Millicom International Cellular S.A.
Q4 2016 Earnings Call Transcript

Published: 8 Feb 2017

[Operator:]

Welcome to Millicom Fourth Quarter and Full Year 2016 results. As usual, the results will be presented by our Chief Executive, Mauricio Ramos; and CFO, Tim Pennington. Before I hand over to Mauricio, I would like to draw your attention to the Safe Harbor slide, slide 2 in the presentation pack. So, without further ado, I hand over to Mauricio.

[Mauricio Ramos:]

Good day to all, and welcome to our full year 2016 earnings call. As always, Tim and I will host the call. This year, we are publishing our first integrated annual report to bring together into one our corporate responsibility in the annual reports. This integration reflects how we continue to embed responsible business practices into our business processes. This integrated report will be out shortly, so please take a look, when you get a chance. Today, we want to cover three topics, one, we want to brief you on our fourth quarter and annual results. Two, we want to review the progress we have made during 2016 in building the strategic foundation for our future business. And three, we want to give you our outlook for 2017. So, let’s get to the 2016 results. This was the year in which we stepped up the execution of the strategy that you’re familiar with. We are making outstanding progress in building a strong foundation for future growth. Our net additions of mobile data users for the full year are a record for us. We added over 5 million smartphone users in the full year. We now have over 25 million smartphone users. Much more importantly, we added an impressive 2.6 million 4G users in that time. That is more than triple the 4G net adds we did in 2015. In the fourth quarter alone, we added 840,000 4G users. In cable, we have also really ramped up the pace of growth of the network build. In 2016, we build almost 800,000 fiber cable homes across our footprint. Our fixed network now covers 8.1 million homes passed. So we have indeed exceeded the target of 8 million homes we had announced earlier. This is already one of the largest cable footprints in the region and we’re growing it rapidly. We’re also filling the network faster than we expected. In the year, we added almost 0.5 million HFC RGUs to our subscriber base. In short, the cable and 4G mobile user intake was very strong for the year. And most importantly, it ramped up in the fourth quarter. It should be no surprise since we have squarely focused our CapEx investment in the areas of key strategic relevance and you know what these are, 4G network rollouts, fiber cable rollouts, and our IT transformation. This focus derives both efficiency and efficacy in our capital spend. On 4G, we went full speed ahead in 2016 in our network investment. We have now launch 4G networks in all of our Latin American markets. In one year, we more than doubled the number or 4G points of presence from about 1,900 to over 4,200. And this has allowed us to focus the commercial activity on 4G. With the strong additions that I mentioned during 2016, we now have 3.4 million 4G users in total. With a larger 4G network and more 4G users, we took 4G traffic itself to 30% of all mobile traffic in Latin America up from only 10% a year ago. Now moving mobile traffic to 4G is financially strategic, it has allowed us to reduce the capital spend on what would have been far less efficient additions of 3G capacity. Remember, the cost of delivering a bit of our 4G network is four to five times less than doing so over a 3G network. On fiber cable, I have already mentioned impressive increase in our network build. We’re both rebuilding, legacy networks and adding homes to our footprint. We’re doing so at a very fast pace because the opportunity is so large. In the markets, we operate in Latin America there are all put together about 28 million homes. Our network now covers only 8 million homes. So that’s less than 30%. That’s how big the opportunity is. In 2016 alone, we increased our network size but more than 12%. And now we have a larger state of the art network were ramping up broadband speeds across the footprint. We have increased broadband speeds in just about all of our markets in Latin America. These derives ARPU, differentiation and higher customer satisfaction. Our third area of strategic CapEx focus has been and will continue to be IT. The customer experience of today, and so much more of the future, will rely not only on those high speed data networks that we’re building, but also on IT. We have been rapidly acquiring our legacy IT systems to a digital stack. All our consumer billing systems or prepaid in Latin America have now been migrated. That’s over 95% of our prepaid users in the region. In two 2016, we invested heavily as well in ICT infrastructures, like data centers. Not only for our own needs, but also for our B2B clients. We built a Tier 3 data center in Paraguay and have begun construction on two more across the region. This allows us to grow our B2B business and at the same time get efficiencies for our own needs. The upshot on this slide is simply that we are ahead of target in building our 4G and cable fiber networks and very much into our IT transformation. And of course, this leads into our one key frustration

