Hello, everyone, and welcome to Millicom's First Quarter 2021 Earnings Call. I'm Michel Morin, Head of Strategy and Investor Relations at Millicom. And this event is being recorded. And all participants are in a listen-only mode. Our speakers today will be our CEO, Mauricio Ramos; and our CFO, Tim Pennington. After their prepared remarks, we will have a Q&A session. By now, you should have received a copy of our earnings release, which is available on our website, along with the slides that we will be referencing during today's presentation. Now please turn to Slide 2, for our Safe Harbor disclosure. We will be making forward-looking statements, and these involve risks and uncertainties, which could have a material impact on our results. We will also be referring to many non-IFRS metrics throughout the presentation, and we define these metrics on Slide 3, and you can find reconciliation tables in the back of our earnings release and on our website.

Thanks, Michel. Good morning, and good afternoon, everyone. Thank you for joining us today on this first videoconference call. I do hope that you enjoyed the video that we just showed. This video gives you a summary claims into Tigo's vibrant culture. We refer to it as Sangre Tigo. It is our culture, our war cry, our work ethic and our passion and an important competitive advantage. It became more and more important during the pandemic as it rallied all of us to be there and close to our customer base during the crisis. It helped us navigate well through the same, and we will see in a minute just how extremely well it did, because our purpose as a corporation is clear to all of our 21,000 employees, because our strategy is well known by you, and it can be flexibly adapted to circumstances. Because our culture, this Sangre Tigo, is powerful and perfectly aligned to our purpose and our strategy. In the last few years, indeed, we have built one of the leading telecom platforms in Latin America. We are today an employer of choice, a top great place to work in the region. Our networks now consistently rank best for quality. Our Tigo brand is top of mind in our markets, and we're number one or number two in all of our countries in Latin America. And now we're 100% focused on this region, as we recently signed agreements to sell our two last remaining operations in Africa. These transactions will help us reallocate capital, further delever our balance sheet and focus on building our future in Latin America. Now, please turn to Slide 5, as I am keen to highlight our phenomenal and promising results in the region this quarter. This is our Q1 in a single slide. First, Q1 was nothing short of a fantastic quarter for us. We beat all of our internal projections, and we're now above pre-COVID levels on almost all KPIs, countries and lines of business. Second, we had record net adds in Q1 on both Cable and Mobile. And that came on top of the record quarter we just had in Q4 as a result of our customer base is up substantially year-on-year in both Mobile and Cable. So we expect this strong net momentum to drive revenue growth in Q2 and in the second-half of the year. Third, our strong performance is very broad-based across all business lines and every country. And fourth, this is investment-led growth. As you have heard me say many, many times, we're a network-centric company. We continued to invest for the long term throughout the pandemic, and these investments are now beginning to pay off.

Thank you, Mauricio. Well, what a difference a year makes. This time last year, we started the quarter strong, but we exited with great uncertainty. This year, we came in to the quarter strong, and we have exited it even stronger. On Slide 13, you see our usual bridge from IFRS reported numbers to the LatAm segment numbers we are discussing on this call. On Slide 14, you can see the breakdown of the 2.2% year-on-year organic growth for LatAm. Very importantly, Mobile reported a positive year-on-year growth largely due to extremely strong prepaid performance. Volume was very strong, as Mauricio has explained. ARPU fell a little, but that was largely to reflect the mix shift between pre and postpaid, and in fact, pricing has remained robust across most markets. Now Mauricio has talked about the fantastic Home KPIs. This fueled the Home revenue acceleration to just under 8%. In B2B, while we are still negative, we've made substantial progress in the quarter, and we are expecting to see the growth rates turn positive in the coming quarters. On Slide 15, you can see more detail on a country-by-country basis. Now please note that we have adjusted our earnings presentation to report local currency growth rates rather than organic growth rates. The main difference being changes in accounting or perimeter, neither of which was a factor in Q1, 2021. And in fact, you can find more details on our website. So from the slide of local currency growth rates, we saw once again Guatemala and El Salvador posting very strong revenue growth. Guatemala benefiting from extremely good Home and B2B numbers, offsetting a slight deceleration on the Mobile business. Whilst in El Salvador, the recent network and spectrum investments have fueled very robust mobile growth. In Colombia, growth improved in…

