Millicom International Cellular S.A. (TIGO) Q2 2013 Earnings Report, Transcript and Summary

Good morning and good afternoon, ladies and gentlemen, and welcome to the Millicom Financial Results Conference Call. Today’s call will be hosted by Hans-Holger Albrecht, President and CEO; and François-Xavier Roger, CFO. Following the formal presentation by Millicom’s management, an interactive Q&A session will be available. I would now like to hand the call to Justine Dimovic, Head of Investor Relations. Please go ahead.

Thank you. Welcome everyone to the Millicom second quarter results presentation. My name is Justine Dimovic, and I’m the Head of Investor Relations for Millicom. Today, the presentation slides can be found on our website at www.millicom.com, along with an interview of our CEO this quarter. Before we start, I would like to remind everybody that the Safe Harbor statements apply to this presentation and the subsequent Q&A session. With me today on the call are our President and CEO, Mr. Hans-Holger Albrecht; and our CFO, Mr. François-Xavier Roger. I will now hand over to Hans-Holger to give you an overview of our Q2 results and operational performance, after which François-Xavier will take you through the financials, and we will finish as usual with a Q&A session. Let me now pass over to Hans-Holger.

Yeah, thank you, Justine, and good morning and good afternoon to everyone, and thanks for listening in. I hope you all had a chance to read and digest the results we have been publishing earlier today. Before I come to the kind of presentation, the general presentation made this time a good opportunity to give a bit of a kind of overview of where I see the company is heading and what’s the situation says the company is in. Even before I joined Millicom at the end of last year, I had a very good look at the balance sheet and the kind of road ahead and the options ahead of the company at that time. It became very clear to me at that stage that the company needed a fundamental transformation or face the real prospect, in my point of view, of decline from which, in my point of view, is very obviously is in our case, we have seen the kind of the voice decline and the reduction for a while, and we have seen the kind of impact in the business when it comes to margins since the beginning of 2011, and the kind of acceleration when it comes to 2012. So in my point of view and Francois, and the management team as well, the company had to change and we all agreed we had to change pretty fast. So when we announced the new strategy in March, we set the company on a completely new path when it comes for the business going forward. The idea is to create a new Millicom base, not on one crumbing foundation, but instead of on four solid pillars for growth that would bring back the company into the growth and as well as the kind of decline profile…

Thank you, François. As we close this first half of the year, we have many reasons to remain confident on the progress of our transformation. Our voice business remains resilient, despite the strong regulatory pressures we have seen in our market. But even more important, I think the new business increased the contribution to recurring revenue growth. they grow organically, and they further strengthen the underlying long-term growth drivers, like ARPU customer numbers and RGUs as well. So overall, I think we remain as a management team very confident that the investments we have made in this first half year will pay off in the future and the building of the kind of four pillars kind of approach we have presented to the market will result in growth going forward as well. So nothing has changed since the Capital Markets Day for us. As I mentioned at the beginning just to reiterate, we are changing as a company, we are changing fast. but it was not a question of choice; we have to do in order to have a kind of long-term and sustainable business. So I would like to thank you for listening in, and now looking forward for these answers and then we are going to get the questions.

Thank you. (Operator Instructions) Thank you. The first question comes from Laurie Fitzjohn from Citi. Please go ahead. Laurie Fitzjohn-Sykes – Citigroup: Thank you. I have three questions if I may. Firstly on the EBITDA, given that in H1, you were a bit below 40% at 39.5%, and what sort of factors should see this increase into H2, and for example, overlapping the increases. Secondly, on the UNE transaction, can you give us an update on timing, any sense of when you think that you would be able to sign and then subsequently how long would regulatory approval take in terms of local press articles saying around six months. And then lastly, on online just looking for a bit more detail on the reasons the lower EBITDA loses, the operations are fundamentally turning out to be more profitable early on than you thought? Or is it more due to the decision to invest less early on, and, therefore, the impact on your – the planned total investment you guided to at the beginning? Thanks.

