Q1 2024 Millicom International Cellular SA Earnings Call
Thank you very much.
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Sure.
Now please turn to slide two for the safe harbor disclosure.
We will be making forward-looking statements which involve risks and uncertainties, and these could have a material impact on our results.
And on slide three, we define the non-IFRS metrics that we will reference throughout today's presentation, and you can 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 , Javieramos.
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Yes.
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Thank you, Michelle. Good morning and good afternoon, everyone. The key highlight this quarter is our financial performance, and you can see that on this page.
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After years of carefully building the strategic platform that we now have in TIGO today,
We have spent the last few quarters making up that from a more profitable one.
Yeah.
And this has led to a strong start of the year in this quarter. We're pleased with that, and we remain very focused on navigating the significant challenges that still lie ahead.
Speaker Change: Hello, everyone and welcome to our first quarter 2024 results call. This event is being recorded our speakers today will be our CEO, how resale atmos, our president and CEO Maximo Nobel BD, and our CFO Brendan Herron.
Service revenue this quarter accelerated to 3.8. That's our strongest performance in the early two years.
Two specific elements have contributed to this performance. First, during the quarter we implemented another round of price increases in a majority of our markets. As a result, mobile ARPO increased 5% on average in local currency terms and it was up in every single country.
Speaker Change: The slides for today's presentation are available on our website along with the earnings release and our financial statements now.
Speaker Change: Now please turn to slide two for the Safe Harbor disclosure.
Speaker Change: We will be making forward looking statements, which involve risks and uncertainties and these could have a material impact on our results.
Second, we continue to generate revenue from two large government contracts in Panama.
Please note that these contracts added a bit more than two percentage points to organic service revenue growth in the border. We're extremely pleased with their successful work, our B2B and Panama teams have undertaken to win these two contracts.
Speaker Change: And on slide three we define the non <unk> metrics that we will reference throughout today's presentation and you can find reconciliation tables in the back of our earnings release and on our website.
Speaker Change: With those disclaimers out of the way, let me turn the call over to our CEO, how he still happens.
Going forward, we will continue to beat for more of these contracts that help accelerate Panama's digital transformation.
CEO: Thank you Michele good morning, and good afternoon, everyone. The key highlight this quarter is our financial performance and you can see that on this page after years of carefully building the strategic platform that we now have an <unk> today. We have spent the last few quarters, making up about from a more profitable one and this has led to a strong start of the year. This.
Having said that, I want to caution you that these two large projects are expected to generate less revenue in the quarters going forward. So we don't expect to sustain this level of service revenue growth in Q2, not really for the rest of this year.
EBDA increased 20% year-on-year organically. And this reflects both the service revenue growth that we just talked about and the effect of our efficiency program.
CEO: We're pleased with that and we remain very focused on navigating the significant challenges that still lie ahead.
The cost savings from Project Everest are now very visible. This EBDA growth is going straight to operating catroop as we continue to streamline our capics in line with our plants.
Speaker Change: Service revenue this quarter accelerated to three eight that's our strongest performance in nearly two years.
Two specific elements have contributed to this performance first during the quarter, we implemented another round of price increases and a majority of our markets. As a result mobile <unk> increased 5% on average in local currency terms and he was up in every single country.
But please do know that Q&CAPEX benefited from some facing.
The result of all of these efforts, OCF was 519 million in the quarter. That's all more than 50% organically compared to last year.
As I have indicated very often before, over the past few years we have assembled a strong platform across the region. We're now making a platform more and more profitable.
Speaker Change: Second we continued to generate revenue from two large government contracts in Panama.
Speaker Change: Please note that these contracts added a bit more than two percentage points to our organic service revenue growth in the quarter.
And given the strong starts of the year, we remain confident that we will achieve our target equity free cash flow of about $550 million in 2024.
Speaker Change: We're extremely pleased with the successful work our <unk> in Panama teams have undertaken to win these two contracts going forward. We will continue to beat for more of these contracts and help accelerate Panama digital transformation having.
Let's look at Columbia first. Last quarter, we made excellent progress on our plan to make our Colombian business profitable and cash generative.
Speaker Change: Having said that I want to caution you that these two large projects are expected to generate less revenue in the quarters going forward. So we don't expect to sustain this level of service revenue growth in Q2, nor really for the rest of this year.
Execution of the long-term strategic roadmap that we laid out for Columbia a few years ago is now showing strong results.
In 2019, we made the bold decision to buy two blocks of spectrum in the 700 mega-hage band to strengthen our competitive position in the mobile business.
Speaker Change: EBITDA increased 20% year on year organically and this reflects both the service revenue growth that we just talked about and the effects of our efficiency program.
And as you know, we immediately put that spectrum to work by deploying network infrastructure and by expanding our commercial footprint. Since then, we have more than doubled our post-based customer base, and our mobile service revenue have grown very strongly and steadily, as you can see on this page.
Speaker Change: Our cost savings from project coverage are now very discipline. This.
Speaker Change: This EBITDA growth is going straight to operating cash flow under continue to streamline our capex in line with our plans.
Speaker Change: Please do note that Q1 capex benefited from some phasing.
We have achieved this despite the arrival of a new entrant who brought disrupting pricing to the market over the past few years.
Speaker Change: Result of all of these efforts <unk> was $519 million in the quarter, that's up more than 50% organically compared to last year.
We remained focused on driving increased scale in mobile, aiming to drive better financial performance for the entire Columbia operation. We have now been able to take steps in bringing back price discipline to that market, both in mobile and in the residential broadband business.
Speaker Change: Indicated very often before over the past few years, we have assembled a strong platform across the region, we're now making up content more and more profitable.
As a result, we're now seeing our actions translate into high ARPUs. Mobile ARPU is up about 7% and home ARPU is up almost 10% in local currency terms.
Speaker Change: And given the strong start to the year, we remain confident that we will achieve our target equity free cash flow of about $550 million in 2024.
As a result of this long-term strategy, our sustained pricing discipline, and the savings from Project Everest, we're driving margins higher in Colombia.
Speaker Change: Let's look at Colombia first last quarter, we made excellent progress on our plan to make our Colombian business profitable and cash generative.
The very strong 36.5% EBDA margin in Q1 would have actually reached 41.4% if you were to exclude the severance we booked in Colombia during the quarter. Years of work and the cost discipline of Project Everest are bringing combined profitability to our Columbia operation.
Speaker Change: Execution of the long term strategic roadmap that we laid out for Colombia, a few years ago is now showing strong results.
Speaker Change: In 2019, we made the bold decision to buy two blocks of spectrum in the 700 megahertz band to strengthen our competitive position in the mobile business.
Speaker Change: And as you know, we immediately put that spectrum to work by deploying network infrastructure and by expanding our commercial footprint. Since then we have more than doubled our postpaid customer base and our mobile service revenue have grown very strongly and steadily as you can see on this page.
Please note that one of the consequences of our price discipline in the boom is that we have been sacrificing some customer growth. As a result, we're currently spending a lot less than we're used to on customer private equipment, and this has historically been a very large component of our cap expand.
The net effect of all of this is that OCF is up strongly, roughly doubling over the past year. Good news, but please note that this may not be sustainable if we decide to step up our commercial intensity to return to positive volume growth in our home business.
Speaker Change: We have achieved this despite the arrival of a new entrant, who brought disrupting pricing to the market over the past few years.
Speaker Change: We remain focused on driving increased scaling mobile aiming to drive better financial performance for the entire Columbia operation. We have now been able to take steps, even bringing back price discipline to that market both in mobile and in the residential broadband business.
All along this journey, we have also continued to look for ways to make the business even more efficient in its use of capital. And with that in mind, as you know, we recently finalized an agreement to combine our mobile network with Telefonicas in Colombia. This project was over two years in the making and is now well in place.
Speaker Change: As a result, we are now seeing our actions translate into higher <unk> mobile <unk> is up about 7% on home ARPA was up almost 10% in local currency terms.
His combined network would produce very meaningful synergies in the form of lower spectrum and shared network costs, and it has already given us the ability to buy 5G spectrum jointly in the most recent auction and to deploy a 5G network together, thus enhancing our savings.
Speaker Change: As a result of this long term strategy, our sustained pricing discipline on the savings from project covers we're driving margins hiring in Colombia.
Two questions.
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Yes.
Speaker Change: Strong 36, 5% EBITDA margin in Q1 would have actually reached 41, 4%. If you were to exclude the severance we booked in Colombia during the quarter years of work and the cost disciplined project efforts are bringing combined profitability to our Colombia operations.
Thanks Archie.
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Good morning.
In addition, earlier this year, we also monetized our remaining towers in Colombia as part of our larger asset monetization strategy. And with that, we have further improved our capital efficiency in Colombia.
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Speaker Change: Please note that one of the consequences of our price discipline is that we have been sacrificing some customer growth.
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As a result of this strategic and operational initiatives combined, we're performing much better in Colombia, and we are on track to deliver positive equity free cash flow in 2024.
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Despite this meaningful improvements, we still face significant industry challenges in Colombia. There are still too many players and too many networks, in both mobile and fixed.
Our pools are still the lowest in the region and yet spectrum cost remain the highest. And in Colombia, today only the largest player is able to generate profitable free cash loan. Said differently, there's still a lot of work to make the Columbia industry structure a really healthy one for the long run.
Now, please turn to slide seven, where you can see that Guatemala is back on its game, with both service revenue and EBDA at the year and year in the quarter.
And he is now well in place is.
This combined network with produce very meaningful synergies in the form of lower spectrum insured network costs and it has already given us the ability to buy <unk> spectrum jointly in the most recent auction and to deploy a <unk> network together, thus enhancing our savings in.
As you will surely recall, we made the bold decision to increase our ownership to 100% towards the end of the pandemic and to allocate an important amount of our capital to Guatemala.
This was a tremendous opportunity to own more of the asset with the highest return capital and the most cash generation in our portfolio.
In addition earlier this year, we also monetize our remaining towers in Colombia as part of our larger asset monetization strategy and with that we have further improved our capital efficiency in Colombia.
Shortly after that investment, we began to face a strong challenge from our competitor and we responded by investing heavily in the new spectrum and infrastructure to boost capacity in our networks. We also invested confidently to maintain our strong position in the distribution channels in Guatemala.
As a result of this strategic and operational initiatives combined we're performing much better in Colombia, and we are on track to deliver positive equity free cash flow in 2024.
And as a result of that strategy, closely as it was, we successfully protected our market share and defended our strong leadership. And now, after two successful spectrum options, we have spectrum parity in the Guatemala mobile industry. And this has created the conditions for the return to a more rational competitive environment.
Despite this meaningful improvements, we still faced significant industry challenges in Colombia there are.
Still too many players in too many networks in both mobile and fixed.
<unk> are still the lowest in the region and yet spectrum cost remained the highest and in Colombia today only the largest there is able to generate profitable free cash flow said differently. There's still a lot of work to make the Columbia industry structure, a really healthy one for the long run.
We are now seeing signs of this in Q1, with our mobile ARPOL-up year and year for the first time since early 2021. And this was the main driver of revenue growth this quarter.
