Feb 10, 2023
Operator
Hello, everyone and welcome to our Fourth Quarter 2022 Results Conference Call. Before we begin, please take a moment to review the Safe Harbor disclosure on Slide 2 of the presentation which is available on our website, along with the earnings release.
Now during the presentation, we will be referencing non-IFRS measures and we define these on Slide 3 and we provide reconciliation tables to the nearest IFRS metric in the earnings release and on our website. I will now turn the call over to our CEO, Mauricio Ramos.
Mauricio Ramos
Good morning and good afternoon, everyone. Thank you for joining us today.
Let's go straight to the highlights for the year, starting on Slide 5. On the left, you will recognize the value creation framework that we presented at our Investor Day almost 1 year ago today.
Back then, the global economy was bouncing back strongly from the pandemic and the economic outlook was quite positive. That changed quickly after Russia invaded Ukraine, energy prices spiked and inflation and interest rates moved up sharply.
Despite this abrupt change, we have stayed the course and continue to execute on our plans. We're actually quite used to executing and delivering through uncertain times.
And that's what we did in 2022. We delivered on our objectives with a good outturn for the year, as you will see during today's presentation.
Operationally, we focused even more on our customers and we invested further in our networks and into our people. All of this produced strong financial results.
Organic OCF growth was a strong 8.4% and equity free cash flow all in was $171 million. All of this is consistent with our plans.
And as we said we would, we used that cash flow to reduce leverage. Our leverage was down to 3x at year-end.
We also made very significant progress in our plans to carve out our Towerco portfolio and remain on track for a transaction later this year. Tigo Money continued to execute on its own plans to accelerate growth which we expect will generate interest among potential investors who can bring expertise and capital to help the business flourish and get to the next level on its own.
And finally, 2022 was a big year for us on ESG. Our science-based targets were validated formally and we also made important commitments towards diversity and inclusion.
These and many other actions have further strengthened our Tigo culture and are helping us cement our position as an employer of choice in the region. In 2022, we ranked number 2 in Latin America and number 5 in the world in the Great Place to Work survey, alongside other global household names like DHL, Hilton, Cisco and Salesforce.
So we're entering 2023 from a position of strength and with great confidence on the strategic plans we laid out a year ago. So let's get to some detail.
Please turn to Slide 6 for a look at service revenue in 2022. Service revenue grew 2.3% during the fourth quarter and 3.5% for the full year.
As expected, growth slowed in the second half with the change in macroeconomic conditions. When you look at the full year picture on this page, you can appreciate how strong our business is with every business line and almost every country growing despite a much more challenging macro environment.
As I mentioned last quarter, there are some shifts in the way we're achieving our growth and this is consistent with the general trends in our markets with slower growth in home, offset by stronger growth in mobile. And we believe that this is at least partly related to increased mobility and less dependence on home broadband as kids have gone back to in-person learning and parents have returned to their offices.
And this is happening in the context of a weaker economy where consumers are having to cut some of their spending. And yet, meanwhile, B2B continues to perform very, very well, as you can see in more detail on the next slide.
Service revenue from our B2B business grew more than 5% in 2022, accelerating from only 1% in 2021. As a reminder, we revamped our B2B team, our strategy and refocus our product offering for Tigo businesses just a few years ago.
And with a pandemic now behind us, this is paying off with stronger customer growth, especially in the SME area and very rapid revenue growth, with about 40% coming from high-end digital services that make up close to 20% of our overall B2B business now. This part of our business has continued to perform strongly in the second half of the year.
We have created a strong pipeline of new projects which gives me a lot of confidence that we can continue to drive solid growth in B2B going forward. Now let's look at our mobile business on Slide 8.
As I mentioned earlier, our consumer mobile business grew more than 3% for the year and postpaid has been the main driver of this growth. We added 0.25 million new postpaid subscribers during last year and this drove 9% service revenue growth for the year.
About half of these customers are migrations from our prepaid base. We do this with selective segmentation and based on consumption relos and payment histories and we will continue to increasingly use data to drive our personalized offerings to drive our postpaid penetration.
Note that postpaid still accounts for only 16% of our overall mobile customer base but it now contributes 35% to our mobile service revenue and 20% to our overall total service revenue. Final point I want to make on mobile is that we continue to implement price increases in most of our markets to catch up with inflation and we're encouraged by the competitive response so far.
We're starting to see this translate into our improvements in some countries. ARPU improvements indeed will be a very important area for our focus in 2023.
Now let's talk a bit more about home on Slide 9. As I said earlier, the softer net adds that we saw in Q3 continued in Q4.
This was caused by: one, the post pandemic shift in demand from home back to the office, as I described earlier; two, the more difficult macroeconomic environment, importantly, including civil strikes in Bolivia during the quarter and throughout the year; and three, we're choosing to remain disciplined on price. We continue to implement price increases and to charge installation fees even if some competitors do not.
This dampens net adds in the short term but builds a much better and stronger business for the long run which is what we're all about because we remain very optimistic about the long-term growth potential for residential broadband in our markets. And that's why we continue to invest to expand our network and to strengthen our content offering.
