Q1 2022 Millicom International Cellular SA Earnings Call
Okay.
[music] Master Hello, Daniela here well.
If there's anyone will be added up getting out of what they call opinions are a necessity for somebody that is doing in Memphis that was that I think my silo I know exactly.
How they will because they are worried about my.
My last thing, although he asked I'll focus it sounds like they've done them and they come out of government hands on where youre, sometimes forget yeah boy Phyrric divorce I ran I was on the site you can look at my salary or there you go.
That's one of them now where lets say I mean, my my email mindless, but then also sort of thoughts upon us unions.
Lastly, I want to let the Malawi, Okay, you got a lot of that Lionetti deal Yeah, I'm impressed that arena.
Nissan and freight quite up would've been there my love it.
It's almost sort of where you're also gonna excited what to say Oh, no. It will not form a guy, Indiana. It's all it's like when might have gotten away with it.
[music].
Hello, everyone and welcome to our first quarter 2022 results conference call.
Before we begin please take a moment to review the safe Harbor disclosure on slide two of the presentation, which is available on our website along with the earnings release <unk>.
During the presentation, we will be referencing non <unk> measures and we define these on slide three and we provide reconciliation tables to the nearest <unk> metric in the earnings release and on our website.
Finally, I would like to point out that the <unk> and income statements data in today's presentation exclude Honduras, because the country is not in our perimeter and we now include Guatemala, which we fully consolidated since acquiring 100% last November .
And in addition, after closing the sale of our Africa business earlier. This month of April we have moved it to discontinued operations and have represented the historical to remove Africa.
I'll now turn the call over to our CEO Mauricio Ramos for his prepared remarks.
Thank you Michele good morning, and good afternoon, everyone. Thank you for joining us today to discuss our first quarter results.
We started the year in a very very strong note our operating and financial results are ahead of our plans. We also continue to make meaningful progress on our purpose driven commitment to build digital highways that connect people develop communities and improve lives in the countries, where we operate.
<unk> you just show is a strong testimony to that a.
A few weeks ago with flip the switch to connect and other communities in Panama, which had never had access to mobile data before and there was also an alluded a couple of weeks ago to review progress on the build of new sites that will be data connectivity for the first time ever to over 100000 individuals. All of these also makes our brand even closer to the commuter.
We operate in purpose and brands working together now let's go over the key highlights of the quarter starting on slide five.
First we continue to sustain very strong customer growth across all our lines of businesses and in all our countries.
We continue to convert the customer growth into very strong service revenue growth of four 6%.
Third we're now fully and finally out of Africa. We are now a geographically and strategically focused provider of broadband services in Latin America exclusively and fourth we continue to make progress on our ESG initiatives. It's a really strong start to the year. So let's begin with our customer intake on slide six.
In short our customer base continued to grow at a rapid pace on the left you can see our postpaid mobile business. We added 340000 postpaid subscribers in the quarter. This is our third consecutive quarter with more than 300000 net adds as a result, our postpaid customer base is up 27% year on year.
And is now approaching 6 million subscribers. This is because Colombia is not hitting on all cylinders and on the right is our home business. We added another 74000 fiber cable customers in the quarter, our fiber cable customer base is now more than $4 million up 8% over the last 12 months our net.
<unk> continue to grow at this very strong pace, because theres continued pent up demand for broadband services.
Because we stayed close to our customers during the pandemic, providing basic service when he was needed protecting our customers and also enhancing the closeness of O'brien and because we stayed on the streets selling servicing doing network maintenance and upgrading modernizing and enlarging our network.
As a result, our brand strength has improved and customers are preferring that very same Brian .
Now please turn to slide seven to see the conversion of that customer growth into services revenue equivalent.
The main key message on this page is simply that for a third consecutive quarter every country and every business unit grew service revenue organically.
Business is today's stronger and healthier than ever across the board in every country and in every line of business revenue grew a healthy four 6% in the quarter. This is consistent with our medium term plans and it is even a bit better than we had budgeted internally, particularly if you consider the Q1 last year was very strong.
Key highlight on this page is our <unk> business, which continues to recover and grew 5% in the quarter. You may recall that we have repeatedly said that <unk> would be the last recover from the effects of the pandemic. It is now beginning to do so.
Q1 posted our fastest growth in more than three years and <unk> not only because of the recovery, but more importantly, because of our revamped strategic focus in this area, which we started some years ago I will touch on this again later.