Now please turn to slide seven where you can see that Guatemala is on its game with both service revenue and EBITDA up year on year in the quarter.
When you add this to the meaningful savings from Project Peppers, you can see low single-digit revenue growth translating to high single-digit EBDA growth. So our investments and our patients for the past two years are now beginning to pay off, with our largest market now back to strong positive growth.
As you would surely recall, we made the bold decision to increase our ownership to 100% towards the end of the pandemic and to allocate an important amount of our capital to optimize them.
This was a tremendous opportunity to own more of the asset with the highest return on capital and the most cash generation in our portfolio.
As we see it here today, indeed it feels good to now on 100% of the strong and growing cash rate.
Shortly after that investment we began to face a strong challenge from a competitor and we responded by investing heavily in new spectrum and infrastructure boost capacity in our networks. We're also investing confidently to maintain our strong position in the distribution channels in Guatemala.
With that said, we're not out of the woods and we're not dropping our guard.
Our competitor remains aggressive and it's still too early to tell how the market will react to our most recent price increase in February . So while the strategy is in place and it is working and we're feeling good about the one in Guatemala, we know we still have a lot of work ahead.
As a result of that strategy, mostly as it was we successfully protected our market share and defended our strong leadership and now after two successful spectrum auctions, we have spectrum <unk> automobile industry and this has created the conditions for their return to a more rational competitive environment.
Now please turn to slide eight to talk about Panem.
Five years ago, we made a highly strategic decision to enter the Panama market. That important capital location is also coming to fruition now.
As you will recall, we made two back-to-back acquisitions, first in fixed and then in mobile. A year after the merger, we rebranded everything to our own flagship TICO brand, which is now one of the most recognizable brands in the country, as is also the case everywhere you go in Central America.
Speaker Change: We're now seeing signs of this in Q1 with our mobile <unk> year on year for the first time since early 2021 and this was the main driver of revenue growth this quarter.
Speaker Change: When you add this to the meaningful savings from project Peppers, you can see low single digit revenue growth translate into high single digits EBITDA growth. So our investments on our patients with the past few years are now beginning to pay off with our largest market now box with strong positive comps.
At the time of our initial investment, we saw three critical opportunities that have become a reality by now. First, we saw a tremendous opportunity to cross-sell mobile services to the fixed customer base we have acquired when we bought Cableanda.
Indeed, when we subsequently bought the Telefonica mobile asset, its mobile market share was in the mid-30s. Today we're at about 50% mobile market share in Panama, and we are now driving post-rate penetration to that base.
Speaker Change: As we sit here today, indeed, it feels good to know on 100% of the strong and growing cash flow.
CEO: With that said, we're not out of the woods on we're not dropping our guard our competitor remains aggressive and it's still too early to tell how the market would react to our most recent price increase in February so while the strategy is in place and it is working and we're feeling good about one in Guatemala, We know we still have a lot of work ahead.
Second, we thought that the Panama Mobile Market was right for consolidation, with too many players and too little cashmull. Since then, the market has indeed consolidated from four players when we entered down to two per day.
When you consider that many of the largest countries in the world have only three players, there was no reason for any country in Latin America for more than two mobile players, perhaps with the exception of Brazil, which is much larger, of course.
Speaker Change: Now please turn to slide eight to talk about Panama.
CEO: Five years ago, we made a highly strategic decision to enter the Panama market.
Speaker Change: That important capital allocation is also coming to fruition now.
And finally, the third pillar of our investment thesis was the opportunity to bid and win our fair share of large problem and contracts, or B2B.
Speaker Change: As you will recall, we made two block tobacco positions versus fixed and then in mobile a.
Speaker Change: A year after the merger we rebranded everything to our own flagship <unk> brand, which is now under the most recognizable brands in the country.
After years of work, this is just now starting to happen. As you can see, in our results in the last six months.
Speaker Change: It's also the case everywhere you go in Central America.
With all of this put together, we are now the number one telecom operator in Panama. And as a result, Panama, with its stable and dollarized economy, is now becoming the second largest contributor to Minicom's equity free cash flow in 2024. Now, let me turn the call over to Maxime to say a few words.
Speaker Change: At the time of our initial investment we saw three critical opportunities that have become a reality by now first we saw a tremendous opportunity to cross sell mobile services to the fixed customer base, we have acquired when we bought comdata.
Speaker Change: Indeed, when we subsequently bought the Telefonica mobile asset its mobile market share was in the mid thirties today, we're at about 50% mobile market share in Panama, and we are now driving penetration of that base.
Thank you, Mauricio. As many of you know, I joined the company less than nine months ago, and my first priority was to simplify the way Milicom operates, to empower the countries, optimize CAPEX, and accelerate and expand the scope of projective rest.
Speaker Change: Second we thought that the Panama market was ripe for consolidation with too many players untoward into cash flow.
As we told you on the third quarter running school, Milcom has tremendous assets and a very strong team, but we saw an opportunity to significantly enhance the cash flow generation of the business by bringing more focus on cost control well beyond the initial scope of project PEPREST.
Speaker Change: Then the market has indeed consolidated from four players when we entered down to two to date.
Speaker Change: When you consider that many of the largest countries in the world of only three players there wasn't a reason for any country in Latin America for more than two mobile players, perhaps with the exception of Brazil, which is much larger of course.
We've also decided to upgrade the HFC cable network for it to provide more bandwidth. For a limited cost, we now have the capacity to deliver high bandwidth and be competitive again.
Speaker Change: And finally, the third pillar of our investment thesis was the opportunity to bid and win our fair share of large government contracts or <unk>.
Speaker Change: After years of work. This is just now starting to happen as you can see in our results in the last six months with all of this put together we are now the number one telecom operator in Panama and as a result, Panama with its stable on Dollarized economy is now becoming the second largest contributor to <unk> equity free cash flow in 'twenty.
We constructed our 2024 budget on this basis, and nine months later, the results are very tangible.
A BDA is up more than 20%. OCAF is up more than 50%. Equity free cash flow is always seasonally weaker in Q1, but this year was $134 million better than Q1 of last year.
Speaker Change: 24.
Speaker Change: Now, let me turn the call over to Maxim to say a few words. Thank.
And all of these actions are helping to bring our leverage down very rapidly, which was also one of the key priorities when I joined.
Maxim: Thank you Laura so as many of you know I joined the company less them nine months ago.
Maxim: And my first priority was to simplify the way you come operates to empower the country's optimized capex as accelerate and expand the scope of project K breast.
Every country is contributing to our improved financial performance, and we expect that all of our countries will generate strong equity free cash flow in 24 at level well above what was achieved in 22 and 23.
Speaker Change: As we told you on the third quarter earnings call media Commerce tremendous assets.
Speaker Change: Our strong team, but we saw an opportunity to significantly enhance the cash flow generation of the business.
And while we have been driving this important effort, this is the result of the tremendous effort of many people throughout the company.
Speaker Change: By bringing more focus on cost control well beyond the initial scope of project pay priced.
And we want to take a moment to thank everyone for their dedication over the last several months. It has been painful, but Milicom is already in a much stronger position thanks to you.
Speaker Change: We've also decided to upgrade the HFC cable network, Florida to provide more bandwidth.
Speaker Change: For a limited cost.
Speaker Change: No hub capacity to <unk>.
Of course, there is still much more that we can and will do in the future of continuing cost control, CAPEX optimization and implementing simplification everywhere. It is possible to be more flexible and more efficient.
Speaker Change: Can be competitive again.
Speaker Change: We construct total 2020 full budget on this basis.
Speaker Change: Nine months later the results are very tangible.
Speaker Change: EBITDA is up more than 20% well CF is up more than 50% equity free cash flow is always eliminate weaker in Q1.
We are downsizing the volume of shared services to have the countries fully responsible. And we have a structured TIGO money to keep only countries and use cases that make sense. We can probably do better with organic service revenue growth.
Speaker Change: But this year it was other than $34 million better than Q1 of last year.
Speaker Change: All of these actions are helping to bring our leverage down very rapidly which was also one of the key priorities when I joined.
And we will continue to focus more of our time on identifying opportunities we may have to accelerate our profitable growth.
With that, back to you, Mauritio.
Speaker Change: Rig count trends contributing to our improved financial performance.
Thank you, Maxime. It has been a true pleasure to partner with you over the last several months. Thank you for your incredible support and your friendship and for helping Milicum to tap you to the experience and expertise of the broader Atlas team.
Speaker Change: We expect that all of our countries.
Speaker Change: <unk> controlling equity free cash flow in 2004.
Speaker Change: They are available what was achieved in 2002 equities rates.
Speaker Change: And while we have been driving this important default, which is the result of the tremendous at fault of many people's who hoped the copays.
Before turning the call over to BART to go over the financials, I will wrap up by discussing the various leadership changes that have been announced of the past several months.
First, as part of the CEO succession plan that we had announced nine months ago, I will be stepping down as CEO shortly after the showholder meeting later this month, and I will remain as chair of the board, subject of course to shareholder approval at the AGM. No major news for you there, I hope.
Speaker Change: And we want to take a moment to thank everyone for their dedication over the last several months it has been painful but many companies already in a much stronger position. Thanks to you.
Speaker Change: Of course, there is too much more that we can renew in the future continuing cost control capex optimization and implementing simplification everywhere. It is possible to be more flexible and more efficient.
As we recently announced, the board has appointed Marcelo and It is to be Milicom's next CEO , starting June the 1st. Marcelo's journey at Milicom has been nothing short of incredible.
Speaker Change: <unk> the volume of shelf services 12 countries.
Marcelo joined the company about 30 years ago, starting in one of our closed centers in Padabla.
Speaker Change: Irresponsible.
Speaker Change: And we have <unk> <unk>.
Speaker Change: Monday to keep only countries and use cases that makes sense, we can probably do better with organic service revenue growth.
Since then, he has held leadership roles in multiple countries touching just about every part of the organization.
He's currently the general manager of our Panama operation, where he successfully integrated the acquisitions and has executed our investment plan, which I alluded to just a few seconds ago. A very well welcome to Marcelo, an in-house leader with so, so much sangri people.
Speaker Change: And we will continue to focus more on a full time on you don't swing of alternatives that we may have to accelerate our profitable growth.
Speaker Change: With that back to normal ratio.
Speaker Change: Thank you Maxime it has been a true pleasure partner with you over the last several months.
I also want to publicly thank our board for the time and the effort at every member devoted to the discussions, analyses and interviews with many internal and external candidates.
Speaker Change: For your incredible support on your friendship and for helping me to come to tap into the experience and expertise of the broader <unk> team.
Speaker Change: Before turning the call over to Mark to go over the financials I will wrap up by discussing the various leadership changes that have been announced over the past several months.
Our decision to appoint Marcelo was indeed thoughtful and unanimous, and that could have not been achieved without the months of work that the board put into this very important task.
Mark: First as part of the CEO succession plan that we had announced nine months ago I will be stepping down as CEO of shortly after the shareholder meeting later this month and I will remain as chair of the board subject of course to shareholder approval at the AGM.
And we also recently announced that Maxim will remain our president and CEOO until year-end, and he will join our board as of this May. Maxime's contribution has already been very possibly impactful to the company, and I personally immensely look forward to continue to partner with Maxime now in the boardroom.
