Q3 2023 Millicom International Cellular SA Earnings Call
Speaker 1: transcript
Speaker 1: Hello everyone, thanks for taking the time to connect to our third quarter, 2023 Results Conference call. This event is being recorded. Our speakers today will be our CEO , Maui Sohamos, our CFO , Sheldon Ruja, and our president, and CEO , Maxime Lombardini. And following their preferred 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.
Hello, everyone. Thanks for taking the time to connect to our third quarter 2023 results conference call.
This event is being recorded our.
Our speakers today will be our CEO, Lisa most our CFO Sheldon Bruha, and our president and CFO, Maxine lumbar Daney and following their prepared remarks, we will have a Q&A session.
By now you Should've 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 if you please turn to slide two you can see our safe Harbor disclosure, we will be making forward looking statements, which involve risks and uncertainties and could have a material impact on our results. We will also be referring to many non <unk> metrics throughout this presentation and we define these metrics on slide three.
Speaker 1: transcript
Speaker 1: Now if you please turn to slide two, you can see our safe harbor disclosure. We will be making four looking statements, which involve risks and uncertainties and could have a material impact on our results. We will also be referring to many non-IFRS metrics throughout this presentation and we define these metrics on slide three.
Speaker 1: transcript
Speaker 1: where you can also find reconciliation tables in the back of our earnings release and on our website.
Where you can also find reconciliation tables in the back of our earnings release and on our website.
With those disclaimers out of the way, let me turn the call over to our CEO My we saw house.
Speaker 1: transcript
Speaker 1: With those disclaimers out of the way, let me turn the call over to our CEO , Maui Soramu.
Speaker 2: Good morning and good afternoon everyone. Thanks for joining us today. As usual, I will go over the highlights of the quarter and Shendol will discuss the financials. And finally, Maxime, our new president and CEO was a few words before we take your questions.
Good morning, and good afternoon, everyone. Thanks for joining us today as usual I will go over the highlights of the quarter and schendel will discuss the financials and finally Maxime on your President and CEO will say a few words before we take your questions.
Speaker 2: transcript
Speaker 2: Let's start on slide five with a recap of our four key priorities for 2023 and our progress to date. We'll go into more detail on each of these points in the next several slides, but here are the key highlights.
Let's start on slide five with a recap of our four key priorities for 2023 and our progress to date.
I'll go into more detail on each of these coins in the next several slides, but here are the key highlights first the beginning of the year, we set out to dramatically improve the profitability of our operation in Colombia by simplifying the business by bringing increased discipline on capital allocation and around pricing for our services you can see the results of these <unk>.
Speaker 2: First, the beginning of the year, we set out to dramatically improve the profitability of our operation in Colombia. I simply find the business by bringing increased discipline on capital allocation and around pricing for our services. You can see the results of these efforts starting to pay off in this third quarter. Our quarter in Colombia had very strong EBDA and OCF growth. And we're not done yet.
We're just starting to pay off in the third quarter, our quarter in Colombia had very strong EBITDA and <unk> growth and we're not done yet we have now agreed with our partner to inject additional equity capital into the business in Colombia. So we can focus now on executing on the rest of the plan, which includes continued mobile growth further.
Speaker 2: transcript
Speaker 2: We have now agreed with our partner to inject additional equity capital into the business in Colombia. So we can focus now on executing on the rest of the plan, which includes continued mobile growth further cost discipline. And as you know, some much needed in organic solution.
Disciplined and as you know some much needed inorganic solutions.
Speaker 2: transcript
Speaker 2: Second in Guatemala, we are creating the conditions for a healthy and very sustainable long-term industry structure. In the last six months, we took part in two transparent and successful spectrum auctions in which both players were able to acquire all of the spectrum that was offered by the government. These were the countries two first auctions in more than 15 years. As a result, both competitors now similar and much larger amounts of spectrum.
Second in Guatemala, we're creating the conditions for a healthy and very sustainable long term industry structure in the last six months, we took part in too transparent and successful spectrum auctions in which both payers, we're able to acquire all of the spectrum that was offered by the government.
Operator: Hello everyone, thanks for taking the time to connect to our third quarter 2023 results conference call. This event is being recorded.
Operator: Our speakers today will be our CEO, Mauricio Harmos, our CFO, Sheldon Bruha, and our president, and CEO, Maxime Lombardini. And following their preferred remarks, we will have a Q&A session. By now, you should have received the copy of our earnings release, which is available on our website, along with the slides that we will be referencing during today's presentation.
These were the countries to first auctions and more than 15 years as a result of both competitors now similar in much larger amounts of spectrum. We think the conditions are now set to return to a more rational pricing.
Speaker 2: transcript
Speaker 2: within the conditions are now set to return to a more rational pricing environment.
Speaker 2: transcript
Speaker 2: Third, we continue to improve our operational efficiency across the business more than ever before. We're simplifying product offerings and operations. We are digitalizing processes. We are reducing account and we are automating platforms. And across the board we're driving new opportunities to further reduce costs and increase cash flow.
Third we continue to improve our operational efficiency across the business more than ever before with <unk>.
Operator: Now if you please turn to slide two, you can see our safe harbor disclosure. We will be making four looking statements, which involve risks and uncertainties, and could have a material impact on our results. We will also be referring to many non-IFRS metrics throughout this presentation, and we define these metrics on slide three, where you can also find reconciliation tables in the back of our earnings release and on our website.
Simply find product offerings and operations, we are digitizing processes, we're reducing head count and we are automating platforms, an across the board, we're driving new opportunities to further reduce costs and increase cash flow.
Speaker 2: transcript
Speaker 2: During Q3 we began to implement phase 2 or project Everest, which we spoke about last quarter.
During Q3, we began to implement phase two of project hemorrhage, which we spoke about last quarter. We expect this pace to significantly increase the overall savings we can expect from project Everest overall.
Speaker 2: transcript
Speaker 2: We expect this age to significantly increase the overall savings we can expect from project Everest overall.
Mauricio Harmos: With those disclaimers out of the way, let me turn the call over to our CEO, Mauricio Harmos. Good morning and good afternoon, everyone. Thanks for joining us today. As usual, I will go over the highlights of the quarter, and Sheldon will discuss the financials.
Speaker 2: transcript
Speaker 2: Fourth and finally we have continued to make great progress towards carving out Latti our tower portfolio.
And finally, we have continued to make great progress towards carving out our tower portfolio.
Speaker 2: transcript
Speaker 2: Earlier this month, we began transferring assets to the new legal entities. We're not preparing to launch the motivation process.
Earlier this month, we began transferring assets to the new legal entities. We are now preparing to launch the monetization process. So let's review each of these points in more detail beginning with Colombia on slide six.
Mauricio Harmos: And finally, Maxime, our new president and CEO, was a few words before we take your questions. Let's start on slide five with a recap of our four key priorities for 2023 and our progress to date. We're going to more detail on each of these points in the next several slides, but here are the key highlights. First, the beginning of the year, we set out to dramatically improve the profitability of our operation in Colombia by simply finding the business, by bringing increased discipline on capital allocation, and around pricing for our services.
Speaker 2: transcript
Speaker 2: So let's review each of these points in more detail beginning with Columbia on slide 6.
Speaker 2: transcript
Speaker 2: Most of you know by now our mobile business has been growing rapidly since we acquired critical spectrum in the 700 megahertz band in 2020. Back then we embarked on a multi-year plan to expand our mobile network and to extend the reach of our commercial distribution. Since then we have steadily gained market share, especially in the post-grade segment, where we have doubled our customer base since acquiring the spectrum.
It's most of you know by now our mobile business has been growing rapidly since we acquired critical spectrum in the 700 megahertz band in 2020.
Back then we embarked on a multiyear plan to expand our mobile network and to extend the reach of our commercial distribution.
Since then we have steadily gained market share, especially in the postpaid segment, where we have doubled our customer base. It seems acquiring the spectrum.
Speaker 2: transcript
Speaker 2: The shift in mixed-door spokespane has been lifting up and driving mobile service revenues, which increased 8% this Q3. The scale we're gaining in our mobile business, combined with efficiencies from project Everest, drove EBDA margin to a record, this quarter, as you can see on the middle chart.
Mauricio Harmos: You can see the results of these efforts starting to pay off in this third quarter. Our quarter in Colombia had very strong EBDA and OCF growth, and we're not done yet. We have now agreed with our partner to inject additional equity capital into the business in Colombia, so we can focus now on executing on the rest of the plan, which includes continued mobile growth further cost discipline, and as you know, some much needed inorganic solutions.
The shift in mix towards postpaid has been lifting our pool in driving mobile service revenues, which increased 8%. This Q3.
The scale, we're gaining in our mobile business combined with efficiencies from project Everest drove EBITDA margin to a record this quarter as you can see on the Middle chart.
Speaker 2: transcript
Speaker 2: PBDA grew almost 10% in a quarter, and by close to 20% if we exclude the one-off.
EBITDA grew almost 10% in the quarter and by close to 20% if we exclude the one offs.
Speaker 2: transcript
Speaker 2: We expect that phase two of Everest will that further margin expansion going forward. And we are converting that IBADA growth into operating cash growth, as you can see on the chart on the right.
We expect that phase II of Everest will drive further margin expansion going forward and.
Mauricio Harmos: Second, in Guatemala, we are creating the conditions for a healthy and very sustainable long-term industry structure. In the last six months, we took part in two transparent and successful spectrum auctions in which both players were able to acquire all of the spectrum that was offered by the government. These were the countries' two first auctions in more than 15 years. As a result, both competitors now similar and much larger amounts of spectrum.
And we are converting that EBITDA growth into operating cash flow growth as you can see on the chart on the right.
Speaker 2: transcript
Speaker 2: OCA in Colombia is also benefiting from lower levels of capital investment in our own business.
<unk> in Colombia is also benefiting from lower levels of capital investment in our own business. This is largely because we're choosing to remain disciplined on price, we're charging installation fees and implementing price increases and staying the course, even when competitors don't Colo and even if this means sacrificing subscriber volume gain in profitability.
Speaker 2: transcript
Speaker 2: This is largely because we're choosing to remain disciplined on price. We're charging installation fees and implementing price increases and staying the course even when competitors don't follow. And even if these mean sacrificing subscriber volume, but gaining profitability.
Mauricio Harmos: We think the conditions are now set to return to a more rational pricing environment. Third, we continue to improve our operational efficiency across the business more than ever before. We're simplifying product offerings and operations, we are digitalizing processes, we are reducing account and we are automating platforms, and across the board we're driving new opportunities to further reduce costs and increase casual. During Q3, we began to implement phase two, or project Everest, which we spoke about last quarter.
Speaker 2: transcript
Speaker 2: As we have told you many times, a significant portion of our capex is variable in nature and is directly linked to the number of new customers we sign up, given the high cost of the equipment that we install in their homes. So with higher prices, we're selling less, but we're also investing less and attaining a better return on capex.
So we have told you many times a significant portion of our Capex is variable in nature and is directly linked to the number of new customers. We signed up given the high cost of equipment that we installed in their homes, so with higher prices, we're selling yes, but we're also investing less in obtaining a better return on capital.
Speaker 2: transcript
Speaker 2: Going forward, we expect that our Columbia operation can continue to sustain lower levels of capital intensity than in the past, for two reasons. One, because our 700 megahertz network deployment is now largely complete. And two, because of the very material synergies, we expect from the combination of our mobile network and spectrum with those of telephonic. As you may have seen, this transaction has now received we've been able to approve of just a couple of weeks ago.
Going forward, we expect that our Columbia operation continued to sustain lower levels of capital intensity done in the past for two reasons, one because our 700 megahertz network deployment is now largely complete and two because of the very material synergies. We expect from the combination of our mobile network and spectrum with those of Telefonica as you may have seen this transfer.
Mauricio Harmos: We expect this phase two to significantly increase the overall savings we can expect from project Everest overall. Fourth, and finally, we have continued to make great progress towards carving out Latte Art Tower portfolio. Earlier this month, we began transferring assets to the new legal entities, we're now preparing to launch the legislation process.
Action has now received regulatory approvals just a couple of weeks ago.
Speaker 2: transcript
Speaker 2: Finally, as you may have heard, we recently agreed with a partner to each invest approximately $75 million of equity into our Columbia operation. Despite all the noise that you may have heard on this topic, this equity injection had been planned for quite some time. And its key purpose is to provide long-term funding for all the long-term investments that we have made in the business over the past several years. There's tons and tons of work to still do in Columbia and no doubt, but we made real good progress this quarter.
Finally, as you may have Eric we recently agreed with our partner to each invest approximately $75 million of equity into our Colombia operations.
Mauricio Harmos: So let's review each of these points in more detail beginning with Colombia on slide six It's most of you know by now our mobile business has been growing rapidly since we acquired critical spectrum in the 700 megahertz band in 2020 back then we embarked on a multi-year plan to expand our mobile network and to extend the reach of our commercial distribution since then we have steadily gained market share especially in the post-grade segment where we have doubled our customer base since acquired the spectrum. The shift in mix towards post-paid has been lifting up and driving mobile service revenues which increased 8% this Q3.
Spiteful the noise that you may have heard on this topic is equity injection had been planned for quite some time and it's a key purpose is to provide long term funding for all the long term investments that we've made in the business over the past several years, there's tons and tons of work to still doing Colombia, no doubt, but we made real good progress this quarter.
Now please turn to slide seven to look at what their model.
Speaker 2: transcript
Speaker 2: Now, please turn to slide seven to look at Guatemala. As you know, competition has been intense in the prepaid mobile market since the end of the pandemic in Guatemala. As you also know, we took a variety of important strategic steps to shield our customer base and strengthen our market leadership. That remains convinced that this is the right strategy to preserve and grow the long-term value of our business.
As you know competition has been intense in the prepaid mobile market since the end of the pandemic in Guatemala. As you also know we took a variety of important strategic steps to show their customer base and strengthen our market leadership.
Mauricio Harmos: The scale we're gaining in our mobile business combined with efficiencies from project Everest, drove EBDA margin to a record this quarter as you can see on the middle chart. EBDA grew almost 10% in a quarter and by close to 20% if we exclude the one-offs. We expect that phase two of Everest will back serve the margin expansion going forward. And we are converting that EBDA growth into operating cash growth as you can see on the chart on the right.
That remains convinced that this is the right strategy to preserve and grow the long term value of our business and we see signs already of this strategy is beginning to pay off the chart on the left shows the evolution of our mobile customer base and market share in Guatemala over the last four years as you can see we've picked up quite a bit of market share during the pandemic.
Speaker 2: transcript
Speaker 2: And we see signs already that this strategy is beginning to pay off. The chart on the left shows evolution of our mobile customer base and market sharing what's allowed over the last four years. As you can see, we picked up quite a bit of market share during the pandemic.
Speaker 2: transcript
Speaker 2: We've been able to hold onto these gains and to our customer base, even as our competitor began offering access to the most popular social media apps for free to prepaid customers.
We have been able to hold on to these gains and to our customer base, even as our competitor began offering access to the most popular social media apps for free to prepaid customers no doubt defending our customer base, which is definitely the right thing to do for the long run has had any impact on our foodservice revenue under all profitability of the business you can see on the chart on the right show in <unk>.
Mauricio Harmos: OCA in Colombia is also benefiting from lower levels of capital investment in our own business this is largely because we're choosing to remain disciplined on price we're charging installation fees and implementing price increases and staying the course even when competitors don't follow and even if this means sacrificing subscriber volume but gaining profitability. So we have told you many times a significant portion of our capital is variable in nature means directly linked to the number of new customers we signed up given the high cost of the equipment that we installed in their homes.
Speaker 2: transcript
Speaker 2: No doubt, defending our customer base, which is definitely the right thing to do for the long run, has had an impact on our service revenue and the all profitability of the business. You can see this on the chart on the right, showing the evolution of our total service revenue growth in Guatemala over the last several quarters.
<unk> of our total service revenue growth <unk> over the last several quarters, yet two important and positive events are relevant in the last few months in Guatemala.
Speaker 2: transcript
Speaker 2: Yet, two important and positive events are relevant in the last few months in Guatemala.
Speaker 2: transcript
Speaker 2: One after two consecutive spectrum options, spectrum positions in the marketplace have been increased and stabilized. We no longer have a spectrum deficiency or a spectrum disadvantage in Guatemala. This has an important positive effect on our network efficiency and costs, as well as on our service and product of...
One after two consecutive spectrum auctions spectrum positions in the marketplace have been increased and stabilized we no longer have a spectrum deficiency or a spectrum disadvantage in Guatemala. These has an important positive effect on our network efficiency and costs as well as on our service and product offerings and two we took some price increases in <unk>.
