América Móvil, S.A.B. de C.V. (AMX) Q4 2022 Earnings Report, Transcript and Summary

Good morning. My name is Nadia, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil Fourth Quarter 2022 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions] Thank you. Now I will turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.

Thank you. Good morning, everyone. Thank you for joining us today to discuss our fourth quarter 2022 financial and operating results. We have on the line Mr. Daniel Hajj, CEO; Mr. Carlos Garcia Moreno, CFO, and Mr. Oscar Von Hauske, COO.

Thank you, Daniela. Welcome everyone. In the fourth quarter 2022 financial and operating report. And Carlos is going to make the summary of the results. Back to Carlos.

Thank you, Daniel. Good morning, everyone. Well, at the beginning of the fourth quarter, uncertainty about inflation and how much bringing it down would require in terms of additional interest rate hikes by the Fed drove long term interest rates in the US to the peak for the year in October at 4.2%. They remain very volatile the rest of the quarter, ending the year at 3.7%. Nonetheless, the impression they had peaked ended up helping several currencies in the region, particularly the Mexican peso and the Chilean peso which appreciated sharply vis-à-vis the dollar with the Colombian peso stopping and then reverting slightly decline of several months. Throughout the period, the Brazilian real remained quite volatile and with no upper end trend as the country was in the midst of election. We added 3.3 million wireless subscribers in the quarter of which 1.5 million were postpaid clients. Brazil led the way with 600,000 subs followed by Australia with 232,000 and Colombia with 160,000. Our net gains in prepaid 1.8 million with Mexico contributing over half of that figure with 9,750 subscribers along that came next with 546,000 and then Central America with 247,000. On the fixed-line platform, we obtained a 110,000 new broadband access. Argentina and Eastern Europe generated substantially all of them 69,000 and 40,000 respectively. Central America, the Dominican Republic and Brazil added close to 30,000 each one. Pay TV reverted the losses of several over the last several years with 97,000 new clients. This included 53,000 in Argentina, 36,000 in Eastern Europe and 34,000 in Central America. Although Brazil continued to post net disconnections, they were substantially lower than they had been in prior quarters, minus ⁠60,000 in the fourth quarter, whereas in previous quarters they had covered between 150,000 and 200,000 clients. In terms of actual growth rates and correcting for the acquisition of our clients in the second quarter, our postpaid base continued to be the more dynamic one, with a steady 8% increase year-over-year with prepaid coming next at 4.9%. Including Oi clients, the excess growth rates at the end of 2022 came in at 8.8% and 6.8% respectively. This key use already reflects a 4.1 million cleanup of our wireless subscriber base in the quarter to do with former Oi clients that were not generating traffic. Broadband access remains very stable with a 2.4% growth base. As for Pay TV, there has been a noteworthy shift in the expansion of its client base, which came positive for the first time in several quarters. Our fourth quarter revenue total 216 billion pesos, down 2.4% year-over-year in Mexican peso terms, with service revenue declining 1.4%. The yearly reduction in revenue in Mexican peso terms stems from the appreciation of the Mexican peso vis-à-vis practically all our main operating currencies except the Brazilian real. At constant exchange rates correcting for the currency movements mentioned above. Service revenue actually increased 6% year-on-year, which was the same pricing in the preceding quarter. EBITDA declined 4.4% year-over-year to 84.8 billion pesos in the fourth quarter, or 79.6 billion pesos adjusting for extraordinary items. At constant exchange rates, adjusted EBITDA rose 5% as compared to 5.7% preceding quarter, 4.6% in the second quarter and 4.8% in this first quarter. The adjusted EBITDA margin remained almost flat at 37.8% year-on-year, 34 basis point reduction in relation to the year earlier quarter. The adjustments include extraordinary revenue from the sale of towers by Telmex, both in the fourth quarter of 2021 and 2022, and by Peru in the current quarter; the reduction in medical costs and in property taxes levied on telecom infrastructure in Puerto Rico; and the elimination of a provision in Ecuador associated with the payment obligations regarding telecom infrastructure. You can see the numbers here in this slide. Both mobile and fixed line service revenue expanded at a similar pace than in the prior quarter. Mobile revenue growth was robust at 9.8%, where fixed-line service revenue was slightly positive at 0.2%, very similar to that of the third quarter. On the mobile platform, postpaid service revenue growth 10.5% stayed strong, but that from prepaid declined slightly from 9.5% in the third quarter to 8.6% in the fourth one. Brazil posted 22.7% mobile service revenue growth, partly reflecting incorporation of former Oi subscribers. Mexico came in next at 9.1% and then Eastern Europe at 7.3%. And this already is the mobile platform. As for the fixed-line platform, revenue from both corporate networks and broadband services decelerated from the third quarter from 12.4% to 10.5% in corporate networks, and from 3.6% to 2.9% in broadband services. However, Pay TV revenue continued its recovery, declining only 3.5% in the fourth quarter, its smallest decline in several quarters. Broadband revenue increased faster in Eastern Europe, the Dominican Republic and Puerto Rico, all of them close to a 13% pace with Colombia observing a decline of the same magnitude on account of stiffer competition. Corporate networks revenue climbed 10.5% together with postpaid, it was the fastest growing business line. Eastern Europe, Brazil, and the Nicaragua stand out of the more dynamic ones in this segment. EBITDA growth accelerated in Eastern Europe to 10.7% from 8.6% to prior quarters. In Mexico to 9.4% from 4.3% more than double and in Peru to 5.3% from minus ⁠0.9%. It remains flat in Austria and decelerated to 8.5% from 10.8% in Brazil and to minus ⁠3.7% from minus ⁠0.3% in Colombia. Our operating profit totaled 44.7 billion pesos in the quarter, down 7% in Mexican peso terms as depreciation and amortization charges dropped to 1.2%. This incorporated reduction in tower related to depreciation charges pursuant to the tower spinoff and the increased rights-of-use depreciation charges arising from the new tower-lease obligations. After a comprehensive financing cost of 8.3 billion pesos in the quarter which was 57.5% smaller than the one observed a year before, we ended up with a net profit of 23.1 billion pesos from our continued operations, 5.3% greater than that observed a year before, and of 13.7 billion pesos once the effect of the deconsolidation of Claro Chile is taken into account. So again the net profit of 23 billion pesos from continued operations, which was 5% higher than the prior year. Our cash flow and net borrowings of 7 billion pesos allowed us to cover capital expenditures in the amount of 160 billion pesos; net shareholder distributions of 50 billion pesos and labor obligations totaling 24.4 billion pesos. The tower spinoff and net acquisition of ownership interest in different assets, including a portion of Oi mobile clients, resulted in a net receipt of 35 billion pesos, which you can see on the left. Excluding leases, our net debt totaled 389 billion pesos at the end of the year; it was down 19.2 billion pesos relative to the year-end figure in 2021. Our net debt to EBITDA ratio came down to 1.3x at the end of the year. So with that, I will pass the floor back to Daniel. Thank you.