Speaker Change: No major news for you are there I hope.
Speaker Change: As we recently announced the board has appointed <unk> next CEO starting June the first.
As you can see, Maxim and I will stick around to help Marcelo whenever and for whatever he needs us. Marcello will have our full support, that of the full board, and that of all his TIGO colleagues, who know him so well and have enjoyed his strong leadership for decades.
Speaker Change: Marcellus journey and Millicom has been nothing short of incredible are.
Speaker Change: Marcelo joined the company about 30 years ago, starting on one of our call centers in bottom line Susan.
Speaker Change: Since then he has held leadership roles in multiple countries touching just about every part of the organization.
And also subject to shoulder approval, we will be joined by Justine Dimovic as our new board member.
Speaker Change: He is currently the general manager of our Panama Operation, where he has successfully integrated acquisitions and has executed our investment bond, which I alluded to just a few seconds ago.
Justine is with L'Oreal now, and she was our very own former treasurer and head of IR some years ago at Millicum. So she will bring back tremendous knowledge of the company, along with her experience and financial acumen. Welcome back, Justine.
Speaker Change: Well welcome to Marcello and in House leader with so so much some great people.
Speaker Change: I also want to publicly thank our board for the time and the effort of every member of devoted to the discussions and thousands of interviews with many internal and external candidates our decision to appoint Marcello will indeed, thoughtful and unanimous and that could have now been achieved without the months of work.
Thanks to Michael Golland for sitting on our board for the last year with meaningful insights and contributions.
And also thank you to Pernil Arenberg for her many, many important contributions to the board of the last five years, and also for her insightful challenge and continuous support to the team.
Speaker Change: <unk> put into this very important task.
A few weeks ago, we also announced the appointment of Bargandharen as our new chief financial officer.
Speaker Change: And we also recently announced a Maxime we remain our president and COO until year end and he will join our board as a amaze me excuse contribution has already been very possibly impactful to the company and I personally immensely look forward to continuing to partner with Maxime now in the boardroom as you can see maximo and <unk> stick around for <unk>.
Like Marcelo, Barge is a Millicom veteran who has held several leadership roles during his 14 years with the company, most recently overseeing corporate finance, which encompasses the company's treasury, tax, mergers and acquisitions and corporate administration activities.
As you know, I worked closely with Barglauil and I think highly of him. Before I turn the call over to Bart to go over the financials, I want to reconfirm that we continue to work on monetizing a regional portfolio.
Speaker Change: Seller whenever and for whatever he needs it or.
Speaker Change: Our stellar with half of our full support out of the full board and out of all his steego colleagues, who know him so well and have enjoyed his strong leadership predicts.
We launched the monetization process externally in Q4, and we're now very actively in the middle of the MNA process. Of course, precisely because of that, that's all that we can say at this time. With that introduction, let me turn the call over to Bart for his debut moment.
Speaker Change: And also subject to shareholder approval, we will be joined by Justin demo, because our new board member.
Speaker Change: <unk> with Lauder on now and she was our very own former treasurer and head of IR. Some years ago on medical so she will bring back tremendous knowledge of the company along with our experience and financial acumen, while I'll come back to Steve.
Thank you, Mauricio, and hi everyone. Many of you know me already from my various roles in the past or from investor conferences.
Speaker Change: Thanks to Michael Golan four are sitting on our board for the last year with meaningful insights and contributions.
For those who don't, I encourage you to reach out to me through Michelle, as I definitely want to engage with our broader investor base to hear what is top of your mind.
Speaker Change: And also thank you to <unk> for her many many important contributions to the board over the last five years and also for having cycled challenge and continuous support to the team.
This being said, let's now have a look at our financial performance beginning on slide 12.
Speaker Change: A few weeks ago, we also announced the appointment of Markman hearing now is our new Chief Financial Officer, Mike Marcello Barclays in Millicom veteran who has held several leadership roles. During his 14 years with the company.
Moricio indicated this already. A lot of work has been done over the last few months, and now results start to show. At the same time, we still have significant challenges ahead.
Service revenue was $1.38 billion in the quarter. This is up 8.8% year on year from $1.26 billion a year ago.
Speaker Change: Most recently overseeing corporate finance, which encompasses the company's treasury tax mergers and acquisitions and corporate administration activities. As you know I worked closely with BARDA over the years and think highly of him before I turn the call over to Bart to go over the financials I want to reconfirm that we continue work on monetizing our renal toward <unk>.
Excluding the impact of exchange rates, organic growth was 3.8% in the fourth quarter driven by one, our mobile business, which is up mid-single digits, thanks to ARPU growth from recent price increases and pre-to-postpaid migrations.
Speaker Change: Yes.
Bart: We launched a monetization process externally in Q4, and we're now very actively in the middle of the M&A process of course precisely because of that that's all that we can say at this time.
Two, meeting growth in B2B, coming from large contracts in Panama that Mauricio already talked about.
Bart: That introduction, let me turn the call over to Bart for his debut moment.
These contracts should continue to generate revenue on EBDA for several more quarries, but we anticipate a much smaller contribution from these contracts going forward and beginning in Q2.
Bart: Thank you Mauricio and hi, everyone. Many of you know me already from our various roles in the past or from the Investor conferences.
Bart: For those who don't I encourage you to reach out to me to Michelle as I definitely want to engage with a broader investor base. So here what is top of your mind.
Three, his revenue growth is offset a bit by decline in the home business where we focus on return and profitability in a competitive environment.
Bart: That being said, let's now have a look at our financial performance beginning on slide 12.
Our EBDA, which we will discuss in more detail later, was up 24 and a half percent year-on-year to $632 million, despite $30 million of restructuring costs incurred in the period.
Bart: <unk> indicated there's already a lot of work has been done over the last few months and now results start to show at the same time, we still have significant challenges ahead.
The very strong growth reflects the combined effect of the service revenue growth that I just discussed, as well as the cost savings for project Everest that are now visible and recurring.
Bart: Service revenue was $1 $38 billion in the quarter. This is up eight 8% year on year from $1 $26 billion a year ago.
Then the operating cash flow rose 61% to $519 million, reflecting both the robust EBDA growth and the 38.9% reduction in Campics.
Bart: Excluding the impact of exchange rates organic growth was three 8% in the fourth quarter driven by one our mobile business, which is up mid single digits. Thanks to ARPA growth from recent price increases and pre to postpaid migrations.
This capex reduction is in part due to the efficiency measures baking during 2023 and not materializing in the run rate.
Bart: Mid teen growth in <unk> coming from large contracts in Panama that burrito already talked about.
But a bigger portion is due to the slower phasing of investments in this quarter of 2024. So please, don't annualize Q1 CAPEX as an indication for a full-year investment.
Bart: These contracts should continue to generate revenue and EBITDA for several more quarters, and we anticipate a much smaller distribution from these contracts going forward and beginning in Q2.
Drilling down further to the service revenue by country on slide 13, Guatemala increased by 2%. This was the first positive quarterly growth in five quarters and is fueled by mobile group, where recent price increases are driving output growth.
Bart: This revenue growth has offset a bit by decline in the home business, where we focus on return to profitability in a competitive environment.
As Mauricio mentioned, we are happy with the improved performance in Q1, but competition remains very intense here.
Bart: Our EBITDA, which we will discuss in more detail later was up 24, 5% year on year to $632 million, despite $30 million of restructuring costs incurred in the period.
Columbia service revenue was flat in local currency.
Here, our mobile business continues to grow very nicely and was up high single digits, but this was upset by a decline in our whole business, where we continue to prioritize price discipline and profitability over growth in a market that remains very competitive.
Bart: The very strong growth reflects the combined effect of the service revenue growth that I, just discussed as well as the cost savings from project address that are now visible and recurring.
Bart: Then the operating cash flow rose, 61% to $519 million, reflecting both the robust EBITDA growth and the 38, 9% reduction in Capex.
As Maurice already discussed, we'd be willing to sacrifice some customer growth, but the good news here is that home our pool is up strongly, and we have also seen a significant improvement in churn and net ads in the last couple of months.
Bart: This capex reduction is in part due to the efficiency measures speaking during 2023 and not materializing in the run rate.
In Panama, service revenue grew 17.8% fueled by the two large B2B contracts, as well as a strong growth in mobile. Excluding these large contracts service revenue would have been flat.
Bart: But a bigger portion is due to the slower phasing of investments in this quarter of 2024. So please don't annualize Q1, capex as an indication for full year investment.
Bolivia service revenue was flat as well, with growth in mobile and B2B offset by a declining home where we continue to prioritize price discipline, especially given a more challenging macroeconomic outlook and the longer payback terms in this side of the business.
Bart: Drilling down further into the sublease revenue by country on Slide 13, Guatemala increased by 2%. This was the first positive part of the growth in five quarters and is fueled by mobile group, where recent price increases are driving ARPA growth.
Paraguay Service Revenue grew 4.3% in local currencies with every business unit continuing to perform well.
Bart: As Melissa mentioned, we are happy with the improved performance in Q1, but competition remains very intense here.
Service revenue in our other segments increased 5.4%. As a reminder, the other segments is comprised of our operations in El Salvador, Nicaragua, and Costa Rica, which in aggregate account for just over 15% of our service revenue and ABDA.
Bart: Colombia service revenue was flat in local currency era of mobile business continues to grow very nicely and was up high single digits.
Bart: But this was offset by a decline in our home business, where we continue to prioritize price discipline and profitability overgrowth in a market that remains very competitive.
out turning to ABDA on slide 14. As I mentioned before, ABDA in Q1 was $632 million. That's up 24 and a half percent year on year from $507 million.
Bart: As <unk> already discussed we'd be willing to sacrifice some customer growth, but the good news here is that our pool is up strongly and we have also seen a significant improvement in churn and net adds in the last couple of months.
As you can see, foreign exchange was a tailwind this quarter and contributed about $21 million of growth to the corner. This doesn't happen very often, so we're happy to take it.
Bart: In Panama service revenue grew 78% fueled by the two large b to b contracts as well as a strong growth in mobile.
Bart: Excluding these large contract service revenue would have been flat.
Excluding this affects benefit, the BDA increased 20% organically year and year.
Bart: <unk> service revenue was flat as well with growth in mobile and <unk> offset by a decline in coal, where we continue to prioritize price discipline, especially given the more challenging macroeconomic outlook and the longer payback times and this side of the business.
Noteworthy is that about $30 million of further severance costs are included in our Q1 MBDA.
On slide 15, you can see our ABDA by country. It's quite clear that the cost savings initiatives we've been implementing over the past year or so are having a very positive impact across all our operations, with nearly all countries of double digits.
Bart: Paraguay servers revenue grew four 3% in local currency with <unk>.
Bart: Every business unit continuing to perform well.
Bart: Service revenue in our other segments increased five 4%.
Guatemala, IBDA improved very significantly and increased 7.9% in local currency terms, largely thanks to better ARPA growth in mobile.
Bart: As a reminder, the <unk>.
Bart: Other segments is comprised of our operations in El Salvador, Nicaragua, and Costa Rica, which in aggregate account for just over 15% of our service revenue and EBITDA.