I’d take maybe the first or the second or third question. and then I’ll hand over for the EBITDA question to Hans-Holger. When it comes to UNE, I think we are in very good talks and we are very confident that we’re going to close this deal pretty soon. There has been a slight delay of course, compared to the original plan, but nothing which is material. So we are confident to come back to you in short time. Once we have signed the agreement, then the kind of regulatory approval will take probably towards the end of the year beginning of next year to be seen in detail what kind of request we have. so that’s the kind of timeframe we are looking for. If it comes to the online side and you look at the kind of reduced losses or losses profile, then it was anticipated, it doesn’t mean, obviously that we’re going to reach earlier profitability. it only means that we are just spending towards the kind of composition level we find in the various markets and the kind of speed of gross we want to see. So it’s a kind of a continuing optimization of how much money you invest in subscriber acquisition and new customers versus the kind of cash burn you want to go forward. So it’s really more technical. it doesn’t change kind of underlying fundamental business we have. And saying that as well, to be forward, to capture more question in the future on this one, this business is just eight months old. so of course, it’s not over 100% easy to make a forecast on the spot. And the more experience we have and the bigger the business is of course, the more accurate we can give exactly kind of forecast.…

Thank you. The next question comes from Mark Walker from Goldman Sachs. Please go ahead. Mark Walker – Goldman Sachs: Hi, everybody. Thanks for the questions. I’ve got three, please. The first is on the Mobile Financial Services ARPU trends. I just wondered if you could help us to kind of understand the growing ARPU trends in the South American, African businesses versus the declining trends in Central America; whether those trends in the three regions are sustainable or if we expect a positive inflection in Central America.? Secondly, in Online, I wonder if you could just help us understand how you’re circumnavigating the underdeveloped postal and transport network in some of the key markets in those businesses? And thirdly, if you could just follow-up on Laurie’s point about the margin guidance for the full year of now around 40%, given what you’ve just said is the two reasons for increases in the margin in the second half, it seems to imply that the potential range around that 40% is actually very tight. I was wondering if you could then confirm that in addition does the slightly lower margin guidance for the full year imply that your expectations for revenue growth for the full year are higher than they were before? I appreciate you don’t have guidance on that point, but just if you could give us a sense about internally and how that has evolved? Thanks a lot. François-Xavier Roger: For the margins, so, once again, I obviously reiterate the revised guidance that we have just given, and once again, we are confident that we will make it in the second part of the year, which is around 40%. We keep, obviously, a little bit of flexibility by giving around 40% if we need to invest a little bit…

Thank you. The next question comes from Stefan Gauffin from Nordea Bank. Please go ahead. Stefan Gauffin – Nordea Bank: Yes, hello. I have a couple of questions. First of all, relating to net debt-to-EBITDA, and also the UNE transaction, the net debt-to-EBITDA was slightly higher than at least I expected this quarter, partly due to the lower EBITDA. And you have communicated that you will still be able to maintain net debt-to-EBITDA below 1.5 post UNE transaction; does this still – is this still correct? Secondly, there’s a big jump in mobile data subscribers, and especially so for Africa, which is up 22% quarter-on-quarter. What is behind this acceleration, and is this expected to be maintained? Thank you. François-Xavier Roger: Okay, regarding the net debt-to-EBITDA, we indeed communicated that we expected post UNE transaction the net debt-to-EBITDA to be below 1.5. At the time we communicated that we were at 1. So which mean that we pass on the message through that, that we expected the impact of that transaction to have an impact of about 0.5 times. I confirm that, so which mean that this transaction with UNE will have an impact which will be less than 0.5 times in terms of net debt-to-EBITDA. If we are at 1.2 when we signed that deal, then we will be below 1.7 actually, but the impact will be exactly the same as what we communicated before.

And when it comes to the data size and the pickup in Africa, it’s, of course, the underlying trend that we convert more and more voice customers to data. The drivers behind it obviously are the most advanced markets, particularly Tanzania and Ghana, and it’s the kind of combination of the market, a bit more favorable as well as the kind of push we’re doing in those kind of places in terms of revamping the distribution network, the kind of marketing campaigns we have been running, and the commission structure we have implemented for the retailers. So this is all part of this kind of, we call it the attack process to regain our position in Africa. and as an underlying trend, obviously, it should continue. In terms of quarter-by-quarter, there may swings depending how aggressive we push certain kind of products when it comes to data. But long-term, you’re going to see the same shift from voice to data in those markets. Stefan Gauffin – Nordea Bank: Okay, thank you.

