Good morning, everyone, and welcome to our Q1 2019 Results Conference Call. Before we begin, I want to make sure you take a look at our safe harbor disclosure on Slide 2 of the presentation, which is available on our website. As usual, we will be making some forward-looking statements today and these involve risks and uncertainties, which could have a material impact on our results if these risks materialize. So please take the time to review Slide 2 in detail. And on Slide 3, we also warn you that we use a lot of financial measures that are not consistent with IFRS. And we define these metrics in here and as well as in our earnings release where you will find some tables that reconcile these non-IFRS measures to their nearest IFRS equivalent. So with those legal disclaimers out of the way, let me turn the call to Mauricio Ramos, our CEO.

Thanks, Michel. Good afternoon and good evening, everyone. As usual, I'm joined on the call today by Tim Pennington, our CFO and you all know. Before diving into the results for this quarter, we want to take a few minutes to step back and look at our transformation over the past four years, as it gives meaningful context to where we are and where we're going. So please turn to Slide 5. Some of you will remember this slide, we'll refer back to it often because it is a good roadmap to what we have been doing. We have made a ton of programs with a lot still to do to continue building this new TIGO into the future. A few short years ago, our legacy mobile voice and SMS revenue was under severe pressure. As a result, our revenue was declining with very weak cash flow generation as well. So we needed to accelerate our transition from voice to data by quickly building a 4G network, literally from scratch. Mobile voice used for penetration was mature, so we have to focus on customer retention, 4G intake and postpaid migrations. And we had of course a unique opportunity to build a state-of-the-art cable network right underneath our mobile footprint in Latin America. So we set out to build over 1 million homes per year, which we have been doing. As a result of all of this, our business today is very different [Audio Dip] cable, it is increasingly subscription-based, it is generating revenue growth that is now approaching mid single digit. Our margins are expanding continuously every quarter and our cash flow is now growing strongly and steadily. And it is now enough to both fund our organic plan and also paying attractive dividend yield. So we're a much stronger…

Thank you very much. Okay, let me take you through the numbers. I'll start with our IFRS presentation and then I'll bridge to the Latam segment numbers, we review on these calls, and finally review the Latam financial performance. So starting on Slide 20, this is the group P&L for Q1. And as a reminder, Guatemala and Honduras are treated as equity associates for this purpose. You can see the contribution to net income out A on the slide. Note there were two major impacts. The first was introduction of Cable Onda for the first full quarter and this impacts most of the line items. And the second was IFRS 16, the new lease accounting standards, which added $16 million to operating profit and $1 million to net income. Finance charges were $56 million higher in the quarter. Now this is largely due to $24 million of one-off charges relating to financing activities on a $16 million impact from IFRS 16. And finally, we had gains from associates. These reflect non-cash gains on Jumia. Jumia is a recently IPO-ed business, it's IPO-ed on the New York Stock Exchange and we now hold a 6.3% stake there. On Slide 21, we showed the bridge from group revenue to Latam service revenue and from group operating profit to Latam EBITDA. These are the metrics we'll focus on for the rest of the presentation. Starting with the upper graph, the underlying group revenue in Q1 was $1.55 billion. Africa now represents just 8% and that will fall further once sale of Chad is completed. After excluding the sale of handsets and other non-recurring revenue items, Latam service revenue in Q1 was $1.3 billion. In the lower chart, the bridge is from group operating profit to Latam EBITDA and it shows the underlying operating…

Thank you, Tim. Before taking your questions, let me take a moment to recap. We had a solid Q1. Mobile continues to grow with straining Guatemala, Colombia, Bolivia, and Honduras helping to offset the weaker growth in Paraguay and El Salvador. And our home segment also continues to perform very strongly with double-digit consistent growth. All of this is fueling both our service revenue and our EBITDA growth, which has come back. All of which are trending in line with our guidance for the full year. We've made good progress in capital location with the disposal of Chad and with our integration of Cable Onda. And we're now fully preparing to close our three acquisitions in Central America in the next few months. We're thrilled to welcome the teams in these countries to the TIGO family. With these transactions, we're buying leading market positions, adding mobile to fix, creating in market scale and unlock significant synergies. And we'd call also that one of the key strategic outcomes is that this transaction will help to reshape and strengthen the industry landscape in Central America. We expect this will pave the way for a healthy investment environment to help fulfill our purpose of building the digital highways that will connect people and develop our communities in these countries. And with that, we're ready for your questions.