[Tim Pennington:]

Thank you, Mauricio. As said, I will now take you through the numbers. As Mauricio has just outlined, we made substantial progress towards our operational targets in 2016, and we’re picking up the pace in 2017. 2016 was a pretty tough year, but in Q4 we did see some positive signs

[Unidentified Analyst:]

Congrats on the results. I want to get more color on El Salvador. I’m just trying to understand whether what’s your relationship with the government there? Is there a risk of, I don’t know, you get contracts with the government, seeing a Guatemala-type situation, where it’s hard to collect and you had to write-off? I know it’s not a massive operation but, from a cash perspective, could hit the results. I’m just trying to understand what’s your view there. What’s the worst-case scenario?

[Mauricio Ramos:]

Sure. Thanks for the question, because if helps us and allows us to clarify some of the dynamics in there. As you know, El Salvador is a country fighting a very difficult but worthwhile war on gang violence, street violence, and we have a part to play in that. And we’ve been asked to play a part, not just ourselves, but other operators as well, in helping the government control connectivity around prison areas, in urban areas, to prevent continuation of criminal activity and to help fight in that war. And we’re doing so, as an industry, in a coordinated manner, and I emphasize a highly coordinated manner, with the government. I’m sure there are some frictions on how to be done and when to do it. But our relationship with the Government of El Salvador is nothing other than very strong. We’re happy to be able to help, even if it means that we have to lose some traffic on these sites.

[Unidentified Analyst:]

A follow up on that, I’m more concerned with the financial fiscal situation with El Salvador. I’ve seen and read electricity companies not getting paid, subsidies being delayed, just wondering whether there’s any risk from a cash flow perspective.

[Tim Pennington:]

Our B2B business in El Salvador is very modest at this stage, and it represents – Group-wide it represents less than 0.5% of our revenues. And we don’t have significant contracts outstanding there.

[Julio Arciniegas:]

Yes. Okay, Julio Arciniegas from RBC. Congratulations for the result. Could you give me some color about what is really driving the change in the situation in Colombia? You know we’re all in a competitive situation. I have seen, for example, America Movil, that they have been improving their KPIs in the last quarters. So, but at the same time, the methods that are giving you that, basically, pricing tariffs starting to stabilize. So how does…

[Mauricio Ramos:]

Yes, the first thing that comes to mind, Julio, amongst fellow Colombians, both you and I, is a phrase by Garcia Marquez, [indiscernible] there isn’t an illness that can last 100 years. So that’s, I think, part of what’s happening here. The mobile part of the industry has had a rough last 18 months with very aggressive competition and prices coming down. I think there’s been a stabilization in the subscriber counts, and, as a result of that, there is now a fair amount of oxygen being put into the system. I also think, since you’re asking for interpretations, that the tax reform has made the industry think, going forward, on more rationale behavior towards the market. Because otherwise, it would have been aggravation upon aggravation, a very difficult competitive environment and consumer pressure for a fiscal reform. So as I said, we’re now seeing three important signs. The fiscal reforms, as they apply to the telecom sector, are being passed on by all the operators to their consumers. That does not mean that there won’t be some sort of consumer effect felt. But the important thing is a more rationale behavior, that’s sign number one. As we said, postpaid is working better. There’s price increases there that are healthy. And the dangers and damaging price discrimination practices among geographic regions have now been taken out of the market. As a result of that, it is a better environment, but not one without challenges. And I think you’re beginning to see that trickle through the results of the operators that play in the market. I won’t state for our competitors, but certainly, as Tim said, we saw an improvement in Q4; and certainly December was better than November, November was better than October. So I don’t want to say victory here, I don’t want to sound overly optimistic, but it does seem like the winds are slightly more favorable.

[Julio Arciniegas:]

Thank you.

[Peter Kurt Nielsen:]

Peter Kurt Nielsen from ABG. Just a question related to Latam, please, and the transition which you talked a lot about, the good reasons from voice to data revenues. Have you made any changes to your pricing on this? Or is there anything you can do to speed up this process in terms of your pricing, bundling, et cetera? Thank you.