Thank you, Carlos. We are going to start with the Q&A.

[Operator Instructions] Our first question goes to Lucas Chaves of UBS.

Hey, guys, thanks for having my question. And I would like to understand what you have in mind in CapEx for the near future, especially considering 5G and how that would affect shareholder distribution. And if I may ask a second question on Mexico, if you could give us more detail on the mobile strategy adopted during the quarter, and mostly to understand the strategy going forward in prepaid brands and if the space of addition is going to continue going forward. Thank you very much.

Thank you. First question on the CapEx. What we said last year is that we're going to have $24 billion CapEx for the next three years. And I think it's the target that we have that includes frequencies. And last year I think we do 7.9. So this year our target is around 8.2 because we have something last year that we're going to put this year, but 5G and what I said one or two years ago is that 5G did not increase a lot of CapEx because what we have been doing is investing in 5G. So we have put the bases, fiber to the node. A lot of the things that 5G needs so the only thing that we need to put to increase and to do 5G is more the radio, okay, a little bit on MFB and some of the other things that we need a little on electronics, but it's not a big investment to do 5G in our network. We have been investing in our networks and modernizing it. So it's not something that, but we're targeting for this year is to increase our fiber. In some places, we're seeing some opportunities in some countries, doing more fiber and increasing our big broadband. And that's more or less where we're going to focus. We're going to focus on the digitalization of all the company to save cost. We have been doing that for the last five years, and that's something that we are doing. So more digital, more everything, more new and cutting costs you have to invest to do better systems IT so that's more or less where we're investing. Our target is $24 billion in three years and we are on that. On Mexico, what's your question specifically on Mexico.