Mauricio Harmos: So with higher prices we're selling yes but we're also investing less and obtaining a better return on capital. Going forward we expect that our Colombia operation can continue to sustain lower levels of capital intensity than in the past for two reasons. One because our 700 megahertz network deployment is now largely complete until because of the very material synergies we expect from the combination of our mobile network and spectrum with those of telephonic as you may have seen this transaction has now received to go to approval just a couple of weeks ago.
Speaker 2: transcript
Speaker 2: And two, we took some price increases in prepaid in mid September . As a result, for the revenue growth remain negative in Q3, there were clear signs of stabilization compared to Q2 and were encouraged by the trends we saw during the quarter.
Prepaid in mid September as a result from our revenue growth remained negative in Q3, there were clear signs of stabilization compared to Q2, and we're encouraged by the trends we saw during the quarter still early to tell whether this price increase will stick for the long run, but we are encouraged by the response at our points of sales and we are optimistic and we do.
Speaker 2: transcript
Speaker 2: It's too early to tell whether this price increase will stick for the long run, but we are encouraged by the response at our points of sales, and we're optimistic. And we do see the makings of a healthier industry structure in the making in Guatemala, as we had anticipated earlier.
Mauricio Harmos: Finally as you may have heard we recently agreed with a partner to each investor approximately seven five million dollars of equity into our Colombia operation. Despite all the noise that you may have heard on this topic this equity injection had been planned for quite some time and it's key purpose is to provide long term funding for all the long term investments that we have made in the business over the past several years. There's tons and tons of work to still do in Colombia no doubt but we made real good progress this quarter.
See the makings of a healthier industry structure in the making in Guatemala, as we had anticipated earlier.
Speaker 2: transcript
Speaker 2: We want to remain cautious on the commercial outlook and also flag that there have been some mass protests on the streets in Guatemala since the presidential elections a couple of months ago. And this may carry on until the new president takes office in January . So we remain cautiously optimistic in Guatemala.
We want to remain cautious on the commercial outlook and also flagged that there have been some mass protests on the streets in Guatemala seems a presidential elections, a couple of months ago and this may carry on until the new President takes office in January So we remain cautiously optimistic in Guatemala.
Speaker 2: transcript
Speaker 2: Now, let's go to slide 8 to discuss Project Everest. As many of you will recall, we began implementing our efficiency program earlier this year, and we communicated an ambition of achieving run rate savings of more than 100 million by year-end 2024. We are on track to achieve those savings. In addition, early in the summer, we began working on phase 2 of the program, as we mentioned on our Q2 call.
Now, let's go to slide eight to discuss project efforts as many of you will recall, we began implementing our efficiency program earlier this year and we communicated an ambition of achieving run rate savings of more than 100 million by year end 'twenty to 'twenty. Four we are on track to achieve those savings. In addition, early in the summer we began working on phase two.
Mauricio Harmos: Now please turn to site seven to look at Guatemala as you know competition has been intense in the pre paid mobile market since the end of the pandemic in Guatemala. As you also know we took a variety of important strategic steps to shield our customer base and strengthen our market leadership. That remains convinced that this is the right strategy to preserve and grow the long term value of our business and we see signs already that this strategy is beginning to pay off.
Two of the program as we mentioned on our Q2 call.
Speaker 2: transcript
Speaker 2: Indeed, in September , we began implementing important headcount reductions and new cost-saving initiatives.
Indeed in September we began implementing important head count reductions in new cost saving initiatives, starting with our centralized functions. We expect this first phase of phase II to produce approximately $35 million additional savings on top of the initial $100 million target with <unk>.
Speaker 2: transcript
Speaker 2: starting with our centralized functions. We expect this first phase or phase two to produce approximately 35 million in additional savings on top of the initial $100 million target. We also expect to finalize the scooping for the full phase two along with our annual budget plan. So our ambition is actually much broader as we have already identified very meaningful opportunities that we expect to implement mostly before year end.
Mauricio Harmos: The chart on the left shows evolution of our mobile customer base and market sharing Guatemala over the last four years as you can see we picked up quite a bit of market share during the pandemic. We've been able to hold on to these gains and to our customer base even as our competitor began offering access to the most popular social media apps for free to pre-paid customers. No doubt defending our customer base which is definitely the right thing to do for the long run has had an impact on our food service revenue and the opportunity of the business.
Also expect to finalize the scoping for the full phase II, along with our annual budget plan. So our ambition is actually much broader because we have already identified very meaningful opportunities that we expect to implement mostly before year end shutdowns will give you additional details about the cost of the program in a minute.
Speaker 2: transcript
Speaker 2: Sheldon will give you additional details about the customer program in a minute. On slide nine, let's review our.
Mauricio Harmos: You can see this on the chart on the right showing the evolution of our total service revenue growth in Guatemala over the last several quarters.
On slide nine let's review our progress on Lucky.
Speaker 2: transcript
Speaker 2: That is already a separate company and a separate brand. New legal entities have now been created in every country.
That is already a separate company and a separate brand new legal entities have not been created in every country earlier. This month, we started transferring tour assets from <unk> and we expect to complete this process in November. This means that we are ready now to launch a process to monetize this important infrastructure asset in Q4, yes, Showtime is coming up soon.
Mauricio Harmos: Yet two important and positive events are relevant in the last few months in Guatemala. One after two consecutive spectrum options spectrum positions in the marketplace have been increased and stabilized. We no longer have a spectrum deficiency or a spectrum disadvantage in Guatemala. This has an important positive effect on our network efficiency and costs as well as on our service and product offerings. And two, we took some price increases in pre-paid in mid-September.
Speaker 2: transcript
Speaker 2: Earlier this month, we started transferring our assets from TIGO to LATI, and we expect to complete this process in November .
Speaker 2: transcript
Speaker 2: This means that we're ready now to launch a process to monetize this important infrastructure asset in Q4. Yes, showtime is coming up soon. As we have said in the past, we have certain preferences on the transaction that we envision will best maximize value. But as we have also said, we plan to keep all our options open until we can evaluate and compare the options that are brought to the table.
So we have said in the past we have certain preferences on the transaction that we ambition with best maximize value, but as we've also said and kind of keep all their options open until we can evaluate and compare the options that are brought to the table. So stay tune opening date is indeed coming soon.
Mauricio Harmos: As a result for the revenue growth remain negative in Q3, there were clear signs of stabilization compared to Q2 and we're encouraged by the trends we saw during the quarter. It's too early to tell whether this price increase will stick for the long run but we are encouraged by the response at our points of sales and we're optimistic and we do see the makings of a healthier industry structure in the making in Guatemala as we had anticipated earlier.
Speaker 2: transcript
Speaker 2: So stay tuned, opening date is indeed coming soon. With that, I will hand over to Sheldon to discuss the financials for the quarter.
I will hand over to Sheldon to discuss the financials for the quarter.
Speaker 3: transcript
Speaker 3: Thank you, Mauricio. Before we review the financials, let me quickly recap the macro context on slide 11. As you can see on the slide, inflation across most of our markets has followed closely the trend we've seen in the US, with inflation back to a more reasonable level of around 4%, with the exception of Colombia, where inflation is still in the double digits. The good news, though, is that the Colombian pace was strengthened significantly this year, and in fact, you will see that FX was a small tailwind for us during Q3.
Thank you Mauricio.
Before I review the financials, let me quickly recap the macro context on slide 11.
As you can see on the slide inflation across most of our markets is followed closely the trend we've seen in the U S with inflation back to a more reasonable level of around 4% with the exception of Colombia, where inflation is still in the double digits.
Mauricio Harmos: We want to remain cautious on the commercial outlook and also flag that there have been some mass protests on the streets in Guatemala since the presidential elections a couple of months ago. And this may carry on until the new president takes office in January. So we remain cautiously optimistic in Guatemala.
The good news, though is that the Colombian peso there was strengthened significantly this year and in fact, you will see that FX was a small tailwind for us during Q3.
Mauricio Harmos: Now let's go to slide 8 to discuss Project Everest. As many of you will recall, we began implementing our efficiency program earlier this year, and we communicated an ambition of achieving run rate savings of more than 100 million by year and 2024. We are on track to achieve those savings. In addition, early in the summer, we began working on phase 2 of the program as we mentioned on our Q2 call. Indeed, in September, we began implementing important HECK and reductions in new cost saving initiatives, starting with our centralized functions.
Speaker 3: transcript
Speaker 3: And in terms of economic activity, our markets are generally proving quite resilient, with some countries like Panama and Paraguay expected to grow real GDP in the range of 4 to 5 percent this year.
And in terms of economic activity, our markets are generally proving quite resilient with some countries like Panama and Paraguay expect it to grow real GDP in the range of 4% to 5% this year.
Speaker 3: transcript
Speaker 3: Now, let's look at our Q3 performance, beginning on slide 12. Service revenue was $1.32 billion in the quarter, which is up 3.2% on a reported basis from $1.28 billion a year ago. For the first time in more than a year, our service revenues benefited from favorable FX trends this quarter, primarily due to the Colombian peso, as I just mentioned. Excluded the impact of FX, organic growth was 1.8% in the third quarter, very similar to the growth we reported in Q2.
Now, let's look at our Q3 performance beginning on slide 12.
Service revenue was 132 billion in the quarter, which is up three 2% on a reported basis from $1 billion to $8 billion a year ago.
For the first time in more than a year our service revenues benefited from favorable FX trends this quarter, primarily due to the Colombian peso as I just mentioned extruder.
Mauricio Harmos: We expect this first phase of phase 2 to produce approximately 35 million in additional savings on top of the initial 100 million dollar target. We also expect to finalize the scooping for the full phase 2, along with our high-not-budget plan.
Excluding the impact of FX organic growth was one 8% in the third quarter very similar to the growth we reported in Q2.
Speaker 3: transcript
Speaker 3: our mobile business continues to perform well and accounted for nearly all of the growth in the quarter. Meanwhile, our fixed businesses were flat and this is consistent with our broader capital allocation strategy over the past year, as I'll discuss later.
Our mobile business continues to perform well and accounted for nearly all of the growth in the quarter, meaning.
Mauricio Harmos: So our ambition is actually much broader that we have already identified very meaningful opportunities that we expect to implement mostly before year end. Children will give additional details about the cost of the program in a minute.
Meanwhile, our fixed businesses were flat and this is consistent with our broader capital allocation strategy over the past year as I'll discuss later.
Drilling down further on slide 13 to the service revenue by country.
Mauricio Harmos: On slide 9, let's review our progress on Latte. Latte is already a separate company and a separate brand. New legal entities have now been created in every country.
Speaker 3: transcript
Speaker 3: Going down further on slide 13 to the service revenue by country, as you can see, most of the countries experienced positive service revenue growth in the quarter. The two exceptions were Guatemala, which Mauricio already discussed, and Bolivia, which was down less than 1% in Q3.
You can see most of the countries experienced positive service revenue growth in the quarter with two exceptions for Guatemala, which Maurice you already discussed in Bolivia, which was down less than 1% in Q3.
Mauricio Harmos: Earlier this month, we started transferring power assets from TIGO to Latte and we expect to complete this process in November. This means that we're ready now to launch a process to monetize this important infrastructure asset in Q4. Yes, show the time this coming up soon.
Speaker 3: transcript
Speaker 3: This is a significant improvement for Bolivia compared to last quarter as we've begun to lap the regulatory changes that have impacted results since August of 2022. Our mobile business had positive growth in the quarter, and the decline is coming from our home business, where we are choosing to be very disciplined on price to drive better cash flow from this market, given the more volatile macro backdrop in this country.
This is a significant improvement for Bolivia compared to last quarter.
Got to lap the regulatory changes that have impacted results since August of 2022.
Mauricio Harmos: So we have said in the past, we have certain preferences on the transaction that we envision with best maximized value, but as we have also said, we plan to keep all our options open until we can evaluate and compare the options that are brought to the table. So stay tuned, opening date is indeed coming soon.
Our mobile business had positive growth in the quarter and the decline is coming from our home business, where we're choosing to be very disciplined on price to drive better cash flow from this market given the more volatile macro backdrop in this country.
Speaker 3: transcript
Speaker 3: Columbia and Panama had low single-digit growth, and this is largely the result of our commercial and capital allocation decisions to focus on mobile in these countries.
Sheldon Bruha: With that, I will hand over to Sheldon to discuss the financials for the poor. Thank you, Mauricio. Before we review the financials, let me quickly recap the macro context on site 11. As you can see on the slide, inflation across most of our markets has followed closely the trend we have seen in the US, with inflation back to a more reasonable level of around 4%, with the exception of Colombia where inflation is still in the double digits.
Colombia, and Panama had low single digit growth and this is largely the result of our commercial and capital allocation decisions to focus on mobile in these countries.
Speaker 3: transcript
Speaker 3: On the positive side, we've had solid mid-single-digit growth in the four countries on the bottom part of this page, with all three business units contributing to growth in these countries. Okay, turning to slide 14, EBITDA of $533 million was down 1.2% from $539 million from a year earlier. This is a cleaner quarter than first half of the year, but there are still a few items to unpick here to provide a fuller picture of the performance.
On the positive side, we've had solid mid single digit growth in the four countries on the bottom part of this page with all three business units contributing to growth in these countries.
Okay, turning to slide 14, EBITDA of $533 million was down one 2% from $539 million from a year earlier.
Sheldon Bruha: The good news though is that the Colombian pace was strengthened significantly this year, and in fact, you will see that FX with a small tailwind for us during Q3. And in terms of economic activity, our markets are generally proving quite resilient with some countries like Panama and Paraguay expected to grow real GDP in the range of 4% to 5% this year.
This is a cleaner quarter than first half of the year, but there are still a few items to unpick here to provide a fuller picture of the performance.
Speaker 3: transcript
Speaker 3: First, Forex, primary from Columbia, provided a small tailwind of about $4 million this quarter. Second,
First Forex primary from Colombia provided a small tailwind of about $4 million this quarter.
Second we had two large one offs.
Sheldon Bruha: Now let's look at our Q3 performance, beginning on slide 12. Service revenue was $1.32 billion in the quarter, which is up 3.2% on a reported basis from $1.28 billion a year ago. For the first time in more than a year, our service revenue has benefited from favorable FX trends this quarter, primarily due to the Colombian peso, as I just mentioned. Extruded the impact of FX, organic growth was 1.8% into third quarter, very similar to the growth we reported in Q2.
Speaker 3: transcript
Speaker 3: The first was $22 million for severance related to Project Everest, which I'll talk about later.
<unk> was $22 million for severance related to project Everest, which I'll talk about later.
Speaker 3: transcript
Speaker 3: The second one was for $11 million and was the result of an adverse legal ruling in Colombia. Excluding FX and these one-offs in this quarter, as well as another in Q3 of last year, EBITDA would have grown 2.6% during the quarter with positive growth in most countries, as you can see on slide 15. On this page, you can see that EBITDA tells a similar story as our service revenue growth, with positive growth everywhere except Guatemala and Bolivia.
The second one was for $11 million and was the result of an adverse legal ruling in Colombia <unk>.
Excluding FX and these one offs in this quarter as well as another in Q3 of last year EBITDA would have grown two 6% during the quarter with positive growth in most countries. As you can see on slide 15 on this page you can see that EBITDA tells a similar story as our service revenue growth with positive growth everywhere, except Guatemala and <unk>.
Sheldon Bruha: Our mobile business continues to reform well and accounted for nearly all of the growth in the quarter. Meanwhile, our fixed businesses were flats, and this is consistent with our broader capital allocation strategy over the past year as I'll discuss later. Going down further on slide 13 to the service revenue by country, as you can see most of the country's experienced positive service revenue growth in the quarter. The two exceptions were Guatemala, which Mauricio already discussed, and Bolivia, which was down less than 1% in Q3.
Yes.
Speaker 3: transcript
Speaker 3: As Mauricio discussed previously, we are seeing some signs of stabilization in Guatemala. EBITDA declined 3% year-over-year, but it has been stable at $199 million for the third consecutive quarter.
As ratio discussed previously we are seeing some signs of stabilization in Guatemala, EBITDA declined 3% year over year, but it has been stable at $199 million for the third consecutive quarter.
Speaker 3: transcript
Speaker 3: Bolivia was down 2.2%. This is a big improvement from the last three quarters as we've begun to lap the regulatory chains that went into effect in August of last year, and we've seen improvement in our mobile business there.
Olivia was down two 2%. This is a big improvement from the last three quarters as we began to lap the regulatory change that went into effect in August of last year, and we've seen improvements in our mobile business there.