Service revenue growth for home or fiber cable business was 5% in Q1 growth. This year was strengthened and be more back ended towards the second half of the year as we accelerate our build program throughout the year as you will see I mean.
The other key highlights of the quarter as Colombia, which continued to accelerate here, 8% revenue growth in Q1, So let's look at Colombia on this next slide <unk>.
In short Q1 was an exceptional quarter in Colombia with another quarter of a spectacular postpaid net adds of 216000.
We have now added 1 million postpaid subscribers in Colombia over the past 12 months. This is 50% growth in the postpaid base in our year driving mobile revenue growth in Colombia.
17% year on year as.
As you know we have invested with strategic focus to get here. The news is that it is.
And with coverage and quantity is at its best ever we're adding subscribers customer satisfaction is high we're gaining share and revenue is increasing with margins now beginning to expand.
Please note that Q1 is our toughest comp for 2022 comps actually get easier in Q2, and Q3, given that the competitive dynamics changing Columbia exactly one year ago.
And also because the largest part of the investments to deploy the network increase the commercial distribution network and enhance our service platforms are largely behind us now.
Said differently.
Where we wanted to be not only funding of the new competition, but harnessing the new market dynamics to grow our own business now as you also know the game is far from over there is still a lot of work for us to do and we still need to invest for further growth because we still need to achieve the scale that we need in order to sustain adequate level.
For profitability in the long term in Colombia.
The good news is that we are on track.
Of that and before I move on and I wish to acknowledge the clarity of vision, the spirit and determination and above all the bolts on good people culture that Marcellus Aldar, Jimmy in Colombia, and the entirety of Columbia team are deploying.
I know, they're listening to this call as we usually do and this is their work so a big thank you to the entire Columbia team.
Now, let's talk about our home business on slide nine.
In Q1, another outstanding 74000, net customers, we are well on track towards target of more than 1 million net adds in the next three years. Indeed, we continue to build a strong residential fiber cable broadband business.
Call our home business that is now $1 $6 billion in revenue over 4 million residential subscribers and passes about 12 million homes.
During the pandemic focused on increasing that will penetration.
And the results today speak for themselves and what penetration is now at 34%.
This makes the business more profitable and further proves the business case and there is still room for penetration rates to grow.
Many of our more mature nodes have penetrations of well over 40% and the new ones are reaching their penetration levels just as we expected.
So with so much demand for residential broadband we are accelerating our network expansion just as we indicated we would do during our investor days earlier. This year. So you can see on the right. We have now ramped up our building activity to a run rate of 600000 islands with this we're tracking towards our target of around 1 million homes built per year.
We're also on track for about 50% of our new builds to be fiber to the home this year.
And effectively all the new builds to be fiber to the home going forward after that.
<unk> had even more simply home remains really on track.
Let's move on to <unk> on slide 10.
So likely recall, we told you at the Investor day that we have been executing on our strategy to accelerate our growth in <unk>.
He also likes you recall that we thought the segment would be the hardest hit by the pandemic and the slowest to recover to.
When the pandemic, we've stayed close to our customers base and we protected while we continue to develop that new strategy.
That strategy has a number of key elements a more focus to include the signed customer segmentation approach simplifying and streamline product set which is anchored on high speed connectivity in cloud and digital services and for which we have both invested internally to develop our own deep technical and marketing capabilities and also developed important partnerships with companies like <unk>.
Amazon and Microsoft to support our capabilities complement the needs of our customers and leverage the investments we have made in our own network infrastructure, including our <unk> fiber under 13 state of the art tier three data centers, we have built over the last few years.
As a result of this increased focus will be.
Adding customers every quarter, especially in the fast growing SME customer segment in which we have placed particular focus.
With the pandemic now, adding our <unk> segment is starting to strengthen our top line growth <unk> was up 5% in the quarter right in line with our long term ambition.
Let's turn our attention now to <unk> on slide 11.
We're making some important strategic progress. We've told you just a couple of months ago that our strategy and protocols are in place and that our management team and our development teams are also in place.
And that we are now squarely on execution mode. In short we're right on track with our long term plan our customer key commodity base is up 17% year on year, we are ramping up digital customer intake, we're rapidly increasing merchant acquisitions across the board. We have now relaunched people what the model, which is an important market for us.