Thank you, Stefan.

Thank you. The next question comes from Chris Grundberg from UBS. please go ahead. Chris O. Grundberg – UBS South Africa Ltd.: Yeah, thanks. Just a quick one on the Online business. I’m just curious in terms of your guidance there. I think if I’m right in remembering, when you last commented on that, you did say that if you were to see higher losses, and hitting the higher end of your loss guidance, that would in fact be a sign of greater confidence and of greater traction in those businesses. So I’m just trying to square that with the comment now that actually you’re expecting lower losses and the fact that you’re still pleased with that; whether there’s anything in there; whether you’ve found that these front of lower OpEx levels than you’d initially anticipated or just if you could maybe give me some color or correct me if I’ve misremembered that? And then secondly, just on some press commentary around the Dominican Republic and the Orange asset there, I don’t know if you can give any color on whether you’d be interested or whether you’ve had a look at that? Thanks.

When it comes to the online side, again we are – just to repeat, we are eight months to nine months now into the business and we’re really, as I said, have a very fast moving targets and therefore we can only work with certain kind of ranges when we give guidance in terms of what the revenue will be and what the kind of losses profile will be. At the same time, and we take it very seriously, from our side as well, we want to make sure that the money we are giving to these kind of ventures are spent wisely. So we’re not going to buy at any cost customers and growth, and rather see it as a kind of optimization quarter-by-quarter even month-by-month, what is the kind of landscape looking like; what is the competition doing; what kind of special offers you have to do in order to drive things forward. Hence therefore, you’re going to see swings in terms of the cash burn and in terms of bills. The key point which we are always reiterating as well, when you look at the Online business are there two factors, obviously is the growth coming in, which growth coming, if you look at the revenue growth, and do you take a market position which is normally the number one or number two in this segment you’re covering in the market, which we’re doing as well, and then it’s fine tuning. So to be very clear, there is no change in the outlook. We take it as the long-term view and the short-term view and this is purely optimization quarter-by-quarter how we allocate the cash and how aggressively we’re going to expand the business going forward. And to give you confidence as well, of course, the more we’re going – as I said, we got into the business and that is by next year when you have year-on-year comparison, the more stable, of course, those kind of forecasts going to be for you. If it comes to the Orange rumor and the kind of Dom Rep, we have a philosophy not to talk about any kind of deals, so I can’t answer you this question, unfortunately. Chris O. Grundberg – UBS South Africa Ltd.: No problem. Thanks very much.

Thanks.

Thank you. The next question comes from JP Davids from Barclays. Please go ahead. JP Davids – Barclays Capital: Hi, good afternoon. Two questions from me, please. The first one, you’ve had a few changes at a board level, and you’ve also had a change in African leadership. Could you comment on the impact these will have on executing your strategy or the benefits you see in executing your strategy from these changes? The second question is on the Cable & Digital Media business. As Slide 11 shows your homes connected as a percentage of homes passed is obviously falling as you pass a lot more homes, should we expect a bit of a step up in your intensity in that area to drive more customer acquisition? Thank you.

Yes, this is always a very thin ice for a CEO to talk about a board and the board composition. So I have to be a bit careful of what I’m saying here now, but it – I think to add really the remuneration committee – not only the remuneration, the committee who put the Board together and the shareholders. But it reflects a bit the kind of process and the kind of strategy I outlined earlier that we have to diversify the business from what it has been in the past into something new and so you need different kind of skill set in the board as well when it comes to those kind of new features, that can be kind of regional skill set or more operational strategic skill set for the kind of business we are entering. And I assume that is kind of – and that’s the main reason why some of the board positions have been changed. And the only thing I can say to you as a CEO, of course, is that, for me as a CEO, I have a very strong vote now and for every problem I have, I have a sparring partner in the board and can go to and discuss those kind of things. When it comes to the management in Africa, yes, we change that one as well. Actually, we start to build a management team there. We have recruited a very senior manager from – Arthur Bastings. The main goal for us is really to get strong management skill set into this region again with kind of a diversified range of experience. Obviously, there is a certain experience which we have to bring in when it comes to telecom and distribution side, but equally important I think for Africa it is about the branding, which we have some issues to fix and it is about the migration out of the mobile business into new business like MFS, which is one of the kind of key drivers of the Online side. So we are committed to build this kind of African team dedicated to push the business forward, and we’re going to have probably some other recruits in order to strengthen the team there as well. And it all reflected by the ambition that if you have ambitious plans, you need dedicated strong executives for each of those kind of regions.

