America Movil, S.A.B. de C.V.

Good morning. My name is Nadia and I'll be your conference operator today. At this time, I would like to welcome everybody to the America Mobile fourth quarter 2022 conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. Now I would like to turn the call over to Ms. Daniela Laquana, Head of Investor Relations. Thank you.

Good morning, everyone. Thank you for joining us today to discuss our first quarter 2022 financial and operating results. We have on the line Mr. Daniel Hash, 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 a summary of the results. Thank you, 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 U.S. to their peak for the year in October at 4.2%. They remained very volatile the rest of the quarter, ending the year at 3.37%. Nonetheless, the impression they had picked ended up helping several currencies in the region, particularly the Mexican peso and the Chilean peso, which appreciated sharply vis-a-vis the dollar, with the Colombian peso stopping and then reverting slightly to decline of several months. Throughout the period, the Brazilian trail remained quite volatile and with no apparent trend as the country was in the midst of a disputed election. We added 3.3 million wireless subscribers in the quarter, of which 1.5 million were post-decline. Brazil led the way with 600,000 subs, followed by Austria with 322,000 and Colombia with 160,000. Our net gains in prepaid total 1.8 million, with Mexico contributing over half of that figure with 975,000 subscribers. Colombia came next with 546,000, and then Central America with 247,000. On the platform, we obtained 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. ATV reverted the losses of 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 four clients in the second quarter, our post-paid rates continue to be the more dynamic one, with a steady 8% increase year over year, with prepaid coming next at 4.9%. Including our clients, the excess growth rates at the end of 2022 came in at 8.8% and 6.8% respectively. These three years already reflect a 4.1 million cleanup of our wireless subscriber base in the quarter to do with former oil clients that were not generating traffic. Broadband accesses remain very stable with a 2.4% growth pace. As for PayTV, there has been a noteworthy shift in the expansion of its client base which turned positive for the first time in several quarters. Our fourth quarter revenue totaled 216 billion pesos, down 2.4% year-on-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-a-vis practically all our main operating currencies except the Brazilian reais. At constant exchange rates, correcting for the cancer movements mentioned above, service revenue actually increased 6% year-on-year, which was the same as in the preceding quarter. EBITDA declined 4.3% year-on-year to 84.8 billion pesos in the fourth quarter, or 79.6 billion pesos adjusted for extraordinary items. At constant exchange rates, adjusted EBITDA rose 5%, as compared to 5.7% in the first quarter, 4.6% in the second quarter, and 4.8% in the first quarter. The adjusted EBITDA margin remained almost flat at 37.8% year-on-year, 34 basis points 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 third quarter. The reduction in medical costs and property taxes levied on telecom infrastructure in Puerto Rico, and the elimination of a provision in Ecuador associated also with 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%, whereas fixed-line service revenue was slightly positive at 0.2%, very similar to that of the third quarter. On the mobile platform, Post-paid service revenue growth at 10.5% stayed strong, but that one decreased likely from 9.5% in the third quarter to 8.6% in the fourth one. Brazil posted 32.7% mobile service revenue growth, partly reflecting incorporation of former OSO subscribers. Mexico came in next at 9.1%, and then Eastern Europe at 7.3%. And these are all in the mobile platform. And for the figure-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-to-do revenue continued its recovery, declining only 3.5% in the fourth quarter, its smallest decline in several quarters. Global 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 specific competition. Corporate networks revenue climbed 10.5%. Today, we posted it was the fastest growing business line. Eastern Europe, Brazil, and Ecuador standard of the more dynamic ones in this segment. EBITDA growth accelerated in Eastern Europe to 10.7% from 8.6% in 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. Operating profits total 44.7 billion pesos in the quarter, down 7% in Mexican peso terms, as depreciation and amortization charges dropped to 1.2%. This incorporates the reduction in tower-related depreciation charges pursuant to the tower spinoff, and the increased rise of year depreciation charges arising from the new power lease obligations. After a comprehensive financing cost of 8.3 billion pesos in the quarter, which was 57% 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 13.3 billion pesos, one the effect of the consolidation of Cloud Chile. is taken into account. So again, the net profit of $23 billion from continued operations, which was 5% higher than the previous year. Our cash flow and net borrowing of $7 billion allowed us to cover capital expenditures in the amount of $160 billion, net shareholder distributions of $50 billion, and labor obligations totaling $24 billion. The tower spin-off and net acquisition of ownership interest in different assets, including a portion of all mobile clients, resulted in a net receipt of 35 billion pesos, which you can see on the slide. Excluding leases, our net debt totaled 389 billion pesos at the end of the year. We were down 19 billion pesos relative to the year in 2021. Our net debt to EBITDA ratio came down to 1.3 times at the end of the year. So with that, I will pass the floor back to Daniel. Thank you. Thank you, Carlos. We can start with the Q&A.