Thank you. [Operator Instructions] And the first question comes from the line of Mathieu Robilliard with Barclays. Please go ahead. Your line is now open.

Good morning, all. First question, please. Looking at the midterm targets that to communicate with just months ago. I was wondering, what were some of the underlying assumptions there? When we look at the revenues a mid single-digit and you're not far from it, did you expect basically when you give this guidance that all markets will be doing fine? Or does it allow for one or two countries to divert from positive trends? And likewise, on EBITDA, what brings the range of EBITDA from mid to high single-digit gross? What are the kind of assumptions that are behind that? And then second, looking to the quarter, and specifically Paraguay, so obviously, you flagged already in the previous quarter, but the competitive environment have deteriorated and I was wondering what exactly was going on. I mean, is it one of the smaller player Mediamix [ph] that is becoming more aggressive? Is it a question of scale for some of the smaller players and they really want to become the leader, which could suggest – it could last for a little while or is it something else is going on? Thank you.

Sure. So there is a lot there, Mathieu, but thank you. Because you're hitting on some really important points here. On the way, we'll look at our business and our long term guidance, I think this Q1 is a perfect example of indeed the fact that we do incorporate that not all markets we'll be hitting in all cylinders all the time. And Q1 is a perfect reflection of that. We've got some really great performance from some of our larger markets and we got Paraguay that requires us to focus to defend our market share. But the combination of that yields a quarter in which we're right on line with our guidance for the year and right on line with our midterm projections and effectively the strength that we now have in overall business and in some of our key markets allows us then to continue to defend Paraguay and continued to improve us El Salvador. So that's the benefit if you will have a good and well balanced portfolio. And for our midterm and the way we project, we do try to allow ourselves some of the way in some markets and that's precisely why on this quarter we're right on bang for the guidance. Now on the EBITDA part, effectively we've now reached that sort of mid-single revenue growth target. If you adjust for the B2B, lumpiness that I described this Q1, we're at 4.7%, either 3.7% or 4.7%, whichever – which one you want to take is within our guidance for the year. But more importantly into the longer term, obviously, when we've got revenue growth back in the system, we can put in operational leverage and continued efficiencies into the business. So going forward, it's a combination of operational leverage with few began to see…

Thank you very much.

And your next question comes from the line of Soomit Datta at New Street Research. Please go ahead. Your line is now open.

Hi, there. Yes, couple of questions, please. One, you talked a little bit about the lumpiness of B2B revenues in Colombia. Are you able to say whether in principle there should be a growth business or not? More is it at least stable? So we can kind of think about the year ahead. And then secondly, just slightly kind of conceptual, you mentioned that though 5G. Have you got any – you said you're thinking about it and you'll be ready for it. And perhaps, you could just quickly give some thoughts on where you think you might see spectrum coming first and what your approach to the new technology will be? Thank you.

Sure. So listen on B2B, I think, we've said before that normalizing for the lumpiness of B2B, we envision it to be a mid single grower and if you back out the last couple of years, you'll get to about that. Once you sort of normalize for the lumpiness of it. This Q1 indeed have that election contract in Colombia that I mentioned. And just to highlight the lumpiness of it, we already won the contract for the midterm elections in Colombia later this year. So there'll be positive lumpiness sometime later on this year. Our Panama results for Q1, which are pretty good on non-revenue growth. We're also wide dampened by lower B2B in Panama this year simply because we've got elections coming up and things do tend to quiet down when you've got elections coming up in a country. So this is just a business that would have some lumpiness but has significant growth, mid single-digit growth potential into the future that we said in the past. And with regards to 5G, as I said early on, ours is to prepare for 5G and keep a very close ear to the ground onto deployments and commercial developments in the more developed countries. So our views on 5G will evolve as we sold, start to play out in other market. It's very early days for us, but we like to plan ahead. So the key things that we're doing are investing a ton in fiber. As you know, 5G is largely a fiber technology. For 5G to work, you need to have use RF antennas pretty close to the consumer. And in order to do that effectively, you need a ton of fiber. And that's what we're doing. We're deploying over a million homes passed with a lot of popularity in every single one of our markets. With regards to spectrum, we are tactically buying some of the 5G spectrum that may be the one that gets standardize or deployed or auctioned in our markets. But 5G auctions in our markets are not even in the radar screen. We're still on 4G auctions, whether it's 700 or AWS pending in some of our markets. So we don't expect any 5G spectrum auctions to come our way in the foreseeable future. That's the long and short.