[Mauricio Ramos:]

I think that the word I would continue to refer to is price discipline on mobile data. I cannot highlight how important this is, to make this sustainable into the future and have mobile data more than offset the decline in the legacy business. I – we show you some numbers, but we’ve shown you before that we are holding pricing in Latam at around $5 per gig, per month, which is healthy and very sustainable into the future. And I did mention, because we thought it was relevant, that those 4G subscribers are coming in with about $20, on average, on ARPU. Now, of course, as we expand the base, that doesn’t necessarily hold at those levels, there are not significantly better than an $8 ARPU. So rather than price changes, what we’re doing is we’re holding the line on the pricing. And as I said repeatedly, we are successfully innovating on the way we price. I’ve referred before to an all-you-can-app pricing scheme in El Salvador, and the benefits of having pricing that is time-based and app-based, because it takes away the price elasticity that consumers normally have towards buying mobile data on our prepaid world, while allowing us to have price dynamic tactics that will make better use of the network; and, more importantly, recuperate some of real estate on the phone. The trial in El Salvador was nothing short of fantastic, and we’re rolling out elsewhere soon.

[Unidentified Company Representative:]

We’re just going to take some questions over the phone. Go ahead please, operator.

[Operator:]

Our next question is come from Mr. Robert Slorach from Handelsbanken. Please go ahead, sir. Your line is open.

[Robert Slorach:]

Thanks a lot for taking my question. On Colombia, just checking, did you say 15% increase in November in cable prices across the board? And secondly, I was wondering when the connection rate that forms part could go up. You connected about 700 – 7,000 HFC homes, and looking at around 200,000. Do you expect this ratio to go up over time? Thank you very much.

[Tim Pennington:]

The first one was confirming the price rises in cable; and the second one was about [indiscernible] connections.

[Mauricio Ramos:]

The first one was, Tim is just telling me, to confirm the 15% rate hike on cable; and the answer is yes, we did that November or early December across the base. Now, as I’m sure you realize, we didn’t just slap a 15% increase on a large subscriber base, we provide more value. So we provided higher broadband speeds, we provided some minutes. We did all the retention and enhancements to the product value that you would expect us to do. Very well prepared. We’ve been doing this in the industry for a number of years. And in Columbia, we have mobile to add to the equation as well. And, as a result of enhancing value, we were very prepared to retain better; and, as a result of that, we’re seeing very little churn. So it’s a product enhancement, not just a price hike. And thank you for allowing me to clarify that. And the second question?

[Tim Pennington:]

The second question was just about the connection rate, which I think is we are growing now at an extremely fast rate. And inevitably, there is going to be a little bit of a lag on the connection rate so you of penetration rate on new build to be as high as the average as a whole. I think we did pretty well. We generally pick up between 15% and 20% connection within the first year. We’re averaging out mid-early 30s generally, so I don’t think we need to comment more on that.

[Mauricio Ramos:]

No, that’s exactly right. There’s two movements there that you have to pay attention to. Number one is we’ve focused on ramping up the run rate of the build. And we’re now at 300,000 per quarter, so we’re comfortable that we can now build at that rate. That took a lot of blocking and tackling. This is getter construction crews; this is training construction crews; this is assigning territory; this is getting to procurement for the key building players. And it’s just a lot of work to ramp up that kind of a build over a number of countries. We’ve nailed that. And you’re rightly focused, I think, on, okay, are we getting the subscribers in, because that’s commercial activity that we’ve got to do right behind after we build. And we are. As Tim mentioned, 12 months into buildor getting penetration rates of about 15% to 20%, depending on where we are. And those are pretty good, by any industry standard. And that’s a little bit better than we had anticipated in our business plans, but right about where we should be 12 months out. I think lastly, so that the numbers don’t become confusing for you guys into the future, remember that we’re upgrading corporate homes; and, as a result of those, some of the build goes into upgrading homes and some of the build goes into retaining into the future some of those homes. So just make sure you factor that into the math when you see the homes connected. And we’ll try to do it for you, but just keep that in mind. And, obviously, that’s great revenue that we want to hold on to.

[Unidentified Company Representative:]

Can we take another questions off the phone, please?

[Operator:]

We will now take our next question from Stefan Gauffin. Please go ahead, your line is open.

