware to the fact that there are two categories of investors who may have difficulties to maintain their shareholding. The first one is index-linked by definition. But we expect that over time should we be – should we join some of the index in Sweden over time, we expect that we should be able to recover on the other side what we lose on the one hand.

And the second category of investors that we may lose are we are aware of the fact that there are some investors who have restrictions to the invest only in US listed stocks. For these investors, they can still keep their ordinary shares in the US. And it is likely that there will be an OTC market where these investors should be able to trade their shares in the future.

Lena Osterberg – Carnegie

Have you got any sort of net flows between the US and Swedish investors?

François-Xavier Roger

We have some – and then we have done some analysis in this.

Lena Osterberg – Carnegie

And I assume that it’s a negative, there will be selling pressure from the US side initially.

François-Xavier Roger

If you can – if we make the decision to do, to foresee with this project that we’re confident that we could do it with – if we’re confident.

Lena Osterberg – Carnegie

Sorry, does not mean that you will have initial selling pressure before you get the index.

François-Xavier Roger

No, I didn’t say that. I said that we are confident that over time this issue if it happens is fully manageable.

Lena Osterberg – Carnegie

Okay, all right. Thank you.

Operator

We have a follow-up question from Bill Miller of JM Hartwell. Please go ahead.

Bill Miller – JM Hartwell

When you have your value-added services such as you have in Paraguay, do you clip little bit off in the number of transactions or the dollar amount?

Mikael Grahne

Our focus is, of course, on the penetration side. So we are more interested in driving as many people as possible to use the services. That’s the start of it. And then, naturally, when we start getting traction, we would like to then add other services that been sort of drive up the ARPU. But initially we are more penetration and transaction focused than revenue focused. That’s typically how they build revenue new products in the service category.

Bill Miller – JM Hartwell

Mikael, what I was trying to get at, do you get revenue from the number of transactions or the dollar amount of the transactions?

Mikael Grahne

Well, in a way both, because they are linked. When you – transaction means that you send money. And on that transaction, we take a fee.

Bill Miller – JM Hartwell

Okay. Thanks very much.

Mikael Grahne

You’re welcome.

Operator

(Operator Instructions). We now have a follow-up question from Ric Prentiss of Raymond James. Please go ahead.

Ric Prentiss – Raymond James

Yes, hi, one quick follow-up question. Looking at below the EBIT – reported EBITDA line to the corporate costs and maybe including stock-based compensation, there was $22 million I think of corporate cost, $18 million if you exclude the stock comp. As you look at the progression in 2010 compared to 2011, should we expect those corporate cost to go up or is this kind of the new level we should expect to see?

Mikael Grahne

I think you should expect the corporate cost to go up, because we are investing in building new skills. So we are basically investing in human resources to really drive – to be able to come up to world-class performance in the solutions category or innovations and entertainment and communication so on. And so we are in the process of recruiting more people. We think it’s the smartest investment we can do at this stage is really invest in people.

Ric Prentiss – Raymond James

Okay. Make sense. Thanks Mikael.

Mikael Grahne

Welcome.

Operator

Our next question comes from Martin Mabbutt of Nomura. Please go ahead.

Martin Mabbutt – Nomura

Thanks. Just a very quick one, it was on the tax. When you guided for tax rate of less than 30% for the full year, is that including the Colombian one-off in Q1 or excluding it?

François-Xavier Roger

It is including it.

Martin Mabbutt – Nomura

Thanks.

Mikael Grahne

Welcome.

Operator

There are no further questions in the queue. That will conclude today’s Q&A session. I would now like to hand – turn the call back to you, gentlemen, for any additional or closing remarks.

Mikael Grahne

Well, I would just like to thank you for joining the call today, and we look forward to seeing you soon. Thank you.

Operator

That will conclude today’s conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.

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