And we have secured all the necessary regulatory approvals to launch in Panama. Another important market in the next few months given the potential we see we're happy to continue to make the additional investments required to capture the long term value of this opportunity even if this means.
Is it does short term pressure on our OCI this year.
We need to do is explain to you that this is going on and why it makes so much sense for us to continue to make those investments.
Now please turn to slide 12 for a bit of a big picture update.
At the end of the quarter, we closed the sale of tons EMEA, yes, with this transaction. We are now out of Africa as planned and as promised and with this and with the full ownership and consolidation of that demand that we are now clean and focused Latin American owned business with clear geographical and strategic direction.
With the small exception of allude US we are now also a full consolidated all of our businesses.
Which means you can see our true revenue growth our high profitability, our growing operating cash flow and given our positive earnings per share and strong holding equity free cash flow.
Plus our earnings release is about 10 pages shortly by the way this space, which means it can be more easily understood.
Equally important is that our journey out of Africa has freed up capital and allowed us to put this capital management resources to Latin America.
This has allowed us to make important investments into Panama, and Nicaragua and to increase our ownership in Guatemala, and all of these have been great capital allocation moves.
In these three countries and none of them have the number one position there.
They are all healthy two player markets, they all have growth and strong cash flow margins.
All have helped us increase our exposure to countries that are growing economies and stable currencies, Panama is an investment grade dollarized economy, Guatemala will grow GDP over 4% this year and the Consol remains one of the strongest currencies Nicaragua remains one of our fastest growing businesses. As you saw this quarter on the back of strong and growing slow remittance.
Yes.
These investments are becoming key pillars to our equity free cash flow story for the next years to come.
As we reiterated at our Investor Day, we are a purpose driven an ESG focused business both things define who we are on both thing give us a competitive advantage. As you also know we have now submitted our science based climate targets, we expect those targets to be validated later on in the year.
And we are of course are already implementing action plans that will allow us to deliver on those commitments about 30% of our Capex budget. This year is earmarked for projects that not only have strong returns, but it also helped us improve energy efficiency and curb emissions.
We've also continued to move forward with all of our ESG programs and in that regard, we're happy and proud to report that we were highly recognized once again in the most recent great place to work survey.
We now ranked number five in center may cut across all companies in all industries and ranking the top five in eight of our nine countries. This is not only great ESG accomplishment and a source of pride to all employees, but it also positions us to continue to attract the best talent across the board in all our markets on that note, let me turn it over to Sheldon to cover the financials.
In detail for the quarter.
Thank you Mauricio let me now take you through the Q1 numbers as a reminder, and as Michelle mentioned at the beginning of the call. The way we present our financials. This changing this quarter with the acquisition and consolidation of Guatemala, and the sale of Africa.
As a result of both of these changes we will now focus your attention on the performance of the group.
This includes all of our operations, except Honduras of which we own 67%, but account for under the equity method and our reporting under <unk> standards.
Let's start on slide 15, with service revenue, which was $1 3 billion in the quarter, that's an increase of 37% year on year due to Guatemala acquisition.
Excluding the acquisition and adjusting for FX movements organic growth was four 6%, which is consistent with the mid single digit medium term growth target that we've communicated at our recent investor day.
Our mobile business grew 4% and contributed more than half of the overall growth in the quarter.
Almost all of that came from postpaid, which grew more than 9% year on year.
This solid performance in mobile as a direct result of the additional investments we've made in our networks and spectrum over the past couple of years, especially in Colombia, El Salvador, Nicaragua and Panama.
Our fixed business grew at four 8% and that reflects the five 3% growth in home that <unk> mentioned as well as a three 6% growth in the fixed part of our <unk> business.
Finally, you can see the FX detracted from reported growth this quarter largely due to the Colombian peso, which strengthened at the very end of the quarter.
8% weaker on average compared to a year ago.
Drilling down further on slide 16 to the service revenue performance by country. Once again every country performed better in Q1 than they did last year.
Standout performances were from El Salvador, and Nicaragua, which grew about 10% each with all three business lines performing well in these two countries.
Colombia had a very solid quarter with growth of seven 8% with our mobile business up almost 17% and thats coming mostly from the very strong postpaid net adds.
That ratio mentioned.
Which is driving ARPA up almost 4% in local currency <unk>.
Paraguay in Panama, both had solid mid single digit growth with both seeing stronger trends in mobile and in fixed.
<unk> had a slower growth in Q1, but this was actually in line with our expectations for the quarter.