As more to understand the strategy regarding the mobile strategy, special things and net additions in prepaid if the space is going to continue going forward. And thanks for the first question.

On Mexico, I think we're doing good. We have around 100 CP in 5G. We are in a very good position in 5G. I think our competitors really, they are not competing in 5G. We have good quality, good name, good distribution, good top of mind in Mexico. So we're doing good. We're growing. We're growing in prepaid; I lost in 2020 with the Pandemic. I think the post paid subscribers decreased a little bit. But this year, last year, 2022 start to grow again. And this quarter we have 60,000, good we feel we're doing also very good in postpaid. So we have a good strategy. We are with a very good name in the market, and that's good. What is happening a little bit is in 2020 the fixed wireless. We grow a lot in the fixed wireless because people stay at home and need internet. And that is becoming -- is reducing. We're having disconnections on that because a lot of companies and Telmex is putting fiber. So they are disconnecting a little bit fixed wireless. But in the normal phone, we're growing also the good. So that's more or less what we have been seeing. So people are starting to move. They need a phone, they need 5G and they are not staying at home. So they are, let's say, moving from the wireless and speak from the wireless Internet to a mobile Internet. So that's what we have been seeing in the last six months.

And the next question goes to Alejandro Galastro of BBVA.

Hi. Good morning, Daniel, Carlos, Oscar and Daniella. I would like to ask you about the fixed-line business strategy in Brazil. You've been reporting consistently good results on your broadband business and also on your corporate segment in Brazil. But somehow the Voice and the Pay TV segments continue to track down results and you continue reporting a small decline in this fixed- line business. So I'd like to understand why this is happening despite the strong FTTH deployment that you're implementing in the country, how are you seeing the competition or why this is happening and when we should expect to see a turnaround in this fixed line business in Brazil? Thank you. This is my first question. Thank you.

Well, as you mentioned, you look at the revenues of fixed-line, we are growing 5.5%. Let me comment that we did in the previous conference calls. Look at the network. All the cable network is already prepared for [inaudible] So we could deliver one gigabit speed in all the cable network. And as you mentioned, we've been building fiber to home. And we announced last year with close to 8 million home passes, we fiber to the home and we will continue to do that. And we see a very good month on December, may that’s a problem. We were really positive on that side. I think the landscape is changing with the ISPs and all the environment that we saw in the last years. But as you mentioned, voice is declining and is declining everywhere. I mean, it's difficult now as a substitution through the mobile or to different sources of IP voice and in Pay TV, when you look at the decline, we are half of the decline that we saw in the pre quarters and has been working pretty nicely, the new, let's call it a new TV. So we call App Claro and Clarovox. They are working pretty good. Of course, not enough to compensate the decline, but we believe that it's a good trend to compensate the decline on Pay TV. On corporate, we mentioned before we have a very good year and different value added services. When I mentioned value added services, we are running pretty good in cloud services, in new vertical solutions in the market, in a chat bot that includes machine learning and artificial intelligence. So we feel that we have the right organization to get a good position on the corporate market. So blend it all. I think the revenues were good and the EBITDA in Brazil as well. But we will continue to do that. We will do, as I mentioned, more fiber in the country. And another thing that I forgot to mention is that in fixed broadband speed is relevant. No question, but more relevant is availability of the network, time to repair. So we've been working how we do the best customer experience in the market. We are number one in ultrabroadband in the country. And we are working to reduce the churn. And when you look at the last quarter, the churn was really good against the prior quarters because we are working as well in all customer experience, around fixed broadband and all the services.