As you can see on this page, this year, we accelerated our home build to add more than 800,000 homes passed and about 40% of those were FTTH. On the content side, we told you last quarter about a deal with ViX which gives us access to Spanish LaLiga sports content.
We're very satisfied by the early results we're seeing, particularly now that the World Cup is overrun our customers focused shift back to the local and international soccer leagues. Now let's look at 2 of our largest markets.
Starting with Guatemala on the left, we continue to invest in sales, marketing, content and our network to maintain our market share, especially in the prepaid market, where competition picked up some intensity last year. We're very pleased with our results.
Our prepaid market share remained unchanged from a quarter ago. And meanwhile, all of our subscription businesses, postpaid Home and B2B continued to perform very well, showing acceleration in the quarter compared to Q3 and we also had some positive help from the World Cup this quarter.
So overall, another year of solid performance from our largest operation with very robust and sustained market share positions and strong free cash flow generation. In Colombia, the story hasn't changed much since Q3.
We continued to gain share in mobile, especially in postpaid. The shift in mix to postpaid is driving ARPU higher.
And the good news is that ARPU for our prepaid segment is now also growing nicely and contributing to the 15% mobile service revenue growth we're now seeing in Colombia. As we saw in Q3, the growth in mobile more than offset the softer trends in Home, as we discussed previously.
And overall, service revenue growth was almost 7% for the year in Colombia, a strong performance considering the challenging macro environment we have been facing. Now please turn to Slide 11 for a summary of our network investment in 2022 and the recent years.
On the left, you can see that we have now upgraded and modernized all of our mobile networks that all of our markets are now 5G and SA ready. And in fact, we already launched 5G in Guatemala during the year.
Because of this, as we have said before, launching 5G SA in our markets when that happens, will be within our existing CapEx envelope, as we just in Guatemala over the past year. On the fixed side, our network is very new and fiber deep and increasingly so.
We now have over 12 million home passes with HFC, already including 730,000 of we passed with FTTH across 6 of our markets. And last week, we announced the completion of a new fiber network that connects Paraguay and Bolivia.
Importantly, this provides a new key fiber route linking the Pacific and Atlantic oceans. This is a combination of a multiyear project that will improve quality and lower the cost of connectivity in South America.
All of this investment has been undertaken within our stated CapEx embed of about $1 billion per year which translates into a healthy CapEx to sales ratio of around 18% on average over the last 3 years. Now look at TigoMoney on Slide 12.
2022 was a breakthrough year for this business. Over the past 2 years, we've invested in the business, first, by building a strong team and bringing new and expert in tech talent.
During the past year, the team was very busy redesigning, rebuilding a new, more robust digital armband fully scale. We launched a new app and have been rolling it out across the footprint to drive adoption and we're now starting to see the results.
Digital users, that is those people who transact online using the new app almost tripled and we're monetizing that growth. Revenue from these detailed users more than double.
It is still early days and our digital user base is still small but we're very satisfied by the early take. Meanwhile, we're also working on driving increased engagement with our digital user base, rolling out our new merchant platform.
And in the last several months, we have signed up about 45,000 new merchants. That's up from close to zero,1 year ago and expect to add a lot more merchant in 2023, leveraging our Tigo business relationships.
Over the last several months, we have been piloting our new lending business, originating more than $100,000 in annual loans. The average loan size is about $40 to $50 and the average maturity is only about 20 days.
Clearly, there's a big opportunity for us in this area and we're using this pilot to fine-tune their algorithms before being this out more broadly later this year. And finally, we also signed an alliance with Visa, giving TigoMoney customers access to the Tipo Money Visa card, allowing them to use their TigoMoney wallet balances anywhere Visa accept.
Now please turn to Slide 13 to review the progress of our Tower company carve-out. By now, you all know the reasons why are doing this can create a lot of shareholder value.
We've made a ton of progress over the past year and the key message here is that we're on track with the timetable we shared with you 1 year ago. We continue to expect the transaction towards the end of this year.
The project and the company now has a name as it's coming to life. It's late [ph] which will see the light of day very soon.
Last but not least, I want to take a moment to comment on the important progress we made on the ESG front during 2022, as you can see on Slide 14. On societal programs, we continue to focus on providing tools for employment in the digital economy, training key socioeconomic sectors such as women, children and teachers.
On the environmental side, we validated and announced our science-based targets, committing to reducing Scope 1 and 2 greenhouse gas emissions by 50% by 2030 and to achieve net zero over the long term. Our achievements in 2022 were made possible for the dedication and the effort of our 20,000 employees and I have no doubt that the continued hardware will contribute to even more success for our business in 2023.
And with that, I will turn it over to Sheldon.
Sheldon Bruha
Thank you, Mauricio. Before we review the financials, let's recap the macro context on Slide 16.
We continue to closely monitor the macroeconomic situation in our countries. On the left, you can see how inflation has been tracking over the past year or so.
It peaked at 8.5% in July and has fallen to about 8% in December. And on the right, you can see the latest GDP growth forecast from the World Bank.
Our markets on average are expected to grow about 3%, with all of our largest cash generative markets in excess of 3%. This is faster than regional peers like Mexico and Brazil which are expected to grow less than 1% which I think speaks to the resiliency of our markets in the face of a potential global recession.