As most of you know our Guatemala business continued to grow throughout the pandemic. So the comparisons in mobile our tougher in Q1.
And as we flagged in our Q4 call.
<unk> is a country, where the global chip shortage has had a bit of an impact on our handset sales and this drives new customer activations.
But the situation is gradually returning to normal and we expect global growth to show improvement in the second half.
But again the key point here is that we had expected Guatemala would have a slower start to the year and this was already reflected in our plans for the year.
Meanwhile growth in home and B to be in the country was very solid in the quarter and the broader economic conditions in Guatemala are good with GDP expected to grow 4% and with inflation of around four 5%. According to April forecast from the IMF.
Finally in Bolivia, the situation hasn't really changed our mobile business continues to see archon pressure due to price competition and we are mitigating this impact by expanding our fixed business as quickly as we can.
As you know we have slowed our build activity during the pandemic and we are now in the process of ramping our build machine here.
We continue to see very strong penetration in these new notes that we are installing and we're hitting 20% penetration much sooner than what we had assumed in our investment case.
So we're looking to accelerate our planned investments here.
Okay.
Okay, turning to EBITDA on slide 17.
EBITDA of $564 million was up 56% year on year due to the consolidation of Guatemala.
Organically EBITDA was just slightly positive as we reinvested the revenue growth into our <unk> fintech business and into customer acquisition, mostly on our Colombia business.
This is actually right in line with the plan for the year and most of these investments are now behind us and the comparisons start getting easier in Q2, especially in Colombia.
Also impacting the year on year comparison were lower than usual levels of bad debt provision and incentive management compensation in Q1 of 2021, which both normalized in 2022.
I would point out that taking all the above into account our EBITDA margin for the group was a healthy 40% for the quarter and a sequential increase from the margin in Q4.
Now looking closer at EBITDA performance by country on Slide 18, leading the pack in the quarter was Paraguay up 9% with a margin of 46%.
And this good performance is the result of operating leverage after four consecutive quarters of positive revenue growth driven in large part by an improving pricing environment and our mobile business.
Salvador, Panama, and Nicaragua delivered solid mid single digit growth as we have come to expect from these countries.
As I mentioned earlier Columbia continues to be impacted mostly by increased sales and marketing expenses to support that accelerated customer growth over the past year, and we will start to lap that increased marketing spend in Q2.
EBITDA in Colombia was also impacted by the in sourcing of a network services contract that was not renewed and from the impact of a government mandated 10% increase in minimum wages in January as that country is seeing higher inflation than in most of our other markets.
But despite these cost challenges the EBITDA margin in Colombia grew on a sequential basis this quarter, reflecting our ability to find savings to offset such decrease operating costs.
Automotive was up only slightly basically inline with the service revenue growth, which I just discussed while Bolivia, and Honduras were down about 3% and both markets. We're seeing heavy competition in mobile which is impacting <unk>.
Higher energy costs are also having impact in many countries, but so far we've been able to offset that impact with savings in other areas. As a reminder, energy costs represent about 2% of sales across our markets.
Moving to slide 19, you can see how our operating cash flow that as EBITDA less capex compared to the previous year.
Operating cash flow of $365 million in Q1 was up 51% year on year due to Guatemala.
Organically it was down seven 6% and thats because of phasing of our capex for the year.
As most of you know the timing of Capex spend can change a lot quarter to quarter.
So the first quarter of a year doesn't always give you a good indication of how the year is trending.
Last year Capex was heavily weighted towards Q4.
This year, we're cutting our capex spend to be more equally spread than in years past as we're accelerating our revenue generating projects as much as possible to more quickly benefit from them within the year.
The key message here is that we are on track with our plans for the year in fact, our service revenue EBITDA and operating cash flow were all ahead of our budgets in Q1.
We continue to target 2022, capex of around $1 billion as discussed at the Investor Day, and we're on track towards our operating free cash flow growth target of 10% on average over the next three years.
Finally, let me close on the leverage situation on slide 20.
During the quarter, we were active in debt capital markets issuing a new five year sustainability bond for 225 billion Swedish krona, which we immediately swapped into U S dollars.
The proceeds will fund climate and social project categories in accordance with our framework.
Our Guatemala business also issued a new 10 year $900 million bonds and the proceeds were used to repay a significant portion of the bridge loan used to acquire the remaining 45% of that business.