Speaker 3: transcript
Speaker 3: On the positive side, Columbia stood out with EBITDA growth of 9.1% and almost 20% excluding the legal one-offs. As Mariso mentioned already, our margins have been expanding over the past two years, and we think there is still more upside here, thanks to Project Everest and other initiatives that we have been implementing in order to drive better profitability and cash flow from our business in this country.
On the positive side Columbia stood out with EBITDA growth of nine 1% and almost 20% excluding the legal one offs as <unk> mentioned already our margins have been expanding over the past few years and we think there is still more upside here. Thanks to project at risk and other initiatives that we have been implementing in order to drive better <unk>.
Sheldon Bruha: This is a significant improvement for Bolivia compared to last quarter, as we've begun to lap the regulatory changes that have impact the results since August of 2022. Our mobile business had positive growth in the quarter, and the decline is coming from our home business, where we are choosing to be very disciplined on price to drive better cash flow from this market, given the more volatile macro backdrop in this country. Columbia and Panama had low single-digit growth, and this is larger the result of our commercial and capital allocation decisions to focus on mobile in these countries. On the positive side, we've had solid, mid-single-digit growth in the four countries on the bottom part of this page, with all three business units contributing to growth in these countries.
Great ability in cash flow from our business in this country.
Speaker 3: transcript
Speaker 3: Panama grew 2 percent, which is consistent with the 1.4 percent service revenue growth we saw in the quarter. Remember also that we have made investments in our sports content offering that hurt our EBITDA growth this year. But that investment strengthens our home business and help us maintain our leading market share in this business.
Panama grew 2%, which is consistent with the one 4% service revenue growth we saw in the quarter.
Remember also that we have made investments in our sports content offering that hurt our EBITDA growth this year, but that investment strengthens our home business and help us maintain our leading market share in this business.
Speaker 3: transcript
Speaker 3: You will also notice a lower margin in the quarter, and this is due to higher equipment sales related to the large B2B contract that we expect will start generating service revenue beginning in Q4.
You'll also notice a lower margin in the quarter and this is due to higher equipment sales related to the large <unk> contract that we expect will start generating service revenue beginning in Q4.
Sheldon Bruha: Okay, turn to slide 14, EBITA, a $533 million, was down 1.2% from $539 million from a year earlier. This is a cleaner quarter than first half of the year, but there are still a few items to unpick here to provide a fuller picture of the performance. First, Forex, primarily from Columbia, provided a small tailwind of about $4 million as quarter. Second, we had two large one-offs. The first was $22 million for severance, related to Project Everest, which I'll talk about later.
Speaker 3: transcript
Speaker 3: Paraguay had impressive EBITDA growth of 8.1% and it was 11.6% excluding the Everest-related severance. The strong performance is consistent with the strong service-driven growth we are seeing.
Paraguay had impressive EBITDA growth of eight 1% and it was 11, 6% excluding the adverse related severance the strong performance is consistent with the strong service revenue growth we are seeing.
Speaker 3: transcript
Speaker 3: In El Salvador, EBITDA growth of 16.1% benefited from a lower-than-usual level of bad debt that flattered performance this quarter. On a year-to-date basis, EBITDA is up just under 7%, which is more consistent with the mid-single-digit service revenue growth in that country.
And El Salvador EBITDA growth of 16, 1% benefited from a lower than usual level of bad debt that flattish performance this quarter.
On a year to date basis EBITDA is up just under 7%, which is more consistent with the mid single digit service revenue growth in that country.
Sheldon Bruha: The second one was for $11 million, and was the result of an adverse legal ruling in Columbia. Excluding aspects in these one-offs in this quarter, as well as another in Q3 of last year, EBITA would have grown 2.6% during the quarter, with positive growth in most countries, as you can see on slide 15. On this page, you can see that EBITA has a similar story as our service revenue growth, with positive growth everywhere except Guatemala and Bolivia.
Nicaragua EBITDA grew three 6% as our business and the broader economy continued to grow despite the volatile political environment and that is largely thanks to remittances from the United States, which continued to grow very rapidly.
Speaker 3: transcript
Speaker 3: Nicaragua EBITDA grew 3.6% as our business and the broader economy continue to grow despite the volatile political environment. And that is largely thanks to remittances from the United States, which continue to grow very rapidly.
Speaker 3: transcript
Speaker 3: Finally, Honduras, which we do not consolidate, had another strong quarter with growth of 7.9%, reflecting the improved revenue trends during the quarter.
Finally, Honduras, which we do not consolidate had another strong quarter with growth of seven 9%, reflecting the improved revenue trends during the quarter.
Sheldon Bruha: As Mauricio discussed previously, we are seeing some signs of stabilization in Guatemala. EBITA declined 3% year over year, but it has been stable at $199 million for the third consecutive quarter. Bolivia was down 2.2%, this is a big improvement from the last three quarters, as we began to lap the regulatory change that went into effect in August of last year, and we've seen improvement in our mobile business there. On the positive side, Columbia stood out with EBITA growth of 9.1%, and almost 20% excluding the legal one-offs.
Now please turn to slide 16 to review our efficiency program project Everest re.
Speaker 3: transcript
Speaker 3: Now, please turn to slide 16 to review our efficiency program Project Everest.
Speaker 3: transcript
Speaker 3: Mauricio already gave you the highlights, but I want to help unpack the various puts and takes.
<unk> already gave you the highlights, but I want to help unpack the various puts and takes.
Speaker 3: transcript
Speaker 3: In terms of savings, we are accelerating our plans for phase one. We remain on track to deliver more than $100 million by year end 2024 and are in fact accelerating our plans.
In terms of savings we are accelerating our plans for phase one we remain on track to deliver more than $100 million buy.
By year end 2024 and are in fact accelerating our plans.
Speaker 3: transcript
Speaker 3: On a run rate basis, we now expect to achieve more than 75% of these savings by end of 2023. This is up from our previous estimate of more than 50%.
On a run rate basis, we now expect to achieve more than 75% of these savings by end of 2023.
Sheldon Bruha: As Mauricio mentioned already, our margins have been expanding over the past few years, and we think there are still more upside-ear thanks to Project Everest and other initiatives that we have been implementing in order to drive better profitability and cash flow from our business in this country. Panama grew 2%, which is consistent with the 1.4% service revenue growth we saw in the quarter. Remember also that we have made investment in our sports content offering that hurt our EBITA growth this year, but that investment strengthens our home business and help us maintain our leading market share in this business.
This is up from our previous estimate of more than 50%.
Speaker 3: transcript
Speaker 3: As Marisa told you, we have decided to significantly expand the scope of the project, which we refer to as phase two.
As <unk> told you we have decided to significantly expand the scope of the project, which we refer to as phase II.
Speaker 3: transcript
Speaker 3: During the quarter, we incur $22 million of implementation costs.
During the quarter, we incurred $22 million of implementation costs.
Speaker 3: transcript
Speaker 3: $19 million of this was related to new actions and initiatives we took that were concentrated in our headquarters and other centrally managed and shared service activities.
$19 million of this was related to new actions and initiatives. We took there were concentrated in our headquarters and other centrally managed and shared service activities.
Speaker 3: transcript
Speaker 3: including approximately 30% of our Miami-based population.
Including approximately 30% of our Miami based population.
Speaker 3: transcript
This will result in additional run rate savings of approximately $35 million above and beyond the phase one savings of $100 million.
Sheldon Bruha: You will also notice a lower margin in the quarter, and this is due to higher equipment sales related to the large B2B contract that we expect will start generating service revenue with beginning in Q4. Paraguay had impressive EBITA growth of 8.1%, and it was 11.6% excluding the Everest-related severance. The strong performance is consistent with the strong service revenue growth we are seeing. In El Salvador, EBITA growth of 16.1%, benefited from a lower than the usual level of bad debt that flooded performances quarter.
Speaker 3: transcript
In total since the beginning of this year, we will have reduced our Miami based population by approximately 40% through a number of separate restructuring decisions.
Speaker 3: transcript
Speaker 3: Over the next several weeks, we'll be finalizing our 2024 budget. And we expect to take additional measures across all our geographies as part of that process, where we expect additional severance charges to drive additional savings for the business.
Over the next several weeks, we will be finalizing our 2020 for budget and we expect to take additional measures across all our geographies as part of that process, where we expect additional severance charges to drive additional savings for the business.
Speaker 3: transcript
Speaker 3: We will provide further information at our Fourier results in February .
We will provide a further information at our full year results in February.
Sheldon Bruha: On a year-to-date basis, EBITA is up just under 7%, which is more consistent with the mid-single stage of service revenue growth in that country. Nicaragua Ebertier grew 3.6% as our business and the broader economy continued to grow despite the volatile political environment, and that is largely thanks to remittances from the United States, which continued to grow very rapidly. Finally, Honduras, which we do not consolidate, had another strong quarter with growth of 7.9%, reflecting the improved revenue trends during the quarter.
Now please turn to slide 17.
Speaker 3: transcript
Speaker 3: In addition to organizational savings, we've also had significant savings in capital expenditures this year. Through the first nine months, our CapEx spend is about $150 million lower than prior year. I've mentioned in prior calls the source of these savings, which is a combination of three key components of roughly equal size.
In addition to organizational savings. We've also had significant savings in capital expenditures this year.
Through the first nine months, our Capex spend is about $150 million lower than prior year.
As mentioned in prior calls the source of the savings, which is a combination of three key components of roughly equal size.
Speaker 3: transcript
Speaker 3: Firstly, earlier this year, we conducted three-year renewals with our largest mobile vendors where we received a multi-year discount.
Firstly earlier this year, we conducted three year renewals with our largest mobile vendors, where we received a multi year discounts.
Speaker 3: transcript
Speaker 3: As you can see on the left-hand side of this chart, our level of mobile build activity has remained constant, while we are also able to absorb the impact of activating the new 700 and 2600 megahertz spectrum we obtained in Guatemala.
As you can see on the left hand side of this chart our level of noble build activity has remained constant while we were also able to absorb the impact of activating the new 700, 2600 megahertz spectrum, we obtained in Guatemala.
Sheldon Bruha: Now please turn to slide 16 to review our efficiency program project Everest. Mauricio already gave you the highlights, but I want to help unpack the various puts and takes. In terms of savings, we are accelerating our plans. For phase 1, we remain on track to deliver more than $100 million by year in 2024, and are in fact accelerating our plans. On a run rate basis, we now expect to achieve more than 75% of these savings by end of 2023. This is up from our previous estimate of more than 50%.
Speaker 3: transcript
Speaker 3: Secondly, we produced our home footprint expansion in light of tougher competitive and macro environments in Colombia and Bolivia in particular.
Secondly, we have reduced our home footprint expansion in light of tougher competitive and macro environments in Colombia, and Bolivia in particular.
Speaker 3: transcript
Speaker 3: And lastly, home installations are down, again, primarily in Colombia and Bolivia, as we are being more disciplined in pricing and promotions given the more challenging environments there.
And lastly home installations are down again, primarily in Colombia, and Bolivia, as we are being more disciplined in pricing and promotions given the more challenging environments there.
Speaker 3: transcript
Speaker 3: On top of this, we continue to scrutinize all other CapEx spending and are finding other opportunities to lower spend and contribute to this year-on-year savings.
On top of this we continue to scrutinize all other capex spending and are finding other opportunities to lower spend and contribute to this year on year savings.
Sheldon Bruha: As Mauricio told you, we have decided to significantly expand the scope of the project, which we refer to as phase 2. During the quarter, we incur $22 million of implementation costs. $19 million of this was related to new actions and initiatives we took that were concentrated in our headquarters and other centrally managed and shared service activities, including approximately 30% of our Miami based population. This will result in additional run rate savings of approximately $35 million above and beyond the phase 1 savings of $100 million. In total, since the beginning of this year, we will have reduced our Miami based population by approximately 40% through a number of separate restructuring decisions.
Now please turn to slide 18 for our usual net debt bridge net.
Speaker 3: transcript
Speaker 3: Net debt declined $74 million in the quarter to just over $6 million.
Net debt declined $74 million in the quarter to just over $6 billion.
Speaker 3: transcript
Speaker 3: Net debt deputy after leases was 3.32 times. That's down from 3.34 times at Q2. If we include lease obligations of just over $1 billion, our leverage was 3.34 times.
Net debt to EBITDA. After leases was 332 times Thats down from 334 times at Q2. If we include lease obligations of just over $1 billion, our leverage was 334 times.
Speaker 3: transcript
Speaker 3: The decline of that debt during the quarter was primarily due to strong equity-free cash flow of $100 million, which was partially offset by the forex impact from the translation of local currency debt as the Colombian peso strength of this quarter.
The decline of that debt during the quarter was primarily due to strong equity free cash flow of $100 million, which was partially offset by the forex impact from the translation of local currency debt as the Colombian peso strengthened this quarter.
Speaker 3: transcript
Speaker 3: Regarding our equity free cash flow, I would remind you that there is a lot of seasonality here. Q-Wine is usually negative, and then we see improving cans throughout the year.
Regarding our equity free cash flow I would remind you that there is a lot of seasonality here Q1 is usually negative and then we see improving turns throughout the year.
Sheldon Bruha: Over the next several weeks, we will be finalizing our 2024 budget, and we expect to take additional measures across all our geographies as part of that process, where we expect additional seven charges to drive additional savings for the business. We will provide a further information at our full-year results in February.
Speaker 3: transcript
Speaker 3: The strong cash flow in Q3 reflects typical seasonal patterns, as well as some of the benefits of Project Everest and of our capital allocation decisions over the past year.
The strong cash flow in Q3 reflects typical seasonal patterns as well as some of the benefits of project Everest and of our capital allocation decisions over the past year.
Speaker 3: transcript
Speaker 3: Looking ahead to Q4, which is usually the strongest quarter of the year for equity-free cash flow, I want to caution you that this year should be a bit different. This is because we're expecting more than $100 million of spectrum payments in Q4. This is for the renewal of the 1,900-MHz spectrum in Colombia and the acquisition of the new spectrum of 700-MHz band in Guatemala, items that we flagged for you when we revised our equity-free cash flow targets in June .
Looking ahead to Q4, which is usually the strongest quarter of the year for equity free cash flow I want to caution you that this year should be a bit different. This is because we are expecting more than $100 million of spectrum payments. In Q4. This is for the renewal of the 900 megahertz spectrum in Colombia.
Sheldon Bruha: Now please turn to slide 17. In addition to organizational savings, we have also had significant savings that cap looks penetrates this year. Through the first nine months, our cap expense is about $150 million lower than prior year.
Sheldon Bruha: I've mentioned in prior calls the source of these savings, which is a combination of three key components of roughly equal size. Firstly, earlier this year, we conducted three-year renewals with our largest mobile vendors, where we received multi-year discounts. As you can see on the left-hand side of this chart, our level of mobile build activity has remained constant, while we are also able to absorb the impact of activating the new 72600 megahertz spectrum we obtained in Guatemala.
And the acquisition of the new spectrum of 700 megahertz band and Guatemala items that we flagged for you when we revised our equity free cash flow targets in June.
Speaker 3: transcript
Speaker 3: Also in Q4, we have to pay a lot of the severance that we booked in Q3 and that we expect to book in Q4.
Also in Q4, we will have to pay a lot of the severance that we booked in Q3 and that we expect to book in Q4.
Speaker 3: transcript
Speaker 3: Let me hand the call over to Maxime, who is joining us for the first time on this earnings call.
Let me hand, the call over to Maxime, who is joining us for the first time on this earnings call.
Speaker 4: transcript
Speaker 4: Thank you, Sheldon. It is my pleasure to be here today. As you may know, I joined the company on the 1st of September , so a little less than two months ago.
Thank you Michelle.
It is my pleasure to be here today as you May know I joined the company on the first of September so little less than two months ago.
Sheldon Bruha: Secondly, we produced our home footprint expansion in light of tougher competitive and macro environments in Columbia and Bolivia in particular. And lastly, home installations are down, again primarily in Columbia and Bolivia, as we are being more disciplined in pricing and promotions, given the more challenging environments there. On top of this, we continue to scrutinize all other cap expending and are finding other opportunities to lower spend and contribute to this year on your savings.
Speaker 4: transcript
Speaker 4: At this time of year, the company begins planning the budget for next year, and this has given me the perfect opportunity to interact with each of the country teams and with the leadership teams in Miami and Luxembourg.
At this time will show the company begins planning the budget for next year.
And this has given me the perfect opportunity to interact with each of the country teams and with the leadership teams in Miami and Luxemburg.