Colombia, EBDA, local currency growth was more than 24% due to both mobile service revenue growth and continued price discipline in our home business, as well as all savings from project Everest.
Bart: Our turning to EBITDA on slide 14.
The ABDA margin of 36.5% was a new record.
Bart: As I mentioned before EBITDA in Q1 was $632 million, that's up 24, 5% year on year from $5 7 million.
Noteworthy is that during Q1, our Colombia operation incurred almost $18 million of restruction costs related to the voluntary retirement plan that we implemented early in the year.
Bart: As you can see foreign exchange was a tailwind this quarter and contributed about $21 million of growth through the corner.
Excluding this charge, the margin would have been 41.4%. That's up 10 percentage points over the past year. And this is one of the reasons why we expect equity-free cash flow to be positive in 2024, as Morizzo indicated previously.
Bart: This doesn't happen very often so we are happy to take it.
Bart: Excluding this FX benefit EBITDA increased 20% organically year on year.
Bart: Noteworthy is that about $30 million of <unk>.
Bart: <unk> costs are included in our Q1 EBITDA.
Now turning to Panama, where EBDA grew 26.1%. The B2B projects contributed more than half of this growth, and as I've just told you, we expect much smaller contributions from these projects going forward.
Bart: On slide 15, you can see our EBITDA by country.
Bart: It's quite clear that the cost savings initiatives, we've been implementing over the past year or so are having a very positive impact across all our operations with nearly all countries up double digits.
Bolivia, EBDA increased 12.7%, and this is largely due to the savings from Project Everest and to our reduced commercial activity in home. As a reminder, the macroeconomic situation in Bolivia has become more challenging because there is a shortage of US dollars in the economy.
Bart: Guatemala, EBITDA improved very significantly and increased seven 9% in local currency terms, largely thanks to better ARPA growth in mobile.
Bart: Colombia EBITDA in local currency growth was born and 24%.
Bart: Due to both mobile service revenue growth and continued price discipline in our home business as well as savings from project Everest.
Up until now, this hasn't had any noticeable impact on consumer demand, but it has become a lot harder for us to convert Vodigiano's to dollars to pay some of our vendors and to upstream cash from the country.
Bart: The EBITDA margin of 36, 5% was a new record.
Bart: Noteworthy is that during Q1, our Columbia operation incurred almost $18 million of restructuring costs related to the voluntary retirement plan that we implemented early in the year.
In other words, no impact yet on revenue or ABDA, but our working capital was about $16 million better than it should be because of these payment delays.
Paraguay had another solid corner with ABDA up 14.1% organically and the margin expanded almost 5 percentage points to 48.3%.
Bart: Excluding this charge the margin would have been 41, 4% that's up 10 percentage points over the past year and this is one of the reasons why we expect equity free cash flow to be positive in 2024 as Mauricio indicated previously.
EBDA in our other segments increased 17.8% with all three countries contributing to the growth.
Bart: Now turning to Panama, where EBITDA grew 26, 1%.
Now please turn to slide 16 for our usual net debt bridge. During the quarter, net depth increased slightly by $19 million to end Q1 at just under $6 billion. But thanks to EBDA growth, our leverage decreased by 19 bibs in this quarter.
Bart: <unk> projects contributed more than half of this growth and as I've. Just told you we expect much smaller contributions from these projects going forward.
Bart: While EBITDA increased 12, 7%.
Bart: This is largely due to the savings from project Everest and through our reduced commercial activity in home as a reminder, the macroeconomic situation in Bolivia has become more challenging because there is a shortage of U S dollars in the economy.
The key factors have contributed to the increase in debt where our equity-free cash flow was $1 million, however includes the proceeds of the sale of Towers in Colombia for $39 million.
We repurchase our bonds in open market for approximately 132 million. These purchases were made below par, leading to a $15 million benefit.
Bart: Up until now this hasnt had any noticeable impact on consumer demand, but it has become a lot harder for us to convert body beyond those $2 based some of our vendors and to upstream cash from the country.
We also bought back shares for approximately $27 million.
As a result of these items, and considering also the strong MBDA growth that I already talked about, our leverage ratio ended Q1 at 3.10 down from 3.29 at Q4.
Bart: In other words, no impact yet on revenue or EBITDA, but our working capital was about $16 million better than it should be because of these payment delays.
Bart: Paraguay had another solid quarter with EBITDA up 14, 1% organically and the margin expanded almost five percentage points to 48, 3%.
Now, please turn to slide 17 to review our financial targets. We continue to target equity-free cash flow of around $550 million in 2024, and we continue to target leverage of 2.5x by 2025.
Bart: EBITDA in our other segment increased 17, 8% with all three countries contributing to the growth.
Bart: Now please turn to slide 16 for our usual net debt bridge.
These targets remain unchanged from what we communicated to you at our Q4 results last February .
Bart: During the quarter net debt increased slightly by $19 million to end Q1 at just under 6 billion. Thanks to the EBITDA growth our leverage decreased by 19 bps in this quarter.
As you can see from our Q1, we have started the year on a relatively strong note, and we are indeed slightly ahead of our plans. But as Mauricio and I have already told you, we benefited from a number of tailwinds in Q1 that won't necessarily repeat. We also see a number of risks for the remainder of the year.
Bart: The key factors have contributed to the increase in net debt, where our equity free cash flow was $1 million. However includes the proceeds of the sale of towers in Colombia for $39 million.
These risks are contemplated and reflected in our targets.
Bart: We repurchasing our bonds in the open market for proximately $132 million.
Now let me turn the call back to Mauricio to wrap up.
Thank you, Bart. Pretty good for your first time. Before I take your questions for the last time, as CEO myself, I want to recap some of the key strategic decisions we have made as a team over the past several years to help get us to where we are today.
Bart: These purchases were made below par leading to a $15 million benefit.
Bart: We also bought back shares for approximately $27 million.
Bart: As a result of these items and considering also the strong EBITDA growth that I already talked about our leverage ratio ended Q1 at three point down.
First, we invested heavily in our networks. We deployed 4G and Bot Spectrum to secure our mobile market leadership, and we expanded aggressively into home and into B2B.
Bart: Down from $3 29 at Q4.
The largest chance of our spectrum acquisitions and renewals are now behind us, as you know, and B2B is beginning to show its strength. Second, we invested at Africa where we had no scale. We closed offices in London and Stockholm and we sold out non-poor assets.
Bart: Now please turn to slide 17 to review our financial targets, we continue to target equity free cash flow of around $550 million in 2024.
Bart: And we continue to target leverage of two <unk> by 2025.
Third, we enter Panama, Nicaragua, consolidate our leadership in Central America. Panama is now a success story, and we increased also our ownership in Guatemala, the country where our return capital is by far the highest and strong cash flow growth is back.
Bart: These targets remain unchanged from what we communicated to you at our Q4 results last February.
Bart: As you can see from our Q1, we have started the year on a relatively strong note.
Bart: And we are indeed slightly ahead of our plans for.
Fourth, we have made great strides to improve profitability in Colombia. We still have a lot of work to do there, but we're closer than we ever work making Colombia a key contributor to Milicom's growth and to its free capital generation in the future.
Bart: <unk> already told you we benefited from a number of tailwind in Q1 that won't necessarily repeat we also see a number of risks for the remainder of the year.
Bart: These risks are contemplated are reflected in our targets.
Fifth, and this is perhaps the most important, we created a winning Sangretigo culture that makes all of our plans possible. In this, out of this Sangretigo, and perhaps because of it, comes our next leader, Marcelo and Niedes.
Bart: Now, let me turn the call back to Marty so to wrap up.
Marty: Thank you Mark pretty good for your first time before I take your questions for the last time, a CEO myself I want to recap some of the key strategic decisions. We have made as a team over the past several years to help get us to where we are today.
Stigo indeed has become a magnificent tiny tapton in the region, one that is now more profitable, thanks now also to the immense and positive support of our largest shareholder, Atlas.
Marty: First we invested heavily in our networks, we deployed for Gn bought spectrum to secure our mobile market leadership, and we expanded aggressively into AUM I mean tobey to be.
I am happy now to hand over the helm to a seasoned and highly capable company veteran like Marcelo, a great colleague and a dear friend of many years. You will get to meet Marcello in early August for the second quarter results conference call. Today, Bart, Maxime and I will take the questions.
Marty: The largest chunk of our spectrum acquisitions, our renewals are now behind us as you know and <unk> is beginning to show its strength.
Marty: Second we divested our Africa, where we have no scale, we closed offices in London, and Stockholm, and we sold off non core assets.
Perfect. Thank you very much, Mauricio, Barge, Maxime. We will now move to the Q&A session. First question will come from the line of Sumit Dada and Street Research Summit. The line is yours.
Marty: Third we enter Panama, Nicaragua consolidate our leadership in Central America, Panama is now a success story.
Marty: <unk> also our ownership in Guatemala, the country, where our return on capital is by far the highest in strong cash flow growth is back.
Yeah, hi guys, thanks very much.
Marty: We have made great strides to improve profitability in Colombia.
Maricio, thank you for all your help of years and good luck with the new role. Look forward to talking to you, Bart going forward, good luck with everything. A couple of questions please. So first of all, I mean, a really remarkable job on the cost side over the last
Marty: They'll have a lot of work to do there, but we're closer than we ever were committing Colombia, a key contributor to men it comes growth and towards free cash flow generation in the future.
Marty: Fifth and this is perhaps the most important we created a winning sangre <unk> culture that makes all of our plants possible in this out of this sangre tivo and perhaps because of it I'm sorry next leader Marcelo any of this.
few quarters. I've looked at the sector for many years and can't really recall anything quite as heroic in terms of in terms of margin improvement. So, you know, well done to everybody for that. It does sort of lead to the obvious question, though, as to how sustainable
Marty: <unk>, Indeed has become a magnificent and unique platform in the region.
Marcelo: That is now more profitable things now also to the mens and positive support of our largest shareholder Atlas I'm happy now to hand over the helm to a seasoned and highly capable company veteran like Marcello a great colleague and a dear friend of many years you will get to meet Marcello in early August for the second quarter results conference call today Mark <unk>.
is that policy and I think you've hinted at areas you would look to maybe step up investments within home for example just curious if you could elaborate elaborate sorry as you look forward over the next
few months either on the home side or on the wireless side, where you might see opportunities to pick up investment again in order to try and pep up the top line growth.
Speaker Change: Take your questions.
Mark: Perfect. Thank you very much while we sail barge vaccine, we will now move to the Q&A session.
That would be the first question please. And then secondly, just going back to something you touched on which is cash coming out of a couple of markets, Honduras and Bolivia, just trying to get a sense as to how real that risk is, what that might mean for equity free cash flow.
Mark: First question will come from the lineup <unk> at New Street Research Your line is yours.
Speaker Change: Yes, hi, guys. Thanks very much.
Speaker Change: Marcio. Thank you for all your help again and good luck with the new role.
Speaker Change: Look forward to talking to you about going forward good luck with everything.
Speaker Change: A couple of questions. Please first of all I mean.
You've talked about it being within the guidance, but again, a bit of colour there would be helpful as to what's happening on the ground. Thanks very much.