Very clear. Thank you.

Your next question comes from the line of Kevin Roe with Roe Equity Research. Please go ahead. Your line is now open.

Thank you. Could you give us an update since you announced in late February, your Costa Rica, Panama, Nicaragua transaction with Telefonica. I'm sure, you and your team has spent more time with in those markets. Maybe talk about the integration plans. I think you mentioned earlier, you expect this to close in the next few months. Is there a long pole in the tent down closing? And just your views in general on how those transactions will impact the industry structure of the markets.

Yes. So in terms of timing first, I think we had said that this would be a second half panorama for us. We think, we may get one of those actually closed during the second quarter and then maybe one in Q3 and one in Q4. So with a small adjustment, we are within that timeframe and that's good because just like we saw in Panama, having very short timeframes between signing and closing reduces the M&A risk and allow us to get control of the assets quicker and start doing our thing quicker. In terms of preparation for the integration, you can imagine that, we've hired advisors. We've got the teams allocated specifically to it. We're going through now that in-depth preparation in order as the transactions may come in place likely in a staggered manner. So we feel, we're quite prepared for that. We haven't just like in Panama we have had no hiccups in Panama. And we're now running the business for a full quarter. In with regards to the Telefonica acquisitions so far we haven't come across any hiccups, so we remain just as positive as we did, when we announced acquisition that these are good assets that we will be able to incorporate. And indeed, as I said, all the time that the long term strategic outcome of this is of course that industry structures will become healthier in most of our markets. Guatemala will go from three to two and El Salvador will go from four to three and the rest of their markets we'll have fixed mobile and there'll be a natural tendency for these ones convergence kicks in to move to two player markets or three mobile and two fixed mobile providers, which is a healthier industry. And this is important because it effectively does two things. One, it provides for a healthier mobile structure. Two, it unlocks pending spectrum auctions in most of these markets. Because once you have a healthier investment environment, players are likelier to have a business – a better business case and therefore more proactively work with the governments to unlock that spectrum that is healthy for the industry. And then lastly, as a third point, once you basically have fixed on mobile convergence, naturally those markets tend to converge to a two player market. So that's what we see happening in Central America.

That's helpful. And just a quick follow-up on M&A, one of your smaller mobile competitors in Panama and El Salvador has said, those two markets are non-strategic. How do you see future mobile consolidation occurring if it does occur?

I mean, I think, from a big picture point of view, it is healthier for the investment climate in these countries to have smaller number of players. That have a better business case and as a result, invest more in the development of the industry of this countries require. And I mean, basically the digital highways and networks that need to be built for the development. So I think that's beginning to become the case and most regulators are realizing that a smaller number of players that can invest more is a better outcome for their digital economies. So I see that as something that will continue to happen in this market. Now I don't know whether they will happen tomorrow, the day after or exactly when, but I quite clearly see that trend and obviously that was a significant part of the strategic rationale for acquisition of the Telefonica assets.

Very good. Thank you.

To be clear, Kevin, I mean, we are very focused on Telefonica. I mean, we are focused on the delivery and integration of Telefonica. And that's really where our sole focus will be over the next few periods.

I didn't mean to suggest, Kevin, with my long term view that we're going to do more M&A, like our plate is full. I was very clear on my script. We've got two strategic priorities. One is we're going to continue to deliver organic growth. We're accelerating and we're happy with where we're accelerating. And two, we're going to integrate this businesses and that's what we're focused on. So thank you Tim for helping me clarify that. There is no other strategic priority other than those two.