Speaker 4: transcript
Speaker 4: I have also had the opportunity to travel in our three biggest countries of operations, Guatemala, Colombia, and Panama, and I have more visits planned before your end.
And also wanted the opportunity to travel.
The biggest country operations with MLR, Colombia and Panama.
More visits planned before year end.
Speaker 4: transcript
Speaker 4: As you can imagine, I'm still learning about the company, but today I can share some of my first impressions on my priorities.
As you can imagine I'm still learning about the company, but today.
Sheldon Bruha: Now please turn to slide 18 for our usual net debt bridge. Net debt declined $74 million in the quarter to just over $6 million. Net debt deputies after leases was $3.32 times. That's down from $3.34 times FQ2. If we include lease obligations of just over $1 billion, our leverage was $3.34 times. But a client of that debt during the quarter was primarily due to strong equity free cash flow of $100 million, which was partially offset by the 4X impact from the translation of local currency debt as a Colombian peso-straight that was quartered.
I intend to share some of my first impressions on my priorities.
Speaker 4: transcript
Speaker 4: Firstly, Tigor is an incredible company with a strong brand and market leadership position, run by a talented team, a team with a strong culture and can-do attitude, ready to take on any challenge when the target is clear.
Firstly, you always is an incredible company with a strong brand and market leadership position run by a talented team.
A team with a strong culture.
Execute ready to take on any challenge when they're telling you it is clear.
Speaker 4: transcript
Speaker 4: But we do business in countries with volatile macroeconomics and political environments. We do not generate enough cash.
But we do business in countries as we use the volatile macroeconomic and political environments.
We do not generate enough cash.
Sheldon Bruha: Regarding our equity free cash flow, I would remind you that there is a lot of seasonality here. Q1 is usually negative, and then we see improving cans throughout the year. The strong cash flow in Q3 reflects typical seasonal patterns, as well as some of the benefits of project Everest and of our capital allocation decisions over the past year.
Speaker 4: transcript
Speaker 4: This means that we must de-risk the company by operating efficiently and with lower leverage.
This means that we most derisked the company.
Operating efficiency and with lower leverage.
Speaker 4: transcript
Speaker 4: And we must ensure that the business can generate much higher equity free cash flow every year.
And we must ensure that the business kind of Geneva, Mirchandani, our equity free cash flow.
Yeah.
With that in mind.
Speaker 4: transcript
Speaker 4: With that in mind, one of my first priorities has been to significantly expand the push on cost.
One of my first priorities has been to significantly expand to push on costs.
Sheldon Bruha: Looking ahead to Q4, which is usually the strongest quarter of the year, for equity free cash flow, I want to caution you that this year should be a bit different. This is because we're expecting more than $100 million of spectrum payments in Q4. This is for the renewal of the 1900-mager spectrum in Colombia, and the acquisition of the new spectrum of 700-mager span in Guatemala. Bidings that we flag for you when we revised our equity free cash flow targets in June. Also in Q4, we'll have to pay a lot of the severance that we booked in Q3, and that we expect the books in Q4.
Speaker 4: transcript
Speaker 4: We started immediately in September by decreasing drastically HQ costs in Miami.
When we started immediately in September by decreasing cross typically HQ costs in Miami.
And currently you spoke of the budget process I am challenging each country team on their costs and Capex.
Speaker 4: transcript
Speaker 4: And currently, as part of the budget process, I am challenging each country team on their costs and capex.
Speaker 4: transcript
Speaker 4: On a day-to-day basis, I am personally reviewing each purchase order and every dollar that we spend.
On the day to day basis.
<unk> reviewing each purchase holder and every dollar that we spend.
Speaker 4: transcript
Speaker 4: So shutdown, the strong focused on cost control is the gear priority.
So short term.
Focused on.
On cost control.
Priority.
Speaker 4: transcript
Speaker 4: And always try to deliver on the free cash flow target that we are iterating today. I will be equally focused on making sure that we capture the long term with a new growth opportunity with the right investments and are necessary to provide the excellent experience that people customers have come to expect.
Maxime Lombardini: Let me hand the call over to Maxime, who is joining us for the first time on the Surnick's call. Thank you, Sheldon. It is my pleasure to be here today.
And we strive to deliver on the free cash flow targets that we are reiterating today will.
Will be equally focused on making sure that we capture the long term, we have a new growth opportunity with the right investments. Upon this history to provide the excellent experience.
Maxime Lombardini: As you may know, I joined the company on the 1st of September, so little less than two months ago. At this time of year, the company begins planning the budget for next year, and this has given me the perfect opportunity to interact with each of the country teams and with the leadership teams in Miami and Luxembourg. I have also had the opportunity to travel in our three biggest country operations, Guatemala, Colombia, and Panama, and I have more visits planned before your end.
<unk> customers have come to expect.
Speaker 4: transcript
I will report back to you next quarter.
Progress with more details.
Speaker 1: transcript
Speaker 1: Thank you, Meg Zim. With that, we're gonna now go into the Q&A session. As a reminder, if you'd like to ask a question, please email us at investorsatmillicom.com.
Thank you Maxime.
We're going to now go into the Q&A session.
As a reminder, if you'd like to ask a question. Please E mail us at investors at Millicom Dot com.
Speaker 1: transcript
Speaker 1: We'll take the first question from Oscar Ronquist from ABG. Oscar the line is yours.
I'll take the first question from Oscar Runquist from AVG Oscar the line is yours.
Maxime Lombardini: As you can imagine, I am still learning about the company, but today I can share some of my first impressions on my priorities. Firstly, to go with an incredible company with a strong brand and market leadership position run by a talented team, a team with a strong culture and can do attitude ready to take on any challenge when the target is clear. But we do business in countries with volatile macroeconomics and political environments, and we do not generate enough cash.
Thank you and good morning.
Speaker 5: transcript
Speaker 5: Thank you and good morning. Maybe we'll do it that in the middle of the day for me in Stockholm.
It stopped in the middle of the day for me in Stockholm.
Speaker 5: transcript
Speaker 5: Just two questions, that's okay, please. Just the first one on Guatemala. You say that signs of improvement or an improving market is visible. So how should we think about timing?
So just two questions if that's okay. Please.
First one on Guatemala, you say that the signs of improvement.
Market is available so how should we think about timing.
Speaker 5: transcript
Speaker 5: You may not around one to two percent decline in service revenue like the last few quarters So just wanted to get a sense of if you should see that health-inproving already in Q4 or if you expect that to take a bit longer
I mean at around 1% to 2% decline in service revenue like last few quarters. So just wanted to get a sense of if you should see that they'll think improving already in Q4, or if you expect that to take a bit longer.
Speaker 5: transcript
Speaker 5: My second question is just on cap-backs. I think you have been around 180 million each quarter for the last three ones. And you say that, I mean, you're holding back a bit on home, right? And also you are looking at efficiency. So just the 180 figure over the last three quarters, I guess that's a bit low, maybe, on the sort of run rate on an annualized basis. Just if you could elaborate on the timing or any quantification on the new run rate, please. Thank you.
My second question is just on Capex I think you have been around $180 million.
Maxime Lombardini: This means that we must de-risk the company by operating efficiently and with lower leverage. And we must ensure that the business can generate much higher equity free cash flow every year. With that in mind, one of my first priorities has been to significantly expand the push on costs. We started immediately in September by decreasing drastically HQ costs in Miami. And currently, as part of the budget process, I am challenging each country team on their costs and capital.
Each quarter for the last 21, so did you say that youre holding backup made on home rights on that.
Also you are looking at efficiency. So just the 180 figure over the last three quarters.
That's a big low maybe one on the sort of a run rate on an annualized basis. Just if you could elaborate on the timing or any quantification on the new run rate. Please. Thank you.
Alright.
Speaker 2: transcript
Speaker 2: Hello, Oscar, and welcome. Thanks for joining us today. I'll take the first one on what thing, on timing, et cetera, and the market, and I'll keep Sheldon a little bit of time to prepare some numbers for you on the topic's question.
Hello, and welcome thanks for joining us today.
I'll take the first one on <unk>.
Maxime Lombardini: On a day-to-day basis, I am personally reviewing each purchase order and every dollar that we spend. So short term, a strong forecast on cost-confold is the clear priority. And as we strive to deliver on the free cash flow target that we are reiterating today, I will be equally focused on making sure that we capture the long term with a new growth opportunity with the right investments and the necessary to provide the excellent experience that the good customers have come to expect.
Timing et cetera in the market and our team's shelves out a little bit of time to prepare some numbers for.
Are you on the Capex question.
Speaker 2: transcript
Speaker 2: On what I think we've played it really, really well. And the timing, which is the core of your question, is happening.
I think we've played it really really well.
And timing.
Core of your question is happening.
Speaker 2: transcript
Speaker 2: pretty much as we expected it would happen. And with that, I'll give you some color. As you recall, over the last
I already mentioned that we expected it would happen.
And with that I'll give you some color as you recall over the last.
Speaker 2: transcript
Speaker 2: year or so, we faced a tremendous amount of competitive pressure on pre-paid. We set out to basically hold our market share position, a very strong market share position, and we've been able to do that. Not without some pain on the revenue for sure, but certainly holding on to our market share and our private base.
Year or so.
We faced a tremendous amount of competitive pressure on eight.
Maxime Lombardini: I will report back to you next quarter on our progress with more details.
We set out to basically hold our market share position, a very strong market share position and we've been able to do that not without some pain on the revenue for sure, but certainly holding on to our market share in our subscriber base and we did that knowing that we could and we would re.
Operator: Thank you, Maxime. With that, we are going to now go into the Q&A session. As a reminder, if you would like to ask a question, please email us at investors at Millicom.com.
Oscar Ronquist: We will take the first question from Oscar Ronquist from ABG. Oscar, the line is yours. Thank you, Ann.
Speaker 2: transcript
Speaker 2: And we did that knowing that we could and we would revamp, re-establish both the spectrum position and the network position. And we have done that. That was the long game. That was the long strategy that we were playing. And over the course of the quarters this year, we have seen that play out.
We stabilized.
Operator: Good morning. Maybe you know it's up in the middle of the day for me in Stockholm. Just two questions. That's okay, please. Just the first one on Guatemala. You say that the signs of improvement or an improving market is visible. So how should we think about timing your main at around one to two percent decline in service revenue, like the last few quarters. So just wanted to get a sense of if you should see that that's out there improving already Q4 or if you expect that to take a bit longer.
Spectrum position in the network precision and we have done that that was the long game that was the long strategy that we were playing out over the course of the quarters. This year, we have seen that play out.
Speaker 2: transcript
Speaker 2: to consecutive spectrum options. We no longer have any network disadvantage. We no longer have any service disadvantage. We no longer have any spectrum disadvantage.
Two consecutive spectrum auctions, we no longer have any network is advantage, we no longer have any service disadvantage from no longer having the spectrum advantage. So quite frankly, we're playing the long game and has worked out as we expected.
Speaker 2: transcript
Speaker 2: So by frying people were playing the long game and he had worked out as we expected it would.
Speaker 2: transcript
Speaker 2: Subsequently to that, we took a price increase on prepaid to a percentage of the prepaid base in need to late September . So you can actually see it in the quarterly numbers yet. But as we look forward, this was a timing that we were expecting, strong network positions, strong spectral positions, so that we could now focus on the commercial action.
Subsequently to that we took a price increase.
Operator: My second question is just on cupcakes. I think you have been around 180 million each quarter for the last three ones. And you say that I mean, you're holding back a bit on home, right? And also you are looking at efficiency. So just the 180 figure over the last three quarters, I guess that that's a bit low maybe on the sort of run rate on an annualized basis. Just if you could elaborate on the timing or any quantification on the new run rate, please.
On prepaid.
Percentage of the prepaid base.
In mid to late September So you can actually see it in the quarterly numbers yet but.
But as we move forward. This was a timing that we were expecting strong network position strong spectrum position. So that we could now on the commercial actions. So far as I said, we are cautiously optimistic cannot guaranteed ever ever guarantee that price increases will stick.
Speaker 2: transcript
Speaker 2: So far as I said, we are cautiously optimistic, cannot guarantee ever, can ever guarantee that price increases will stink, but we're certainly playing a cautious, well-played game here. So the answer to your question is things have been playing out as we expected it would, as we wanted to play it them out.
Operator: Thank you. All right. Hello, Oscar, and welcome. Thanks for joining us today. I'll take the first one on what time being, et cetera, and the market. And I'll give Sheldon a little bit of time to prepare some numbers for you on the cupcakes question. On what I think we've played it really, really well. And the timing, which is the core of your question, is happening pretty much as we expected it would happen.
But we're certainly playing a cautious well today Jim here. So the answer to your question is things have been playing out as we expected.
One typically them out.
Speaker 2: transcript
Speaker 2: We're also just mathematically lapping pretty much the initial effects of the push on competition. But we are playing the long game here Oscar and that's what we use to pay cautiously optimistic thing. You're better in the market, you're more rational in the market as compared to what they were before. But we're playing the long game and we're playing a very strategic game here. So we're cautiously optimistic.
We're also just mathematically lapping pretty much the initial effects of the.
On competition, but we are playing the long game here Oscar and that's what we use to maintain cautiously optimistic.
I mean, the market rationally in the market.
Compared to what they were before but we're playing the long game and we're paying a very strategic game here. So we're cautiously optimistic.
Operator: And with that, I'll give you some color as you recall over the last year or so, we faced a tremendous amount of competitive pressure on prepaid. We set out to basically hold our market share position, a very strong market share position. And we've been able to do that, not without some pain on the revenue for sure, but certainly holding on to our market share and our private base. And we did that, knowing that we could and we would revamp, re-stabilize both the spectrum position and the network position.
Speaker 2: transcript
Speaker 2: Going into Q4 just to manage expectations, remember we had a very good Q4 last year because the World Cup that we had. So we're not going to have that this year. So again, long term means Q4 will have some difficult comms to be the World Cup.
Going into Q4, just to manage your expectations remember we had a very good Q4 last year because of the work that we had.
So we're not going to have that this year. So again long term in Q4 will have some.
Some difficult comps.
The World Cup.
I mean is there anything guys.
Speaker 1: transcript
Speaker 1: I think Oscar we should also just flag that there's been some significant protests in the street in Guatemala these last several weeks since the presidential election. So that has created a little bit of a
I think Oscar wave should also just flag that there has been some significant protests in the streets and Guatemala. These last several weeks since the presidential election, So that has created a little bit of.
Operator: And we have done that. That was the long game. That was the long strategy that we were playing. And over the course of the quarters this year, we have seen that play out to consecutive spectrum actions. We no longer have any network disadvantage. We no longer have any service disadvantage. We no longer have any spectrum disadvantage. So by frankly, we were playing the long game and it has worked out as we expected it would.
Speaker 2: transcript
Speaker 2: disruption in terms of economic activity, but you know, the new president takes office in early January , so that could continue for some time, but still a little too early to know what what kind of impact that might have. Yeah, quite a matter of how there's a very lengthy time frame between elections and actual handover, over six months, so that's pretty to a little bit of political turmoil there.
Disruption in terms of economic activity, but.
The new President takes office in early January so that could continue for some time, but still little too early to know what kind of impact that might have quite the amount. It has a very lengthy time frame between elections and actual handover over six months. So that's created a little bit of political turmoil there.
Speaker 2: transcript
Speaker 2: So come generate our whole wood heat as you will be on your client's side completely.
Operator: Subsequently, to that, we took a price increase on prepaid to a percentage of the prepaid base in need to lay in September. We didn't actually see it in the quarterly numbers yet, but as we look forward, this was a timing that we were expecting, strong network positions, strong spectral positions, so that we could now focus on the commercial actions. So far, as I said, we are cautiously optimistic, cannot guarantee the price increases will stink, but we're certainly playing a cautious, well-played game here.
From January onwards, it will be on the client side quickly.
Understood.
Speaker 3: transcript
Speaker 3: Okay, on the CapEx question you had, look, I mentioned a lot in the presentation around what was driving some of the reductions in CapEx this year, really around, really around, basically, you know, majority of CapEx decline really related to two markets, Columbia and Libya, where, you know, we're, I think it's absolutely appropriate to some of the steps we're taking in terms of discipline around our own span, given the, you know, the situations did you truly do
Okay.
On the Capex question you had.
I mentioned a lot in <unk>.
In the presentation around what was driving some of the reductions in Capex. This year I mean really around.
Really around basically.
The majority.
The majority of Capex decline really related to two markets, Colombia, and Bolivia, we're yet to witness.
I think it's absolutely appropriate some of the steps we're taking.
In terms of discipline around around or around our homes spend given the situations in both of those countries.