Well, I think, in Brazil. Just to make a summary of what Oscar is saying, I think in Brazil, we are expecting a better this year than last year in terms of broadband and in terms of the TV subscribers market and everything. So I think it's a good opportunity this year on Brazil from that segment from the market.

Thank you, Oscar and Daniel. Any color on whether or not you plan to use the infrastructure of other companies or sharing infrastructure there? Any color on that?

We have talks with a lot of them. Until today, we haven't closed anything in Brazil, so no comment on that. We're open depending on the conditions, but until today, we don't have anything close.

Okay, good. Thank you, Daniel. My second question is regarding the 5G technology. I would like to hear from you what's been your experience with the 5G deployment? It's been a few quarters since you already started deploying this technology in the region. And I would like to hear from you what you expect to get out of this technology going forward. And maybe more specifically, what's been your experience with the customers using this technology, if you believe that they are willing to pay a premium for using this technology, and therefore, we should expect an increase in revenues and ARPUs going forward as you continue to playing in this technology. And also, maybe given the increased efficiency of the 5G technology, maybe you should expect an improvement, continued improvement in margins going forward. But maybe these efficiencies should be offset by the higher operating expenses driven by the increased number of towers that you should be renting in order to deploy this technology. So overall, how should we think about the 5G deployment going forward? What should be the impact in revenues, ARPU, and profitability going forward giving your experience so far? Thank you.

It's a very good question. It's difficult to explain everything, but the thing that I can tell you is that on Mexico that we have been deployed a hundred cities and it was our first city. Well, also Austria and Mexico, Brazil is growing also in a good pace. The ARPUs has been growing. In Mexico, ARPUs grow. Let me tell you, around 6% and lot of that in postpaid is because of 5G, 5G is helping us to grow that. I think the experience with the people is good. I think speeds are okay. People are using more [inaudible] and well you need to do a lot work to optimize the network because then you running 3G, 4G, 5G so there's a lot of things that you need to do .As you said, it's more efficient 5G than 4G so there a lot more handset with 5G than we have last year. So there is a lot of things coming and I think it’s a good technology, more efficient, as you said. So doesn't make any sense to put only 4G if you can have 5G. If you, as I said a few minutes ago, if you do all the work on all the investments that you need to do fiber to the node, electronics and a lot of things in the core also to deploy 5G, in the other side, that's the massive market, okay. In the corporate market, I think there's a lot of new applications that we're going to sell. There's a lot of things, internet of things, things connected and it's starting to go on and on. And I think that's not for tomorrow, but for the next five years I can tell you that we're going to have millions of things connected in the corporate side and a lot of new applications in that. So we're happy deploying 5G. I think it's profitable for us deploying 5G and the people like 5G. So little bit of advertising, a little bit of more speed, a little bit of applications. There's a lot of things. And the other applications that I think it's working very well in the US is 5G with fixed. Okay, fixed broadband, wireless in 5G. I think it's another application that it's going well and in places where you are not going to have fiber. I think it's very competitive, it's very good product, and I think the CPS are reducing the prices. So we're going to start to put more and more of this. In Austria, we have a lot of that and it's because let's say, young people do not want to call us for fiber connected. So what they do is they buy the 5G modem, and then if they change home or they change place, they take it with them, and it's very easy for them. Good speed. It's working very good. So there's a lot of things that around 5G, and it's working for us. Definitely, it's working.

[Operator Instructions] And our next question goes to Walter Piecyk of LightShed Partners.

Thank you. Carlos, thanks for providing the constant currency growth in service revenue. Was there also any type of one time counter entry to what you report in service revenue? I know sometimes there's like intercompany eliminations or anything in that service revenue line that might have reduced it relative beyond currency, which you also obviously put in your press release. And maybe if you can give us some sense of, in constant currency terms, what you think service revenue growth will look like for 2023.