Now, let's look at our Q4 performance, beginning on Slide 17. Service revenue was $1.3 billion in the quarter.
That's up nearly 11% year-on-year due to the Guatemala acquisition. Excluding the acquisition and the impact of FX, organic growth was 2.3%.
Our mobile business grew just over 2.5% and contributed about 2/3 of the overall growth in the quarter. And for a second consecutive quarter, all of the mobile growth came from postpaid which has had its best performance of the year, growing at 9.6%.
Investments we've made to some of our mobile businesses and networks in recent years, especially in Colombia continued to yield positive results. Adverse FX trends impacted our revenue growth negatively this quarter and largely due to the Colombian peso which depreciated 18% on average during the quarter compared to a year ago as well as the Paraguayan Pirani which depreciated about 5%.
Drilling down further on Slide 18 to service revenue by country. Mauricio already talked about Colombia and Guatemala, so I won't cover those again.
Elsewhere, our performance in most of our other markets was solid. El Salvador continued its strong performance during 2022 and was up 7.5% in the quarter, with every business line contributing to this growth.
Nicaragua also maintained their strong momentum with growth of about 5%. Paraguay grew for a seventh consecutive quarter and was up 4% with solid performance in mobile and B2B.
Panama had flat growth against a tough comparison due to some large B2B contracts in Q4 of last year. Bolivia was down 4.5% as we felt the impact of a change in regulation on mobile overage rates that went into effect in August as well as a strike in Santa Cruz region which impacted economic activity and our install capabilities during the quarter.
Honduras which we don't consolidate, had its strongest quarter of the year, growing almost 5% with growth across all business units. Okay.
Turning to EBITDA on Slide 19. EBITDA of $548 million was up 19% year-on-year due to the consolidation of Guatemala.
Organically, EBITDA was up 1.8% as revenue growth was partially offset by the net effect of higher direct costs and lower OpEx. Direct costs increased due to the higher content costs related to items such as soccer rights, both our new agreements with ViX and the World Cup.
And we also saw our bad debt expense increase over the past year as this largely reflects growth in our postpaid and B2B subscription businesses. Operating expenses declined due to lower selling and marketing spend which offset the impact of inflation on our energy and labor costs.
Now looking more closely at EBITDA performance by country on Slide 20. And El Savador and Nicaragua both had very strong EBITDA growth from operating leverage and we saw margins expand roughly 200 basis points over the past year.
Paraguay returned to positive growth this quarter, posting an almost 7% growth. As Mauricio mentioned previously, Guatemala had a stronger Q4 with EBITDA growth of 2.6%, although revenue from the World Cup contributed to some of the sequential improvement.
Colombia was up 4% and margins were just shy of 31% which is our highest level since the entrance of the new competitor in Q2 of 2021. We remain very focused on improving profitability in our second largest market.
We continue to gain scale in mobile and we are also taking steps to adjust to our cost structure and mitigate the effect of the 16% increase in minimum wage that went into effect in January in that country. Panama EBITDA was down slightly in Q4.
Again, this is because of some large B2B contracts in Q4 of 2021. Our full year performance is more representative of the trends we are seeing there.
And on a full year basis. Panama EBITDA was up more than 6% which was a good result in the year where our main competitor was not allowed to raise prices under the terms of their merger approval and our OCF increased over 20% during the year in a dollar-raise market.
Bolivia EBITDA declined almost 12% as we saw a full quarter impact of the regulatory change from last quarter which dropped straight to the EBITDA line. Additionally, results were impacted by the strike in the Santa Cruz region, with slow commercial activity during the quarter.
Honduras which we do not consolidate, had impressive growth of 13%, reflecting both improved revenue trends in Q4 of 2022 and an easy comparison against a muted performance in Q4 of 2021. Honduras is the one country where we recently upgraded our mobile network, as Mauricio outlined earlier and we have seen revenue growth accelerate nicely in the second half of the year in this market.
Looking at EBITDA margins on Slide 21. Margins were broadly stable and even improved compared to last year's Christmas selling season of Q4 of 2021.
We achieved this despite the investments in our carve-outs and the tougher macro situation. Energy costs were up almost 11% on average during the quarter.
We have seen higher minimum wage increases in our footprint given the inflationary environment. We continue to invest in preparing the carve-outs of our Tigo Money and Tower call businesses, although this impact moderated somewhat in Q4 as we begin to lap some of the earlier investments in Tigo Money in particular.
Meanwhile, we continue to implement price increases across our businesses in Q4 and we will continue to focus on price increases in 2023. Finally, we are starting to implement our efficiency program, Project Everest which we expect will help us achieve our financial targets.
Let me spend a moment providing more details on Everest. As you can see from this slide, Everest is a very broad-based efficiency program that will touch every part of the business and in every country, including our headquarters.
This will include revenue initiatives around convergence, commercial OpEx savings from improved churn and customer base management and truck roll costs, network OpEx savings from energy optimization and not consolidation, IT savings from simplifying platforms and CapEx avoidance with improved reverse logistics. So this is not simply a cost-cutting exercise but improving the way in which we operate.