Thank you, Tim. Before we take our questions, let me recap the quarter. First, this was a very strong Q1 with record net additions and excellent operational performance across all our markets and businesses. Second, our growth is accelerating, with organic service revenue growth returning, which is driving both our strong EBITDA and operating cash flow growth in the quarter. March was particularly strong, as I've already said, and this momentum has continued into April. We're feeling a lot more confident about our outlook today for the rest of the year than we did just a quarter ago. Third, our leverage continues to decline, and we expect to make a lot more progress on this front by the end of the year, particularly as we now have EBITDA growth in the system. Fourth and finally, our priority will remain to invest in the business and in our networks to drive faster organic growth. We're emboldened in this approach by the results of the last couple of quarters. Because of that, we want to keep the immediate flexibility to invest more this year in business as we see the clear opportunity to capture more growth. As a result of all this, we are confirming our goal to deliver at least $1.4 billion in operating cash. You all know that we could deliver much more, but we feel it is best to retain the flexibility that has worked so well for us. And with that, we're now ready for your questions.

Thank you, Mauricio, and thank you, Tim. We will now begin the Q&A session. So with that, our first question will come from Stefan Gauffin at DNB. Stefan?

Yes. Hello. So a strong set of numbers, both on subscriber intake, service revenue and EBITDA, and you talked a little bit about your outlook, but perhaps not as outspoken as you have been earlier. And in Q4, you commented that you were unlikely to meet the medium-term targets regarding service revenue growth, mid-single digit and high single digit -- mid - to high single-digit growth for EBITDA in 2021. Given the solid start and much easier comps, solid subscriber intake, do you still think it is unlikely that you can meet these targets? Or are you just being cautious? I'll stop there with the first question, and then I have a country question as well.

So let me start with a little bit kind of our view on what has changed. And then I'm sure, Tim, you can add. What we have seen during the last 15-months, pandemic plus this quarter, is prepaid coming back very, very quickly as soon as there's mobility allowed. And as we look forward, even with limited curfews or nightly curfews here, we find that consumers on prepaid adapt very, very quickly. We're seeing that they top-up more, which is good for the prepaid business, and our connectivity has remained particularly important for them. Home, as you've seen, because penetrations are so low and people want broadband, and we've been providing that service, is growing rapidly. And B2B, as I said, is coming back. So we feel a lot different from the way we felt certainly a year ago, and certainly, the way we felt one or two quarters ago, because we've seen that the teams and the strategies that we put in place to manage the pandemic has reacted so strong. So we're ahead of pre-COVID levels with growth now stronger than it was before. And we see a strong and healthy runway for us to continue to grow. As we become more and more emboldened, as we said a quarter ago, we're likely to invest more this year to capture more of that growth going forward because everywhere we've build Mobile or everywhere we've build Cable network, we see the results immediately. And whereas last quarter, I was talking about keeping flexibility, because there was a lot of uncertainty about macro and where we would be with regards to COVID and because we wanted to keep some flexibility in that if we needed, now, Stefan, we're keeping up flexibility largely because we want to invest to capture growth, and a lot less because we're uncertain about our ability to manage through the remaining part of the pandemic. So our outlook is, as you've noticed, certainly improved and pretty positive. Tim, do you want to add anything to this?

Yeah. I would just -- I would say -- I think I said to you guys last quarter that my litmus test for Q1 would be that we have higher growth than Q1, '20, because that was pre-COVID, and we did deliver that. So clearly, Stefan, you're right that the outlook is looking strong for us. Q2 and Q3 are going to be -- because there was such difficult quarters for us last year, I think the comp there is not going to be that meaningful in reality, and certainly, from an internal point of view, we're not sort of patting ourselves on the back to step over the Q2, '20 comp. Yes, we're looking at sequential growth, and we're looking at the growth against 2019. So yes, on those headline numbers, we're going to have a good year in 2021, but I think in terms of our outlook, it's about sustainable long-term growth rates. And I don't think that we can sort of take a lap of honor on hitting a 2021 number. We're building a business to drive to those medium-term growth rates on a sustainable basis in the future.