[Stefan Gauffin:]

Yes, hello. Two questions from me, please. First of all, on Project Heat, where you earlier talked about $200 million to OpEx, CapEx, and working capital savings, can you say anything of what you’ve realized of this in 2016 in money terms; and secondly, what can we expect for 2017? And then also, on El Salvador, you have had the issue with the security and the close down of the mobile network for a while now, still the problem seems to have escalated in Q4. Why has this happened? And should we expect this level, going forward?

[Mauricio Ramos:]

Let’s start with the second one on El Salvador, which I think it’s obviously a judgment call that you’re asking us to make on what the situation is in El Salvador. I think we’ve done, as an industry, a very strong move of support towards the government and the fight in El Salvador. It is not a small amount of sites that we have shut down; it is not a small amount of traffic that we have shut down. It has, as we have told the government, impacted traffic beyond that of the traffic in the prisons, because that’s the nature of a mobile network, and the population has felt that. But I think the hit has already been taken. That traffic has been shut off. I don’t imagine why there would be further shutdowns of the networks at all. We have done it in a number of prisons around El Salvador. So we feel like this is an effect that is in the rear-view mirror, rather than a continuing long-term problem. It’s already taken. The traffic is already off. With regards to Heat, we’ve given you an overview of the project. But this is a multi-year project. We feel like 2016 was a great year in taking down a lot of the important savings. It is, for P&L, refurbishing. Off the top of my head, refurbishing and for P&L are the larger numbers in what we’ve been able to achieve in 2016. But moving capacity from 3G to 4G is probably the largest ticket that we’ve been able to put through into our efficacy program. And we articulated to you that a couple of trimesters ago saying it was all about 4G and why it was all about 4G. We’ve now delivered on moving the traffic, and also on having the savings trickle down. I’m a little shy of articulating how much of it was in 2016 and how much of it was in 2017, because I know Tim is just going to kick me underneath the table. And he just did.

[Tim Pennington:]

No, we’re making good progress in this. This is about bringing, primarily, it’s about transforming our business to make us more efficient into the future. And we expect cost savings and we highlighted we expect about $200 million cost savings to come out of a three-year program. Within 2016, we’ve made good progress. We’ve probably picked up round about one-quarter of the benefit of that, round about $50 million of benefit into the first year. I’m not going to make an estimate on to the next year because we, if anything, we’re probably running somewhat faster than we originally expected. But these are complicated matters. We’ve transformed our billing system, converting billing system; that has taken a whole year to do, and it’s not an easy project. We have many other projects like that. They could go well, they could take longer, so I don’t think we want to forecast too much here what’s going to happen in 2017.

[Unidentified Company Representative:]

We will take one more of the phone and then we’ll come back into the room.

[Operator:]

Our next question comes from Mr. Bill Miller with Hartwell. Please go ahead, sir. Your line is open.

[Bill Miller:]

Okay, in talking – can you here me, David. Okay, in talking about the three to five year plan historically, has anything changed? And as you look at the horizon, you said there were 28 million cable homes that could be passed. Can you expand even from there? Or is that the limit? Or what do you have to do to make it even bigger and better?

[Mauricio Ramos:]

It’s a great question. If you take that $28 million number and you apply the billed percentage that a developed economy has over the number of homes that percentage is 90%, 80%, somewhere in the U.S.; and about 90% in Western Europe. If you use the more advanced Latin America countries in terms of broadband, like Chile and Puerto Rico, it’s around 75%, give or take. So 30% is a long way to go to get to 75%. Even in the program that we’ve articulated of a target of 12 million homes, we’d still get to only 40%. Now I get the fact that these are economies with lower GDPs per capita, but 40% is still pretty low. The reason we haven’t beyond 12 million as a medium-term target is not because the opportunity is not there, is not because we’re capital constrained, we’re throwing all the possible capital that we can to 4G network rollouts, IT transformation, and the cable bill; it is simply that there are construction crew constraints and permit constraints that do not allow us to build any faster than 1 million homes a year, because it’s in multiple jurisdictions. It’s over five jurisdictions that we’re doing this program over. Now if we can better at it Bill, if we can train more technicians, if we can get more permits, if the machinery can be further rolled up, and it’s pretty darn good today, then we’ll ramp it up. This is us going at pretty high capacity here.

[Bill Miller:]

Great. Thanks very much.