That's very clear. Thank you both.

Your next question comes from the line of Bill Miller of Hartwell. Please go ahead. Your line is now open.

Good morning, good evening. Tell me, if we had to look at the chart that you started out with on where you've come from in the last four years and where you are now. Tell us what it's going to look like in three years?

So it's all going to be data driven and hardly, data driven. We're going to look a lot more like a fully subscription business as we do more postpaid, more cable and we are deployed further into convergence. So it will look a lot more like a subscription business. There will be an increased focused on our parts on B2B, which we alluded to earlier, largely focusing on the small offices and the small and medium enterprises, but also deploying a lot of our B2B large multinational capabilities out of Panama and Colombia into the rest of our markets. You will therefore see a more stable portfolio and one with the growth prospects of that we have highlighted in our medium term guidance. And increasingly, you'll see us from a financial point of view because of that deliver and continue to generate growing equity free cash flow. It's effectively the medium term outlook on the business plan that we presented earlier this year. With the increased benefit of the Telefonica acquisitions, giving us a better market structure, as we were discussing earlier and helping us unlock synergies and pursue our B2B growth in Central America, which was of course not part of the early January, our long term plan that we presented to you.

Great. Thanks.

Your next question comes from the line of Johanna Ahlqvist at SEB. Please go ahead. Your line is now.

Thank you. Just a few questions. If I may, first of all in back to Paraguay, I'm just wondering, is it only mobile, where you see this as the competition or is it also impacting fixed? And then a question related to El Salvador, I'm just wondering, I know the management changes you made so forth, but has this sort of competitive climate or the market environment changed in any ways since Q4 since that the trends are continuing to look a bit poor currently. And then lastly, if I may, Jumia, you own the 6% stack, when and if or you expected to divest this stack or I mean, I guess it's not the strategic decision for you. Thank you.

Yes. So I'll take the first two and then Tim probably has a very clear model in his careful mind as to Jumia. On Paraguay our home business continues to perform extremely well. We're growing really, really well on home in Paraguay. We have a great network there. We've been making acquisitions and deploying cable. We've launched next-generation TV services. We've got exclusive soccer content. So that business continues to perform extremely well. We are seeing some fiber overbuild in certain neighborhoods that of course we are defending for. And as a result of that, we have a very strong home business, that is helping us weather their storm on the mobile business. So that's with Paraguay and I think I've been very clear on the Paraguay approach that we're taking. With regards to a Salvador…

Mauricio, sorry. Mauricio I just wonder if I could make one additional comment on Paraguay. I mean, I think it's fair that Paraguay didn't sort of meet our high standards for this quarter. But it is still a business and I think you articulated really well in the first question with great strength. And it still knocked out a 48% EBITDA margin in Q1 on flat revenues despite the intensity of what we saw. So I think it remains an extremely strong business for the group.

So as I said earlier, we're going to weather their storm and the outcome is going to be sustained market share and the timing of how long that will take, we don't know. But we got the strength to weather it out. With regards to El Salvador, we did indeed put a revamped management team late last year. We're very excited about what we're seeing from them. And the playbook that has worked everywhere else will work in El Salvador. Again, we're not exactly sure how long did the turnaround will take, Honduras is now working, but it took us a little while and I'm sure for a number of quarters, you heard us say it's going to work and you are wondering when exactly it was going to work. With El Salvador, we got to give the management team some time to put the playbook in place. It's harder in El Salvador because there were some IT issues that cost a little bit of the problem on top of the macro and political situation that you're very well aware of Johanna. But we've done all the things that we need to do with cleanup the subscriber base. We fix the IT systems, we've written off the bad debt. And as a result of that we remain very positive on El Salvador turning around. And we only see a better industry structure coming out of the recent M&A activities there in the medium term. So if your patience on El Salvador the playbook there will work as it has worked everywhere else.

Yes. On Jumia essentially we are in a sort of bankers post-IPO lockup period. And once that is expired, we'll consider what opportunities we have with that particular stake.

Which is not a small amount of money by the way.

That's why I'm asking. Thank you.