I think, Stefan, what I said was, I think on the prepared remarks, which I believe is true, is that, in developed markets, you saw sort of a COVID bubble, if you will, for broadband. We view it very differently in our markets because penetrations are low and speeds are low and demand is so high. For us, I think, the runway is much longer. And as I think that's very, very important for us. There really is just a long runway for broadband adoption in Latin America. So what this couple of quarters have shown is, if you're on the street, if you build a network that demand will come sustainably to us into the future.

Yes. And then just a question on Colombia. There's a new competitor. You stated that you have seen limited impact in Q1. But what have you seen in terms of operations, changes in price plans, marketing activity, etc.? Any flavor would be helpful. Thank you.

Yeah, sure. So first, a little bit about the new entrant and then a little bit more about Colombia. So for clarity, the new entrant launched right after Easter in early April. It's actually some six months later than they had announced they would launch, so obviously, there were some hiccups there. The launch itself, in terms of the product offer, was exactly as we had expected given all the work that we had done to see what they have done elsewhere. Effectively, they did something similar to what they did in Chile in terms of the product offer. There was no difference, nothing unexpected there, which is basically three more times data for the same price. And the market matched immediately. Literally, we were so operationally prepared, that we matched within a matter of hours. And of course, as we expected, it's pressure on ARPU, and that's completely within the expectations. Let's put that into context for us rather than what they did. We're not an incumbent in Mobile in Colombia. We only have 15% market share. So we'd be opposite. We are a challenger, and that's what the team has been preparing to do regardless of the new entrant, because we have that brand-new network with very low payloads on it. So our network is not legacy constrained at all. So we can play the high allowance game that is what the market is playing now, specifically high allowance on the data game, because we have this brand-new MT network on it. So we're well-positioned, extremely well-positioned to play what I call the volume game now, because we increased commercial distribution, as you know, and we have this brand-new empty network with full-spectrum capacity, and you will develop it faster than anyone else. So what this is going…

Thank you. That's very clear.

Thank you, Stefan. Our next question is going to come from Marcelo Santos at JPMorgan. Marcelo?

Hi. Good morning to all. Thanks for taking the questions. I would like to ask for competitive updates specifically on Paraguay and Bolivia. Paraguay, more on the fixed segment. And in Bolivia, how is the behavior of state-owned Intel?

Sure. So let's start with Paraguay. Macro in Paraguay, COVID has been managed quite well. And we're now seeing a little pleasure for the government to accelerate vaccinations. But overall, Paraguay has remained very resilient and you know this. If you go back to what we've done in Paraguay, to answer your question more specifically, we've put in a new teams two or three years ago, we acquired spectrum, we put a new network, and we've significantly increased our quality of service. At the same time, we continue to build Home, and we've been closing that price gap that existed in Paraguay to basically defend completely our market share with a better value proposition. GDP is expected to grow in Paraguay, 4%. So we've now basically stabilized Paraguay in terms of volume, and you see that in the numbers. And we think we've reduced our price gap. And with all the goods that we have, the network, the teams and the content rights, we think we can begin to see that business grow into the future, particularly to answer your question, because we've seen competition be more rational. It isn't that it isn't there, but it is more rational, Marcelo, and that's largely because they've seen us, I think, really strong in defending our position and our market share, giving little room to the others to play anything other than a more stable, more rational game. And you've seen the quarter numbers. I think they had a speak to this point, the net adds are positive, both on Mobile, some 60,000, and now the base up its 6% year on year. And Home as well is growing quite nicely, the base is up 4% with almost 20,000 net adds. So Paraguay is more stable. Bolivia, as I said on the prepared calls, it had a double whammy, political and economic uncertainty and then competition. Just to say it very quickly, there's new management at Intel, and that new management has appeared to be a lot more rational in their pricing. And I think that's with the view that I think the government needs the company to produce, and as a result is a lot more rational. And you saw that in the quarter actually in terms of the net adds. Mobile is 50,000 net adds, and Home is phenomenal with 50,000 net adds, strongest quarter since 2018. And March, as I said on the calls, was particularly strong. So we see Bolivia certainly more rational on pricing and coming up. Tim, maybe you want to add a little bit of color from your point of view.