Speaker 3: transcript
Speaker 3: But looking at going forward, I wouldn't say, and you would have heard kind of in Maxime's comments, in addition to the things that's been happening this year, we are being very disciplined and scrutinizing sort of cap-expanic across the business. I would not expect cap-expan to be higher than what you're seeing right now as we go into 2024. I would expect us to be, be suddenly lower than those levels on a going forward basis. So, well, that's how, you know, where we see the trendings going, it's, you know, levels lower than what you're seeing currently.
Look like going forward.
Operator: So the answer to your question is things have been laying out as we expected it would, that we wanted to play them out. We're also just mathematically lapping pretty much the initial effects of the push on competition, but we are playing the long game here Oscar, and that's what we use to obtain cautiously optimistic thing. You're better in the market, you're more rational in the market, as compared to what they were before, but we're playing the long game and we're playing a very strategic game here, so we're cautious of the optimistic.
I wouldn't say you would've heard kind of in vaccines comments. In addition to the things that has been happening this year.
Are being very disciplined and scrutinizing sort of capex spend across the business I would not expect capex spend to be higher than what youre seeing right now as we go into 2024, I would expect us to be.
Suddenly lower than those levels on a going forward basis. So.
Well, that's how you're asking sort of where we see the trending is going.
Level levels lower than what you are seeing currently.
Okay.
Speaker 5: transcript
Speaker 5: Thank you very much. Thank you, Esther.
Understood. Thank you very much thank you Oscar.
Operator: Going into Q4, just to manage our expectations, remember, we had a very good Q4 last year, because the World Cup that we had, so we're not going to have that this year. So, again, long-term means Q4 will have some difficult comms to be the World Cup. Did I miss anything, guys? I think Oscar, we should also just flag that there's been some significant protests in the street in Guatemala these last several weeks since the presidential election, so that has created a little bit of a disruption in terms of economic activity, but new president takes office in early January, so that could continue for some time, but still a little too early to know what kind of impact that might have.
Speaker 1: transcript
Speaker 1: Okay, next we're gonna go to Final, Final Kenomu-Rey from HSBC, Final. I. I. I.
Next we're going to go to find them funny kind of memory from HSBC Penny Lane.
Your line is yours.
Speaker 6: transcript
Speaker 6: Yeah, thanks everyone for taking my questions. My first question is on Columbia. You seem to have had a good margin equation this water. How sustainable is the margin equation? And once you complete the project Everest, we do expect the margins to trend in Columbia.
Yes.
Thanks, everyone for taking my questions. My first question is on Colombia.
You seem to have had a good margin accretion this quarter.
Sustainable is the margin accretion and once you complete the project.
Operator: Yeah, Guatemala has a very lengthy timeframe between elections, and actual handover is over six months, so that's created a little bit of political turmoil there. So, come January, our whole would be on the quiet side politically. There's it. Okay, on the CapEx question you had, look, I mentioned a lot in the presentation around what was driving some of the reductions in CapEx this year. I mean, really around, really around, you know, basically, you know, majority of CapEx decline really related to two markets, Colombia and Libya, where, you know, I think it's absolutely appropriate for some of the steps we're taking, in terms of discipline around around our homespan given the, you know, the situations in both those countries.
Evidenced.
The margins to trend in Colombia.
Speaker 6: transcript
Speaker 6: And again, the second question is again in Colombia. You had a recent equity infusion into Colombia. Do you see any potential equity infusions in 2024 or 2025 into Colombia?
And the second question is again in Colombia.
You had a recent equity infusion into Colombia, and do you see any <unk>.
<unk> equity infusions in 2020 for liquidity 25 into Colombia.
Speaker 2: transcript
Speaker 2: All right, I'll take the first one and perhaps a little bit of the second one and as always, keep shelving a little bit of time to get the numbers right. So the things that have been driving our record margins in Columbia, these quarter are a combination of a-
Okay.
Alright.
Thanks.
The first one and perhaps a little bit of the second one is always Sheldon.
Sheldon a little bit of time to get the numbers right.
So the things are funny that have been driving our record margins in Colombia this quarter combination of activities.
Speaker 2: transcript
Speaker 2: First, as you recall, there was a ton of network investment and commercial expansion that happened in the years prior, right after we had bought 700 megahertz spectrum. That's behind us. So now we are more on the efficiency phase of those network investments and commercial expansion.
First as you recall, there was a ton of network investment and commercial expansion.
Operator: But look, on going forward, you know, I wouldn't say, you know, and you would have heard kind of in Maxime's comments, you know, in addition to the things that's been happening this year, you know, we are being very disciplined and scrutinizing sort of CapEx span across the business. You know, I would not expect CapEx spans to be higher than what you're seeing right now as we go into 2024, or I would expect us to be, you know, you'd be suddenly lower than those levels, you know, on a going forward basis. So, you know, that's how, you know, you're asking sort of where, where was either trending is going? It's, you know, levels lower than what you're seeing currently. Thank you very much.
And in the years prior.
Right. After we had bought 700 megahertz spectrum.
Operator: Thank you, Oscar.
Behind us. So now we are more on the efficiency phase all those network investments in commercial expansions.
Speaker 2: transcript
Speaker 2: The second element is, as you know, mobile is a game of scale and we have been gaining scale, particularly in post-grading Colombia. So obviously that helps the margin on a fixed power space business.
Second element is that as you know volumes are gaining more scale than we have been gaining scale, particularly postpaid in Colombia. So obviously that helps the margin on a.
Fixed cost based business.
Speaker 2: transcript
Speaker 2: The third element in Colombia is project Everest, phase one of project Everest, which we started very on this year. And as we're talking, there's a phase two that will help maintain sustainability of that margin expansion going forward. The fourth element is that there's been, and I use these words with a degree of consciousness.
A third element in Colombia is project Everest Phase one project in Brazil, starting to bear on this year.
And as we've been talking to is in phase two that will help maintain sustainability of that margin.
Pension going forward.
The fourth element is that there has been.
Use these words.
Cautiousness more price rationality in the market in the last few quarters, and particularly we have been able to sustain or drive our services revenue and postpaid both on volume on Rpms me well.
Speaker 2: transcript
Speaker 2: more price rationality in the market in the last few quarters.
Speaker 2: transcript
Speaker 2: And particularly we've been able to sustain or drive service revenue on post-paid, post-on-volume and on our service level.
Phani Kanumuri: Okay, next we're going to go to Phani Kanumuri from HSBC, Phani. Line is yours. Yeah, thanks everyone for taking my questions.
<unk>.
Speaker 2: transcript
Speaker 2: Also, we've been very, very disciplined on the home business, as we alluded, during the call, keeping prices up, charging installation, and if need be, sacrificing volume over profitability. And that's what you see in the results. Going forward, profitability will also be enhanced by the Mobile Network and Spectrum Contribution Agreement that we talked about in the prior quarter and this quarter.
Also we've been very very disciplined on the home business as we alluded.
During the call keeping prices off charging installation and it needs to be sacrificing volume over profitability and that's what you see in the results.
Phani Kanumuri: My first question is on Columbia. You seem to have had a good margin equation this quarter. How sustainable is the margin equation and once you complete the project Everest, we do expect the margins to trend in Columbia. And again, the second question is again in Columbia, you had a recent equity infusion into Columbia. Do you see any potential equity infusions in 2024 or 2025 into Columbia?
Forward.
Our visibility will also be enhanced by mobile network and spectrum contribution agreement that we've talked about in the prior quarter and this quarter.
Speaker 2: transcript
Speaker 2: And all of these combined lead to the one single focus that we have in Colombia, which is to make Colombia equity-free cash flow possible.
And all of these combined.
Leading to the one single focus that we have in Colombia, which is to make Columbia equity free cash flow positive.
Mauricio Harmos: Alright, I'll take the first one and perhaps a little bit of the second one and as always, Sheldon, a little bit of time to get the numbers right. So the things that have been driving our record margins in Columbia this quarter are a combination of activities. First, as you recall, there was a ton of network investment and commercial expansion that happened in the years prior right after we had bought 700 megahertz spectrum.
Speaker 2: transcript
Speaker 2: who called me saying a number of times the only operation in the portfolio that has not been equity-free cash flow. And our drive has been to make up this business equity-free cash flow. And I'll tell you at the risk of not giving you specifics that we're really focused on making that happen as soon as possible.
Recall me, saying a number of times the only operation in the portfolio that has not been equity free cash flow and our drive has been to makeup business equity free cash flow and I'll tell you.
Mauricio Harmos: That's behind us. So now we are more on the efficiency phase of those network investments and commercial expansions. The second element is that, as you know, mobile is a game of scale and we have been gaining scale, particularly in post-grading Columbia. So obviously, that helps the margin on a fixed post-based business. The third element in Columbia is project Everest, phase one of project Everest, which we started very early on this year.
Risk of not giving you specifics that we're really focused on making that happen as soon as possible.
Speaker 2: transcript
Speaker 2: And that gives you an idea as to why we're driving hard with the expectation of not having any additional equity contribution going forward. And with that, I'll hand it over to children. Yeah, no race really at the key points of everything.
And that gives you an idea as to why.
We're driving hard.
Expectations of not having any additional equity contribution going forward and with that I'll hand, it over to Sheldon generation. It really hit the key points I mean, I think EBIT.
EBITDA.
And EBITDA margins are important metrics to be tracking, but most importantly, and more importantly, it's the equity free cash flow performance, we're trying to drive out of that business and and getting that business to equity free cash flow breakeven in the first initially and then ultimately.
Speaker 3: transcript
Speaker 3: metrics to be tracking, but most importantly, and more importantly is, it's the equity free cash flow performance we're trying to drive out of that business. And getting that business to equity free cash load, break even personally, and ultimately, equity free cash flow positive. And of course that, once that's achieved, that's gonna certainly address your second question about one more capital we needed from the shareholders. I mean, the answer we know, once we get to that business, to be equity free cash flow positive. So that's where the focus is. You look, I think we're gonna make a lot of progress on that in 2024 in terms of achieving that objective.
Free cash flow positive and.
Of course that once that's achieved that's going to start to say dressers for your second question about one more capital we needed from the shareholders.
But you know once we get to that business to be equity free cash flow positive. So.
Mauricio Harmos: And as we've been talking, there's a phase two that will help maintain sustainability of that margin expansion going forward. The fourth element is that there's been, and I use these words with a degree of cautiousness, more price rationality in the market in the last few quarters. And particularly, we've been able to sustain or drive service revenue on post-paid, both on volume and on our own very well. And also, we've been very, very disciplined on the home businesses we are doing during the call.
That's where the focus is look I think we're going to make a lot of progress on that in 2024.
Speaker 3: transcript
Speaker 3: in terms of achieving that objective. And that's kind of where the focus is right now, but that is.
In terms of achieving that objective and.
That's that's kind of where the focus is right now for that business.
Speaker 6: transcript
Speaker 6: So in the baske scenario, when do we expect to achieve a kind of pre-cubing? At least a broad timeline for Colombia.
So in the base case scenario.
Uh huh.
Well, that's a broad timeline.
Colombia.
Okay.
Speaker 2: transcript
Speaker 2: There's this thing that happens on a yearly basis called the budget, right? That's all I'll say.
There is this thing that happens on a yearly basis called the budget.
Alright, that's all I'll say.
Speaker 2: transcript
Speaker 2: That's a non-answer, Fanny. As soon as we possibly can, there's nothing we... You can just imagine how focused we are on this, Fanny, right? As soon as we can. We've got everything in Colombia. Again, back to the Guatemala question. Buy the playbook.
That's a non answer funny.
Mauricio Harmos: Keeping prices up, charging installation, and it needs to be sacrificing volume over profitability. And that's what you see in the results. Point forward, profitability will also be enhanced by the mobile network and spectrum contribution agreement that we talked about in the fire quarter and this quarter. And all of this combined lead to the one single focus that we have in Columbia, which is to make Columbia equity free cash flow possible. As you recall me saying a number of times the only operation in the portfolio that has not been equity free cash flow, and our drive has been to make up the business equity free cash flow.
As soon as we possibly can there is nothing you can just imagine how focused we are on these funny right as soon as we've got everything in Colombia again back to the West mine requests by the table. This is the game, we're playing with a single objective, which is to get economy of equity free cash flow positive as soon as possible and just about every action has been drawn.
Speaker 2: transcript
Speaker 2: This is the game we're playing with a single objective, which is to get Columbia to be a pre-Castle positive, as soon as possible. And just about every action has been driven in that direction. We put Everest, space one, early on in Columbia, and in this year, where obviously focus on Columbia for space two of Everest. And all you can take away from, you know, without forcing us into specific time guidance is that we're very focused on making Columbia to be a pre-Castle.
In that direction.
We put at risk phase one early on in Colombia and in this year.
Obviously focus on Columbia for patients who are at risk spend.
All you can take away from without forcing us into specifics on guidance is that we're very focused in Mexico on the equity free cash flow.
Okay sure no. Thanks, a lot for that.
Mauricio Harmos: And I'll tell you at the risk of not giving you specifics that we're really focused on making that happen as soon as possible. And that gives you an idea as to why we're driving hard with the expectation of not having any additional equity contribution points forward.
Speaker 5: transcript
Speaker 5: Thank you, Fanny. All right, next we're gonna go to Marcelo Santos from JP Mori and Marcelo.
Thank you Tony Alright next we're going to go to mass set of centers from Jpmorgan and Marcelo.
Speaker 7: transcript
Speaker 7: Hi, hello, good morning. Thanks for taking my questions. The first question is just if you had any update on Kegel Money's strategic alternatives. So you disclosed that in the investor day, so I would just want to know how this is going. And the second question is actually for Maxime. Mentioned that you're going to do the right investments to capture the long-term revenue growth opportunities. Could you expand a bit on what do you see as the main long-term revenue growth opportunities? If you could give some color would be great.
Hi, Hello, Good morning, Thanks for taking my questions.
First question is just if you had any update on <unk> strategic alternatives. So you disclosed that in the Investor base, but I just want to know how this is going.
Sheldon Bruha: And with that, I'll have that overdue shelter. Generally, we really have the key points. I mean, I think, you know, EBDAs, and I think any EBDA margins are important metrics to be tracking, but most importantly, and more importantly is, it's the equity free cash flow performance we're trying to drive out of that business. And getting that business to equity free cash flow, you know, break even the first initially and ultimately equity free cash flow positive.
And the second question is actually for Maxim.
Mentioned that.
We can do the right investments to capture long term revenue growth opportunities could you expand a bit on what do you see as the main long term revenue growth opportunities. If you could give some color would be great.
Sheldon Bruha: And, you know, of course, once that's achieved, that's going to certainly address your second question about one more capital being needed from the shareholders. I mean, you know, the answer we know once we get to that business to be equity free cash flow positive. So, you know, that's where the focus is. You look, I think we're going to make a lot of progress on that in 2024 in terms of achieving that objective.
Speaker 2: transcript
Speaker 2: Alright, I'll take the first one and give Maxima a little bit of time to
Alright, I'll take the first one and give up might seem a little bit of time too.
Speaker 2: transcript
Speaker 2: You know, I'm preparing a couple of brilliant ideas there for sure.
A couple of brilliant ideas there for sure.
Speaker 2: transcript
Speaker 2: So listen, on Tivo money, we continue to grow the business.
So listen on the T mobile money.
We continue to grow the business.
Speaker 2: transcript
Speaker 2: quite positively. Geographically, as you may recall, we're very strong in part of why, very strong in Polymeria. We've relaunched this year in Guatemala. Ticomani existed in Guatemala, but it didn't have the false little products in there, so we've relaunched in Guatemala.
Positively.
Geographically as you may recall, we're very strong in Paraguay very strong in EMEA.
Mauricio Harmos: And, you know, that's, you know, that's kind of where the focus is right now, So, in the basque scenario, when do we expect to achieve a kind of equipment? At least a broad timeline for Colombia. There's this thing that happens on a yearly basis called the budget, right? That's all I'll say. That's a non-answer, Phani. As soon as we possibly can, there's nothing we... You can just imagine how focused we are on this, Phani, right?
We launched this year in Guatemala, CECO money existed in Guatemala, but it didn't have the full suite of products in there. So we've relaunched in Guatemala.
Speaker 2: transcript
Speaker 2: We've also attained line-sisters and launched in Panama and we're happy with the progress that we're making and operationally. Our second area of focus is making sure that we complete the delivery and implementation of the full suite of the service offering. So they do all it up, but also continue to increase the merchant community and also begin piloting which...
Slide 10 lines of businesses and launched in Panama, and we're happy with the progress that we're making that operationally.