Well, I think it's been quite consistent the revenue growth. It has been accelerating throughout the year, as we saw in one of the slides. And I think it has been stable at about 6% for two quarters, having increased from about 4% at the beginning of the year. And I think that the underlying trends point to growth remaining in this range, which is, by the way, higher than what we had mentioned in the Investor Day more than a year ago. We're looking at 2.5% to 4% service revenue growth, and we've been delivering 6% over the last two, three quarters. So I think at present, we estimate that we are going to be continuing with this kind of service revenue growth. There was nothing exceptional in terms of revenues. So what you see in all the results that we have in the reported countries, all the intercompany transactions are eliminated, so they are canceled out. So there's really no noise in the resource from the company construction at all.

Okay. Maybe it’s just a math and how we're calculating that conversion. Just one follow up. Okay. Thank you. And then, Carlos, obviously, the move in the currency has helped the debt leverage relative to the EBITDA. When you think about capital return, who knows how sustained currency moves are going to be? But how do you think about that internally when currency helps your net debt leverage? Are you willing to pounce in that quarter to add additional share repurchase or do you wait some period of time to see kind of where currencies will ultimately end up?

Yes. I think that most of the [inaudible] is in the peso and peso, I think our business represent the largest share of our EBITDA. I don't believe that the returns or the distributions will be determined really by the currencies. I mean we've been accustomed to seeing currencies all over the place and what you are saying, if anything going forward is a strengthening of all the other currencies that have been depreciating in light of higher interest rates and to the extent that there's some perception that inflation has peaked, I think that we will continue to see currencies like the Brazilian real appreciate. We think we will continue to see the Chilean peso appreciated, the Colombian peso. So I think most of the currencies in the region will be gaining strength over the next few quarters. And I think the Mexican peso will remain also quite strong. But I don't see that really affecting our distributions. I think the EBITDA with the leverage ratio, I think, is going to remain fairly stable at 1.3 - 1.4 net debt to EBITDA throughout the year.

Got it. If you don't mind just sneaking one more in for Daniel on. You talked a lot about 5G and consumers buying phones, but in last year in the United States, people, the replacement cycle was getting longer. People were taking longer to replace their phones, even though 5G was available. And I'm just curious, when you look at your markets in 2023, do you think people will be upgrading their phones more frequently or follow the same trends that we're seeing in the US.

Good question. I think last year and maybe ’21 or 2022, definitely there's a lack of handsets. So chips and handsets, I think they don't replace as often because of that. Maybe ’21 a little bit also 2022. I think today we have enough handsets but people, what's happening and what we're seeing, people is choosing a better handset in Latin America, a higher priced handset. But as you said, they are replacing that a little bit longer is what we are seeing a little bit. They choose a 5G, but 5G phones are available at $250, $200 right now. So there's a good price for 5G handset. So for us, it's good if people delay a little bit the replacement, so it's longer what they stay. And I think it's good mostly in all places we have been selling. We are not subsidizing any more in Latin America. Some places yes, other ones not. But I think it's good if people stay a little bit longer with the handset so and we're seeing that all around Latin America.

And the next question goes to Alejandro Azar with GBM.

Hello. Good morning, Daniel, Carlos, Oscar and Daniela. My question is on value creation and especially on tower announcements spinoffs and congrats on the announcement on Telekom Austria. My first one is on that front and down the road on your stake in Telekom Austria. Should we think that you could monetize part of that stake on tower, that your tower business in Latin America? And how many towers of AMX Telmex do you have on the balance? And if you're planning to divest some of them in the next one, two years. And the third one, if I may. Also value creation is on the possibility of seeing monetization of other infrastructure assets, perhaps a [inaudible] of your network in Mexico. Thank you very much.

Well, the tower assets, remember, we do with Latin sites, and we've been off that last year. I think we still have Colombia and Peru. And we're planning to do Peru, as we said already, that we're going to do Peru this year. It was still reviewing, but it's going to be in the next month to do Peru. And the only towers that we still have are Colombia. So those are the only ones. In Austria, Austria, the only thing that we do is we authorize the spinoff so we're going to work on the spinoff of the Towers of Austria. These towers are going to be, I think, listed in Austria. Planning to be listed in Austria. But we're going to remain within with the shares that we already have and I think the government of us is going to stay also with us. So we are not planning to take it out to the market. So at the beginning, we're going to stay like this only outside of Telekom Austria. And that's what we are planning to do. Still a lot of work and a lot of authorizations, but that's what we have been discussing and what we're going to work to do in the next months. Okay. No, I don't think we are thinking to sell any other infrastructure in Latin America at this moment. We are okay. I think we have a lot of fiber, but we are not planning to sell any of our fiber in Latin America also in Europe. We are not thinking about selling that. I think it's a good asset. We want to use it. We want to penetrate. We want to have more subscribers so. And in the other side we're going to do more fiber-to-the-home, fiber-to-the-curb. Fiber, we're going to put more fiber part of the CapEx of this year is to put more fiber through Europe and Latin America, Mexico.