We have been working on this for the past several months and the program is the result of a very detailed bottom-up assessment of all of our operations and we are now implementing Phase 1. We expect savings from Project Everest to ramp up to an annual run rate of more than $100 million by the end of 2024.
So it will be a key pillar of our EBITDA and OCF growth over the next couple of years as we focus on delivering our equity free cash flow targets. Moving to Slide 23.
You can see our operating cash flow, that is EBITDA less CapEx performed in 2022 compared to 2021. OCF more than doubled during the year to $1.264 billion mainly due to the consolidation of Guatemala.
Organic OCF growth was 8.4% which adjusts for both the acquisition of Guatemala as well as for the OCF that we spent in Africa prior to exiting in April 2022. Excluding the one-offs we called out in the previous quarters in both '21 and '22, organic OCF growth would have been 8.6%.
This organic growth was due to organic EBITDA during the year as well as lower CapEx as we completed some key investment projects that began during the pandemic. Slower home customer growth also means that we spend less than expected on installs and customer premise equipment which typically is one of the biggest components of our annual CapEx spend.
Now let's look at equity free cash flow on Slide 24. As Mauricio outlined, we generated $171 million during the year, in line with the guidance that we gave you during our third quarter call.
This was the first year that we provided guidance on the metric. So I wanted to provide you a bit more visibility on all the main line items that go into our equity free cash flow which reshow describes as being after everything.
Starting with EBITDA of $2.25 billion. We then deduct cash CapEx of about $960 million.
This was a bit below our guidance of around $1 billion which reflects the variable nature of a portion of our CapEx related to CPEs for customer home additions. There was about $1 billion of fixed charges for financing, leases and taxes.
There's another $200 million for working capital and spectrum and these items can vary somewhat from year-to-year. Finally, we add back repatriations from our Honduras joint venture which was just north of $80 million in 2022.
I should point out that we own Tanzania through early April. So all the numbers above include about 3 months of Africa.
So we removed the net effect of that down at the bottom to give you equity free cash flow from our current footprint. Now please turn to Slide 25 for our usual debt bridge.
Net debt is down $1 billion in 2022, with a reduction of more than $200 million in Q4 due to the very strong equity free cash flow generation during the quarter. We ended 2022 with $5.8 billion of net debt and net debt to EBITDA after leases of 2.94x.
This is down more than 30 basis points from 3.28x at the end of 2021. if we include lease obligations of just over $1 billion, our leverage was 3.04x at the end of Q4, well aligned with our deleveraging targets.
With that, we are now ready for your questions.
A - Sarah Inmon
Thanks, Sheldon. We'll now move to the Q&A portion of the call.
[Operator Instructions] As most of you are aware, we published a press release on January 25, in which we confirm that we are having discussions with Apollo Global Management and Cloud Group about a possible or potential acquisition of all outstanding shares in Millicom and that there is no certainty that a transaction will materialize nor as to the terms timing or form of any potential transaction. And we have no new updates on this topic today.
And for legal reasons that should be clear to most of you, we cannot and will not be taking any questions on this topic. So with that, we'll take the first question today from Froylan Mendez of JPMorgan.
Froylan Mendez
So you mentioned the Everest project efforts to increase prices across the regions. We wanted to understand what are the key levers for the further free cash flow acceleration into next year?
What is the main source of that acceleration? And if we could expect a similar seasonality as the one that we saw in 2022?
And the second question would be if you could give additional color on the competitive environment in Guatemala mobile market and what has the impact been on prices?
Mauricio Ramos
Thank you, Froy. Michael, you scared me more than all the lawyers or the last a few days with those comments.
So we got a CFO here who's been around now for a pre year. So we can fully tackle number 1, Froy and they don't talk a little bit about Guatemala how about that?
Sheldon Bruha
First of all, just on our equity progression, we're not giving guidance specifically on for 2023 versus 2024 in our 3-year range. So I think what you picked on what's underlying or underpinning our 3-year equity cash flow target is ultimately sort of our 10% organic OCF growth that we expect over that 3-year period.
And the key levers there. I think you hit pick that one of the most, at least what can we do on the top line or what we expect on the top line price increases will be a big component of that.
It's something we started introducing in the second half of 2022. It's something that's going to be a big focus in 2023 and beyond.
So that will be a key piece of driving that as well as that approach how we drive margins. Project Everest is going to be a big component of that.
We'll get to, as I said, exiting 2024 at 100 -- in excess of $100 million of benefits. 2023 will be ramping towards that now.
I wouldn't say it's exactly a straight line ramp. The recent one-off costs, probably a bit more in the beginning part of this exercise versus what you'll probably see in 2024.
So it will be exactly a straight line to that $100 million exit but that will be a big contributor for both years and [indiscernible] 10% organic OCF growth over the 3-year period. All right.
And then on the beautiful country of Guatemala, you get history provide the context, of course, as you all know, for the pandemic period, we took a lot of market share. We were just active on investing as we did the acquisition of the asset have about 15 months or so in row, we had expected that our competitor would launch some of that back.
So compared to the value for that, we invested through sales and marketing and network and launch 5G policy to make sure that in Guatemala remains healthy as we are now. So the updates on that.