Our second area of focus is making sure that we can lead.
The delivery of the implementation of <unk>.
<unk> full suite of service offerings.
Stores like the wallet App I'd also continue to increase the merchant community and also began piloting.
Mauricio Harmos: As soon as we can, we're done. Everything in Colombia, again, back to the mathematical question by the table. This is the game we're playing with a single objective, which is to get Colombia to recruit a pre-carsal positive, as soon as possible. And just about every action has been driven in that direction. We put Everest, page one, early on in Colombia, in this year. We're obviously focused on Colombia for page two of Everest. And all you can take away from, you know, without forcing us into specific some guidance, is that we're very focused on making Colombia recruit a pre-carsal.
Which successfully delivery in Bolivia, and also in Guatemala, and we continue to find very important ways of making the telecom business worked really closely with the fintech business in the ice within consumer, which we think is a win win for everybody and we're all.
Phani Kanumuri: Okay, sure. Now, thanks a lot for that. Thank you, Phani.
Speaker 7: transcript
Speaker 7: professionally delivering in Bolivia and also in Guatemala. And we continue to find
Speaker 7: transcript
Speaker 7: very important ways of making the telecom business work really closely with the fintech business in the eyes of the consumer, which we think is a win-win for everybody. And we're also now beyond this investment phase that we put for the last couple of years, very focused, again, going back to our past coincidences for 2024, on making sure Tico Money is, with all of these investments and launches behind it, OCF breakeven, and we're very happy with that result.
Also now beyond this investment phase that we put for the last couple of years very focused again going back to our escrow emphases for 2024 on making sure <unk> money is with all of this investment that launches behind it ocs breakeven very happy with that result, which leaves us with plenty of flexibility.
Speaker 7: transcript
Speaker 7: which lives us then with plenty of flexibility to then figure out in this very difficult fintech market, Michel D'Oll.
Marcelo Santos: All right, next we're going to go to Marcelo Santos from JP Mauri and Marcelo. Hi, hello. Good morning. Thanks for taking my questions. The first question is just if you had any update on Tigo Mane's strategic alternatives, so you disclosed that in the investor base. I would just want to know how this is going.
And then figure out in these very difficult Fintech markets Marcello.
Maxime Lombardini: And the second question is actually for Maxine. I mentioned that you're waiting for the right investments to capture the long-term revenue growth opportunities. Could you expand a bit on what do you see as the main long-term revenue growth opportunities? If you could give some color, it would be great.
Speaker 2: transcript
Speaker 2: When is the best time to maximize and how is the best time to maximize the value of that ask? And that is the punchline for your question.
When is the best time to maximize on how is the best time to maximize the value of that asset.
And that is the punch line for your questions.
And Maxine.
Showtime for Ya.
Speaker 4: transcript
Speaker 4: Thank you. Good morning and good afternoon. Thank you, Marcelo, for your question. You know, I joined the company something like seven weeks ago, so it's a bit early to describe a full strategy for the future. What I wanted to say with a few words about the future is that
Thank you.
Good morning, and good afternoon. Thank you for your question.
I joined the company something like seven weeks ago.
Mauricio Harmos: All right, I'll take the first one and give Maxine a little bit of time to, you know, prepare a couple of brilliant ideas there for sure. So listen on Tigo Mane, we continue to grow the business quite positively geographically. As you may recall, we're very strong in part of why, very strong in polymer. We've relaunched this year in Guatemala. Tigo Mane existed in Guatemala, but it didn't have the false little products in there.
Don't need to.
I described before strategically for the future. We wanted to say a few words about the future is that the.
Speaker 4: transcript
Speaker 4: The future of a company cannot be only on cost-cutting.
The future of our company can not only on cost cutting.
Speaker 4: transcript
Speaker 4: cost getting used to the clear need to be back to cash generation but
<unk> continues to do neither.
To be back to cash generation, but.
Speaker 4: transcript
Speaker 4: That's not the whole project for the company, so we are working a lot also.
This one project for the company. So we are working a lot also on capex optimization, meaning where to invest appropriately in mobile.
Speaker 4: transcript
Speaker 4: on CapEx optimization, meaning work to invest properly in mobile, densification coverage.
Mauricio Harmos: So we've relaunched in Guatemala. We've also attained line systems and launched in Panama and we're happy with the progress that we're making and operationally. Our second area of focus is making sure that we complete the delivery and implementation of this. This full suite of the service offering. So they do all that up, but also continue to increase the merchant community and also begin piloting which successfully delivering in Bolivia and also in Guatemala.
Application coverage.
Speaker 4: transcript
Speaker 4: And more importantly, probably a way to invest and what to do at home.
And more importantly, probably where to invest and when to do them home.
Speaker 4: transcript
Speaker 4: where you know the the marching are a bit stretched. So, the owner would say we'll probably come into bit more next.
No no.
Entrepreneur retrenched, so those I would say.
We probably comment a bit more.
Speaker 4: transcript
Speaker 4: quarter of a two days a bit too early. And then there are many other options within each one of the geography where on the home business, as you can see, there are many networks of building and probably intelligent solutions that could be worked on.
Next.
Quarter to date.
Too early.
And then many many other options.
Within each one of the of the geography, where.
Home business as you can see that.
There are many networks over building.
Probably.
Intelligent solutions that could be worked on.
Mauricio Harmos: And we continue to find very important ways of making the telecom business work really closely with the thing tech business in the eyes of the consumer, which we think is a win-win for everybody. And we're also now having on this investment phase that we put for the last couple of years. Very focused again going back to our ask for answers for 2024 or making sure Tigo Mane is with all of this investment and launches behind it.
Wonderful.
Thank you very much for the answers.
Speaker 1: transcript
Speaker 1: Thank you, Marcelo. So next we're gonna go to the FANGO 5 of the NB.
Thank you Marcello. So next we're going to go to a stefanko fab D&B.
Mauricio Harmos: OCF rates even very happy with that result, which leaves us then with plenty of flexibility to then figure out in this very difficult. So feedback markets for Sheldon, when is the best time to maximize and how is the best time to maximize the value of that ask? And that is the punchline to your question, and Maxime.
So Stefan you're on mute I believe.
Speaker 8: transcript
Speaker 8: So, can you hear me now? Yes, great. So, a couple of questions. First, on the network JV with Telefonica in Colombia, if you can somehow quantify what kind of savings you could get from that on both OPEX and CAPEX and when those can materialize?
So can you hear me now.
Yes.
Yes, great.
So a couple of questions first on <unk>.
On the network JV.
The telephone the guidance in Colombia.
If you can somehow.
Uh huh.
Quantify what kind of savings you could get from that on both opex.
Capex and when those can materialize.
Speaker 8: transcript
Speaker 8: and secondly a question for Maxime.
And secondly, a question for Maxim.
Maxime Lombardini: Show time for you. Thank you.
Speaker 8: transcript
Speaker 8: you mentioned in your remarks that given volatility in these markets, you believe the
Maxime Lombardini: Good morning and good afternoon. Thank you, Martin, for your question. You know, I joined the company something like seven weeks ago, so it's a bit early to describe a food strategy for the future. What I wanted to say with the few words about the future is that the future of a company cannot be only on cost-cutting. Cost-cutting is today a clear need to be back to cash generation, but that's not the sole project for the company.
You mentioned in your remarks that given volatility in these markets you believe.
Speaker 8: transcript
Speaker 8: the leverage is a bit high, which I think all of us agree to.
The leverage is a bit tie, which I think all of us agree too.
Speaker 8: transcript
Speaker 8: But now given the strategic initiatives with the sale of last the et cetera. So my question is where would you see leverage to go to be comfortable and if it's
But now given.
The strategic initiatives with disabled lusty, etc.
So my question is where would you see a leverage to go to be comfortable.
Maxime Lombardini: So we are working a lot also on CapEx optimization, meaning work to invest properly in mobile, densification coverage, and more importantly, probably work to invest and what to do on home. Where you know, the margin are a bit stretched. So, all I would say, we'll probably come into a bit more next quarter, but today it's a bit too early. And then there are many other options within each one of the geography where, on the home business, as you can see, there are many networks over building and probably intelligent solutions that could be worked on.
Speaker 8: transcript
Speaker 8: totally preferred to pay down death drawden, have some sort of shareholder remuneration from sale of latiates.
Thanks.
That totally prefer to pay down debt throughout that Didnt hub.
Some sort of shareholder remuneration from save a lot the etc.
Thank you.
Speaker 2: transcript
Speaker 2: Hey, Stephan. Good to see you, as always. You too. Great questions. I'll take the first one on the network JV briefly, and then I'll hand over the second one, if it's okay with you, to our CFO .
Operator: Wonderful. Thank you very much for the answers. Thank you, Marcelo.
And as to find good to see you as always great questions I'll take the first one on the network JV briefly and then I'll hand over the second one if it's okay to your view as to our CFO.
Speaker 2: transcript
Speaker 2: Sheldon so that we provide you with the full institutional, and I got to do this in my role as I can see or smile as interimps here so that we provide you with the full institutional view on leverage from the board.
Sheldon so that we can provide you with a full institutional I gotta do these in my role as I can see her smile.
As interim chair so that we can provide you with a full institutional view on leverage.
The board.
Speaker 2: transcript
Speaker 2: On the network, Jay, I think the two key areas without our ability to give you specific details.
On the network JV.
Two key areas without our ability to give you specific details obviously there is the opex and capex savings of running a single net right. That's the nature of a network choppy on mobile and in addition to that there is synergies of running a single.
Stefan Gauffin: So, next, we're going to go to Stefan Goffin of the NB. Stefan, you're on mute, I believe. I don't mind any issues. So can you hear me now? Yes, great. So, a couple of questions.
Speaker 2: transcript
Speaker 2: Obviously, there is the topics and topic savings of running a single network, right? That's the nature of a networked RBE on mobile. In addition to that, there is the synergies of running a single pool of spectrum.
Paul All spectrum and this is important particularly in Colombia, because you know the cost of spectrum in Colombia is significantly higher than in most other regions. So the ability to run not only a single network from a capex and Opex side, but also impose your network is an important part of the savings from from that.
Speaker 2: transcript
Speaker 2: And this is important, particularly in Colombia, because you know the cost of spectrum in Colombia is significantly higher than it moves to...
Mauricio Harmos: First, on the network JD, with Telephonic in Colombia, if you can somehow quantify what kind of savings you could get from that on both OPEX and CAPPEX and when those can materialize.
Speaker 7: transcript
Speaker 7: So the ability to run not only a single network from the CapEx and OpEx side, but also to pull your network is an important part of the savings from that JV. And on the question of leverage.
JV.
And on the question of leverage.
Speaker 2: transcript
Speaker 2: you will be happily reassured that we have coincidence on our targets institutionally. Show them.
You will be I believe.
Stefan Gauffin: And secondly, a question for Maxime. You mentioned in your remarks that given volatility in these markets, you believe the leverage is a bit high, which I think all of us agree to. But now given these strategic initiatives with sale of Latte, etc.
Reassured that we are a coincidence on our targets.
Institutionally Sheldon.
Speaker 3: transcript
Speaker 3: Sure, look on leverage, I think you're very consistent what we've said before, step on, you know, on this point, you know, our intermediate target remains two and a half times eBDA. We haven't made progress towards that objective this year for a right reason, some of them were in our control, some of them, you know, the word, but we've got several one-offs this period, things that we're, you know, a neutralized, but also things that we're doing and driving the business around the severance costs. you know?.
Sure on leverage I think we've got a very consistent what we said is the first step on this point in our intermediate target remains two five times EBITDA.
Haven't made the progress towards that objective this year for a variety of reasons some of them that were in our control some of that.
You know that work, but we've got several one offs. This period things that were unusual items, but also things that we're doing and driving the business around the severance costs.
Mauricio Harmos: So, my question is where would you see leverage to go to be comfortable, and if it's totally preferred to pay down death, rather than have some sort of shareholder remuneration from sale of Latte, etc. Thank you. And Stefan, good to see you. As always, you too. Great questions. I'll take the first one on the network JV briefly, and then I'll hand over the second one if it's okay to you with you to RCFO, Sheldon, so that we provide you with the full institutional.
Speaker 3: transcript
Speaker 3: You know, we see us making a lot of progress next year on this leverage reduction. I mean, next year's gonna be a big year for us, for Casual Generation, if you said, it's gonna be the highest of the three years.
We see us, making a lot of progress next year on the on this leverage on this leverage reduction I mean next year is going be a big year for us for you know for cash flow generation as we said, it's going to be the highest of the three years.
Speaker 3: transcript
Speaker 3: in our three-year targets in terms of what we're going to be delivering. It's also going to be sort of cleaner of a lot of the one-off charges we've been taking, particularly this year, regardless of the severance charges. I will point out, you know, we're expecting, as you've heard by Prepare to Marks, more severance charges in Q4 as we complete the budgeting processes and go to the country. So there will be sizable charges again. We'll put some benefits. It will be a brewing in 2024.
In our in our three year targets are in terms of in terms of what we're gonna be delivering its also going to be sort of cleaner of a lot of the a lot of the one off charges, we've been taking out, particularly this year with regard to the severance charges I will point out we're expecting.
One of my prepared remarks, more severance charges in Q4, as we complete our budgeting process isn't going to go into the country. So no there will be sizable charges again.
Mauricio Harmos: I got to do this in my role as I can see or smile as interim chair so that we provide you with the full institutional view on leverage from the board. On the network J.D., I think the two key areas without our ability to give you specific details. Obviously, there is the all-pics and topics savings of running a single net, right? That's the nature of a network J.B, on Mova. In addition to that, there is the synergies of running a single pool of spectrum.
The benefits will be accruing in 2024.
Speaker 3: transcript
Speaker 3: You know and currently this year there's kind of a lot of unusualness a little bit around FX That's also, you know picked our leverage up a bit higher
And currently this year, there was kind of a lot of unusual and there's a little bit around FX.
Thats also ticked our leverage up a bit higher.
Speaker 3: transcript
Speaker 3: In particular, Columbia has appreciated from a currency standpoint. Now, a lot of that appreciation has happened more recently. And so in terms of the benefit on EBITDA, that hasn't really slowed through our LTM EBITDA last 12 months of EBITDA, but it has pretty quickly on marking the market the Columbia debt, on a higher basis on the debt situation. So that should roll off, assuming that trends kind of remain constant on the currency. That should also benefit us into 2024. So what are going to be making progress on the developing, certainly in 2024? We told you on a previous call that we expect to get to that two and a half times level by 2026.
In particular, Colombia has appreciated from a currency standpoint, now a lot of that appreciation has happened more recently and so in terms of the benefit on EBITDA that hasn't really flowed through our LTM EBITDA.
Last 12 months of a day, but it has hit us pretty quickly on on marking to market the Colombian debt.
At a higher basis and.
Mauricio Harmos: And this is important, particularly in Colombia because, you know, the cross-aspectrum in Colombia is significantly higher than it most other regions. So the ability to run not only a single network from the capics and not the side, but also to pollute your network is an important part of these savings from that J.B. And on the question of leverage, you will be happily reassured that we have coincidence on our targets institutionally. Sheldon?
On the debt situations, so that should roll off assuming that.
Trends are kind of remain constant on the on the currency that should also benefits benefit us into you know into 2024, so we're going to be making progress on the deleveraging certainly in 2024.
Told you on our previous call that we expect to get to that two five times level by 2026.
Speaker 3: transcript
Speaker 3: One year later than previous given some of the adjustments we've made on our equity-free cash flow outlook, but But look, I think we're going to make a lot of progress
One year later than previous given some of the adjustments we've made on our equity free cash flow outlook.
But look I think we're going to make a lot of progress on that.
Mauricio Harmos: Sure. Look on leverage, I think you know, very consistent what we've said before, Stefan, you know, on this point, you know, our intermediate target remains two and a half times the E.B.D.A. We haven't made the progress towards that objective this year for a variety of reasons, some that were in our control, some that, you know, even the word. But we've got several one-offs this period, things that we're, you know, unusual at us, but also things that we're doing and driving the business around the severance costs.
Speaker 3: transcript
Speaker 3: and really seeing me in full progress in 2024. As it pertains to Latte, in sort of, I think we're gonna kind of pull it off and sort of talking about proceeds in Latte until we have proceeds in Latte, right? So that we're launching a process and we'll obviously have that process evolve in terms of what we are able to achieve and then we'll assess the situation at that point in time. I think in terms of what the best way to allocate those process.
And it really seeing meaningful progress in 2024 as it pertains to <unk>.
And sort of.
Quite frankly, I think we're gonna kind of pulled off in sort of.