Speaker Change: A really remarkable job on the cost side over the last few quarters I've looked at the sector for many years and felt really recall anything quite as heroic in terms of in terms of margin improvement so well.
You bet. I'll take a little bit of the first one, maybe
Maxim can help out there and I think the second one will leave our brand new CFO to cut his teeth with not only on the question but you know on actually handling the challenge.
Speaker Change: Welcome to everybody for that it does sort of lead to the to the obvious question, though as to how sustainable.
So listen, on the commercial initiatives and on the Everest project, as I've said often,
Speaker Change: Is that is that policy and I think you've hinted at areas you would look to.
Speaker Change: Maybe step up investments within home for example, just curious if you could elaborate elaborate sorry as you look forward over the next.
Everest was something we had started quite a bit of time ago, had been properly planned for with external resources and we had started implementing. But in reality, it got deeper and faster with the support held and challenge from our new largest investor.
Speaker Change: Few months, either on the home side or on the wireless side, where you might see opportunities to to pick up investment again.
Speaker Change: In order to try and pick up the topline growth.
That external force just made Everest one, but Everest two, and it just sped out the process. And I've been vocally saying thank you for that external support. And since Maxim is on the call, you know, we allude often to our partnership and it has really worked well.
Speaker Change: That would be the first question. Please and then secondly.
Speaker Change: Just going back to something you touched on which is cash coming out of couple of markets Honduras.
Speaker Change: Olivia just trying to get a sense as to how real that risk is.
So what you're seeing today is the combination of initiatives that are strategic nature from years ago, now being combined with that platform, Panama, Guatemala, work on Colombia, etc., etc., becoming more and more profitable.
Speaker Change: Might mean.
Speaker Change: For for equity free cash flow I think it's.
Speaker Change: You've talked about it being within the guidance, but again a bit of color there would be would be helpful. As to what's happening on the ground. Thanks very much.
Speaker Change: You bet.
Now, the tub line, which is very, very important,
Speaker Change: I'll take a little bit in the first one maybe.
We have continued as ever focused on it. So let me give you some color on that so it doesn't just remain as words.
Speaker Change: Mexican can help out there and I think the second one will D var brand new CFO.
Speaker Change: His death with not only other question button on actually handling the challenge.
Number one, on mobile, you've seen or continued push on postpaid, and that's true in Panama. You see it coming into the result, we're cross-selling first and then adding post-paid to the new subscriber base. It's working like a charm. Colombia, you've seen the numbers. Post-bid is really working for us in Colombia, as in other markets, but that pushing to post-bate comes with, as you know, lower churn, a little bit more hourful, and higher or longer lifetime value cycles.
Speaker Change: So listen on the commercial initiatives.
Speaker Change: And on the on the.
Speaker Change: The Everest project as I've said often.
Speaker Change: Everest was something we had started out a bit upon the goal had.
Speaker Change: Had been properly planned or with external resources and we have started implementing.
Speaker Change: In reality, it got cheaper and faster with this reported healthy challenge from our new largest investor that external force just made at risk.
And that's
a long-term initiative that we continue on. We are increasingly using our fixed footprint to drive convergence. Maybe we don't speak about it in the calls because we don't have enough time, but we're raising speeds and adding more convergence into key markets where we have a long,
Speaker Change: Separates one, but <unk> still and it just sped up the process and I've been vocal in saying. Thank you for that external Arden Suezmax seems on the call. We are moving into a partnership and it hasn't really worked well so what youre seeing today is a combination of initiatives that are strategic in nature.
fixed network like Colombia and Bolivia etc so that's on going and
Speaker Change: Years ago, now being combined with that platform, Panama, Guatemala and out of the work on Colombia, et cetera, et cetera are becoming more and more properties.
And B2B, which today is all about Panama, but you've heard us over the years talk about the importance of driving B2B into the mix and that you begin to see that. So there are initiatives there on the revenue that have stayed on and will continue to be the focus going on.
Speaker Change: Now the top line, which is very very important.
Speaker Change: We continue.
Speaker Change: Continued as every vertical style. So let me give you some color on that so it doesn't just remain those words.
Having said that, and as we've said publicly, we did become very price discipline in Colombia some borders are gone. We've actually implemented installation costs and remain very prime discipline. That has come at the cost of volume.
Speaker Change: Number one on mobile you've seen a continued push on postpaid and that's true in Panama.
Speaker Change: Coming in as a result of the cross selling first and then adding postpaid to the new subscriber base is working like a charm, Colombia, you've seen the numbers postpaid is really working for us in Colombia as in other markets, but that pushing to postpaid comes with as you know lower insurer and it'll be more iron ore on high.
It drives cash flow, but it slows or growth. And as we just highlighted earlier on, that is one avenue in which if we see an improved industry structure in Colombia,
Speaker Change: Higher or longer lifetime value cycles.
As we began to see over the last couple of months really, crisis has stabilized and competition in homes seems a little bit more stable. You've seen us drive ARCO a little bit. Then we may go back into home with a little bit more a push on volume. And the same is true on Bolivia for macro reasons that we'll address later.
Speaker Change: Our long term initiatives that we have continued on.
Speaker Change: Our increasingly using our footprint to drive convergence, maybe Ron speak about it in the call is because we don't have enough time.
Speaker Change: Racing speeds and adding more conversions into key markets, where we have a long.
That's the long way of say we remain very grateful, not only on costs, but also on revenue forward. And I could speak at length on Blate, but maybe, Maxime, anything to add to that?
Speaker Change: Except where like Colombia.
Ron: I'll give you et cetera, so that's ongoing.
Ron: And B to B, which today is all about Panama, but you've heard us over the years talk about the importance of driving me it'll be in the.
Thank you, Maurit. Hi, Sumit. I would say first, we have not sacrificed CAPEX.
Ron: The mix I'm not you begin to see that so there are initiatives there on the revenue that have stayed on and will continue in the focus.
Much more we have optimized CAPEX, especially by aligning technical IT and sales to be more efficient.
Speaker Change: Having said that.
Speaker Change: We've said publicly.
Speaker Change: Did become very price disciplined in Colombia, some quarters ago, we've actually.
Second, we have renegotiated a lot of contracts with the vendors, both on network and IT. So for the same amount of money, we can get more.
Speaker Change: And installation costs and remain very price disciplined that has come at the cost of volume.
And there is more to come on that. And on the home business, we've made a huge HFC upgrade in terms of bandwidth capacity for quite a low cost.
Speaker Change: Drives cash flow, but it slows our growth and as we just highlighted earlier on that is one avenue in which if we see an improved industry structure in Colombia.
So all that explains you that we can have a good performance commercially with relatively low capex. On top of that, there is more to come on costs.
Speaker Change: As we began to see you over the last couple of months really prices have stabilized and competition in home seem to maybe be more stable you've seen us drive our call a little bit then we may go back into all with a little bit more up push on volumes and the same is true in Bolivia for macro reasons that will address later.
especially on contents. Each time a contract comes to his end, we can renegotiate drastically and that is big amounts.
Speaker Change: That's the long way of saying, we remain very very focused not only on cost, but also on revenue on OLED.
And then on subcontractors and on shared services. There are many shared services in Milicom that we started to push
Speaker Change: Could you speak up length, or whatever but maybe maxime anything to add to that.
First to reduce and then to push to the countries just to avoid, let's say, HQ costs with limited
Maxime: Thank you Horacio.
Speaker Change: Permit.
Speaker Change: First we have not sacrificed capex.
leadership on them. And the third aspect, we have many initiatives that are pushed on the service revenue. The first one is to lower as much as we can to trial.
Speaker Change: Much more we have optimized capex, especially by aligning.
Speaker Change: Technical <unk>.
Speaker Change: And sales to be more efficient.
especially on home because this come with a high cost, both OPX and CAPEX.
Speaker Change: Signal leaning appreciate a lot of contracts with the vendors.
Speaker Change: Postal network and Nike So for the same amount of money, we can get more.
And the HFC upgrade is quite successful on that.
Then on the distribution, we are improving the distribution network.
Speaker Change: And there is multiple come on that and on the home the home business, we've made a huge them.
And we are great believers on the FMC office, putting together the home and mobile business.
Speaker Change: HFC upgrade in terms of bandwidth capacity.
especially when fighting in some countries with the small ISPs that are cheaper, providing BBI only. That's the best way to fight on that.
Speaker Change: Quite a low cost so all that explain you that we have.
Speaker Change: Good.
Speaker Change: <unk> commercially.
Speaker Change: Relatively low capex.
Speaker Change: On top of that there.
Thank you, Maxime. And part, Bolivia and Honduras. Yep.
Speaker Change: Multiple chromone costs.
Speaker Change: Especially on the content, even though each time a conflict.
So thanks for the question, Sumit. So for once we had positive currency effects in the quarter, so we'll take that, but we operate in emerging markets and can all be positive in all countries at the same time.
Speaker Change: But we can renegotiate to drastically in that.
Speaker Change: It is big amounts.
Speaker Change: And then on subcontractors on milk shelf services, there are many shared services and medical.
Speaker Change: We started to push.
In Bolivia, so we are putting in the work in the sense that working with all suppliers to convert our contracts from US dollar to local currency, so to reduce our US dollar need.
Speaker Change: First to reduce and then to push to the countries just to avoid.
Speaker Change: Let's say HQ costs.
Speaker Change: Ltd.
Speaker Change: Leadership on that and so the aspect we have many initiatives that are pushed on the service revenue. The first one is to lower our as much as we can control.
We are still able to buy
number of dollars and euros in the market. A lot thanks to good relationships with our banks over the years, we've been issuing local bonds, or been in the market for many years with them. But those come at commission rates in between 10 and 30%.
Speaker Change: Especially on.
Speaker Change: This home was a high cost.
Speaker Change: Also opex and Capex.
Speaker Change: <unk> greatest quite successful on that.
Speaker Change: Then on logistic solution, we are improving the distribution network and we're great believers on the FMC offers.
So that only makes sense to the extent that we can share that commission costs with our supplier, which in most cases is
Speaker Change: Together with the home and mobile business.
Speaker Change: Especially when titanium countries with the smaller asps.
is relatively straightforward for them and for us then to execute on.
Speaker Change: Cheaper.
Speaker Change: <unk> BV.
Speaker Change: <unk> only.
You know, we also allocate some of the cash flow that we generate in the market for debt repayments, so our net debt in Bolivia will have come down.
Speaker Change: The best way to.
Speaker Change: Two final debt.
Speaker Change: Thank you Maxime.
Speaker Change: <unk>, yes.
Speaker Change: So thanks for the question Sumit.
during the quarter. But then lastly to say, I think the business itself has not suffered from this.
Speaker Change: So for once we had positive currency effects and the quarters will take that but we operate in emerging markets and that will be positive in all countries at the same thing.
Mobile business is up, B2B is up. And then in home we have a slowdown. In our returns in home are a little bit longer. So to allocate the cash, it's better to go into the mobile business or even more immediate
Speaker Change: In Bolivia.
Speaker Change: So we are.