Does that answer your question? JP Davids – Barclays Capital: Yes, thanks. And just on the Cable & Digital Media question, should we expect a step up in intensity to drive more homes connected? Thank you.

Yeah, I mean, on the long-term, absolutely you should expect that, of course, that’s the all ambition. It’s an owned ecosystem however, how you do it, you need the kind of infrastructure in place, obviously you need the kind of right product range in place when it comes to the entertainment product and the Internet product and you need the right marketing campaign and price campaign. And all those elements, when you have them together, then you can get to kind of product push. So it’s not the question, if it’s more question when we have all those kind of element in place and start to move forward. JP Davids – Barclays Capital: Thank you.

Thank you. The next question comes from Barry Zeitoune from Berenberg. Please go ahead. Barry Zeitoune – Berenberg Bank: Hi, I think I’ve just got a couple of questions please. The first is you’ve talked about and we’ve heard recent news about potential new taxes in Ghana and Rwanda. I was just wondering whether you take those into your updated guidance of around 40%, and whether you would still be taking those into account in the guidance that you gave for 2014 where you mentioned around, I think it was round about 35% margin guidance post corporate costs? And then my second question is on subsidy. Historically, you’ve been talking about subsidy growth slowing and we’ve seen quite a step up this quarter. How do you expect subsidies to grow from here, I think the growth should slow from this point, or could we see a step up further? Thank you.

Okay, regarding the taxes we have mentioned indeed that some governments have raised or shared publicly some intention to introduce new taxes. We didn’t give any details, because these plans are not final locally, so we thought that it was our duty to share whatever we knew with the market, but we don’t know exactly what it will in which shape and form it will end up. So as a consequence, we did not build it in our revised guidance of 2013, because we don’t know exactly what it will be at the end. You know that if it is reasonable, we can certainly absorb these new taxes with other initiatives, be it cost avoidance or any type of other initiatives, if it is more significant, okay we’ll have to see. Regarding the impact on our 2014 guidance, we have always integrated in medium-term planning the fact that new taxes will be introduced. After for that, I mean the quantum is what could make the difference. but as of now, I would say that there is no reason to challenge, or to review the guidance that we provided for 2014 of an EBITDA margin at 35%. Regarding the subsidies, we have indicated indeed in the past that we expected that over time that could slow down. One of the factor could be was actually the fact that the cost of handsets would go down, which is a fact, I mean we stop now seeing good quality smartphones at less than $60, and we are obviously promoting these devices, because they give an opportunity for more customers to get accessed to the data category even without subsidy or gives us the opportunity as well to extend subsidies to more customer. This is actually what we do. We have always had fairly opportunistic view on subsidies. if we see that there is a good response in the market under the payback and the return that we get is good. We do not hesitate to accelerate subsidies, which is somewhat what we have done in Q2 and what we have done even in the last couple of quarters. If we see that, I don’t know in some markets, for example, we start reaching, not a saturation, but a level where the return of the response from new customers is less attractive then we slow it down. so we’d it’s difficult, there is probably a time when it will slow down as a rate. We used to have a rate of subsidies, which was twice as high as our revenues, today, it’s even a little bit more. But we want to keep some flexibility to adjust, whenever necessary. Barry Zeitoune – Berenberg Bank: Can I just ask a follow-up. Are you using competition drive increase subsidies in any of your markets?