If I can take them holistically Froy this is your specific question is none, Q4, so no deterioration much water in a competitive environment being prepaid, as you know, specifically your question. That's a result of the way I think we have built the value for the year.
So the market remains in Q4, stable on prepaid. I believe the way we responded work smart and presenting long-term health of the business but it also allowed our competitor to not be in a position or they needed to escalate and they have not so we return to a more stable prepay market there as we imagine.
The second point, the other businesses called them the subscription businesses on postpaid, they all continue to grow. And although there are now out of bases in Guatemala, they're growing very, very well.
Point number 3 which is, I think, from this kind of important to bring up since this is a year-end call. just kind of take stock of the year working as a whole.
And it's also been about 15 ranks it seems really about 100% of it. So it's a good time to kind of figure out how we're doing.
Point number one is that sessions -- we've sustained market share, same market share we obviously. Number two, it's actually improved our number to a better network than the day before.
We launched 5G throughout the year where the first room strictly to do that. It's NSA 5G as I've said a number of times, so it doesn't change the CapEx in the normal CapEx envelope to create a capital in -- we've actually improved a spec position.
We were able to impair 700 spectrum. We have bought from model on.
A lot of us the wide options 100. So we now have to say market share, better able to improve spectrum position and most importantly, sustained equity cash flow, as you just show out of Guatemala with our ability to do more debt down which, of course, is increasing equity in Guatemala.
So we are very, very happy with the key outcomes in Guatemala. And there's 3 things that are also important for the long-term nature.
We like 90% of the tower portfolio there. So that makes actually be reliable; two, as you've seen, our day-to-day business is something our emphasis on and now it is about Guatemala portfolio because the great the product streams to 100% of it.
And we're relaunching all money in Guatemala again, easier when you understand the business and it can be incorporated everything or stream. And all of those things were part of the acquisition plan, also say, 15 years -- 15 months into this, it's all working out according to the acquisition of plan.
So that's Guatemala the offshore manner.
Sarah Inmon
Next, we're going to go to Stefan Gauffin of DNB.
Stefan Gauffin
Stephan. So I had -- hopefully, can hear my question.
I was going to talk to the -- build our plans. You have clearly accelerated the practical buildup.
We had 800,000 homes passed which is a target of around 1 million homes did have not taken off way lower than the target overall. I know there is some heightened back-to-work defects in order to accelerate the -- and without better would you consider slowing down your network build until demand peaks up.
I'll stop with that and then I can go short questions.
Mauricio Ramos
I think our -- the connection was not helping. And as good as my Swedish is right now, your English is far better, Stefan.
So I think the connection was not helping out. But I think we got a gist of the question, this around whole build, the penetrations, our commitment long term.
So I think we got most of that. So kind of short term sort of what we're seeing this year and why be the slowdown in the net adds and how that makes sense in the context of us continuing to build for the long term.
So the slowdown, we think, is due to one macro. And you can see that because the slowdown out in terms of the second half of the year.
That makes sense to us. People are watching their consumption every -- and number two, that's also consistent with what I call [indiscernible] mobile versus home and context coming out of the pandemic the demand shifted from their own towards the office and that's consistent as people are in the context of number one, slower macro volumes.
And there's also some specific country issues which relate to Bolivia where the strikes were not just the last quarter throughout the year, they were going to be minor in or to sell install -- is kind of really the a few are on 20,000 were. And the most important one of all of these is we've been extremely price-disciplined -- whereas some of our competitors, we may have not quitting price increases, we have.
Whereas some of our competitors may have not postal installation costs we have. And we think this is a serve as a long-term healthy mix of if we take some short-term pain but we have to explain to you on the net adds in conservative body areas mix going forward.
And that gives you an idea of why indeed we keep the tons because we think that it alone will look on home than you normally do on our businesses because those penetration will come. The underlying factors for that build partition population, adopting digital household formation, middle class formation and low penetration would all generate increasing demand for broadband services and in long term and we want to build the network as we have been doing that cater to that and fulfill that demand.
So we're very happy with it to build. Now do we need to abjure according to the demand.
Yes, in the short term, yes, we need to slow down according to the demand. So we don't need a lot of capital.
We don't cut it off out there, it's something for media news. But overall, you'll see, as you have seen now for a few years that we will manage the business so that we sustain the economic of the residential program which is 30% to 35% network penetration.
And we're always in just to try to get there and I'm going to have ourselves or behind it ever since. And we're happy with what we're seeing in terms of deploying that network, 800,000 is a good rating.
40% of that is already fiber. It's a pretty good number with in.
We've done the logistics to work. That's not an easy thing -- etiologists to work in 6 of our markets, we will not be any tier.
And of course, as we've said, think going forward, will be to ramp up the percentage of that fiber till we get to the 90's very quickly. All of this simply to say, we remain extremely volition company and deploying fiber and residential broadband services is directly for the business.
I won't even go into FMC which will remain growing levels as a company.
Stefan Gauffin
You had some test business but EUR50 million of risk business, could you just update where you are for [indiscernible].
Mauricio Ramos
I didn't get it Danielle's going to have to go on. I think give us as sort of where we are in AFS revenues as we're seeing this year versus what we've been talking about historically of $50 million.
Is that the question? Yes.
Okay. Okay.