Talking about proceeds from last year until we have proceeds from left to right. So, but we're launching a process and Doug we'll have to see how that process.
Evolves in terms of in terms of what we are what we are able to achieve and then we'll assess the situation at that point in time I think in terms of what's the best way to allocate those proceeds.
Mauricio Harmos: You know, we see us making a lot of progress next year on this leverage reduction. I mean, next year is going to be a big year for us for, you know, for cashflow generation. And we said it's going to be the highest of the three years in our three-year targets in terms of in terms of what we're going to be delivering. It's also going to be sort of cleaner of a lot of the a lot of the one-off charges we've been taking, particularly this year, regardless of the severance charges.
Speaker 8: transcript
Speaker 8: Yes, yes agree. Better to wait until the bear is shocked before we sell the skin.
Yes, yes.
To.
Wait until their bear itself before we.
Sell the scanner.
Speaker 9: transcript
Speaker 9: That's unlike the scandal way of saying it's a defund. The priority remains reduced leverage, that's the short answer. Thank you, Stefan.
It sounds like the standard way of saying it.
Now the priority remains to reduce leverage that's the short answer.
Thank you Stefan.
So next we will go to the other one yet though of Jpmorgan.
Mauricio Harmos: You know, I will point out, you know, we're expecting, as you've heard by prepared remarks, more severance charges in Q4 as we complete the budgeting processes and go to the country. So there will be sizable charges again, which the benefits will be accruing in 2024. You know, and currently this year, there's kind of a lot of unusualness a little bit around effects that's also, you know, ticked our leverage up a bit higher.
Speaker 10: transcript
Speaker 10: Eduardo? Yes, thank you guys. So part of my question was already answered, but I wanted to follow up on the capital allocation strategies.
Yes. Thank you guys so far.
My question was already answered, but I wanted to follow up on the capital allocation strategies.
Speaker 10: transcript
Speaker 10: Moody's recently put you on a negative watch, basically because of Chinese in Colombia, but also because of high leverage. And governance concerns potentially having more aggressive financial policies. You've partly addressed that, but curious on what your plan is to address those concerns, avoid the downgrade. And my second question would be in Colombia, in terms of the 5G auction. Obviously, I'm just curious about how you will translate the performance into cash flows and how you will...
Moody's recently put you on a negative watch basically because of Chinese in Colombia, but also because of high leverage and governance concerns potentially having more aggressive financial policies you partly addressed that but curious on what you're planning to address those concerns have weighed the downgrade.
Mauricio Harmos: You know, in particular, Columbia has appreciated from a currency standpoint. Now a lot of that appreciation has happened more recently. And so, you know, in terms of the benefit on EBDA that hasn't really slowed through our LTM EBDA last 12 months of the day. But it has pretty quickly on on marking the market, the Columbia debt, you know, you know, on a higher basis in, you know, on the debt situation. So that should roll off, you know, assuming that, you know, trends kind of remain constant on the, on the currency, that should also benefit us into, you know, into 2024.
And my second question would be in Colombia.
In terms of the five G option obviously.
I'm just curious about how you will translate to EBITDA.
Four months into cash flows and how you expect spectrum costs and all of those items to behave going forward. If you see any other opportunities you talked about inorganic solutions. So curious if you can give any more color on that.
Speaker 10: transcript
Speaker 10: spectrum costs and.
Speaker 10: transcript
Speaker 10: all those items to behave going forward. If you see any other opportunities, you talked about in organic solutions, so curious if you can give any more color on that.
Speaker 2: transcript
Speaker 2: Yeah, listen, on the part of Eduardo that has a little bit of a noise on Colombia, as you very well know, there was just a lot of noise there. But the reality is we came out of that process.
Yeah listen on their part and a lot of that that has a little bit of the noise on Colombia as you very well know there was just a lot of noise there, but the reality is we came out of that process with a well capitalized business a business that has an expanding margins revenue growth.
Mauricio Harmos: So look, I think we're going to be making progress on the leveraging certainly in 2024. You know, I told you on a previous call that, you know, we expect to get to that two and a half times level in, you know, by 2026. I said one year later than previous given some of the adjustments we've made on our equity free cash law, but. But look, I think it's we're going to make a lot of progress on that.
Speaker 2: transcript
Speaker 2: with the well-capitalized business, a business that has expanding margins, revenue growth, OCM growth, and as we discussed earlier, a significant focus on driving the business towards being able to pre-cash a little positive.
Growth and it has as we discussed earlier.
Significant focus on driving the business towards being equity free cash flow positive as soon as we can so I think there was a lot of noise there, but the reality is the business in Colombia is improving significantly at all levels, including.
Mauricio Harmos: You know, and really seeing me in full progress in 2024 as it pertains to Latte. And sort of, you know, but frankly, I think we're going to kind of pulled off and sort of, you know, talking about proceeds and Latte until we have proceeds and Latte. Right. So that we're launching a process and then you'll have to see how that process, you know, evolves in terms of in terms of what we, what we are able to achieve.
Speaker 2: transcript
Speaker 2: can. So I think there was a lot of noise there, but the reality is the business in Colombia is improving significantly at all levels, including its strategic optionality going forward. And, you know, as that relates to the group, as we just discussed, and I'll hand it over to Sheldon for additional, our focus remains on cash flow generation next year. As we have said a number of times, and we'll repeat that today, we think 2024 is a year of our cash flow. And with that, I think, you know,
10 year option R&D going forward.
And as that relates to the group as we just discussed and I'll hand, it over to show them for additional our focus remains on cash flow generation next year. We have spent a number of times and we'll repeat that today, we think the 'twenty 'twenty four is a year of our cash flow and we thought I think.
Mauricio Harmos: And then we'll assess the situation at that point in time. I think in terms of what the best way to allocate those process. Yes, I agree. Better to wait until the bear is shot before we sell the skin.
Speaker 7: transcript
Speaker 7: We reiterate our focus on reducing leverage as we have done this a number of times.
<unk>.
We reiterated our focus on reducing average as we have done this number of times.
Speaker 7: transcript
Speaker 7: 5G in Colombia, we're reviewing the terms, they just came out last night, obviously we've been very involved in the process, we understand a lot of it, but I'd rather, you know, answer that question once we have full information on exactly what the details of that, you know, it's an ongoing process and those processes do tend to move around and shift around as they are being finalized with the authorities.
Sheldon Bruha: At some of the part of my question was already answered, but I wanted to follow up on the capital allocation strategies. Moody's recently put you on a negative watch, basically because of Chinese in Colombia, but also because of high leverage. And governance concerns potentially having more aggressive financial policies. You partly addressed that, but curious on what your plan is to address those concerns about the downgrade. And my second question would be in Colombia, in terms of the 5G auction.
By GM, Colombia.
We are reviewing the terms.
It came out last night, obviously, you've been very involved in the process, we understand a lot of it but.
But I'd rather answer that question once we have full information on exactly what the details of that it's an ongoing process.
Those processes tend to move around and shift around as they are being finalized with the authorities.
Speaker 3: transcript
Speaker 3: Children, anything? Well, I've done not too much more to add. I think in terms of the moody's concerns that they're highlighted, I think are the exact items that we probably have as our core priorities in terms of what we're addressing as a company. So.
Children anything whether and I'm not too much more to add I think in terms of terms of the Moody's.
You know concerns that Theyre highlighted I think aren't the exact items that we'd probably happens as our core priorities in terms of what we're addressing.
Speaker 3: transcript
Speaker 3: You know, we need to deliver stronger cash flow. We believe next year, you know, and stronger de-leveraging. We believe next year is gonna be a big year for us on that front and go a long way towards addressing a lot of things that you guys have been highlighting to us. The booties has been highlighting to us. So I think, you know, we've kind of highlighted exactly where, you know, what we expect. We expect from a cash flow perspective and a de-leveraging perspective. And, you know, I think now we just need to deliver on that and to address those issues.
The company so.
But we need to deliver stronger cash flow, we believe next year.
And stronger deleveraging. We believe next year is gonna be a big year for us on that front in depth and go a long way towards addressing a lot of things that you know you guys have been highlighting to us that Moody's has been highlighting to us so.
Sheldon Bruha: Obviously, I'm just curious about how you will translate the performance into cash flows and how you expect spectrum costs and all those items to behave going forward. If you see any other opportunities you talked about in organic solutions, so curious if you can give any more color on that. Yeah, listen, on the part is a lot of those that has a little bit of the noise on Colombia. As you very well know, there was just a lot of noise there, but the reality is we came out of that process with a well capitalized business, a business that has expanding margins, revenue growth, post year growth, and it has as we discussed earlier a significant focus on driving the business towards being able to pick up the positive as soon as we can.
Uh huh.
We've kind of highlighted exactly where what we expect we expect from a cash flow perspective in a deleveraging perspective and.
I think now we just need to deliver on that and to address those issues.
Speaker 5: transcript
Thank you very much thank.
Thank you Eduardo.
Next up.
I think we have Andre Thomas from UBS on the lineup Andre are you.
Sheldon Bruha: So I think there was a lot of noise there, but the reality is the business in Colombia has improved significantly at all levels, including its strategic optionality going forward. And that relates to the group that we just discussed, and I'll hand it over to children for additional. Our focus remains on cash for generation next year, as we have said a number of times, and we'll repeat that today. We think 2024 is a year of our cash flow.
Are you there.
Speaker 11: transcript
Speaker 11: Yes, yes, I'm on. Sorry about my camera. There's been technical difficulties here to make it work. Sorry. So hi, everyone. First of all, thanks for the presentation for taking my question here. Actually, I have two on my end. The first one is more like on the cash flow basis with softwares and the contribution here of working capital to free cash flow in the squatter.
Yeah, Mark sorry about my camera, there that would be a technical difficulty here.
To make it work sorry, so hi, everyone.
Thanks for the presentation and for taking my question here.
Actually I have two on my end the first one is more like Oh.
From a cash flow basis with saltwater contribution here of working capital to free cash flow in this quarter.
Speaker 11: transcript
Speaker 11: Could you please give us a little more color on that and what has driven this positive impact in if we should expect the tank drain to go in the following quarters.
Would you please give a little more color on that what has driven this positive impact and if we should expect to think trained to go in the following quarters and the second.
Speaker 11: transcript
Speaker 11: And the second question is regarding our prototype line here in the Guatemala business.
Second question is regarding your broad timeline here in Guatemala business. So when do you expect that the booth.
Speaker 11: transcript
Speaker 11: So when do you expect the team to move the spectrum capability that you now have, what translates to barricades?
Sheldon Bruha: And with that, I think we re-release our focus on reducing the average as we have done this number of times. 5G in Colombia, we were reviewing the terms, and just came out last night, obviously we've been very involved in the process, we understand a lot of it. But I'd rather answer that question once we have full information on exactly what the details of that, it's an ongoing process. Those processes tend to move around and shift around as they are being finalized with the authorities.
Actual capability that you now have with translate into various patient B L.
Speaker 11: transcript
Speaker 11: And it's a good means to invest in the country in the upcoming quarter. That will be all for my side. Thank you.
And do you think it's a good move investments here in the country in the upcoming quarters there'll be all from my side. Thank you.
Sure I'd be.
Speaker 7: transcript
Speaker 7: I'll be brief on number two and give Sheldon a little bit of time to look at the numbers in detail. We've been working, as I said, for the long run, long game that I described on the very first question in Guatemala.
Brief on number two in a game show them a little bit of time to look at the numbers in detail.
We've been working as I said on a long run long game as I described I'm not ready for a question of what's come out of that so we were ready and at work and getting ready.
Speaker 2: transcript
Speaker 2: So we were readying up the network and getting ready for the use of the new spectrum pretty quickly. So a lot of that has been done. And as a result of that, we started the subsequent commercial activities, as I said, on September the 18th.
Sheldon Bruha: Children, anything? Well, I've done much more to add, I think in terms of the Moody's concerns that they're highlighted, I think are the exact items that we probably have as our four priorities in terms of what we're addressing as a company. So we need to deliver stronger cash flow. We believe next year, and stronger to leveraging, we believe next year is going to be a big year for us on that front, and go a long way towards addressing a lot of things that you guys have been highlighting to us.
The news of the new spectrum pretty quickly so.
So a lot of that has been done and as a result of that we started to make some secret of commercial activities. As I said on September 18, So now really it comes down to the market place and route and stabilization of the commercial activities in the marketplace and as I alluded also some some.
Speaker 2: transcript
Speaker 2: So now, really, it comes down to the marketplace, Andrea, and stabilization of the commercial activities in the marketplace. And as I alluded also, some of the political.
Sheldon Bruha: So I think we've kind of highlighted exactly what we expect from a cash flow perspective, and a de-leveraging perspective, and I think now we just need to deliver on that and to address those issues. Thank you very much.
The protocol.
Speaker 2: transcript
Speaker 2: last few weeks' issues also to stabilize. So it's less of a network and a spectrum issue and more of a commercial stabilization now going forward. And as I said earlier, we took a prepaid price increase. We're optimistic about it and commercially we're constantly optimistic. That's the full answer on that.
Last few weeks issues also to stabilize so it's less of a network and the spectrum issue and more of a commercial subsidization not going forward and as I said earlier.
Carl prepaid price increase we're optimistic about it.
Operator: Thank you, Eduardo.
Andre Salis: Next up, I think we have Andre Salis from UBS on the line, Andre, are you there? Yes, yes, I'm sorry about my camera, there's been technical difficulties here to make it work. Sorry, so hi everyone. First of all, thanks for the presentation for taking my question here. Actually, I have two on my end. The first one is more like on a cash flow basis with some positive contribution here of working capital to free cash flow in this water.
We're cautiously optimistic.
A full answer on that one.
Speaker 3: transcript
Speaker 3: Sure, on the equity-free cash flow performance for this quarter, I mean, look, you highlighted working capital. I mean, I would highlight, I think, strong performance kind of across the board. I mean, OCF was a big contributor to us this quarter in terms of driving equity-free cash flow.
Sure on the equity free cash flow performance for this for this quarter I mean look I mean, you highlighted working capital I mean, I would highlight I think I think strong performance kind of across the board I mean OCI.
It was a big contributor to us this quarter in terms of driving equity free cash flow.
Andre Salis: Could you please give us a little more color on that and what has driven this positive impact in this, we should expect the same train to go in the following waters. And the second question is regarding our broad timeline here in the Guatemala business. So when do you expect that they improve the spectrum capability that you now have, what translates to barricades? And if it's a good means investment here in the country in the upcoming quarters, they'll be off on my side.
Speaker 3: transcript
Speaker 3: Taxes, I think, was a contributor for us in terms of driving every free cash flow this quarter. Interest costs actually was not, as we've been talking about, just some of the higher interest rate environment in some of our countries. Working capital contributed as well, but, you know, to some degree, a couple items I would highlight there for you, though.
Texas I think was a contributor for us in terms of driving equity free cash flow. This quarter interest costs actually was not as we've been talking about just some of the higher interest rate environment that some of our countries working capital contributed as well but to.
To some degree a couple of items I would highlight there for you, though we took we took our severance provisions here.
Speaker 3: transcript
Speaker 3: You know, we took we took our severance provisions here about $22 million this quarter. You know, that's that's going to be paid in future quarters. Right. So that's probably that's one of the contributors to working capital benefit. The same on this on this legal provision we took in in Columbia that was cashed out at least this period. So that was.
Here about $22 million. This quarter you know, that's that's going to be paid in future quarters right. So that's probably that's one of the contributors to your working capital benefit the same on this on this legal provisions we took in in Colombia that was cash out at least.
This period. So that was also a contributor to working capital we did have a large <unk> project in Panama.
Speaker 3: transcript
Speaker 3: also a contributor to working capital. We did have a large B2B project in Panama that we were
That we were a bit.
Speaker 3: transcript
Speaker 3: Benefited us a bit on working capital sort of, you know, the timing and sort of payments received versus payments going out to some
Mauricio Harmos: Thank you. I'll be brief on number two and give children a little bit of time to look up the numbers in detail. We've been working, as I said, for the long run, long game that described, I'm not ready for a question in Guatemala. So we were ready enough to network and getting ready for the use of the new spectrum pretty quickly. So a lot of that has been done. And as a result of that, we started the two sequence commercial activities as I said on September the 18.
Benefited us a bit on working capital sort of the timing of sort of payments received versus payments going out.
Uh huh.
Speaker 3: transcript
Speaker 3: uh, to some subcontractors and some, uh, uh, you know, and some of the equipment providers who are, who are providing, uh, some of that, some of the, um, some of the information or some of the, um,
To some subcontractors and some.