And your next question comes from the line of [indiscernible]. Please go ahead, your line is open.

Yes. Good morning. Just a couple of questions. One, in terms of the Telefonica acquisition, can you talk about – you need for equity to help finance that deal? Second question is, any sense of the timing of Chad sale closure? And third question, if you look out 2021, 2022 and potentially the company can become or already is, but even more so, kind of a very strong free cash flow story. You've guided over time to 15% capital intensity and yet, most expectations are near those levels. And given the incremental purchase of mobile with the capital intensity that entails vis-à-vis the Panamanian cable asset, obviously with a higher capital intensity. So how should we think about that over the next couple of years just in terms of how that capital intensity may change over time? Thanks.

Thank you, Mora. So on Telefonica, no, we don't envision and we never predicated the acquisition on the need for equity. We initially finance it with a typical acquisition bridge loan that we've been in the process of converting into a long-term debt. And Tim has made some significant improvements on that. And I'll let him address that in a minute. But the outcome has been that we have taken advantage of the good credit markets to actually put in place longer-term financing that had interest rates that were lower than we had envisioned in the acquisition plan. Further allowing us to be more convinced that we don't need any equity issuance to finance for Telefonica. Couple of other things that happened that coupled with the way we see the business delivering allows us to believe that this should be a debt finance. One is Jumia turned out to indeed be a successful IPO sooner than we had anticipated and with better outcome that we had anticipated. And we've already alluded to that. And when we did the Telefonica, we hadn't yet announced Chad, which as you know, has a nice purchase price on it. And it's something that going on to your second question, we're working harder to close as soon as possible and as soon as possible could be very, very soon or it could take a little longer simply because this is Africa and the political situation in Chad as I'm sure, you know Mora is very delicate. So we don't really control the timing, but like everywhere else in our prior transactions in Africa, we'll get to the finish line, hopefully sooner rather than later. So I think we've said effectively sometime this year, maybe much sooner than that. And with regards to free cash flow.…

Yes. Awesome. Thank you.

Your next question comes from the line of Lena Osterberg at Carnegie. Please go ahead, your line is now open.

Yes. No question on Africa. So I think I have one here. Could you say something maybe on what's going on the IPO in Tanzania? And if you look at the size of your business compared to Vodafone, which is already IPO-ed. Do you expect to get similar proceeds for your business? How much could if that case expect? And then also the government contract in Colombia, was it just for this quarter or is it also for Q2? I think if Q2 that you'll have the headwind as well, right? So just to remind us.

Yes. Michel, I may need a little help because I do think you're right. I do think it travels a little bit into Q2.

It'll be a little bit of Q2 impact, roughly the same impact that we had in Q1.

So, and again, these are good margin contracts and obviously the adjustments that we mentally make to get a feel for our long-term adjusted or normalized growth. Also have an impact on EBITDA growth rates, which I'm not going to speculate about. On Tanzania, on the IPO, I said on the last call that completing the IPO is a priority for the government, it's actually mandated by law and one that we're working very actively with them who to execute on. We have a very respectful then a very good working relationship with the authorities there. So we're focused on completing that as a next step. The amount that will come out of the IPO obviously are very consistent. We hope with the prior IPO, that's the only prior experience there is. And as a result of that – as a result, the only data point that we have in what otherwise is a fairly liquid market. So it's hard for us to have any other data points in that one. Anything Tim, do you want to highlight on the IPO in Tanzania?

Yes. I mean, I would add that it is complicated in Tanzania. I certainly wouldn't be penciling any proceeds into your models. Just at this point in time there are several steps that we need to take to prepare the business in terms of some internal restructuring, some internal plumbing that we need to do for that. And then once that has been completed, we'll then decide on the nature of the IPO – a little bit of that we want to do yet.

Yes. I think that the government has made it abundantly clear, we like to see the IPO completed and as a result of that that's what our current focus is on.

But previously you said that, you expected it sometime mid year, is that still the timing?

Yes. Still our timing.

Okay. Thank you.

Your next question comes from the line of Rodrigo Villanueva at Merrill Lynch. Please go ahead, your line is now open.