Speaker Change: Putting in the work in the sense that working with all suppliers to convert our contracts from U S dollar to local currency so to reduce our U S dollar.
In Honduras,
a bit of the same activities working with the suppliers.
Speaker Change: We are still able to buy.
But in Honduras, the difference with Bolivia, we are able to convert much larger amounts in US dollar.
Speaker Change: Number of dollars and euros into markets.
Speaker Change: A lot of thanks to good relationships with our banks over the years, we've been issuing local bonds of being in the market for many years with them.
The way it works is we have to present the invoices to the regulator. Those get reviewed and approved.
over time, so there is a bit of a delay. DPO will go up.
Speaker Change: But those government commission rates in between 10 and 30%.
Speaker Change: So that only makes sense to the extent that we can share about the commission costs with our supplier, which in most cases.
But, you know, it's a process that is still functioning and so far we're not expecting that much of an impact on the upstream at this moment in time.
Speaker Change: In a relatively straightforward.
Speaker Change: What that meant for us them to execute.
A couple of additional comments just to wrap it up to me. Number one,
Speaker Change: We also allocate some of the cash flow that we generate in the markets for debt repayments. So.
For quite some time now, you've heard us say we're cautious on our investment envelope in Bolivia, and we talk about on Duda's to a lesser extent. That's precisely because we saw the dry up of foreign reserves coming out. We've been preparing ourselves for that and managing the way parties describing it.
Speaker Change: I believe you will have to come down.
Speaker Change: During the quarter.
Speaker Change: But then lastly to say I think the business itself has not suffered from this so.
Speaker Change: All of our business is up <unk> is up and then in the home we have a slowdown.
In terms of the
Target, there are things that can go well, that are going well, there are things that can go bad and we try to put it into a bag and that basically shakes out without confirming the envelope for target for this year with all the puts and takes in there.
Speaker Change: And then the returns on in home are little bit longer to allocate the cash better to go into the mobile business for you or mark to immediate return.
Speaker Change: <unk> been through the same activities.
Speaker Change: With that with the suppliers.
It's very helpful. Thank you very much.
Speaker Change: But I will do it as a difference we believe that we are able to confirm much larger the mouse.
Thank you, Sumit. So next we're going to go to Stefan Gofi at D&B, Stefan.
Speaker Change: In U S dollar.
Speaker Change: Way. It works is we have to present the invoices to deregulate the those get reviewed and approved over time. So there is a bit of a delay.
Yes, hello, Amy. Perfect.
Yes, okay. Well, first of all, just thanks Mauricio for all discussions over the years.
Speaker Change: Joe will go up.
Speaker Change: But it's a process that is still functioning.
And I have a few questions. A couple of them will likely be short.
Speaker Change: So far we're not expecting that much of an impact.
So first of all on the restructuring charges. Are we done now or will there be more charges in the coming quarters?
Speaker Change: The upstream is dominant effect.
Speaker Change: Couple of additional comments just to wrap it up for me number one.
Speaker Change: For quite some time now you've heard US say, we're cautious on our investment envelope in India.
Secondly, the Panama business was boosted by the B2B contract, so around 2 percentage point to groups of this revenue or around 25 million.
Speaker Change: Talk automd as to a lesser extent, that's precisely because we saw the dry Apple R&D sharps coming up.
Speaker Change: [noise] ourselves or that managing the way parties, describing it in terms of the <unk>.
to Panama Service Revenues.
How should we think about these contracts going forward? Will they come down materially or how should we think?
Speaker Change: Target.
Speaker Change: There are things that can go well are going well there are things that can go buy it and we try to put it into a bag and that basically shakes out with us confirming the envelope or target for this year with all the puts and takes in there.
And then just thirdly, you mentioned reducing the MFS footprint.
And just a couple of years ago, I believe the target was to do the opposite and to build out that business materially. So could you just give a brief update on the MFS business? Thank you.
Speaker Change: That's very helpful. Thank you very much thank.
Speaker Change: Thank you <unk>. So next we're going to go to that type of Fas Dnb.
Speaker Change: Yes.
Speaker Change: Ami.
Speaker Change: Right.
Speaker Change: Okay, well first of all thanks.
You bet. So listen, on the first part, Stefan, on the charges, I will tell you
Speaker Change: Mauricio for all discussions over the years.
Speaker Change: And I have a few questions.
As a matter of principle, we're going to continue driving efficiencies wherever we can find them, whenever we can find in with driven focus to make the platform more and more profitable.
Speaker Change: Couple of them will likely be.
Mauricio: Sure. So first of all on the restructuring charges.
Mauricio: All we've done now or will there be more.
Mauricio: Charges in the coming quarters.
And I think we see eye to eye the entire board and all of our investors. So now we've done a lot over the last few months, Everest 1 and Everest 2. So the level of that activity will certainly be slower, but we ain't going to stop looking for efficiencies.
Mauricio: Secondly.
Mauricio: Panama business was boosted by the B to B contract. So around two percentage points to group service revenue or around $25 million.
Mauricio: Panama service revenues.
Speaker Change: What should we think about.
Speaker Change: Cds contracts going forward.
Mauricio: When they come down materially or how should we think and then thirdly.
Yep, trying to go for it. Yeah, they call this. I think a lot of the restructuring charges are already spent, Stefan. So on the flip side, a lot of the benefits are in the run rates or in the bank, as we call it.
Mauricio: You mentioned, reducing the MFS footprint.
Mauricio: Just a couple of years ago I believe.
Mauricio: The target was to do the opposite to build out that material.
Now as Mauricio said, we continue to look for more efficiency. So I would say, you know, generally yes, you will see more.
Mauricio: Materially so could you just give a brief update on all the MSS business. Thank you.
But that's as well where we now not report the justice anymore as a presentation as you have seen. So it has been ongoing for a number of quarters.
Speaker Change: You bet.
Speaker Change: So listen on the first part.
Speaker Change: And on the charges I will tell you.
And so I personally look at it and what we have as reported numbers, and as this can continue over time, not going to say at the same intensity, but you know, I would encourage to look at reported rather than adjusted for one of charges.
Speaker Change: As a matter of principle, we are going to continue driving efficiencies wherever we can find them.
Speaker Change: However, we can find in with driven focus to make them more and more profitable.
Speaker Change: But I think we see eye to eye.
Speaker Change: Our board and all of our investors. So now we've done a lot over the last few months ever Swan and Everest students, but the level of that activity was certainly be slower, but we ain't going to stop looking for efficiencies.
On the B2B contracts, Stefan, very quickly, these are very large, very profitable contracts.
that basically have us in Panama get to something that begins to look like a fair share of the B2B market.
Speaker Change: How exactly that translates into charges effectively on a quarter basis, Bob can probably give you some comment on that.
in that economy given the size that Tigo-Panamana currently has. We fought for those for years and we're happy to attain them. But B2B, as you know, tends to be lumpy. These are long-term contracts, but we booked the bulk of
Speaker Change: <unk>.
Speaker Change: Yep.
Speaker Change: Obviously, I think a lot of the restructuring charges are already spent stuff also.
the first year revenue both in last quarter, so last quarter of last year and this quarter. Going forward, we want to be super clear, do not expect that we're going to continue to be having quarterly revenue from these contracts to the level that we had in the past two quarters.
Speaker Change: The flip side a lot of the benefits are in the run rates are in the bank as we call it.
Speaker Change: Now as Melissa said, we continue to look for more efficiencies. So I would say generally yes, you will see more.
Speaker Change: But that's as well where we now report.
So now 25 to 30 per quarter, materially less. Very important that we be transpiring on that.
Speaker Change: The part that just Thats anymore, I've said presentation as you have seen so it hasn't been ongoing for a number of quarters.
On MFS, a couple of comments and I'll hand it over to Maxime. Number one, we've worked very hard to bring the business to OCEF Break-Given. I think I've said that a number of times so that we have perfect optionality with that
Speaker Change: And so I personally look at it.
Speaker Change: We have as reported numbers.
Speaker Change: And as this can continue over time and that's going to stay at the same intensity.
We are very, very focused now on integrating it better into the operations of the business because that particular product reduces churned, increases ARPU and has a lot of affinity with the operations.
Speaker Change: But you know I would encourage to look at our reported rather than adjusted for one off charges.
Speaker Change: On the <unk> contract Stefan very quickly these are very large very profitable contracts.
Speaker Change: Basically popeye's in Panama.
which in fact means, you know, we're learning a lot from that business.
Speaker Change: Something that begins to look like a fair share of market in that economy, given the size of the Tivo Parramatta currently has.
learning a lot
on what countries it works better and in countries it doesn't quite work as well.
What works in Paraguay may or may not work in countries like Guatemala or others. So we're pretty much in the learning process, we're pretty much in the efficiency process, pretty much in the integration process.
Speaker Change: Four years in <unk> opinion, but <unk> as you know tends to.
Speaker Change: It will be lumpy. These are long term contracts, but we are booked at all.
Speaker Change: Our first year revenue both in last quarter, so last quarter of last year.
And going forward, it's all about optionality. We're no longer focused on one specific, you know, M&A outcome here.
Speaker Change: Each quarter going forward, we want to be Super clear do not expect that we're going to continue to be having quarterly revenue from these contracts to the level that we had in the past two quarters. So now 25 to 30 per quarter materially less very important that we'd be transparent on that.
Maxime, over to you for any add-ons you want to give on that. Yes, very limited additional elements. The first one, we are not with fintech.
It's a market which is very complicated, very competitive with very limited margins. So we decided to focus on the countries where we are relatively strong, such as Paraguay, Bolivia, Honduras.
Speaker Change: On MFA has a couple of comments and I'll now hand, it over to Maxime.
Maxime: Number one we've worked very hard to bring the business towards CF breakeven I think I've said that number of times. So that we have perfect optionality with that business.
And on specific use cases, mainly the ones that are bringing something to the telco business.
Maxime: We are very very focused now on integrating it better into the operations of the business.
meaning the reloads for prepaid and the bill payments.
to lower the cost of commissions.
Maxime: That particular product.
Lending will be in Paraguay only because it's a risky business that is not our core business. And very important we've made the countries fully responsible for that's go-money business.
Speaker Change: Uses charity increases our board has a lot of opportunity with the operations.
Speaker Change: Which means we were learning a lot from that business learning a lot on what countries. It works better in a country that doesn't quite work as well.
There is not anymore any longer, a big team to build everything and think for the countries. The countries will have to define what are the use cases they really need.
Speaker Change: Works in Paraguay may or may not work in a country like Guatemala or others. So we're pretty much in the learning process, we're pretty much in efficiency process pretty much immediate ratio process.
to build software development and to market the products in very close relationship with the B2C teams.
Speaker Change: And going forward, it's all about Optionality, we are no longer focused on one specific <unk>.
So it's a different approach, really something where TIGO money is supporting the telco business and not anymore the fintech living its life.
Speaker Change: M&A outcome here.
Speaker Change: <unk> over to you for any I don't want do you want to give them on that.
Speaker Change: Very limited additional elements.
Speaker Change: The first one we all know if you can take it to the market, which is very complicated very competitive with very limited margins. So we've decided to focus on the countries, where we are listening to this.
Hey, thank you very care.