I wouldn’t have said that we don’t do it as a reaction to competition, we do it as a way to grow our business, as a way to increase loyalty, reduce churn, increase the ARPU, increase our customer base, and we don’t especially do it, because the competition does it. We obviously look at competitive forces. We believe that whatever we offer is in line with what the competition does or better. Barry Zeitoune – Berenberg Bank: Perfect. Thank you.

Thank you. The next question comes from Anders Wennberg from Brummer. Please go ahead. Anders Wennberg – Brummer: I guess most questions have already been asked, but I wonder a little bit about this interconnect cut. We’ve had quite a few interconnect cuts coming up the last nine months from El Savador, Honduras, Tanzania, et cetera. What do we know about cuts for the second half then just looking at the list here, it feels like it could actually be peak year-over-year effect of this in Q2, and that maybe this could be less effect in the second half.

Yes, but it’s always difficult to forecast because we never know what can happen tomorrow. That being said, it is true that we might reach a certain peak because we have the full quarter impact in Q2 of whatever had been introduced as cuts in Q4 last year, and in Q1 as well, and especially the 70% cut in Tanzania that happened at the end of Q1, so we got the full impact. The impact in Q4 will be lower because I mean, as a comp we will have a more favorable base, because interconnection cuts have been introduced in both Paraguay and Bolivia at the beginning of Q4 last year, so it’s going to help us a little bit. It’s important as well to remind everybody that we are less and less dependent on interconnection rates. They used to contribute to a significant part of our total revenues. Today it’s around 6% of our total revenues, so we are far less dependent. And they are not at a really high level, with the exception of maybe one or two countries, where there is probably room for further decreases. But let’s say they are not that really abnormal or extremely high level, and we are less dependent on it. Why? Because, first of all, they have already come down significantly and second, because we have developed strong franchises with data, with music, with online, with MFS aside. So we are less dependent on the traditional telecom business and less dependent on ICX as well. Anders Wennberg – Brummer: So you could potentially see the voice decline slower little bit and stabilize in the second half, is that the conclusion?

We had provided an indication in our medium-term planning that we expected voice to decline on the yearly basis between 3% and 5% on them. We confirm that and we are pretty much in line with the trend, it maybe a little bit more in some years and a little bit more, a little bit less in our sales, but we believe that it’s still a reasonable assumption. Anders Wennberg – Brummer: Okay, thanks.

Thank you. The next question comes from Peter Nielsen from Cheuvreux. Please go ahead. Peter-Kurt Nielsen – Cheuvreux: Thank you. Yes, just one question left. Firstly, on the free cash flow, I presume that CapEx will come up somewhat in the second half of the year. Would it be fair to say that we are looking at a negative free cash flow for the full year? And yes, I’ll just, I’ll leave it there. Thank you.

We don’t provide any guidance on free cash flow. But we had a strong cash CapEx amount in H1, which meant that we paid a lot of CapEx, because we paid in excess of $500 million of CapEx in H1. I’m not saying that we won’t pay any CapEx in H2 obviously, but we expect to pay less than that in H2. Peter-Kurt Nielsen – Cheuvreux: Okay. So part of H2 CapEx will be pushed into 2014, is that correct?

Whatever yes, well also, I mean it’s dependent on deliveries by manufacturers and so forth, but traditionally we have quite a lot of CapEx in Q4, which mean that this is one product that we say in the following year. So it should happen again this year. Peter-Kurt Nielsen – Cheuvreux: Okay. Thank you.

Thank you. The next question comes from Lena Osterberg from Carnegie. Please go ahead. Lena Osterberg – Carnegie: I was wondering if you could provide a little bit more detail on the Online revenues. I know you’ve highlighted it several times that it’s a very young business, but if you could say a little bit about the split between Latin America and Africa in terms of revenue generation. And then also, I was wondering, you mentioned in your release that there were several new measures, which will be implemented in Africa by the governments there. What type of measures? Are they new taxes, or are they interconnect cuts that you expect second half of the year? And also, maybe what impact they would have?