Not to what you said, Mauricio. I think just maybe more generally, pricing has been pretty stable across all of our businesses in the quarter, kind of prepaid in particular has been -- we've actually seen some price rises in some markets. So now fingers crossed, there's some kind of stability out there.

Perfect. Thank you very much.

Thanks, Marcelo. So next, we have a question that came in via email. I'm just going to read it for you, Mauricio and Tim. It's from Johanna Ahlqvist with SEB. She's asking, maybe this is for you, Tim, how big is the impact from lower bad debt in the quarter? And whether or not we expect this trend to continue going forward? The second question was on competition in Colombia, but actually, I think we just answered that one, so we can probably ignore that for now.

So, on bad debt, I mean, we did have a lot of our debt charge than we had a year ago, probably about $10 million lower. But it's kind of sustainable. I think the thing that we're seeing is that our collections are really very, very good, and they've been improving. We've seen churn reducing, so people aren't leaving as much. And we have introduced things like installation fees, front-end payments. So our customers are more committed. So while our bad debt charge is lower than it was a year ago, I think this is an underlying sustainable sort of lowering of our bad debt charge, at least during this next period.

So, what happened during the pandemic is that we got better on our collection path and our processes. We put those upfront installations, the industry followed, and we just got increasingly better because it was critical. And all of those improvements we've kept going forward, and they seem to be making, creating a better industry.

Great. Thank you. I think that should answer the question from Johanna. So next up, we have Sergey Dluzhevskiy from Gabelli. You can go ahead with your question.

Good morning, guys. Thank you for taking the questions. My first question is on Mobile Financial Services, I think you provided an update a few quarters ago. I was just wondering, has anything changed now that you're out of Africa? And I guess, I was wondering about the Mobile Financial Services business in Latin America, where do you expect it to go? I guess what is the size now? And where do you expect to be in five years?

That's a great question, Sergey. Of course, just on building the business, the MFS or FinTech business, and as we build it from a very strong base, by the way, as you know, we've got 5 million users, we're going to give ourselves a little bit of time to get that properly built, and we eventually will start reporting on it more on a quarterly basis. We just don't think it's important for us to be focused on the quarterly gains, where we're looking at the -- building the business long term. And that's true for -- actually, the two platforms, Sergey, that we're trying to build as we grow Cable, Mobile and B2B, there's a couple of platforms that we're building. One is infrastructure, of course. As you know, we have a ton of towers and now a dozen data centers. We installed one in Bolivia just yesterday, actually. We got about 100,000 kilometers of fiber. So we have an infrastructure platform there that we're strategically figuring out how to best optimize and put out. And then we have this FinTech platform. We brought in, Sergey, new management. So we've got an entire new management for our FinTech platform. We're also developing local capabilities. And the key point here is that those 5 million users are growing, their ARPU stable and growing. We're doing over $2.5 billion of transaction. But as I said on a couple of quarters ago, we're still in a low-margin, high-volume peer-to-peer game. We want to build that platform, be the payment platform or choice on all of our markets, and then on top of that, we're going to build the FinTech business. So we'll give you more color in the following quarters.

All right. Thank you. And my second question is M&A. I think over the past few quarters, you guys have been pretty clear that the near-term focus is on, whether or not the crisis, reducing debt, delivering on synergies, making the right investments for the future. But, I guess my question is, given all that, are there still assets that you would be interested in, given this pandemic-affected environment? And also has anything changed -- has the pandemic or any other event over the past 15-months changed how you think about M&A and relative attractiveness of certain markets or certain assets?