As of the end of the quarter, we had $450 million remaining on the bridge, but.
So we used the proceeds of Africa to pay that down to $350 million as of today.
As you can see on the slide our equity free cash flow was negative $69 million in the quarter, which reflect the usual seasonal patterns and our working capital and Capex spending.
Our net debt declined by a $90 million during the quarter that largely reflects the disposal of our Africa business, which was discontinued in the quarter.
That sale took place on August 5th after the end of Q1, so our net debt and leverage metrics at the end of March do not yet reflect the cash proceeds of about $100 million that we received from that sale.
We also continue to move forward with our plans to complete a $750 million rights offering and you should have seen that earlier today, we announced the <unk> state of May 12.
Plan to use proceeds to pay off the remaining $350 million of the bridge and for general corporate purposes, including repayment of debt liabilities and other obligations.
Adjusting for both the African disposal proceeds received in April and for the rights offering.
We ended with leverage of 3.09 times were 296 times, if we exclude the impact of leases.
And we reiterate our target of leverage to be below three times by the end of the year.
And with that I'll turn the call back over to Mauricio to wrap up.
Thank you show them before we take your questions. Let me recap the key highlights for the quarter first we had another strong quarter in terms of customer growth, especially in postpaid <unk> second we're ramping up our home fiber build and we expect this will drive faster growth in home in the second half of the year third service revenue growth for print in Q1 is riding.
Line with our medium term targets that we outlined at the Investor day, and we're getting the customer growth we need to sustain this level of growth going forward fourth we continue to win in Colombia as you can see from our very strong postpaid mobile performance over the past year and this is helping us to transform our overall business in that country and fifth and finally, we continue to make significant progress on the <unk>.
Since we made to you at our recent Investor day.
And in case, you have already forgotten, let me remind you of that press release that we published with all the key commitments. We have made as you can see on slide 23 securities. Once again on one page eight commitments that will generate and unlock significant shareholder value.
You haven't done so already the digital photo printer press release and bring it to our meetings. This is what the plan is hold us accountable to delivering the message today. The key message today is that we are squarely on track to deliver on all of these key initiatives is a great start of the year is a great start.
These initiatives were now ready for your questions.
Alright, Thank you Mauricio.
We will now move to the Q&A session of the call if you'd like to ask a question. Please remember to send US an email at investors at Millicom Dot Com and we will add you to the queue.
With that we will take our first question from a set of Santos from JP Morgan.
Yes.
Obviously.
Okay.
Sorry, I hope you can hear me.
First question I wanted to ask was about the competitive environment in Colombia, but not on the bio side, but on the fixed side yesterday, we hurt America module make a comment that.
The broadband environment had deteriorated so I wanted to hear your views on that.
And the second is also the competitive environment in Paraguay.
There was a sale of one of your mobile competitors and.
Also wanted to understand how is it in the fixed side against.
Telecom Argentina. Thank you.
Alright, so let's start with Paraguay, because I think Paraguay is a commentary of where.
For quite a bit of time.
You heard us say that we had all the good <unk> and all the employees to really perform there.
The spectrum that we bought earlier on the network build out that we did the <unk>.
<unk> care on content either read on a state of the art position, both in fixed and mobile.
And some years ago and <unk>, we're putting a new team in place, putting a very very strong customer driven strategy.
Reworked our product and what you see today is that we're growing quite well in bottom line.
We've continued to secure the soccer rights will continue to build and penetrating network in Paraguay in the fixed side.
And mobile has started to come back and as a result of all of that Youll see product why now for a couple of quarters back to growth. So otherwise a market, where I think we got it right Marcelo quite honestly after a little bit and it is one of our high performers today.
With that with the benefit addition, or the additional benefit that it is one of our really good cash flow performance. It's got high margins by nominal market position today, better product mix and better competitive pricing and we're certainly not only with standing by for <unk>, Inc.
Either way now.
Now a little bit of context going forward as you know product why is where our <unk> product is the most advanced.
We would try to the most so Paraguay will become a testing pool for us to see what else. We can do with teco money and we would only do that if we felt that we got everything else in place as we feel that we do so now we're asking a product team to focus on <unk> as well to see what we cannot move forward.
Okay.
Colombia.
John .
As you can see on again I got to rollback, a few years right. Because this is not a quarter story. This is a this is a continuous story right.
<unk>.