When it comes to the revenues split between Latin America and Africa, obviously Latin America is a bigger part than Africa. By definition it’s a kind of smaller size when it comes to the breakup. Long-term, obviously we believe Africa can be even more interesting, because we have much less competition there and much more higher demand when it comes to those kind of products from the population. And in terms of the revenue growth as I said, we indicated and we gave the kind of guidance for the year, that’s the best we can do out of our knowledge today and there is nothing more we can really add. François, do you want to take that one? François-Xavier Roger: If you go to comment on as I said earlier, on the possible introduction of new taxes of new regulatory framework for H2 because it’s still under discussion. I mean there are discussion in some countries between the regulator on the industry, and I think it’s by the way it’s very good that there are these kind of discussion. Let me just give you an example in one of the countries there is a plan to introduce, the tax, a minimum tax per customer per month regardless of consumption, which can we respect the right of regulators to introduce that, but it would be quite negative, very negative actually for really the low-end customers and many of these guys really need them, I mean, their phone because it’s a basic communication tool for them. So, we are in discussion not ourselves only, but as an industry. We are in discussion with the regulator to make sure that they understand before making such a decision what will be the impact and that maybe there are other ways to introduce different taxes. So difficult to really comment on what will be the final outcome, when it will come, if it comes on what kind of shape and form. So we have to wait. Lena Österberg : Okay. Thank you.

Okay. Thank you.

Thank you. The next question comes from the Andreas Joelsson from SEB. Please go ahead.

Hey, good afternoon. Just a clarification on Online. I know we have spoken a lot about it, but the long-term guidance that you gave when you entered into the Online business of aggregated losses around $300 million for the next three years, 2013 to 2015, is that still valid? SEB Enskilda: Hey, good afternoon. Just a clarification on Online. I know we have spoken a lot about it, but the long-term guidance that you gave when you entered into the Online business of aggregated losses around $300 million for the next three years, 2013 to 2015, is that still valid?

Yeah. On the Online guidance, nothing has changed from what we announced and presented at the Capital Markets Day, absolutely intact.

Perfect, very clear. SEB Enskilda: Perfect, very clear.

Thank you.

Thank you. The next question comes from Cesar Tiron from Morgan Stanley, please go ahead.

Yes. Two questions from my side, please. First, on the guidance, can you please tell us what has changed over the past three/four months since your Capital Markets Day? So you had to cut the guidance on the core business, and why do you think you have better visibility now? And also on this, a follow-up question on those Online losses. So, basically, if you’re cutting the Online losses for 2013, but maintaining your guidance for the next three years, doesn’t it mean that you’re delaying basically the expenses into next year? And then, just a question on regulation. You mentioned the negative impact of regulation in a couple of countries, but can you also please talk about the positive regularity changes you have in Colombia and how those impact you, and give any sense of your local currency revenue growth and margins in Colombia? Thank you very much. Morgan Stanley: Yes. Two questions from my side, please. First, on the guidance, can you please tell us what has changed over the past three/four months since your Capital Markets Day? So you had to cut the guidance on the core business, and why do you think you have better visibility now? And also on this, a follow-up question on those Online losses. So, basically, if you’re cutting the Online losses for 2013, but maintaining your guidance for the next three years, doesn’t it mean that you’re delaying basically the expenses into next year? And then, just a question on regulation. You mentioned the negative impact of regulation in a couple of countries, but can you also please talk about the positive regularity changes you have in Colombia and how those impact you, and give any sense of your local currency revenue growth and margins in Colombia? Thank you very much.