So we haven't disclosed the numbers but we're growing at sort of high single digits to low double digits year-over-year. At this point in time, I think the important point to note around MPS is we've essentially spent a lot of this year as recently say in the prepared comments on establishing the new platform and rolling out the new platform this year.
That rollout was really happening in the second half, frankly, the latter part of the second half of the year. So a lot of the benefits from that, it hasn't really been never to realize at this point in time.
But I think it's -- we've been encouraged by sort of the digital adoption and the like on this platform but it hasn't sort of translated into sort of within your revenues in 2022 or something amort. This is why where I would have wanted to give you Q4 numbers but we would have been really persistent and everybody during the presentation to be like how doing talking about full year in Q4 because it's really in Q4 actually November, December and you see the runout that MFS is high because you see the digital subscribers coming in, the merchants coming the revenue coming and significantly, the NPS really staying on very, very high in some really, really good results on our trials or through the entering.
Sarah Inmon
We'll now go to Klas Danielson at Nordea.
Klas Danielsson
Sorry, submissions with the new patent here in Stockholm. So no, I was only going to ask questions on the acquisition but Michele's scared me a bit to here, so I'm going to avoid that.
But you Compliance guys give me your med card. And you have those over line, you just showed it and I was like, okay, that works...
It's a good gesture, I think, for sure. A couple of follow-ups, I guess, on Stefan's question on the CapEx levels.
So I mean, you had cash CapEx of roughly $960 million in 2022. You guided for $1 billion previously.
I guess that's been the kind of headline numbers, I guess. And that's kind of despite inflation being what it is to a certain degree and just the impact that, that is having.
So I guess it's partly due to a slowing momentum in home during this year. But I think with Project Everest, I mean you're guiding for kind of additional CapEx cuts.
But then on the flip side, you still want to invest in the home business. Could you maybe talk about some of the kind of puts and takes within the CapEx older?
Is this a sustainable level in the long term? Or what should we be expecting in absolute CapEx spend over the next few years?
Mauricio Ramos
So I'll give you some color and maybe Sheldon can bring it down to ones just to some more specific in a time -- we've been investing, as we showed in the presentation, we usually see around $1 billion, just to give that lack of a number. Obviously, we're coming in below that number with under names an extremely healthy CapEx-to-sale ratio CapEx intensity over the last 3 years.
And that's because [indiscernible] investing a bit in the business cost in sale of the group to the board, we're coming out of a big investment cycle. Most of the big things that are not variable in nature are behind us.
That's important. So what are those things?
We modernized the down, will show you, all of them in the last 3 years. We put 5G [indiscernible], I'm talking about now and the same quarter in every operation.
And that's important, not only the current port there but also because it is our view that 5G would be any same in the meeting. That's a very important point because it means that the CapEx associated with it, is similar to consistent with what you would expect us doing on priority mortgages [ph].
We've also spent the last few years expanding average. That 80% coverage is important because what it means is going forward is less coverage finance on a more variable happens for capacity CapEx, if you will, should have traffic revenue associated from here.
And of course, as you surely know, we are almost done with the Colombia 700 that were built which is in the past. And on fixed, we actually had a bit of a tag with Stefan's question.
Our bill continues to be heavy immune fixed. We're now almost 13 million passes, 700 million of those are already fiber and we have the ability to build high working many patients.
The most important thing that we said in our Investor Day is that -- our existing network is fiber dip with deep, deep capacity. All of the copper upgrades, remember those are done.
We've got maybe 200,000, 300,000 homes still with copper that we just get tricky in a trickle manner with our radio. So on fixed, it's really -- and we've ramped up the FTH for the FTTH machine which means we're going to get our reverse logistics to start to be better.
So all of the -- for lack of fixed heavy lifting, if you will, on CapEx is sort of behind us. And from year on, it becomes a lot more variable.
We even did this year with [indiscernible] fiber which we're very happy about. It's not only relevant for us -- but first in the network on the business.
Sheldon Bruha
I would just add a little on project net risk. I mean from a CapEx perspective, I would expect to see a lot of savings on the CapEx side, at least in terms of what ends up in terms of being our bottom line number that we're reporting.
I mean, there's some opportunities around CapEx. I think that also just need sort of more from what we're spending than actually a reduction in spend.
So we'll be getting more -- I think, more bang for our dollar on the CapEx side. And then just the other point of CapEx kind of we've been mentioning kind of throughout the call.
I think the other variable on our spend for next year is going to really come down to the demand and pace of our home net adds. That was a little bit lower this year, therefore, anisole spend on that in terms of what we reported this year.
And Everest is all about doing things more efficiently, better or digital is what you would expect us to be doing over the long term. It's not about cuts, it partly but it's about efficiency going forward.
Klas Danielsson
All right. No, very good.
And then just a quick follow-up also on that side but the other line, I guess, on the spectrum and licenses part because there you're also tracking a bit lower than what we were kind of expecting since the CMD. Is this the kind of full level?
Or again, what should we kind of expect on that side?
Sheldon Bruha
I think we said spectrum under our Investor Day we track 100 to 150 kind of where we were from a were before. I'll tell you as the structure is very lumpy.