Thank you. At this time, I would like to remind everyone in order to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our third question goes to Lucas Chaves of UBS. Lucas, please go ahead. Your line is open.

Hey, guys. Thanks for having my question. And I would like them to understand what you have in mind 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. Mostly to understand the strategy going forward in prepaid plans and if the space opposition 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 a $24 billion capex for the next three years. And I think it's the target that we have. That includes frequency. And last year, I think we do 7.9. So this year, our target is around 8, 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 putting the bases, the 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 NFB and some of the other things that we need, a little on electronics, but it's not a big investment to do in our network. We have been investing in our networks and modernizing it. So it's not something that... What 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 fixed broadband. And that's more or less where we're going to focus. We're going to focus on the digitalization of all the companies to save costs. We have been doing that for the last five years and... And that's something that we are doing. So more digital, 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?

It's more to understand the strategy regarding the mobile strategy, especially seeing the net additions in prepaid if the state is going to continue going forward. And thanks for the first question.

On Mexico, I think we're doing good. We have around 100 cities 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 are doing good. We're growing. We're growing in prepaid a lot. In 2020 with the pandemic, I think the postpaid subscribers decreased a little bit. But this year, last year, 2022, it starts to grow again. And this quarter we have $60,000. We're doing also very good in cost base. 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 reducing. We're having these connections on that because a lot of companies and Telmex is putting fiber, so they are disconnecting a little bit the fixed wireless. But in the normal phone, we're growing also 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 internet to a mobile internet. So that's what we have been seeing in the last six months.

Okay, that was very clear. Thank you very much. Thank you. Thank you.

Thank you. And the next question goes to Alejandro Galastro of BBVA. Alejandro, please go ahead. Your line is open.

Hi. Good morning, Daniel, Carlos, Oscar, and Daniela. I would like to ask you about the baseline 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 voices And the pay-to-be segments continue to track down results, and you continue reporting small declines in this fixed-line business. So I'd like to understand why this is happening despite the strong FTTH deployment that you are experiencing. 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.

Yes. Well, as you mentioned, when you look at the revenue 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 DOCSIS 3.1. So we could deliver one gigabit speed in all the cable network. And as you mentioned, we've been building fiber to the home. And we end up last year with close to 8 million home passes with fiber to the home. And we will continue to do that. And we see a very good month on December on the net-asset problem. We were really positive on that side. I think the landscape is changing, you know, with the ISPs and all the environment that we saw in the last years. But as you mentioned, voice is declining, and it's declining everywhere. I mean, it's difficult now. It's a substitution to 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 clear quarters. and has been working pretty nicely with the new, let's call it the new TV. So we call it app Claro and Claro Box. They are running pretty good. Of course, not enough to compensate the decline, but we believe that it's a good trend to compensate the decline on paid TV. On corporate, we mentioned before, we have a very good year in different value-added services. When I mentioned value-added services, we are running pretty good in cloud services, in our new vertical solutions in the market, in our chatbot 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. 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. What's 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 ultra broadband 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 six broadband. And all the services.

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, on that segment of the market.

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

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

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? Do you believe that they are willing to pay a premium for using this technology? And therefore, we should expect and increasing revenues and outputs going forward as you continue deploying this technology. And also maybe even given the increased efficiency of the 5G technology, maybe we 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, ARPUs, and profitability going forward, given 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 100 cities and it was our first city. Well, also Austria. Austria and Mexico. Brazil is going also in a good phase. The ARPUs has been growing. In Mexico, ARPUs grow, let me tell you, around 6%. And a lot of that is because 5G is helping us to grow that. I think the experience with the people is good. I think the speeds are OK. People are using more the Giga mouse. That's of use. And, well, you need to do a lot of work to optimize the network because then you are 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's a lot more handsets with 5G than we have last year. So there's a lot of things coming and... And I think it's a good technology. It's more efficient, as you said. So it 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 nodes, electronics and a lot of things in the core also to deploy 5G. In the other side, that's the 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 it's a 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 good in the U.S. is the 5G with fixed broadband wireless in 5G, I think it's another application that is going well. And in places where you are not going to have fiber, I think it's very competitive. It's a very good product. I think the CPEs 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, and it's working very well. So there's a lot of things around 5G, and it's working for us. Definitely is working.

Thank you, Daniel. Thank you very much for the explanation.