Okay. If I can we can start maybe with the, I’ll take the Online maybe as the first one. Again, it doesn’t mean that we’re going to postpone losses into next year, or holding back investments when they come. It’s more about, which I said several times earlier, it’s about when you’re going to deploy the capital and accelerate the custom acquisition. And that has, again the factor of the market conditions, the competitive landscape, and as well as how well do you have to kind of model to push things forward. If it comes to the regulatory side in Colombia, François, you want to take that one? François-Xavier Roger: Yes. Well, it’s true that in Colombia the regulator has introduced asymmetric tariffs, which given our position, is beneficial to us. It has been introduced, by the way, in Q1. Well, first of all, the impact of asymmetric tariff is probably, is usually lower than what many people expect. And anyway, we decided to reinvest it in the business, and especially in subsidies. We are doing very well, as you know, in Colombia, both on the mobile side where we increased our market share significantly and we have a market share in data, which is actually twice as high as the market share that we have on mobile. So we decided to reinvest whatever we got as a benefit of the asymmetric tariff. Regarding the guidance, what has changed, well, first of all, the revision of the guidance is not something that’s material, but it’s a revision anyway. And what has changed is really the impact of the regulatory headwind, which is slightly stronger than what we expected and some of it has been introduced after we communicated to the market and we picked up, as well, that the impact was actually stronger, just to name one, the decrease of the interconnection rates in Tanzania by 70% is actually strong. We knew it when we talked to the market, but we saw that the impact was actually stronger than what we expected. In Honduras, some of the regulatory headwind that we are suffering from today was not known when we communicated to the markets. So, and fundamentally on the base business itself, there is not really any significant change, maybe a marginal increase in the commercial investment that we do in order to support the growth especially on data, but nothing really significant.

And on Colombia, can you please share? I think you mentioned some revenue growth in the opening remarks. Can share some revenue growth and margin dynamics? Morgan Stanley: And on Colombia, can you please share? I think you mentioned some revenue growth in the opening remarks. Can share some revenue growth and margin dynamics? François-Xavier Roger: We don’t communicate on Colombia specifically.

Okay. Morgan Stanley: Okay.

Thank you. The final question comes from Bill Miller from JM Hartwell. Please go ahead. Bill Miller –- J.M. Hartwell LP: (Inaudible)

We apologize, Bill. We can’t hear you. Bill Miller –- J.M. Hartwell LP: When you mentioned that the UNE deal in Colombia was pretty close, short time, could you give us a little bit more definition? I mean, some people think that the Second World War followed closely by the First.

Well, Bill, I hope we’re not going to be in this kind of a scenario. So, for me… Bill Miller –- J.M. Hartwell LP: That was supposed to be a small joke, Hans-Holger, sorry.

But it’s being as impatient as you can be as the management team. Obviously you want to do it very faster. If we say in the near-term, it should be pretty near. Bill Miller –- J.M. Hartwell LP: Okay. And secondly, for benchmarks as we go through, I noticed that MFS, which is going to be one of your big drivers to reach your goals in 2017, that you added 4,000 on a base of 31,000, which is about, let’s say, just for the argument of it, 12%, maybe 16%, growth. How should we look at these four pillars and measure how close you are to getting near to the 2017 goals? Should we look at the new additions in MFS? Or tell us, if you can, what is going on each one of these that we should look at and follow closely to get us towards the 2017 goals?

Actually, when we communicated our expectations with the five-year horizon for MFS, we gave two KPIs. One of them is penetration. That we said we expected to above 50% by 2017. As you can see, we are already at 10% in total today, and it’s growing quite fast. And actually, even if you look at the penetration rates of MFS among our mobile base it’s actually served more than 13% in the countries where we marketed it. So we are really moving in the right direction there. And the second KPI that we provided as well is that we expected to be, to have an ARPU of more than $10 in 2017. And we are communicating each quarter as well on that one because, as I said, earlier it’s growing on every single quarter, and we are currently at $1.35. So we are really moving in the right direction as far as these two KPIs are concerned. Bill Miller –- J.M. Hartwell LP: Great, really guide me here. And final question is, when you talk about handsets of under $60, what percentage of your total CapEx are handsets?

Zero, because we don’t capitalize them. We write them off and we expense them upfront. So we are on the safe side there. Bill Miller –- J.M. Hartwell LP: Okay, great. Thanks.

Thanks, Bill.

Thank you. I would now like to hand the call back to Hans-Holger Albrecht. Please go ahead.

Yeah. Thank you, everyone for listening in and asking all those questions. And as there are no further questions, once again, I hope you have got a good overview about the performance in the second quarter. If there are any kind of follow-up questions myself, Francois, Justine are obviously here to answer questions in the future. In the meantime, we continue to work on our plan as indicated. And thanks for today and talk to you soon.

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