So, we don't have a current M&A focus, Sergey, because I think, as I've said many, many times, that our greatest opportunity is in-house. Now we're putting our money, as you see, to grow the business organically. And then as I've said, we want to keep the flexibility this year to put more money into better coverage, wider coverage, both on Cable -- and particularly on Cable and Mobile. So that's where we're going to focus our money. And we also have, as you've heard me said a number of times, internal M&A, which I think is very accretive to us. So we want to keep our eyes focused on that.

Great. Thank you.

All right. Thanks, Sergey. And actually, the next question, I'm going to read it for you, Mauricio. I think this one is for you. It's from Bill Miller, a longtime shareholder. He's saying that we've done a lot of strategic things recently. What are our next strategic endeavors over the next one to three years?

Great question. I think I addressed it already. I mean our strategic focus remains to grow our core business. We have great, great broadband demand, which I believe is sustainable and long-term. I've said this for a number of years. It is just now being crystallized. So we will continue to remain focused on great network, great customer service and customer intake on a very network-centric platform. We'll continue to build and add customers for us. Strategically, we're now only Latin America. So over the last five to six years, we've completed the exit product that we allocated capital to Latin America, and our organic growth opportunity is strong. Our inorganic growth opportunity is also strong within the business, as I said earlier, because there's a lot of EBITDA, almost $800 million of EBITDA that we manage, but we don't own. So that's a tremendous organic opportunity that's in-house. And we're very focused on building strategically these two new platforms: our infrastructure platform and our FinTech platform, and those are important strategic moves for us. And we're building this unique telecom infrastructure and FinTech platform. That's what our focus is on.

Great. Thanks, Mauricio. We did get a follow-up by email, again from Johanna Ahlqvist at SEB. She's asking about Tanzania expected proceeds and the timing. I think she was also curious as to when we might deconsolidate the results from Tanzania. So perhaps that's more for you, Tim.

Yeah. So we have now signed the sale purchase agreement. There was a period now that takes place, which is to go through regulatory approvals. It's very typical in all telco deals. These things don't have defined time lines, but we'd expect on a normal basis would take six months to go through those processes. We will not be deconsolidating until we have gone through the process and we have regulatory approval. That's just an IFRS thing, and we will continue to hold it in our numbers until then. But I think, frankly, we've got enough disclosure for you to understand the impact on the group anyway and make your own adjustments. And as to the proceeds, we will be using those to effectively pay down debt, reducing leverage. As with all of our previous Africa deals, we haven't announced a price. We won't do that until we get to the end of the process. So hopefully, Johanna, that covers it.

You're going to have to just trust us a little bit that this is a competitive process with multiple bidders. You can see that we're happy with the outcome strategically as we are also financially, because it helps us delever and it helps us focus on our strategic future, which is Latin America.

Perfect. Thank you. We have Stefan Gauffin from DNB back with us for a follow-up question. Stefan?

Yes. I refrained from asking this question earlier, so now I have the chance. So it's on Panama. It was actually that market that surprised me the most given the really, really strong recovery. And you state that the consumer business is back to growth and compensates for weaker in B2B. I can see the subscriber numbers, both Cable and Mobile, are strong. But can you give some more flavor on the overall development for you in Panama?