Any given year, you have depends on whether something and didn't happen -- didn't get delayed. So don't read too much into any given year and rather take the averages and go back some time.
I'm sure part of your question has to do with the Colombia spectrum. I would imagine there's a large chunk of that.
And just the question is going to come up later and use yours is a good segue to go into it. We're in the middle of those negotiations this year as you're very well aware.
So I'd rather not comment too much, only to say that we're not really expecting enterprises against our targets over the long term because we've been conservative in that regard as we should be. It does not need to say class that spectrum prices in rodent we mean how we should be for international began.
It just means that we are conservative and realistic in our approach to forecasting as a result. We don't expect surprises.
Sarah Inmon
So next, we're going to go to [indiscernible].
Unidentified Analyst
So I had 3 questions, please. The first one was if you could give a bit of color in terms of your pricing activity in the different markets.
You've talked about some of them already. But when I take a step back, look at the inflation, look at your service revenue growth, it seems that it's hard to catch up with inflation.
So maybe if you could help us understand a bit more how that's playing out? Are the price increases front book, back book, are you seeing spin-down?
So that's the first question. The second question was on Everest.
I just wanted to clarify that the $100 million annual savings, that's something that should enable you to reach the guidance or potentially even go above the guidance. And within that, although it's maybe not part of Project Everest, I imagine that the higher financing costs due to the high interest rates could also have an impact on your free cash flow.
So maybe you can comment on that. And then the last question which may give Mauricio the opportunity to use its threat card; I feel a bit safe [ph].
But the question is when you consider the deal, are you -- do you need to follow the U.S. rules, the Swedish rules, both?
How is the context there?
Sheldon Bruha
Definitely, that is going to be used for that fourth well. We're not going to be going there.
But the first 3 are good for you, Mauricio.
Mauricio Ramos
All right. So I'm going to hand over the ends to our Everest expert.
Right? Give me actually in that time at risk by the way.
So we'll hand one and I'll take the pricing one right after that. I'm not sure what third one was?
Unidentified Analyst
Just on [indiscernible] does that kind of propel us, I think, beyond sort of what we're talking about the network free cast range? Or I think I kind of mentioned some of the earlier comments, that hops underpin the 10% organic operating cash flow growth that we've been talking about.
Sheldon Bruha
So that is -- that just help support the company that targets not to the supplemental to that target. With regard to the interest expense cost, look, from that perspective, I comment quite rightly, we're pretty well positioned in this environment of increasing interest rates.
More than 80% of our debt is fixed rate. So we have a very low one that's actually floating and exposed to that.
We don't have a lot of debt maturities here in the near term which you've shown in our maturity profile. So there's not a lot of need for us to be going out the repricing destinies current environment.
So we thought that's positive. And then of course, even better than that, we've generated some good cash here that were going to be used to reduce leverage and you would probably even reduce our need to go out and the capital markets for financing.
So on a deleveraging standpoint which is a positive from that perspective too. So we think we're pretty insulated and well positioned in the strategic issue.
Mauricio Ramos
So let me let me try the pricing math in a constructive manner with a little bit of detail and also some big pictures to share with that. So let's split the question in the segment.
So you get a better feel for what's going on state whether you're doing prepaid favor, residential broadband book. So prepaid because it's dynamic pricing at on a daily basis or as some as our new top office fans and comprise market, it largely is done, of course, on the gross basis.
In most of the markets, we've been adjusting as much as we can. And they should there, of course, is price sensitivity.
And as one elasticity with the exception of also market where we've been more careful like I already talked about, of course and Bolivia, where our competition has kept competition significant on prepaid. We've not been able to do that.
So with the exception of those 2 markets, everywhere else, we will be pricing up to the new offer as much as we can in general terms. When you look at postpaid, the same is true, we focus with the price increases on the new offers rather than under base, we're a lot more careful with the days because you don't want to create a big massive difference between the two.
And generally, we've been very good at doing that, particularly in El Salvador, Paraguay and we see in the results. We're actually being able to do that in Guatemala as well.
And we've held back in Panama, the reasons that I think Sheldon mentioned. And we're also being a little bit more careful for the same reasons [ph].
So that gives you an idea on that. And then on home, I talked about has been very price spin.
So we've been slowly putting price increases. And we do this on a poll, right?
We don't do it to everyone in the same day. We do a small regime.
And this is across the region in a measured way with some delay in Bolivia to get the position back to do. Now your question had an element to okay, what's the mismatch, I think it is a word you use of this one I wrote down, there's a [indiscernible].
So inflation which is part of your question, it hits the cost base immediately it hinges that and we've shown you the impact on energy which we've been able to observe on labor which we've been able to observe on the bottom line but we're not able to pass on inflation on pricing with the same level of experience in terms of timing. So there's a mismatch in time and as I think I showed them referred to us managing ARPU a little more into next year.
That's part of managing that site. Now being careful with expectation, we all know that this using does not have elastic [ph] inflation into customers.
There's some screen or some of varieties, et cetera. And that's just part of this initiative.
So I hope not giving me a lot of color point on the timing of it and some expectations on it's difficult to base.
Unidentified Analyst
Absolutely. Just a follow-up on the home, just to make sure I understand clearly, you are also increasing the front book and the back book, both.