Just a year ago on this call we were all scrambling to figure out whether.
<unk> was a challenger or tivo as a defender.
Quite frankly told you. This is it for US were challenged during this market. Finally, we have an opportunity we've got the spectrum. We've got the network. We've got the teams are deployed we're going to invest for these and you'll see that on mobile it is working it.
Really is working we're getting all the subscribers.
Not only defending of the competition as I said on the call, but actually growing and is very market space.
Fixed in Colombia.
Picture on whats going on in Colombia, we are the second largest.
Fiber cable network in Colombia.
Increasing penetrations as you saw.
We're building in Colombia in areas, where we think Theres greenfield great opportunities in Colombia.
And.
There is indeed, a little bit more price competition in the market.
Okay.
We are growing through that if you look at our fixed growth in Colombia is still pretty healthy and we continue to bring in the customers.
Two key things because I'm sure. It's on your mind Marcello two key things.
We will have access to the Bogota market going forward.
Because the <unk> Bogota, which we don't own is being opened up.
Here's in Bogota, our fiber are opening it up.
We are the natural.
<unk>.
And if you will for that fiber remember, we're not really in Bogota. So that's an upside that we have but the market doesn't really have something that as you know we've been expecting for a long time.
And while we are in.
In the in the in the Columbia context, we're beginning to see a very interesting move towards more and more broadband only place. This happens mostly in Colombia, but everywhere else and and we actually think Thats a good thing our seller you've seen what's happened in the U S. We've been positioning.
Sales for that with our supermarket of content Thomas on nets leagues Geysery everything that we have and what we're beginning to see an environment in which those broadband only come with lower sure right, a better margins and lower capex. So they are actually accretive to our ocs.
I think we're the best position did not broadband fixed market because we've got the mobile as well so we'd become a true movement of broadband fixed and mobile on which we can layer high margin content supermarket on top of that.
I missed anything illumina.
Perfect. Thank you very much.
Alright. Thank you Marcello. Our next question is coming from Sumit Datta Administrate Research summit.
Yes, hi, Doug Thanks for them.
Let me ask a question.
A couple please.
First of all on Panama, we have an announcement from <unk>.
So here, we are looking to exit the market.
Great to get your perspective on that I think also specifically is there any opportunity to pick up.
Other infrastructure assets.
<unk> spectrum, which might become available genomic processes.
And that market when and operate the homes back essentially shuts down the business.
Stir all that would be great maybe I'll start with that question. Please and then follow up with another one.
Yeah.
Sure.
Okay.
Panama for Us has been.
One of the better investment decisions were taken.
Not the best over the last.
The year had been around.
The stories submitted its stellar economy, our business plan.
Buying into fixed defending sustaining growing face and with Don done really really well to continue to grow and fixed but on top of that layering cross selling into mobile, which we have done so overnight with the comp or not and how it's taken us three years, but we've become the number one player in Panama and a dollar economy with useful the margins that we're driving we're ready.
In our mind needs long term, Panama is a small market.
Fairly developed telecom infrastructure hours on our main competitors. So it is a healthy <unk>.
Scriber focused investment country.
So in that regard, we always the margin that it with long term become close to a two player market.
So were the <unk> sales stays along or it doesn't stay on it really doesn't significantly change what we saw was what we are delivering on.
Our focus in Panama as elsewhere. It for very honest with you is largely organic.
Want to distract ourselves with picking these or data because we're driving the brand we're being preferred by customers, who are driving volume and sustaining our one of a very very very focused organically and.
In addition to that.
You may have seen this the government of Panama has released at really reasonable prices AWS spectrum, which we will be picking up I think we're in the process of acquiring it. So we've picked up the spectrum that we need and Panama has historically had a really good spectrum policy, which.
As part of your spectrum for everybody. So and we think that is a really good really good spectrum policy going forward predetermined prices reasonable prizes spectrum priority so quite frankly, that's a.
Good setup nothing that needs to be disruptive there.
Okay. That's really helpful. Thank you.
Follow up question.
A bit more detail maybe its one <unk>.
Michelle them, but on the on the coal costs. So again, when we just simply kind of top of the individual.
Country, EBIT, and then compare that to the.
So the headline the new IRS headline EBITDA, Nicole <unk> seems to be around $35 million from that correctly.
I thought that was going to be running at near a $50 million.
Forward in <unk>.