Great. Just to clarify, the only towers that AMX and Telmex have on balance sheet are the Colombian ones.

See. I don't know if Telmex has something still there, but really, the country, Mexico Telmex, Mexico has a lot of towers. They will spin it off like, I don't know, six years ago. Then, like certain like cities of Latin America. We spin it off around 40,000 sites last August. I think we do that last August. And there are still two countries where we don't have, we just do the Dominican Republic this month. And still Peru and Colombia are the ones that we have. Peru, we're planning to do that. And Colombia still, we don't have any plans to do that. And still maybe we have something in Telmex, but it should be very small, not so big.

Our next question goes to Carlos de Legarreta of ITAU.

Thank you. Good morning. I have a couple of questions here. The first one is fixed-line in Mexico, you had some disconnections in the quarter in broadband. Have you noticed a tighter competitive environment as your competitors expand their networks? And if you can disclose how many homes passed with fiber do you have at the end of the year, that'll be great. Thank you.

Yes. Now, as you know, Telmex has been migrating the customer from copper reset to fiber, which is last year, with 67% of the customers already connected with fiber. And we could continue to grow that through the next year. So now 67% of the base of Telmex is already connected with fiber and we will continue to do that migration this year. So we are expecting to increase that 67% higher within this here.

What we have been doing in fiber in Mexico has been good for Telmex. I think we're migrating copper to fiber. We're doing a lot more home passes. Big part of what we do is Mexico. Mexico, we're going to deploy also a lot of, we're not disclosing how many in each country, but Mexico is with a very good plan on deploying fiber, replacing copper and doing greenfield new areas. So that's more or less what we have been doing. Competition is very tough in Mexico. Prices are very competitive. And what we need is to compete more. And to do what to work. And give a good speed, good experience to the customer, add more value to our offer and that's what we are doing.

Okay, thank you. And two quick follow ups, just the first one on the timing for the stock conversion into a single series, if you have any timing for that. And lastly, if you can, please disclose the proceeds you will receive from the tower sell in the Dominican Republic.

I think on the shares, depending on the CNBB, but I think it's not going to take too long. Hope we can do it in this quarter, February, March, but we don't know. It doesn't depend, it's an authorization. All the papers are submitted, so we're waiting for that. And on the Dominican Republic, we don't disclose those numbers, but we already do around 3,000. I remember it's around 3,000 towers now what Dominican Republic has. Daniela can give you exactly the number, but we're not disclosing country by country. So we already do like spinoff of everything, selling some things, spinoff in other ones, and that's what we’ve been doing. But you can guess.

I'll talk to Daniela for sure. Thank you.

I think, sorry, not 3,000 are 1,400 towers what we sell in Dominican Republic.

And our next question goes to Cesar Medina of Morgan Stanley.

Hi, thanks for taking my question. It relates to serve holder distributions and cash flows. So if I understood correctly the comments that Carlos was mentioning, you have 8 billion to 8.2 billion pesos in Capex, and then leverage is supposed to be roughly stable. I'm assuming you went through your budget process, or maybe you can give us an indication of the building blocks of the free cash flow generation that you have. And what does that mean for directionally speaking the amount of dividends and potential buybacks that you can do this year relative to the 2022. Thank you.