Yes. Thank you. Good morning, you two and Michel. Most of my questions have been answered. But I would like to ask regarding your stake in Ghana. If it's possible to dispose that 50% stake as well anytime soon.

I think the writings on the wall, Rodrigo. You've seen the last four years, we sold DRC, we sold Rwanda, we sold the Senegal, we sold Chad. And as we said, when we announced Ghana, we put in an agreement that is structured for an eventual sale of the asset. So I think the direction of travel is quite frankly unequivocal. Now the timing obviously will maneuver around trying to maximize our positioning there, but the direction of travel is unequivocal.

Understood. Thank you very much, Mauricio.

And your next question comes from the line of Chelsea Colon, Aegon. Please go ahead, your line is now open.

Hi and thank you for the call. I just had one clarification and related question. When you talk about 4.5% organic EBITDA growth, are you including Panama only in 1Q 2019. And if so, it seems that organic EBITDA growth is actually down about 4% year-over-year when you exclude the Panama. So I'm just wondering, what explains that? Is it mostly the B2B in El Salvador or is there something else?

Let me pick that one up Chelsea. I mean, just to be absolutely clear, Panama, we have adjusted the prior year to include Panama's prior year performance. So this is a like for like organic growth rate that we're quoting here.

Okay, great. Thank you for the clarification, I forgot that.

It's completely like for like. We have made that prior year adjustments so that we've got like for like growth.

And then just to further clarify then the B2B effect Colombia and to a smaller degree in Panama in Q1 that we were referring to earlier would make that growth rate higher, but we're obviously not giving you that number because it's very difficult for us to precisely calculate it.

Understood. Thanks.

The last question comes from the line of [indiscernible] at VTB Capital. Please go ahead, your line is open.

Okay. I have several questions. First will be, can you please tell more about any acquisitions that you are planning for this year. I think you mentioned that you were planning some. How much you will be paid if not confidential – if this information is not confidential, what will be sources of funding would be operational cash flow or some process from sale of assets or borrow terms? And in which countries are you planning acquisitions? Again, say that if this information is not confidential? Then second question is…

Yes. I just want to clarify. I don't know where you got this from, but we're not planning acquisitions. We made it clear that we made significant acquisition. And our focus now is on the integration of Telefonica assets into the group. And that opportunity – that's significant opportunity and the synergies that will come out of that. So I'm not sure we can answer any part of your question.

Okay. I see. Then are you planning to decree your net debt to EBITDA ratio? Or are you planning to hold it at the current level?

We indicated when we did the Telefonica deal, the net leverage will go up to about 3 times. We said that our long-term goal is to have leverage around about 2 times. This is on a proportionate basis for us and pre-IFRS 16 and that remains the case. And we see a medium term deleveraging plan through organic cash generation on EBITDA growth.

Thank you. What are benefits and reasons for sale of towers and then leasing them back?

Again, we view towers as passive infrastructure. We have made tower sales historically where we seeing good financial benefits from doing so. We get the benefit of getting local currency financing onto our balance sheet that is long-term and actually low rates. So where we see those opportunities, we've taken them in the past and we will take them in the future.

Okay. I see. Thank you.

Thank you.

There are no further questions.

Perfect. So with that – and that's kind of a good segue for me to just basically say we had a great Q1. It's right on track with what we're building into the future for TIGO. Right in track for our yearly guidance and right in track for our medium term guidance based on everything that we've discussed. And as I said earlier, and that last question allows us to ratify that. There will be no more M&A because our strategic priorities are one tapping on this significant organic growth that we have ahead of us, especially now that we're seeing it acceleration and demonstrating it on a quarterly basis. And two, focusing on the integration of the acquisitions that we've made over the last six months. We've actively bought about 50% of our market cap and there's a ton of synergies and a ton of strategic rationale for those. So we want to make sure that we focused on A, organic growth and B, tapping into the potential of those acquisitions. And we'll not continue to deliver out of those acquisitions as a result of the EBITDA growth that we're seeing come in into the business. And as a result of some of the disposition of the non-core assets that you've seen has continue to act upon. So effectively, we are just basically on plan. And thank you for joining us today and look forward to talking to you next quarter.