[Stephen Bechade:]

Hi, it’s Stephen Bechade from Citigroup. I’ve got quite a few questions; I’ll try and stick to just three, to leave some time for other people. The first one is, clearly, there seems to be a focus, with your recent transactions, of scaling back in Africa, and your free cash flow tends to come from Latin America. Would you be willing to give guidance indicators for the Latam unit, please, on the same way you give Group guidance, so service revenue, EBITDA, and CapEx, even if it’s very vague? My second question would be on just delving a bit more into the Colombian strategy. I think if I look through your KPIs, you’re losing homes connected on a net basis in Colombia, despite expanding the network, which I think is rare for a cable company. And I think it’s also rare for a challenger mobile operator to be losing market share, which I think is also a fair prognosis of where you are in Colombian mobile. So maybe you could help to explain how you intend to turn those two factors round in Colombia in due course. And then, the third one, I’ll try and keep it fairly simple, do you have an equity free cash flow impact of Africa? I’m sure it’s something that you have looked at as a management team what – I know you’ve turned the operating free cash flow positive, but on an equity free cash flow basis what’s the Africa impact?

[Tim Pennington:]

I’ll deal with the last one, quickly. We are still equity free cash flow negative in Africa, after finance lease charges and some small amounts of taxes. And that is clearly in our objective to turn this equity free cash flow positive this year; that is one of the key aspects of this. And actually, one of the parties contributing to that was Senegal, which was one of the reasons why we’ve taken the step to sell Senegal. They’ve doing extremely well, but ultimately we were trying to invest more than we felt was reasonable to get us to the position we wanted to get to.

[Mauricio Ramos:]

So to add to that, I think Tim has given you a pretty strong message. Just as we said Africa was going to be operating cash flow breakeven in 2016, we’re now strongly saying we’re going to make it equity free cash flow breakeven in 2017. And we think we have the track record to show that we can get that done. Not a small achievement, and will allow us to be even more strategic around anything we do in Africa. This has been the strategy from day one, and we’ve articulated it as such. With regards to more…

[Tim Pennington:]

Let me just deal with the first question, because I can deal with it quickly I think, because the answer is, no, we won’t give specific guidance on Latam. But what I would say was that for 2016 a lot of the movements were coming out of getting Africa right, getting our corporate costs right, managing our CapEx. I think we did those pretty well, and I can say so myself. Going into 2017, to achieve the guidance we’ve just put out everyone’s got to contribute, everyone’s got to fire on the whole side of it. So that guidance effectively applies to Latam, just as much as it does apply to Africa, or wherever. And you can probably read through it’s what we need to do in Latam as a consequence of that.

[Mauricio Ramos:]

Stephen as you can see, we’ve got a great CFO here; he just stopped me short of spilling the beans there on more granular guidance. That’s good, that’s fantastic. And listen, on Columbia, this is – you mentioned two or three things in there that are important to address. The first one, the homes connected, this is the copper-cutter effect, and this is why we need to reconvert those homes into cable network as soon as possible. And there’s a lot of focus on that. So these are not cord-cutters, these are I call them copper-cutters, simply because those are networks that we acquired that have subscribers on them that do not have the HFC networks. And we’re ramping up, building those, and retaining those, and cross-selling into those, so there’s that effect there, for sure. And that’s why we give you this ability on HFC versus the entire plan so you can follow through our effort, indeed, in cross-selling and retaining those subscriber base. I think the mobile piece of the equation is, obviously, more concerning, because we think we’ve got the cable piece of the equation nailed in Columbia with the load share, and the price rises, and the HFC pick-up in subscribers. It doesn’t mean that we can’t do more, but I think the mobile is one where we need to be a lot more focused. And then, you mentioned, indeed, some subscriber losses, a lot of that is cleanup. So let’s make sure we understand that

[Unidentified Company Representative:]

We’ll go back to the phones for another question, or several questions from the phone. Go ahead, please, operator.

[Operator:]

Our next question comes from Johanna Ahlqvist from SEB. Please go ahead. Your line is open.

[Johanna Ahlqvist:]

Yes, two questions, if I may. First of all, back to Columbia and the implications from the tax, so do I interpret you right, that you don’t expect any sort of EBITDA impact from the new tax in 2017? And my second question relates to the service revenue outlook for 2017, where you expect to have a higher growth than in 2016, so if you can give a split of what you are thinking here in terms of Latin America. And do you expect to see any difference in Central America and South America on this matter? Thank you.