Presumably that was going to be where some of the expertise of our money pulse was going to be booked as well. So just hoping you can clarify if I misunderstood, but is there anything happening.
Within this quarter please.
Yes, I think you have necessity to go and we wish you cut back labor challenges Sarah just on some of on some of the calculations that number should be probably closer to $45 35.
You do the math right and we would have that we did have the kiko money investment consistent to what we talked about it.
With you at the Q4, so there was.
Just to round about just under $10 million of investment to take our money in.
In the quarter consistent with what we're expecting for the full year about that about $40 million over the year kind of spinouts out on that basis.
Okay, that's great. Thanks Silvan.
Alright, Thanks Sumit.
So we will take our next question now from detailed Tomita Goldman Sachs and as a reminder, if you have any questions. Please send us an email at investors at Millicom Dot com based off the floor is yours.
Hello, Good morning, everyone and thanks for taking our question. So two questions from our side the first slide and you've touched on it briefly during the call, but could you give us some more color on the current general environment and the heavier competition in Bolivia, and Honduras and the second question from our side would be.
As we improve cash flow and as you say strategic measures to raise additional cash like the power higher volatile potential gigamon to carve our rights offering we don't see any room in the medium term.
The acquisitions up remaining stakes in <unk> are entering new markets. Thank you.
Alright, Thank you Victor lots lots in there.
Bolivia first this is a market that.
With the AG.
Exit of trailer D or the sale of the trilogy into what's effectively.
Unknown new player there.
Seems to be going increasingly towards a two player market.
Which I think is a good development sold in the quarter you have hot Panama.
And believe the.
Consolidates further into two player markets and I think thats generally a rationale grew for the local economies trend because two.
Two a stronger players kind of invest more.
And do so in a more sustainable manner.
Jim.
And believe me as you know the competitor is state owned and their policy of competition seems to be one in which volume although pricing is a strategic outcome. As a result of that and this is a matter of how we acknowledged the finances of the state owned company continue to be pressured.
Medium term long term, we believe there is going to have to be a balancing act and the competitive nature of that market space all while by the way.
Eight week long term finances of the state owned entity.
Some into play with a more long term volumes and basement investment base capacity I'm, saying that in a very diplomatic nonaccrual industrial base. The long term outcome. There is and Thats what is going to secure that the country continues to invest in the infrastructure needs.
In addition to that.
Bolivia is largely highly competitive as you sit today on pricing on mobile, but in the meantime, we continue to grow really healthily on fix and we've continued to deploy them fixed networking fixed which increasingly to get really good penetrations.
As a matter of fact, we wish we had been able to build a little bit faster in Q4 and Q1.
But we're ramping up in Bolivia to William underpinning strengthened growing Bolivia. So overall I think Bolivia is a healthy sustainable investment place for us to continue doing what we're doing even if I have to go through this.
Mobile pricing.
And.
<unk> I think is the one country, where just like membrane Salvador three years ago, Paraguay, where we said we got to get it right.
I would say Don Duda is a couple of weeks ago.
Reviewing our plans.
All right.
Now, we're quite comfortable that we're going to get it right in Honduras.
Two player market as one in which we're done all the things that you would have expected us to do so we are modernizing the network investing a little bit visit the mobile network by the way investing a little bit more in cable streamlining our product offering and although you can't really just quite see it in the financials this quarter.
We do see it in the subscriber counts Don Duda is becoming better and remember notice is a market, where we have a very strong position and strong cash flow. So it reminds me a little bit of Paraguay, two to three years ago. So just hold your breath sit down on a mood as well will turnaround.
T go money as I said on the prepared remarks, we are hitting.
The goalposts that we wanted to hit.
In terms of the carve outs on maintenance as well use your question to update everybody that we are on track in terms of preparation for those bringing in advisers doing all of their preparatory work. So all of those things are moving along just as we expected we got advisers for both projects both on.
The investment banking side and on the accounting side, we've got management teams in place and of course Eagle miner is as you've seen already in execution mode and doing so quite well.
And lastly, <unk> is a handful of questions on <unk>.
M&A.
We said during the Investor call, we're not on M&A mode.
We are on operational mode. We've got this amazing really good strong operating performance on the top line, we want to use that momentum to bring it down with operating leverage into EBITDA growth and operating cash flow growth by attended this year.
Because we believe we're completely on track to deliver that 10% operating cash flow growth on average for the next three years.
It's not back ended totally it starts.