Well, the building blocks are always the same. For M&A, we have nothing that we are considering in terms of new acquisitions for the year at present. And we will continue to have some income coming from the sale of Crackdown because there's a part of the earnout is still taking place this year. There will be some amount that will be coming in. So slightly positive on that front. Then on leverage have come out before. I mentioned we don't expect to be at level 1.3x, which is where we are today. Probably 1.3 to 1.4 is probably where we would like to be in terms of the leverage ratio. And I think that very much defines what's left for distributions. So no leakage on M&A, already, Daniel has already mentioned the CapEx, which is fairly, relatively flattish compared to last year. So minor income is for this year, and that's about it.

And then for the rest of working capital. Any comments on that front?

Working capital is very cyclical in this company. We require a lot of working capital in the first quarter, and then we start getting it back over the rest of the year. Okay. So it's very, very cyclical. But increase year-on-year on working capital is relatively small and is linked to the overall growth of the company.

Thank you. Our next question goes to Phani Kanumuri of HSBC.

Thanks, everyone, for taking my question. So my question is regarding the pricing tower for AMX. So among the major markets, which are the markets where you are able to increase the prices for plans and pass on the inflation to the consumers, and looking forward to 2023, which are the countries where you are confident that you could increase prices in line with inflation, that's my first question. Thank you.

I think we have been increasing prices in some countries. Not in all of them. Let's say Mexico we haven't increased prices. We feel comfortable in Mexico, in the peak. There's a lot of competition sorry, in the mobile, a lot of competition in the peak, so it doesn't look easy to increase prices there. But in other countries, yes, we're increasing and depending a lot we're going to see inflation stays high. So of course we're looking where we're going to increase prices in 2023. So in 2022 yes, we already do. We already do some countries, and as I said, in Mexico and in other countries also we don't do so not only Mexico, another one. Yes, we do it. And we were successfully increasing prices. Good. But we're reviewing 2023 and we're going to see where it makes sense for us to increase prices. Of course, we know that inflation is high, costs are increasing, so we have to work hard on cutting costs and also in some places, increased prices, depending on the competition.

What we were saying before, I think that we expect currencies in the region will likely be stronger than they are today. So that gives some relief on the cost side for FX related acquisitions, content and the like.

But it's something that we're looking every month to see exactly cost, competition, prices, promotions, everything. So that's what we need to do all this year.

Okay. Thanks for that. So the second question is regarding the labor obligations. I think you had 24 billion pesos of obligations outflow this year. How do you see the outflow going forward and the recent negotiations with Telmex? How do you expect that to impact the labor obligations outflow going forward?

Okay, just some important comments. So the labor obligations we are presenting there as a use of our cash flow is basically what is paid out that is not coming from the pension fund itself. We have a pension fund in Telmex and the pension fund in Telmex sometimes we would want to keep it more funded and that's why we haven't been withdrawing as much. But we expect that the amount that will be coming out of our own cash flow as opposed to the fund itself is going to be somewhat smaller than what we saw for last year. Okay, so I think that we will start to see some reduction in pension fund of Telmex. The assets have increased significantly. I think it's a larger percentage of the organizations. So I think that we are happy to take out a bit more of that fund and a little bit less of Oi customers.

And the next question goes to Luca Buntum of Bank of America.

Hi, good morning. Thank you for taking my question. So it is related to the Brazilian mobile market. And well, since the [inaudible] consolidation, we saw that both prices, ARPU and net adds have been really strong. So my two questions are in relation to ARPU if you believe that this strong sequence should continue and if higher price hikes will be the new structure of the business, or if this will only keep up in the short term. And then also in net adds, if you believe that those will be sustained at least in the short term. Thank you.

Well, I think we have a good business in the mobile side, I think. Last purchase of Oi customers, we do very good synergy there. I think we incorporate those customers and good costs. In terms of ARPU, we increase some prices in Brazil, so ARPUs are growing. And we have good quality, we have good distribution, good cost, working a lot on coverage, and also 5G. So we feel that we can continue to the mobile side purchase.

And the next question goes to Andrés Coello of Scotiabank. Andrés Coello: Yes, thank you for taking my question. Carlos, you already mentioned the pension fund. Can you perhaps comment on the relevance of the potential conversion of Telmex pension liabilities into stock? If you have perhaps any specific target on what percentage of the pension liability could be converted and what would be the value proposition to workers?