Thank you, Stefan. So next we're going to go to Marcelo Santos at JPM. Massaum.
Hi, good morning. Thanks for taking my questions. I had two. The first is on Panama. So you mentioned that in the end, the third operator
Speaker Change: As such.
Speaker Change: Paraguay, Bolivia on glass.
Speaker Change: And on specific use cases.
Speaker Change: Mainly the ones that are bringing something to the telco business, meaning the reloadable prepaid on the repayments to two.
kind of really left and you were left to a two-player mobile market.
Is this something that a regulator is going to accept? Should there be remedies? Is there some discussion? Usually when the number of players goes down, regulators get
Speaker Change: Lower the cost of commissions.
Speaker Change: Lifting will be in Paraguay.
Speaker Change: Because it's a risky business.
Speaker Change: Uh huh.
a bit more nervous. So I just want to understand what's your perspective. And the second is, has there been any changing behavior in
Speaker Change: Our core business and very importantly, we've made the country's food irresponsible told us <unk> business.
competitive behavior in Colombia due to WOM's financial issues. I mean, we saw that WOMB, Colombia was included, I think, on the Chapter 11. So just wanted to see if you were perceiving something on the ground.
Speaker Change: There is not a news anymore any longer.
Speaker Change: So we tend to be they were seeing in zinc other countries. The countries will have to define what the.
Speaker Change: The use cases, they really need.
Thank you. It's interesting that you ask one question right after the other, as if you're
Speaker Change: To be able to software development and to market the products and very close relationship with the <unk> teams. So it's a different approach really something where <unk> is supporting the telco business and not anymore.
suggesting a parallel and there may or may not be a parallel here Marcelo so let's start with Panama here in it indeed has become a two-player market as as I said we envisioned it would naturally eventually end up being by default
Speaker Change: You can take leaving each life.
Speaker Change: Okay. Thank you very clear.
Speaker Change: Thank you Stefan so net we're going to go into much federal Santos of JP Morgan.
And it has been a very lengthy, organized, and a highly interactive process.
Santos: Hi, good morning, Thanks for taking my questions I have two the first is on Paramount. So you mentioned that in the end the third operator.
since DigSEL decided to turn back the business and the licenses to the Panamanian government quite some time ago. We have work as an industry.
Santos: Really last and you would like to two player mobile market.
Santos: Is it something that the regulator is going to accept should there be remedies is there some discretion usually when the number of vehicles down regulators get a bit more nervous. So we just want to spend what's your perspective and the second is.
Milicom also very closely with the government of Panama to assist in them handling that unexpected situation when the business was handed back to them. It has been a continuous dialogue dialogue. The government has looked for a third party.
Santos: Has there been any change in behavior.
Santos: Good competitive behavior in Colombia, due to Walmart's financial issues and we saw that warm Columbia was included I think on the chapter 11.
to maybe manage that business, take over that business, and has been unsuccessful. And as a result of that, and our focus and continues work at an industry to make sure that there is no
Santos: Just wanted to see if you're a preceding something on the ground.
Speaker Change: Thank you.
customer disruption as those subscribers were looking for a new home, the process has been managed, I think, quite well. And as a result of that, although the law in Panama still says three players, the de facto reality is that it's a two-player market with everyone having done its best to find a very healthy industry structure going forward.
Speaker Change: Interesting that you ask one question right up to the other.
Santos: As a pure <unk>.
Speaker Change: Adjusting a parallel and there may or may not be a part of LCR Marcello so let's start with Panama.
Speaker Change: Uh huh.
Speaker Change: Indeed has become a two player market as.
Santos: As I said, we envisioned.
Santos: Eventually ended up being by default.
Because of these, Marcelo, this is not the result of organic MNA. This is the result of an industry adjustment that was necessary and an inorganic transition, which was well managed vis-à-vis the customer. As a result of that is a de facto to play a market, and as a result of that, we're not expecting any remedies coming out of Panama.
Santos: I mean, it has been a very linked the organized and Anthony highly interactive crosses since Digicel decided to turn back the business under license as to the party.
Santos: Canadian government quite some time ago.
Santos: We have an.
Santos: And the industry.
Santos: Millicom also very closely with the government of Panama to assist in Bam handling that unexpected situation. When the business was handed back to them. It has been a continuous jello dialogue Gulf from anybody.
Colombia, it is a matter of public record that WOM filed
for a Chapter 11 type proceeding not too long ago.
Santos: Or a third party, maybe manage that business take over that business at has been unsuccessful.
The first thought that comes to mind is a book.
by a Colombian novel prize winner, Chronicada of a Mueira Annunciada. Apologies for the use of Spanish language, you can all look that one up.
Santos: As a result of that and are hopeful.
Santos: <unk> work at an industry to make sure that there is no.
chronic call of a death or cold. We always imagined that it was difficult for the Colombian industry structure to accept a new player.
Santos: Customer disruption as those subscribers were looking for a new home that process has been managed I think quite well and as a result of that although the law in Panamax steel SaaS three players that in fact, the reality is that a two player market with everyone having guidance best buy.
Having said that, it has been very painful for five years for the industry.
Crisis came down, we all had to react. Our position Colombia came under a lot of pressure.
Santos: Very healthy industry structure going forward.
But you see that we held their own in Colombia. I spoke about a length, and as a result of that, that process
Santos: Because of these Marcelo this is not the result of organic M&A is the result of an industry adjustment that was necessary.
Bye.
Chapter 11 type bankruptcy of warming Colombia is at the very beginning of that process.
Santos: Inorganic transition, which was well managed these media customers as a result of that inside the fact, the companion market as a result of that we're not expecting any remedies coming out of Panama.
And it will be
The beginning of what I believe to be an inflection point in Colombia, meaning the industry structure in Colombia that has been vocal is too damaging to those do not have the world will to stand it for long term.
Santos:
Santos: Colombia.
Santos: It is a matter of public record that warm.
Santos: Filed or a chapter 11.
Santos: So sitting not too long ago.
And here is one more example of that. So I believe we're at an inflection point and at some reconstruction, the Colombia industry structure, which needs to be reconstructed so that long-term healthy players can continue to invest. Things like
Santos: The first thought that comes to mind is a book by a Colombian novel winner chronic either one of them.
Speaker Change: Seattle apologies for the use of Spanish language.
Speaker Change: Stock went up chronic cough cold, we always imagined that it was difficult for the Columbia and industry structure to ex nuclear.
the combination of our network with Telefonica was badly needed.
the filing of bankruptcy proceedings wherever I want was expected because the industry needs recomposition and this may be on the positive side and inflection. That's what I expect will happen going forward and that we have expected wood, having gone through very painful last four to five years.
Speaker Change: Having said that it has been very impulse for five years on the industry crisis came down we all had to react.
Speaker Change: Albeit came under a lot of pressure.
Speaker Change: But you see that we held our own in Colombia, I spoke about a bank and as a result of that that process.
Having said that myself,
Two colors. One, we're only at the very beginning of that, right?
Speaker Change: The.
and bankruptcy proceedings do afford
Speaker Change: Chapter 11 bankruptcy of warming Columbia is at the very beginning of that process.
the parties that undergoes some financial protection, which means they remain commercially active.
Speaker Change: Yeah.
And because they remain commercially active, they're still a player in the market. So don't expect any short-term upside from that. And bankruptcy proceedings are by definition uncertain.
Speaker Change: And it will be.
Speaker Change: The beginning of what I believe to be an inflection point in Colombia.
Speaker Change: The industry structure in Colombia in local is too damaging those do not have the wherewithal to standing for long term.
and they are at the very beginning. So as much as I see a long-term trend towards a better industry structure in Colombia, I caution you on the short because there's uncertainty on the outcome and the already days.
Speaker Change: And here is one more example of the stock. So I believe we're at an inflection point at some reconstruction of the Columbia industry structural which needs to be reconstructed so that long term healthy players and continue to invest.
Perfect. Thank you very much.
Thank you, Marcelo. So next we're going to go to Oscar Ronquist at ABG. Oscar.
Speaker Change: Things like.
Speaker Change: The combination of our network with Telefonica was badly needed.
You're on mute, Oscar.
So sorry for that.
Speaker Change: The filing of bankruptcy proceedings, whereby wong was expected because the industry needs to be competition and this may be on the positive side an inflection.
Thank you, Michelle. Yeah, so my first question, just a D21 on the severance page. I think you said about the 30 million in severance in H1 and you had a 30 million in now in Q1. So what was that? I mean, obviously we were to expect maybe some more structuring costs, but just on the severance that you alluded to in the Q4 report, is that all already taken now in Q1 or is it still some that we should expect in Q2?
Speaker Change: What I expect will happen.
Speaker Change: I thought we'd have expected having.
Speaker Change: Having gone through a very painful last four to five years, having said that Russell.
Speaker Change: Two comments one we're only at the very beginning of that right.
Speaker Change: Bankruptcy proceedings to afford the parties that are undergoing some financial protection, which means they remain commercially active and because I remain commercially active they are still a player in the market. So don't expect any short term.
Then my second question would just be, you talked a little bit about Colombia and the network
JV with Telefonica and you said that you are on track to reach
Speaker Change: Beside from that and bankruptcy proceedings are by definition uncertain.
profit or more than break-even in pre-cash flow in Colombia during 2024. So just in terms of timing, obviously there's some positive and some negative short-term, but when do we see a positive run rate on a net effect?
Speaker Change: And they are at the very beginning so as much as I see a long term trend towards a better industry structure in Colombia, I would caution you on a short because there's uncertainty on the outlook.
Speaker Change: It is early days.
Speaker Change: Perfect.
Speaker Change: Thank you very much.
cash flow wise in the network JV in Colombia.
Speaker Change: Thank you Marcello. So next we're going to go to Oscar Ron Chris that AVG Oscar.
And just the third, I was just curious to hear your thoughts about, I mean, now that you have accelerated the savings program,
Speaker Change: Youre on mute Oscar.
It was quite a steep headcount reduction that you have seen and also mean cost optimization across the board.
Oscar: So sorry for that.
Oscar: Thank you Michelle.
Oscar: So my first question just one on the <unk> space I think you said about $30 million in severance and an H, one and you had a $30 million in now in Q1. So we'll.
So my question would be, do you have any sort of insights to share with us how the remaining staff has handled all of the cost reductions and if we see any sort of impact on the satisfaction or from the personnel thanks?
Oscar: What was that I mean, obviously, we weren't expecting maybe some more restructuring costs, but just on the severance that you alluded to in the in the Q4 report is that already taken out in Q1 or or is it still something that we should expect in Q2.
That's a good one. So I'll take a couple of those and then maybe give you a Barton time compared to the actual map and the severance.
Oscar: That's my my second question would just be you talked a little bit about Colombia in the network.
So listen, the JV with Telephonic has been years in the making.
Oscar: J V with Telefonica and you.
And it has required not all the important negotiations with the governments to have it approved, but also important negotiations with a partner. It is already yielding benefits, as I said on the call, because we were able to buy 5G spectrum together and we are deploying that network together.
Oscar: You said that you are on track to reach them.
Oscar: Profit or more.
