http://www.morningstar.com/earnings/31576826-millicom-international-cellular-sa-miicf-q3-2011.aspx

Millicom International Cellular SA MIICF
Q3 2011 Earnings Call Transcript

Transcript Call Date 10/18/2011

Operator: Good day, ladies and gentlemen, and welcome to the Millicom Quarter Three 2011 Conference Call. For your information, this conference is being recorded. May I also remind you that this call is being audio streamed over the web and is accessible at www.millicom.com, together with the presentation summarizing the key features of the results.

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

Mikael Grahne - President and CEO: Thank you, operator, and welcome to you all. As usual, you can find the slides for this call on our website. Please go to Slide number 3. In Q3, we recorded underlying local currency revenue growth of 9.1%. We have seen a stabilization of ARPU in Latin America with the loss of some international traffic in Central America being offset by the attractive development of data.

In Africa, there has been a further decline in ARPU as we focus on affordability of our products and services. We are seeing the continued strong development of VAS across the group and non-voice services now contribute to over one-third of our recurring revenue. More specifically in Latin America, half of our growth in recurring revenue is coming from mobile data services.

Despite an acceleration of investment in 3G and other services, we produced an EBITDA margin of 46% for the quarter. Normalized EPS increased by 30% year-on-year due our EBITDA growth in combination with the reduction of our effective tax rate and despite forex losses this quarter following the strengthening of the dollar. We are committed to delivering our previously communicated shareholder returns for the year, but with a more even distribution between dividends and share buybacks. The Board will propose to in EGM to be convenient due course on (exceptional) dividend of $3 per share to be paid in December. This combined with our ordinary dividend and the ongoing share buyback program which will continue in Q4 would bring total shareholder return for the year close to the $1 billion.

Now, let's look at the financial highlights for the quarter in more detail as shown on Slide 4. Revenues for the quarter was $1.150 billion, up 13% year-on-year or 9% in local currency. The EBITDA margin was 46%, 1.5 percentage points lower than for the prior year, reflecting greater investment in 3G and services. We ended the quarter with 42.2 million customers, up 13% year-on-year.

CapEx for the quarter was $217 million or 19% of revenues. Our CapEx in the year to the end of September has been low due to facing issues, and we expect it to increase considerably in Q4. We are revising our CapEx guidance somewhat downward to around $820 million for the full year, due to some delays in the delivery of equipment.

Our operating free cash flow generation in the quarter was grown at ($327) million or close to 34% of revenues

On Slide 5, you can see how our focus on higher value customer is being reflected in our subsidy cost which are almost 18% higher than in Q3 '10. In absolute term, as we supported the development.

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