I think it's still early stages of this. I think this is so far a concept that has been floated. I think to the extent that there is a conversion of pension rights for Telmex equity that overly puts the company on a stronger position because its overall liabilities would be thereby reduced. And to the extent that's the case where the equity can take some more value over time because it will be equity of a company that will be stronger. So I think that's conceptually what there is, I think everything else other than this concept remains to be worked out. So I don't think that I can give you more light on that, but I think the concept is easy to understand. Andrés Coello: Thank you. And my second question will be on Colombia. We've seen weaker results in recent quarters, some margin compression, as you mentioned in the press release, that you've seen more pressure on the broadband segment. Could you perhaps can elaborate a little bit on where that pressure is coming from? Is it from [inaudible] or is it from Telefonica? Just a little bit more color on Colombia. Thank you.

I think what you see in Colombia is one starts maybe one and a half years ago, very aggressive in the mobile side. So we start to be also all the markets start to be more aggressive. But you could see the trends on the mobile. The mobile is starting to grow again. We grow this quarter, 4.5%, it's good. So we used to grow one or even right now we're growing. So on the mobile side, I think things are getting to grow again. On the peak side, well, it's a decision, I think the market is very competitive. Prices are going down. We decide to compete. So we are, our ARPU is reducing a little bit, but at the end of the day, I think that's what we need to do. So it's going to take a little bit of time to recover. We are putting a lot more fiber all around Colombia. I think we have a very good offer, and that's it. No, more than that. It's not only one competitor. I think the market is under big competition in the peak side. And what we're doing is we're competing. So that's what we have. There's fiber, people constructing fiber. We are also doing fiber, and prices are going a little bit down. So we decide to compete. That's more or less well. We do promotions. We do some things to compete in the market. That's more or less what is happening in Colombia. It's not one competitor or the other one. It's the market.

And our final question today goes to Marcelo Santos of JPMorgan.

Hi, good morning. Thanks for taking my question. I wanted to ask your views on FWA, fixed-wire lock access. How does América Móvil see that? Do you think there's potential? you mentioned that in Mexico, you are losing some of those subscribers as fiber advances in the country. So is that something you think could be useful on LATAM or even in Europe, or do you think it's a technology that's going to go down as fiber keeps growing? Thank you.

I think it's going to be a good fiber. It's also important where you put it. Okay. If it's going to be in a house where they already have fiber and they already have Wi-Fi and fiber and everything, well, it's going to be difficult to enter that. But there's a lot of places all around Latin America where you don't have fiber. The speeds are not so good. And fixed wireless access, it's good. We have around 4 million fixed wireless access in Latin America. They grow a lot during the pandemic and slowing the growth right now. But I think there's still very good room for this service. It's going to be very difficult for the fiber to cover all the places, all the territories, and I think it's a good product there. So it's also important in low and medium density areas, okay, where it's difficult to put fiber or so I think we're going to have a good competition. There's also the satellite business that are pulling. So I think this product is better than a satellite business. Also, there's going to be places where we, fixed wireless access don't go in. So it's also an opportunity for the satellite business. So I think to cover all Latin America with broadband, you need to have all the services, now it’s fiber, fixed wireless access, satellite, and then satellite. So that's what you're going to see in the next year.

Just a follow up, but do you think it's going to be relevant, you grow substantially versus the fiber wire broadband, or is always going to remain kind of a more niche product?

It's a difficult question. Depending in some places, depending on what you use at, depending if the fiber, you already have fiber in your house, depending if you are going to deploy it's not the same price to deploy fiber in a city than to deploy fiber in low density areas. So it's depending a lot on the use of that, because this one you can move it whatever you want in your house. The other one you have to put Wi-Fi in places, Wi Fi mesh. So I think there's going to be a market for all these products. Of course, I think fiber is going to be the biggest one, but there's going to be for this one, the fixed wireless access and also for satellite and more in Latin America, but in all the countries.

As there are no additional questions waiting at this time, I'd like to hand the conference back over to Daniel Hajj for closing remarks.

I just want to thank all of you to be, for being in the call. Thank you very much.

Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect your lines.