Oscar: More than breakeven in free cash flow in Colombia. During 2024, so just in terms of timing obviously, there were some some positive and some negative short term, but when do we see.
The actual coming together of the JB is happening as we speak, but it is an important element along with all the other elements that yield positive cash flow targets for Colombia for this year as a full year.
Oscar: Positive run rate on a net effect.
Oscar: Cash flow why stay in network JV in Colombia.
Oscar: And just the third I was just curious to hear your thoughts about I mean now that you have accelerated the savings program. It was quite a steep head count reduction that you have seen and then also I mean cost optimization across the board.
On the headcount reduction element and the impact it has on the team, I want to take the opportunity to
Oscar: So my question would be do you have any sort of insights to share with us how the remaining stuff is handled all of the.
Thank everyone. There was about
possibly three or four hundred people from people listening to this call Oscar so your question is actually very welcome
Oscar: Cost reductions.
Oscar: We see and if at all impact on on.
We could have not undergone this important as it is, valuable to shareholders as it is. We could have not done it as fast as deep without A, the support, the challenge from Apples, but B, also that immense San Gito that we have built in this company.
Oscar: The satisfaction from the personal thanks.
Speaker Change: Well that's a good one last one so I will take a couple of those and then maybe you are marketing tactics.
Oscar: Extra lap on the severance.
Oscar: So listen the JV with Telefonica has been years in the making and it has required not all of the important negotiations with the government stop it approved but also important negotiations with a partner it is already yielding benefits as I said on the call because we were able to buy spectrum together would be deploying grounded.
We have done it because the teams believe in what we're doing.
believe in the purpose of what we're doing, want to see the company succeed, and as a result of that, they understand that harsh and difficult as this was, it was important and better to do it fast and quick and move on going forward, which is only
Oscar: Together.
Oscar: The actual coming together of the JV is happening as we speak.
the result of years of building that tremendous culture that now we're putting to use.
Oscar: But it is an important element along with all the other elements that.
There was a politician that once said, what is the point of having capital if you don't put it to use? That's what we have done, and that is thanks to all the people that have for so many years built this amazing company and this angry table.
Oscar: Yield also the cash flow targets for Colombia for this year.
Oscar: As a full year.
Oscar: On the head count reduction and the other men and the impact it has had on the team I want to take the opportunity to.
On to numbers, severance. Yes, now on severance, I think last year or in the corner we said that we would expect 30 to 35 million dollars of severance payments in the first half of this year.
Oscar: <unk>.
Speaker Change: Thank everyone there was about.
Speaker Change: Possibly three or 400 people from people listening to this call Allscripts. So your question is actually very welcome.
Speaker Change: We could have not undergone this important as it is valuable to our shareholders. As it is we could have not done it as fast as well.
A very significant portion has been executed now in Q1, definitely, you know, as planned.
Speaker Change: Without a history or the challenge from outlets, but B also.
But as I mentioned before, we continue to look for optimizations.
Speaker Change: Mens Sanger to people that we have built in this company.
across the board, not only on headcount, but on other costs, suppliers, GAPEX, name it. So there will be more. We started to report now on, as reported, not adjusted. I don't think the same intensity as this quarter.
Speaker Change: We have done it because the team's belief in what we're doing believing the purpose of what we're doing wanted to see the company succeed and as a result of that the understand that harsh and difficult as it was it was important and better than do it fast and quick and move on going forward, which is.
But as there are maybe less severance, there might be some other restructuring charges. Definitely less, but probably some more to come.
Speaker Change: Only.
Speaker Change: The result of years of building a tremendous culture that we're putting to use there was a politician. Once said what is the point of having capital. If you don't put it to us that's what we have done and that is thanks to all of the people that are out for so many years build this amazing company and he's starting to get tables.
The performance in Colombia is doing very well, right? So we have more than 24% EBDA growth compared to last year. So that gives a lot of oxygen.
Speaker Change: Yeah.
Speaker Change: Onto numbers severance, yes, now on severance I think last year or in the quarter. We said that we would expect 30% to $35 million of severance payments.
Net of restructuring costs, RABDA in Colombia is north of 40%.
Speaker Change: The first half of this year.
This is now the first time that we reach those levels in Colombia and that obviously flows down into a much more error in the equity free cash flow. You know, so we have increased revenue and improved margins.
Speaker Change: No.
Speaker Change: A very significant portion has been executed now in Q1.
Speaker Change: Definitely.
Speaker Change: As planned.
Speaker Change: As I mentioned before we continue to look for for optimizations across the board, but only.
Speaker Change: I have gone on.
lower costs will have less spectrum in the year to go.
Speaker Change: Other cost suppliers capex payments.
Speaker Change: So that so there will be more of the startup.
We have capex savings. We're focusing more on our mobile growth, which has immediate returns as opposed to the growths in the home business. So also cash flow wise and ESCF wise,
Speaker Change: Also report now.
Speaker Change: As reported adjusted I don't think the same intensity of this quarter.
Speaker Change: As they are may be best severance there might be some other restructuring charges.
That gives a lot more flexibility in your equity free cash flow.
Speaker Change: Definitely less.
Speaker Change: Probably some more some mark to call.
And then additionally from the JV with Telefonica, I don't expect
Speaker Change: Alright, Thank you very much.
Speaker Change: Jamie.
And that EFCF saving immediately this year, more of a break-even on that level, and then the benefits to come in mostly next year.
Speaker Change: Equity free cash flow.
Speaker Change: In Colombia.
Speaker Change: The performance in Colombia is doing very well right. So we have more than 24% EBITDA growth.
It's split into size, one on spectrum, and that derives, obviously, some of that is already in the bank as we start to look at 5G, et cetera, together from the JV rather than separately.
Speaker Change: Prior to last year.
Speaker Change: So that gives them a lot of oxygen net of restructuring costs, our EBITDA in Colombia is north of 40%.
And then as well in CAPEX going forward where you will have a single network to manage from the JV as opposed to each company's their own.
Speaker Change: No the first time.
Speaker Change: We reach those levels in Colombia, and that obviously flows down into a much more R&D.
Speaker Change: With the cash flow.
Speaker Change: So we have increased revenue and improved margins.
But you nailed it.
Speaker Change: Lower costs will have less spectrum in the in the year to go.
Good after. Thank you very much. Okay, thank you. So we're about one minute to the top of the hour here. We do have a last question from Eduardo Ruby at UBS. Eduardo, we'll make it a quick one.
Speaker Change: Capex savings were focusing more on our mobile growth, which has the immediate returns.
Speaker Change: Both to the growth in the.
Hi guys, thanks for taking my question. Just a quick one here on my side. So I would like to know how you're seeing the leverage going forward as we already delivered some improvements this quarter. Thank you very much.
Speaker Change: The home business, So also cash flow wise and ESPN Weiss.
Speaker Change: That gives a lot more flexibility in your equity free cash flow and then additionally.
Speaker Change: The JV with Telefonica I don't expect.
Thank you, Eduardo. So definitely a good start of the quarter, you know, rather than running behind the fact.
Speaker Change: FCS saving.
Speaker Change: To be this year or.
Speaker Change: The breakeven on that level and then the benefits to come in mostly.
So our leverage came down from 329 to 310. Our net that went up a little bit, $20 million, but then thanks to the ABDA after leases growth, $120 million, that's what's been driving are the leverage.
Speaker Change: Next year, it's split endo in two sides one on spectrum.
Speaker Change: And then there is obviously some of that is already in the bank as we as we start to look at five at G. It sets up together.
Speaker Change: From the JV rather than separately.
You know,
Speaker Change: And then there's a limit capex going forward, where you will have a single network too much from the JV as opposed of each company's thereof.
We expect to produce much more equities, free cash flow in the coming borders in line with our targets. That would work on our net debt.
Speaker Change: Yeah.
Speaker Change: Good afternoon.
And then on the other side, you know, the BDA after leases is up for a strong year and, you know, let's see where we can land the year. So both metrics are going to be worked on.
Speaker Change: Oh.
Speaker Change: But you nailed it.
Speaker Change: Good afternoon.
Speaker Change: Thank you very much okay. Thank you.
Speaker Change: About one minute to the top of the hour here. We do have a last question from my driver will be at UBS go ahead. It will will make it a quick one.
And then indeed, you know, we hold to our guidance to be close to 2.5 or at 2.5 by 2025. You know, if this comes in early, great. But, you know, it's still early to tell because
UBS: Hi, guys. Thanks for taking my question just a quick one on here on my side.
UBS: I'd like to know how you're seeing the leverage going forward as we already did some improvements this quarter. Thank you very much.
Still a lot of challenges ahead of the year. You know, we're just the first quarter.
Speaker Change: Thank you Eduardo so definitely a good start of the quarter.
We mentioned already some macro issues.
in Bolivia and in Honduras, then there are always regulations, taxation, name it, and business competition remains very, very high in our region.
Speaker Change: Rather than running behind the fact.
Speaker Change: So our leverage came down from 329% to three then or.
Speaker Change: Our net debt went up a little bit.
Speaker Change: On the million dollars. Thanks.
So, but, you know, off from a good start. And the key point, Eduardo, is that it remains the priority to reduce leverage.
Speaker Change: Thanks to the EBITDA after leases growth on our $20 million, that's what's been driving.
Speaker Change: Our deleverage.
UBS: No.
So thank you Eduardo. I think we'll leave it at that. May we see any final words? Sure. I want to take the opportunity to thank everyone who has held
UBS: We expect to continue to produce much more equity free cash flow in the coming partners in.
UBS: And with our with our targets.
UBS: Work on our net debt and.
do two things. One, build this platform over the years and two, make it profitable because that is exactly what we are today, a more and more fantastic and profitable platform. So thank you to everyone who's contributed on both fronts.
UBS: And then on the other side.
UBS: EBITDA after leases is up for a strong year and.
UBS: Let's see what we where we can land the year. So both metrics are going to.
UBS: The work done.
UBS: And I mean, you know we hold to our guidance to be.
From here on, Marcelo, I hope you are taking notes because this is going to be over to you. I'll stick around for strategic direction, for consultation, and for government relations.
UBS: Close to two five or two five by 2025.
UBS: It all just comes an already great but.
UBS: Still early to tell because there's still a lot of challenges ahead of the year and all of our tests the first Arthur.
UBS: We mentioned already some macro issues.
UBS: Good.
UBS: And then there are always regulations taxation name it's in business competition.
UBS: <unk> very very high.
UBS: Our region so but.
UBS: From a good start Nicky pointed why though is that it remains the priority to reduce leverage.
Nicky: So thank you Eduardo.
Speaker Change: Leave it at that low until any final word sure.
Eduardo: I want to take the opportunity to thank everyone who has helped.
Speaker Change: Two things one build this platform over the years and to make it profitable because studies exactly where we are today more and more fantastic unprofitable.
Speaker Change: And to everyone as computers contributed on both fronts.
Speaker Change: From here on our CLO I Hope you are taking notes because this is going to be over to you I'll stick around or strategic direction for consultation and government relations, but I hope you can talk a lot of notes next quarters are all yours. Thank you.
Speaker Change: So everybody.
Speaker Change: Thank you thanks, everyone.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Cool.