[Tim Pennington:]

Well, let me just quickly deal with the tax. What I said was we don’t expect any impact from corporation tax. So our corporation tax, there’s going to be a few pluses and a few minuses, it’s quite complicated; but net-net, there shouldn’t be any difference. The impact on EBITDA is uncertain to us; it will be a consequence of consumer behavior, impacts of the VAT increase. And if they are passed through and customers absorb them then there won’t be any impact; if they don’t, there could be an impact. That remains uncertain. But I think we’ve shown we’re adept at trying to manage that. And if, as Mauricio has just been talking about, we start to see price stability in this market then that should be within the bounds of what we expect. And the service revenue?

[Mauricio Ramos:]

Well, and I think we’ve given you a fairly clear guidance on service revenue, and actually this year we’ve gone a little bit more in providing guidance; we’ve provided a little bit of operational guidance, and we’ve guided towards an OCF target. So we hope that, as a package, is pretty comprehensive to you. We really shouldn’t be more granular than that, and I hope you guys all understand that.

[Johanna Ahlqvist:]

Thank you.

[Unidentified Company Representative:]

Next question please operator.

[Operator:]

Our next question comes from Lena Osterberg from Carnegie. Please go ahead. Your line is open.

[Lena Osterberg:]

Yes, I have a few questions. First of all, I was wondering a little bit if you could tell us how much of revenues are MTRs in Columbia? So roughly how much do you expect that it will impact revenues with the new MTR cuts? And also, if you previously – did you benefit significantly from these asymmetric rates? And do you expect that there will be an adverse impact if you go to symmetric rates? Also, I was wondering if you could say how much cash you up-streamed in 2016. And then also, on D&A charges, if you could give some indication for 2017. They came up now when you did the new PPA for Guatemala and Honduras, if you could give some run rate into 2017, please?

[Tim Pennington:]

Let me have a go at these. In terms of the MTR’s, I haven’t got the figure off the top of my head; and I’m not sure I’d give you it, even if I had. We did benefit from the asymmetric impact, and that did give us an impact of EBITDA, but it’s been a diminishing impact. This has gone on now for three years, I think, the asymmetric – in fact, longer than three years. But for the last three years we’ve seen a diminishing impact. As you saw on the slide, the reduction in our voice and SMS traffic. And as we transition across the data the EBITDA impact of the asymmetric, I think, is diminishing, not to the point of extinguishing them, but I don’t think they are significant. I think they are in the mid, mid/high single-digit millions today. And the same on MTR’s. When we’re looking at growth rates to 1 decimal point, it may have an impact on us. But in dollar terms, these are likely no longer big dollars to – they’re big dollar impacts on us. When I look at the cash up-streaming, we upstream around about $450 million this year for more forms of cash up-streaming; that is enough to pay the bills, as it were, so we’re happy with that. And in terms of D&A, we – what you saw in the P&L is sort of broadly the ongoing level. There was a fair-value adjustment, and this is sort of very complicated simply because of the IFRS requirements for us on Honduras and Guatemala. But without boring you on those details, it gave rise to a fair-value exercise, which gave rise to a change in our balance sheet intangibles, which gave rise to a depreciation charge, which goes through it. It’s non-cash, but it’s big, it’s about $80 million, I think, and so it’s important just to flag that. Touch wood, that won’t happen again, and there won’t be any other fair-value exercises that affect our depreciation in 2017. I pray that’s the case. But I think that is the right number is to use whatever we’ve got for – in the P&L this year as a good proxy, going forward. Is that okay, Lena?

[Lena Osterberg:]

Sorry, I couldn’t hear you properly on that DNA.

[Tim Pennington:]

The level we have in the P&L this year is a good proxy, going forward.

[Lena Osterberg:]

Okay.

[Tim Pennington:]

I’ll take this in a little bit more detail, up in Stockholm, when we meet.

[Unidentified Company Representative:]

I think we’ve got time for two more questions from the phone.

[Operator:]

Our next question comes from Thomas Heath from Danske Markets. Please go ahead.