Some of the equipment providers, who are who are providing some of that some of the some of the information or some of the.
Speaker 3: transcript
Speaker 3: so the aspects of that project. So that benefit us a little bit as well on working capital. Those are probably the key items I would highlight. But look, I think it was a good quarter, overall from equity-free cash flow. I was cautious in terms of making sure you have, in terms of forward-looking, I did pull out and highlight a few items that are forward-looking basis on equity-free cash flow, particularly spectrum in Q4, which is gonna be a big uptick for us. We highlighted in June .
Aspects of that project, so that benefit us a little bit as well on working capital.
Those are probably the key items I would highlight but look I think it was it was a good quarter.
Overall from from equity free cash flow.
Mauricio Harmos: So now really it comes down to the marketplace, Andrea and stabilization of the commercial activities in the marketplace. And as I alluded also some of the political, you know, last few weeks issues also to stabilize. So it's less of a network and spectrum issue and more of a commercial stabilization not going forward. And as I said earlier, we took a pre-paid pricing increase. We're optimistic about it and commercial will cost me optimistic.
I was cautious in terms of making sure you have in terms of forward looking.
What I did pull out and highlight a few items on a forward looking basis on equity free cash flow, particularly spectrum in Q4, which is going to be a big uptick for us.
And in June.
Speaker 3: transcript
Speaker 3: In terms of a full year perspective of higher spectrum costs this year, but particularly it's going to be pronounced in Q4 for us this year.
In terms of a full year perspective higher spectrum costs this year, but particularly it's gonna be pronounced in Q4 for us this year.
Speaker 3: transcript
Speaker 3: you know on the spectrum costs as well as then just paying for some of the items that we took you know we we booked here from a severance perspective this quarter as well as what we expect to be booked next quarter
On the spectrum costs as well as then just paying for some of the items that we took.
We booked here from a severance perspective, this quarter as well as what we expect to be bookings next quarter.
Speaker 11: transcript
Speaker 11: All right. Thank you. Thank you. Thank you. And sorry once again for the camera.
Alright, thank you.
Sheldon Bruha: That's the full answer on that one. Sheldon, sure on the equity free cash flow performance for this, for this quarter. I mean, look, I mean, you called you highlighted working capital. I mean, I would highlight, I think, I think storm performance kind of across the board. I mean, OCF was a big contributor to us this quarter in terms of driving equity free cash flow. Taxes, I think, was a contributor for us for terms of driving every free cash flow.
Thank you, thank you and sorry once again.
With the camera.
Speaker 1: transcript
Speaker 1: No worries, thank you, Andre. All right, so next we'll take our last question from Frederick Littles from Handelsbanken. Frederick, good to see you.
No worries. Thank you Andre Alright. So next we will take our last question from Frederic <unk> from Handelsbanken, Patrick good to see them.
Speaker 7: transcript
Speaker 7: Good to see you. Thank you very much. Thank you for taking my questions as well. Maybe just a little bit of a housekeeping, Sheldon. You, I think you mentioned earlier about severance costs also in Q4. Was that correctly understood or did we see a peak here in Q3 on severance costs? That's the first one, really.
Good to see you. Thank you very much. Thank you for taking my questions as well, maybe just a little bit of a housekeeping shoved them. You I think you mentioned earlier about the southern.
Sheldon Bruha: This quarter interest cost actually was not as we've been talking about just some of the higher interest rate environment in some of our countries working capital contributed as well. But, you know, to some degree, a couple items. I would highlight there for you though, you know, we took, we took our severance provisions here about $22 million this quarter, you know, that's, that's going to be paid in future quarters, right. So that's probably, that's one of the contributors to working capital benefit.
Severance cost tools in Q4 was that correct on the soda or did we see a peak here in Q3 on severance costs.
Speaker 12: transcript
Speaker 12: The second is on the Everest one, two, and possibly number three enlargement of all sort of that project as well. I'm just curious to get an elaboration on how
First one really.
The second is on the Everest, one two and possibly.
Number three enlargement of all sort of that project as well I'm just curious to get a an elaboration on how.
Speaker 12: transcript
Speaker 12: deep you can cut in cost before it starts to hamper your ability to push growth at the same time. I'm just curious how you balance that going forward so you don't get, you know,
Deep you can cut in cost before it starts to hamper your ability to.
Sheldon Bruha: The same on this on this legal provision, we took in in Columbia that was cash out these this period. So that was also a contributor to working capital. We didn't have a large B2B project in Panama. Then we were that benefited us a bit on working capital sort of, you know, the timing and sort of payments receive versus payments going out to some some contractors and some, you know, some of the equipment providers who are providing some of the information or some of the some of the aspects of that project. So that benefit us a little bit as well on working capital.
<unk> growth at the same time I'm, just curious how you balance that going forward.
So you don't get you know.
Speaker 12: transcript
Speaker 12: Poor scores on customer care, or you're not setting up the next base station, whatever it might be, I'm just curious to.
Poor scores on customer care or you you you're not setting up the next base station or whatever it might be I'm just curious too.
Speaker 12: transcript
Speaker 12: have a sort of a reasoning around that balance would be interesting to hear.
Uh huh.
Sort of a reasoning around that balance would be interesting to hear.
Speaker 7: transcript
Speaker 7: I'll start with the second one. Obviously, Frederick will be very, very careful, very, very consensuous. And obviously, we start with the areas that are less revenue generating and protect those definitely as part of the process.
Yes, I'll start with the second one obviously Frederic will be very very careful very very contentious obviously, we start with the areas.
That are revenue generating and protecting those definitely as part of the process.
Sheldon Bruha: Those are probably the key items I would highlight but look at because it was a good quarter, you know, overall from, you know, from equity free cash flow. You know, I was cautious in terms of making sure you're you have in terms of forward looking, you know, what I did pull out and highlight a few items that are forward looking basis on equity free cash flow, particularly spectrum in Q4, which is going to be a big uptick for us.
Speaker 7: transcript
Speaker 7: So you can rest assured that we are surgical in our approach, that everything gets reviewed with a payback analysis, and that we certainly protect the areas that are long-term revenue generating as part of the process.
Can you can rest assure that we are surgical in our approach, but everything gets reviewed a payback analysis and we certainly protect the areas that our long term revenue generating.
That's part of the process.
Sheldon Bruha: We highlighted in June in terms of a full year perspective of, you know, higher spectrum cost this year, but, you know, particularly it's going to be pronounced in Q4 for this year, you know, on the spectrum cost as well as then just paying for some of the items that we took. You know, we, we booked here from a seven's perspective this quarter as well as what we expect, we will move next quarter.
Speaker 7: transcript
Speaker 7: but there is room to be more and more efficient. The ambition on Everest.
There is room to be.
More and more efficient.
Ambition on Everest.
Speaker 7: transcript
Speaker 7: always significantly high and we're emboldened and supported by our new largest shareholder to take that opportunity. And as we've been discussing some of the markets that are part of the question, we should also highlight that part of the reason why we see a path to better cash flow in many of those markets is because we see efficiencies, significant efficiencies there at all levels as well. So that's the full answer to your question.
<unk>.
Always significantly high and we're emboldened.
Ordered by our new largest shareholder.
Take that opportunity and as we've been discussing some of the markets that are part of the question.
Andre Salis: All right. Thank you. I'm sorry once again for the camera. No worries. Thank you, Andre. All right.
We should also highlight that part of the reason why we see part two better cash growing many of those markets is because we see efficiencies significant efficiencies at all levels of the well.
Frederick Lithels: So next we'll take our last question from Frederick Lithels, from Handelsbank and Frederick. Good to see you. Thank you very much. Thank you for taking my questions as well. Maybe just a little bit of a housekeeping, Sheldon. I think you mentioned earlier about the severance costs also in Q4. Was that correct? On the soda did we see a peak here in Q3 on severance costs? That's the first one really. The second is on the Everest 1, 2 and possibly number 3 enlargement of all sort of that project as well.
So that's the full answer to your question.
Speaker 3: transcript
Speaker 3: Yeah, I would just add, I mean, in addition to that, I mean, I think, you know, for these cost savings, we're trying to take complexity out of the business and add simplification, you know, which I think, quite frankly, can be beneficial from a customer perspective, you know, as well, you know.
Yeah, Yeah, I would just add I mean, I think in addition to that I mean, I think so these cost savings were trying to take complexity out of the business and add specification, you know, which I think quite frankly can be beneficial from a customer perspective.
Speaker 3: transcript
Speaker 3: fewer product offerings, you know, you know, fewer complications in terms of how they interact with us, you know, etc. So some of the cost savings actually hopefully will be, you know, I would expect to be beneficial as well to the to the top line, not just, you know, not just sort of, you know.
As well.
Fewer product offerings.
Or complications in terms of how they interact with us et cetera. So some of the cost savings actually hopefully it will be I would expect to be beneficial as well to the top line not just theyre not to sort of put you know if youre kind of purchase started already cutting fat and muscle out of the business I think quite frankly, I think we're trying to improve the way we operate as a company.
Frederick Lithels: I'm just curious to get an elaboration on how deep you can cut in cost before it starts to hamper your ability to push growth at the same time. I'm just curious how you balance that going forward so you don't get poor scores on customer care or you're not setting up the next base station, whatever it might be. I'm just curious to have a sort of a reasoning around that balance would be interesting to hear.
Speaker 3: transcript
Speaker 3: If you're trying to push us towards are we cutting fat and muscle out of the business, I think quite frankly, I think we're trying to improve the way we operate as a company.
Speaker 3: transcript
Speaker 3: In terms of additional severance costs, I mean, yes, we're going as I alluded to or we're going through our budgeting process right now And we know as you know, we've we've taken the actions on the headquarters this quarter in terms of the space to You know, we're finalizing in our plans for you know for the countries here You know as we finalize budgeting and there will be charges here in Q4 related to that
The additional severance costs I mean, yes, we're going to as I alluded to we're going through our budgeting process right now and you know as we've we've taken the actions on the headquarters this quarter in terms of this phase II.
We're finalizing our plans for you know for the country's here.
As we finalize our budgeting and there will be charges here in Q4 related to that.
Speaker 3: transcript
Speaker 3: We're not going to give you size and guidance on that at this point in time, but it will be tens of millions of dollars of severance costs, I would expect, in Q4. And we'll be giving you much more color on that once we complete our budgeting process here and at the full year results in February .
We're not that we're not going to give you simply size and guidance on that at this point in time, but it will be tens of millions of dollars of AR.
Frederick Lithels: I'll start with the second one. Obviously, Frederick will be very, very careful, very, very good sentious and obviously we start with the areas that are less revenue generating and protect those definitely as part of the process. So you can you can rest assured that we are surgical in our approach that everything gets reviewed with a back analysis and that we certainly protect the areas that are long from revenue generating as part of the process.
Severance cost I would expect in Q4 and what we give.
Giving you much more color on that once we complete our budgeting process here and there and at the full year results in February.
Speaker 1: transcript
Speaker 1: Perfect. Thank you very much. And consistent with that, Frederick, you should assume that that 135 million number will also increase commensurately. Right. Correct.
Perfect. Thank you very much and consistent with that project you should assume that that 35 million number will also increase commensurately.
Right right right.
Alright, okay.
Speaker 7: transcript
Speaker 7: Thank you very much, Frederic. So I think that wraps up the Q&A session. Mauricio, back to you. Yeah, I just want to give you the 30-second wrap-up just to make sure that the big points are clear. And they should be pretty obvious on our call today. Colombia's grown well, and it's improving its profitability very quickly. It is now better capitalized, and we have received approval for merging our mobile network and our spectrum positions in Colombia.
Thank you very much fredrick, so I think that wraps up the Q&A session. Let me so back to you, yes, I'm trying to give you the 32nd wrap up just to make sure that the big points are clear.
Frederick Lithels: But there is room to be more and more efficient. The ambition on Everest was always significantly high and we're involved in and supported by our new largest shareholder to take that opportunity. And as we've been discussing some of the markets that are part of the question, you know, we wish also highlight the part of the reason why we see a path to better cash flow in many of those markets is because we see efficiencies significant efficiency.
And they should be pretty obvious on our call today, Colombia is growing well that its improving its profitability very quickly.
It is now better capitalized and we have received approval for emerging our mobile network on our spectrum position in Colombia.
Speaker 7: transcript
Speaker 7: Unsov worth in Colombia and not more kissing progress. But we made a lot of progress this quarter and we're heading in the right direction as we alluded during the call with a clear of depth of our head.
Amazon work in Colombia, and that arent using progress we made a lot of progress this quarter and we're heading in the right direction as we alluded during the call with a clear objective ahead of us in Guatemala.
Speaker 7: transcript
Speaker 7: In Guatemala, as you have heard us for a number of quarters, our market leadership has been sustained. Spectrum positions have now been equalized, so we no longer have a spectrum or a network disadvantage, and we're putting that to use.
Frederick Lithels: So that's the full answer to your question. Yeah, I would just add, I mean, in addition to that, I mean, I think for these cost savings, we're trying to think complexity out of the business and adds lubrication, you know, which I think quite frankly can be beneficial from a customer perspective, you know, as well. Fewer product offerings, you know, fewer complications in terms of how they interact with us, you know, et cetera.
It is for a number of quarters our market leadership has been sustained spectrum positions have now been equalized. So we no longer hobbies spectrum of our network advantage and we're putting that to use and there are initial signs of a healthy environment. After we took some price increases.
Speaker 7: transcript
Speaker 7: and there are initial signs of a healthy environment after we took some price increases in prepaid in mid-September.
Prepaid in September.
Speaker 7: transcript
Speaker 7: So as I said, we're cautiously optimistic in Guatemala. And as you've heard, our cost savings and our ambitions on efficiency have been increased with a broader phase two of Project Everest.
So as I said, we're cautiously optimistic in Guatemala, and as you heard our cost savings and our ambitions on efficiency have been increased with a broader phase two of project Everest and most importantly, all of these efforts are aimed at a single thing.
Frederick Lithels: So some of the cost savings actually hopefully will be, you know, I would expect to be beneficial as well to the top line, not just, you know, not just sort of cut, you know, if you're trying to purchase or don't be cutting back in muscle out of the business, I think what frankly, I think we're trying to improve the way we operate as a company. In terms of additional severance costs, I mean, yes, we're going as I alluded to, we're going through a budgeting process right now, and we know as, you know, we've, we've taken the actions on the headquarters, this quarter in terms of the space to, you know, we're finalizing, you know, our plans for, you know, for the countries here, you know, as we finalize budgeting and there will be charges here in queue for related to that.
Speaker 7: transcript
Speaker 7: And most importantly, all of these efforts are aimed at a single thing, which we have alluded to before, and that is to make 2024 the year of our strongest cash flow delivery. So hopefully those points are clear and thank you for joining us today.
I alluded to before and that is to make 2020 for the year, all our strongest cash flow delivery.
Hopefully north point, they are clean and thank you for joining us today.
Thank you.
Speaker 13: transcript
Speaker 13: Right.
[noise] right.
[noise].
Frederick Lithels: We're not, we're not going to give you simply size and guys on that at this point in time, and it will be tens of millions of dollars of, you know, severance costs, I would expect in, you know, in queue for, and you know, we're giving you much more color on that once we complete our budgeting process here in the, and at the full year results in February. Perfect, thank you very much. And consistent with that Frederick, you should assume that that 135 million number will also increase commensurately. Right. Thank you. All right. Okay. Thank you very much Frederick.
Mauricio Harmos: So I think that wraps up the Q&A session, Mauricio back to you.
Mauricio Harmos: Yeah, I'm just going to give you the 30 second wrap up just to make sure that the big points are clear. And they should be pretty obvious on our call today. Colombia has grown well and it's improving its profitability very quickly. It is now better capitalized and we have received approval for merging our mobile network and our spectrum positions in Colombia. Comes of work in Colombia and not working in progress. But we made a lot of progress this quarter and we're heading in the right direction as we alluded during the call with a clear objective ahead of us.
Mauricio Harmos: In Guatemala, as you have heard us for a number of quarters, our market leadership has been sustained. Spectrum positions have now been equalized. So we no longer have a spectrum or a network disadvantage and we're putting that to use. And there are initial signs of a healthy environment after we took some price increases in pre-paid in mid-September. So as I said, we're constantly optimistic in Guatemala. And as you've heard, our cost savings and our ambitions on efficiency have been increased with a broader phase two of project Everest. And most importantly, all of these efforts are aimed at a single thing between you. We have alluded to before and that is to make 2024 the year of our strongest schedule delivery.
So hopefully those points are clean and thank you for joining us today.