Yeah, absolutely. When the dust settles on the pandemic and the impact it had on Panama, which, as you know, GDP came down 18% last year. That's not small. When the dust settles on that, it will be clear that this was a phenomenal strategic move for us. Dollar-denominated No. 1 market position, executed strategically through M&A in less than 18 months. You will have seen perhaps, Stefan, that yesterday, we changed the brand to Tigo after a very successful integration process. So we've now really created a single platform in Panama that did not exist two and a half years ago, and it's branded Tigo. The outcome once the dust settles is going to show very, very strong for us. I think we're outperforming in every segment in Panama. And as you know, customer intake is followed by financial results. Both our Home and Mobile businesses in Panama had significant important intake. Mobile is up 130,000 net adds just this quarter. The base is up 18% from what it was a year ago, pre-COVID levels. Mobile up 18% from what it was before, because the cross-selling, which was the strategic move we wanted to implement, is working. Remember, we bought an asset that has significant Home market share, state-of-the-art network and the Mobile asset had much lower subscriber base. So we're cross-selling. Every time we go to a home, and we did this throughout the pandemic, we sell SIM cards into that home. It's cross-selling at its best. But the Home business itself is actually being very, very strong. We added 13,000 net adds. The base is actually 8% year on year, and ARPU is down slowly. So what does this tell me? That once the impact of COVID is behind, this business is going to blossom, and it's going to show all the potential that we thought it had when we acquired the assets before COVID hit. Now lastly, Panama was hugely hit by the pandemic, we all know that, but it's also recovering super, super fast. The government has reacted strongly, and has one of the better vaccination programs that we're seeing in the region. The numbers for COVID were high in Panama, the impact was high, but the vaccination has been secured, and vaccines have been secured and a vaccination program is in place. And a result of that, we'll also see, we expect, B2B rebounding in Panama. I don't know exactly when it will be, but with the economy it will come back. So you can see, I think, that we believe we've put all the pieces of the puzzle in Panama to be ready for a strong comeback.

Okay. Sounds great. Thank you.

Thank you, Stefan. So we'll go from one Stefan to another, Stefan Billing from Kepler Cheuvreux. You're on.

Thank you very much, and hi, everyone. Yeah, I have a couple of questions. One is that it seems to me that your Central LatAm markets have benefited quite significantly from rapidly growing remittances. I think there is some data out there as well. Just curious if you agree on that. And also how sustainable do you think this trend on remittance growth is? When will you meet, let's say, tougher comps on that side? That's one question. And the other one is, once again, if you can share some details on M&A synergies, and also, how much integration costs you have incurred? And how much is left? Thank you.

I'll give you, Tim, a few seconds to prepare number two. On the first one, Stefan, yes, remittances have been very strong throughout COVID. We expect remittances to continue to be strong. They seem to grow every year high single digits. And the interesting thing, and this is why we think it will continue to grow, is that this trend goes back 15-years, and they remain strong. There were question marks around whether they would weaken throughout the pandemic. The pandemic demonstrated that they didn't. So going forward, we expect them to continue to be strong. It just seems to be a natural, very important part of what they are. And as you know, in most of the countries, perhaps with the exception of Panama and Nicaragua, remittances are 10% to 20% of GDP and growing low to high single digits. So it is just a structural part of those economies, which is very positive.

And on the synergy question, Stefan, well, run rate now is around about $35 million. That is basically a target level of OpEx, CapEx synergies that we set out as adjusted for Costa Rica. We've got them by the end of the second year. We had planned to get the full run rate by the end of the third year, so into the fourth year. So we're ahead of that. We have said around about $40 million, 4-0, on the costs of the integration. We think we'll spend about $60 million, so another $20 million to go. If you remember, the original estimate was $100 million albeit that did have costs to recur. So actually that bid has gone really, really well, and we've now effectively dismantled the integration team that we had because the business is running very well on a BAU basis. But there's a lot of nitty gritty stuff to do, we've just migrated to an SAP CRM system. And so kind of a lot of stuff like that. There's an awful lot of work done. But I do think that is very evident that we've been getting high levels of synergies than we originally expected, and we've got them faster.

Okay. Thank you very much.

Thank you, Stefan. That is all the time that we had. Mauricio, I'm going to turn it back to you for some closing remarks, and I also just want to mention that anyone who missed the video that we showed at the beginning, you can get to see it again at the end. So, Mauricio?

Well, just two big thank you, one to the entire Tigo team, thank you for a job really well done, and thank you to you all for participating in today's call and keeping an eye out on how we do. Thank you very much, and we look forward to speaking to you one-on-one in the next quarter. Thank you.