Sheldon Bruha
Based on the growth. So next, we're going to go to Fannie at HSBC [ph].
Unidentified Analyst
I have a couple of questions. So it's been a year since you went to the Investor Day and gave some guidance.
So I wanted to understand where we stand on a couple of issues there. First, we expect -- at the time, we expected that organic service revenue growth would be mid-single digit.
Is it still viable now? Or is it that the project are would offset any weakness there?
The second one is, I know we saw that the share buybacks would be expected to commence in 2023 was what we had received at the time. Is that in the plan?
Or it's still too early to say anything -- so I'll ask other questions later.
Mauricio Ramos
Sheldon is having a lot of fun today because these are both for him.
Sheldon Bruha
I think just the first year just as in sort of the underlying -- some of the targets we had at the Capital Markets Day and sort of are we reiterating that. I think that's the key one we mentioned were just the one in the press release and we mentioned earlier in the call, right, the operating cash flow of organic cash flow growth of 10% over the 3 years year.
And then of course, the debt free cash flow over the 3 years of $800 million to $1 billion. So those are the ones that targets we've pointed to.
There's also the deleveraging target. There will also be bioscience 2.5x by year.
This is by 2025 and then down to 2x thereafter. We did comment at the Capital Markets Day about an intention to do share buybacks in 2023.
I would say that's still our ambition. Clearly, a lot has changed in the world over the last 12 months and we're now operating in a higher risk environment, kind of tougher capital markets and higher interest rates and the like.
But February, let's see how the year plays out. And in the immediate term, we're going to continue to prioritize deleveraging and paying down our debt because we think that's the appropriate allocation of capital for the business to ensure we meet those deleveraging targets but near-term buybacks remain our ambition.
My soccer coach used to say never forget that soccer games have 90 minutes. Holidays a little bit more on the new rules and make sure you play all the way until the end So the other question that I had is regarding the repatriation from Honduras.
I mean it's kind of making more than 50% of your equity free cash flow. I think you had $88 million of repatriation from Honduras, I believe.
So is that sustainable going forward?
Unidentified Analyst
Or what is in your target for the next couple of years? Well, look, we're not giving guidance for revaluation for specific segments.
I would point out but I think your comment is about 50% of our equity free cash flow. But we've talked about in the past that Guatemala actually generates $450 million plus of equity free cash flow.
So that's -- you can't, I think, isolate one single country's contribution because there's also interest costs and cost essentially in the center of the center that needs to be absorbed. So I just want to caution you against that point to try to think that's part of our great cash flow is not really dependent on Honduras which is that's not big.
It only looks that way because of the accounting, right, on those in reality, a countries are contributor, as you know, exception in Colombia and they will give them ten and they all came on twit headquarter costs. And then we do it looks like that nicely, right?
That's just the way looks not reality of 30% of our initiation -- it's 10% of other I think the question to help us clarify that. We're been worried on whereby the way, looks -- thank you for your question.
And just a final question on the fixed competition. As you said that the competition is not responding to your price increases.
Is there any specific market that is not responding? Or is it a broad-based kind of a response from the operators?
Any specific markets or competitors? Yes.
Just if you have more questions on our board, if I'm good.
Mauricio Ramos
So we talked about what the area Colombia which is very important, we will talk about this, the market has in now. And I already talked about 6 in Colombia.
So mobile in Colombia has been recomposing in pricing significantly over the last few quarters. And you see that our prepaid ARPU in local currency is up our memory up 6%.
And postpaid is also up. And both of those lines and businesses, prepaid and postpaid are now contributing to our mobile in Colombia which is growing 13%, 15%.
That's more volume but also pricing soaring in Colombia is being recomposed. That's an important element of that.
You see on [indiscernible]. There's a fair amount of good behavior in the market which is consistent with the notion that it's a 2-player market in which market shares are healthy for it.
We expect that like Guatemala and Panama, that will be to say a healthy market share market. We talked about Panama as well in the same that there have been a pullback on any price movements in we monetize our sell market.
So we'll see what 2023 as to earn our regard. Paraguay, very constructive in nomadic and also reconstructing on one pricing or nature pricing.
We've seen that now Paraguay had now 6 or 7 consecutive orders of service revenue growth, margin expansion and restructuring of this cements -- and what am I missing olive talked about, so I don't think any go back there. So I think I'll cover them all.
Operator
So that was our last question. Mauricio back to you, if you want to make any final remarks.
Mauricio Ramos
Okay, that's it. We had an investor call about a year ago, we laid out a number of initiatives.
And as you do point out, we gave a 3-year outlook that is composed of 3 key targets, 10% of rating cash flow both in average for that period derivative equity free cash flow of $1 billion and reducing leverage to 2.5 by 2025 2x by long term. All I need to say is that the first year that consists on track.
And that's really the summary on this. The second point is we've made a couple of big acquisitions over the last few years, both Guatemala and Anima.
Both are working. As I hope you can see, after a year Guatemala and about 2 years Panama that they are on track to our acquisition plans in [indiscernible].
So with that that's really doing the 2 closing remarks begin -- thanks for joining today.
Sarah Inmon
Thank you.