[Thomas Heath:]

A few questions, if I may. Firstly, on Colombia, you mentioned the staff reductions of 450; just to wonder a little bit what the margin impact will be of that in isolation, if we’ll get to see the positive impact already from Q1. Secondly, on the Tanzania listing process, is it still the case that only Tanzanians will be able to buy shares and that we’re looking at a confiscation of 25% of the assets? And then thirdly, more on upselling to data and 4G. If we look both in Central America and South America, you have a rapid increase in mobile data penetration, I think, 4 percentage points higher data penetration in the base in Q4, more or less both in South America and Central America, which is a fast incremental charge; you’ve been adding about 1 percentage point to date, the penetration, quarter, historically. Can we expect this to rapid level, but with a, perhaps, fast erosion of voice ARPU? Or how should we look at this? It seems that data ARPU is turning south in Central America, but still growing in South America. Some questions.

[Mauricio Ramos:]

Sure, so let’s start from the last, backwards. The answer is its right down the strategy; it is as simple as 4G, HFC, and IT transformation with a lot of focus on the consumer. And we’ve articulated a clear message

[Tim Pennington:]

Yes, I’ve nothing to add on Tanzania. In the first question, we – our headcount reduced by 450. The majority of those were early retirements; they generally are long-serving members of our Company. The payback on that is just under two years, is a $20 million cost, so the impact to us will be about $10 million of EBITDA, which is 50/60 basis points. But given that there is a lot of moving parts in Tanzania than Colombia.

[Thomas Heath:]

That’s very helpful. Thanks.

[Unidentified Company Representative:]

Next one will have to be the last question, operator, please.

[Operator:]

Our next question comes from Chris Grundberg from UBS. Please go ahead. Your line is open.

[Chris Grundberg:]

Thanks, guys. I just have a very brief one, and then a nice easy one to finish on. The brief one is just around the Ghana sale. I wonder if you can just add any commentary there in terms of time horizon. Appreciate it’s a sensitive topic, but just, I guess, in terms of any vague commentary you can give on what we should be thinking about. And then the last, the easy final one, just wondering, as you sit where you do, looking across the Group now, where do you see your highest priority markets for incremental investment? What do you see as the best return opportunities in terms of cash flow growth on a three or five-year view across the Group? Thanks.

[Mauricio Ramos:]

Great question. Listen on Ghana, I think the right way to characterize this is simply that, as we do with our entire portfolio, and you’ve heard me say this, a number of times, we always look at what our strategic options are. And if there is one that is better that we can do on our own then we take that option. And in Ghana, in particular, the industry structure is very fragmented, so there is opportunity there for the industry structure to get better. Having said that, I don’t want to say anything better, simply because, as with everything else we do, when the cooks are in the kitchen you better not disturb them; you just let them go on with the recipe and hope that the meal is served appropriately, hot and at the right time. And on the question of better returns, all of our markets in Latin America are relatively similar. In all of those markets, we have the ability to build a state-of-the-art fixed network underneath our mobile network. That’s true even in a market in which we are not the premier leading provider of mobile services, like Colombia, where we are challenger. There, the opportunity is identical. Therefore, the opportunity, as a whole, lies in driving returns across all these markets by quickly building that network that will allow us to become a leading fixed mobile convergent player. Over a period of a long-term horizon, you’d be shocked at how similar the returns are across our markets, simply because the state of development is compensated on one segment versus the other. Now, I think the only other point I would make, which should be fairly obvious as we look across returns on our portfolio, it is not just return but size of the opportunity. And quite evidently, the opportunities are bigger where the markets are bigger, and that’s why Colombia plays such an important part in our portfolio. Tim, do you want to add anything?

[Tim Pennington:]

No, I don’t actually. I think that covers it.

[Mauricio Ramos:]

Hope that helps you a little bit in our thinking.

[Chris Grundberg:]

That’s great. Thanks.

[Mauricio Ramos:]

Well, listen, guys, I appreciate the time you’ve taken, and all the questions. I want to leave you, hopefully, with a view that almost two years into the process now we have a strategy that we trust has been clearly articulated to you all. We know that it is clear and fully supported by our Board. I cannot emphasize how cohesive the Board and the management team is. The strategy has been downloaded methodically and very thoroughly to all of our teams. They’re actually listening to this call. And I thank them for being so aligned with us. Number two

[Operator:]

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