With getting closer to that goal. This year. So the point I'm, making victories that we're very operationally driven.
So we're not focused on expansive M&A.
Now we may need to react to.
Minorities et cetera that would be.
In nature not proactive in nature.
Very clear thank you very much for losses.
Thanks Peter.
So next we're going to go to <unk> <unk> of Scotiabank.
Yes, Hello, guys can you hear me.
Perfect.
Okay. Thank you.
Equity free cash flow during the quarter.
<unk> equity free cash flow by 69 million.
And I guess, it was better than the $182 million a year ago right. There was an improvement in terms of the negative equity free cash flow.
But it seems far from from from guidance, which is as you said 100 to a billion in the next three years. So I'm just wondering.
For 2022, what you are expecting what youre thinking in Pennsylvania, with free cash flow or how youre going to turn from these minus 69 to a positive number throughout the year. That's my first question and my second question. If you can just give us a general update on that on the infrastructure sale, perhaps a little bit on timing when will <unk>.
You still have to thank you very much.
Alright, I'm, making everybody are comfortable by starting to answer. This question because we have this rights offering in a project and I'll give you 2022 numbers blah blah blah blah Blah lastly, considerable sweat.
So I'm going to pass it over to Sheldon So they don't sweat about it.
<unk>.
We've already said that we are ahead of our internal budget on revenue EBITDA and operating culture. I think we said that loudly even given the set of his prepared remarks. So that gives you an idea that we are on track.
Equity free cash flow on a given quarter is a large result, <unk> expense on a year silver at 12 order period, which is the three year period.
Really shouldn't be.
Indicator of what's going to happen ultimately what I can tell you on with US as we are.
Clearly on track on all of the operating metrics revenue EBITDA ahead of our internal budgets and all countries.
I, even thought of giving you the numbers within the guys get really really upset. So we are on track operationally and most importantly, and I said on revenue we are really getting our new store opening customer margins. They are north of 25% right. So once we get operating leverage into the business, which we can then it really starts.
<unk> done at the operating level. The point I'll mention is we are totally on track to equity free cash flow as we guided for the three years and this is right, but it gets a little bit nervous it is not all back ended.
So as far as I can see.
It's not like we're going to wait for year three to just show up with 1 billion box with equity free cash flow.
I would add to that I mean, just a few things we did reiterate our depth.
Objective at the end of the year of being below three times and embedded in that is essentially.
Essentially as our equity free cash flow sort of ambition.
And there so that is on target I wouldn't take away too much of what youre seeing in Q1 as being sort of indicative of sort of our path to getting to that $802 billion to $1 billion over the three years, we're on target on that its really some seasonality I think in terms of our cash flows working capital move.
On the quarter and maybe a little bit.
Capex spending.
I said in my prepared remarks, a bit more.
More equal across the years, then maybe they have in years past when they were more backend loaded or heavier and heavier weighted to Q4. So once again on that point, though from a full year perspective, we are still reiterating the $1 billion of spend and it's just how it is landing in the house landing within the year.
Okay. Thank you.
Thanks Andreas.
So and also something we have no other questions in the queue. So I'll turn it back to you for closing remarks must be that would become very simple company.
And if we can just really greater results and get it. So some key messages and I think everybody has gotten there by docs. We are ahead of our plans operationally and we're on track to everything we committed to deliver earlier on this year. That's the key message. We're just on track and a little bit ahead.
We're also really food operational shape.
Hesitate not to say that we're in the best operational shape, we've been for a long time revenue is growing every countries performing every line of business is performing we see momentum in the business and with the way we've reshuffle. The portfolio. We now have the ability because of our high <unk>.
Cultural low margins to really deliver on that equity free cash flow target for the three years that we've set up. So we're excited really excited about the shape of the business today with reshuffle. The portfolio move this to countries, where we think we can have topline growth rate operating cash flow growth and deliver because.
Our leverage those operating cash flow target of 10% on average on a yearly basis $800 billion to $1 billion of.
While the equity free cash flow and at the same time, we're making progress on the carve outs that also unlock shareholder value outside of the core business people money on the infrastructure and those for which we have said basically at 12 months to 24 timeframe. They are on track we're doing all the work so just as I said earlier.
We keep that one pager with what our strategic plan is in the pocket. We review it weekly and we're simply just ahead of track for those.
Thank you.
Thank you.
Yes.
[music].