Thank you. Thank you. And as another reminder, if you would like to ask a question today, please press star followed by one on your telephone keypad. Please note, we will take one question and one follow-up per person. And our next question goes to Walter Pisek of LightShed Partners. Walter, please go ahead. Your line is open.

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 a bit 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 revenue. So what you see in all the results that we have in the deported countries, all the intercompany transactions are eliminated. Okay. So they are canceled out. So there's really no noise in the results from intercompany transactions at all.

Maybe it's just the math on how we're calculating that conversion. Yeah. Okay.

Okay.

Thank you. And then Carlos, you know, obviously the move in the currency has helped the debt leverage relative to the EBITDA. When you think about capital return, you know, who knows how sustained currency moves are going to be, but like, but how do you think about that internally? You know, when currency moves, 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?

Yeah, I think that most of the is really in pesos. And pesos represent the larger 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 we are seeing, if anything, going forward, is a strengthening of all the other currencies that have been depreciating. In light of higher interest rates and some perception that inflation has picked, I think that we will continue to see currencies like the Brazilian real appreciate. We think we will continue to see the Chilean peso appreciate 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, you know, the leverage ratio, I think, is going to remain fairly stable around 1.3, 1.4.

God, if you don't mind just sneaking one more in for Daniel. He 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, you know, 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 U.S.?

I think, good question. I think Last year and maybe 2021 or 2022, definitely, there's a lack of handsets or chips and handsets. So I think they don't replace as often because of that. Maybe 2021. 2021 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 price handset. But as you said, they are replacing that a little bit longer. It's what we are seeing a little bit. They choose 5G. 5G phones are available at $250, $200 right now. So there's good prices for 5G handsets. 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 anymore in Latin America. Some places, yes, other ones, no. But I think it's good if people stay a little bit longer with the handset. And we're seeing that all around Latin America.

Thank you.

Thank you.

Thank you. And the next question goes to Alejandro Azar of GBM. Alejandro, please go ahead. Your line is open.

Hello. Good morning, Daniel, Carlos, Oscar, and Daniela. My question is on value creation, especially on tower announcements, spin-offs, and congrats on the announcement on Telecom Austria. My first one is on that front and down the road on your stake in Telecom Austria. Do we think that you could monetize part of that stake? And on your tower business in Latin America, how many towers does AMX still have on the balance? And if you are 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 a monetization of other infrastructure assets, perhaps a fibra of your network in Mexico. Thank you very much.

Well, the tower assets, remember, we do Latin sites, and we spin 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. We're 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, the only thing that we do is we authorize the spin-off So we're going to work on the spin-off 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 with the... The shares that we already have, and I think the government of us is going to stay also with that. 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 Telecom Austria. and that's what we're 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. No, I don't think we are thinking to sell any other infrastructure in Latin America at this moment. We are OK. I think we have a lot of fiber, but we're not planning to sell any of our fiber in Latin America. And also in Europe, we are not thinking on selling that. I think it's a good asset. We want to use it. We want to penetrate. We want to have more subscribers. And in the other side, we're going to do more fiber to the home fiber, to the core 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 and Mexico.

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

I don't know if Telmex has something still there, but really the country, Mexico, they sell Mexico that has a lot of towers. We spin it off like, I don't know, six years ago. Then SACAM Light, Titios Latinoamerica, we spin it off. Around 40,000 sites last August. I think we did that last August. And there are still two countries where we don't have. We just do Dominican Republic this month. and still Peru and Colombia are the ones that we have. Peru were planning to do that, and Colombia still doesn't have any plans to do that. And still maybe we have something in Telmex, but it should be very small, not so big. Okay.

Thank you. Thank you.

Thank you. Our next question goes to Carlos Legareta of ITAU. Carlos, please go ahead. Your line is open.

Thank you. Good morning. I have a couple of questions here. The first line, in PixLine 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 home paths with fiber do you have by the end of the year, that would be great. Thank you.

Yeah, as you know, Telmex has been migrating the customer from copper to fiber, which is the last year with 67% of the customers already connected with fiber. And we will continue to do 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 year.

I think 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. A big part of what we do is Mexico. Mexico, we're going to deploy also a lot. We're not disclosing how many in each country, but Mexico is with a very good plan on deploying fiber, replacing copper and doing green fumes in other places. So that's more or less what we have been doing. Competition is very, very tough in Mexico. Prices are very competitive, and what we need is to compete more and to work and give good speeds, good experience to the customers, add more value to our offer, and that's what we're 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 sale in the Dominican Republic.

I think on the shares, depending on the CNBB, But I think it's not going to take too long. I 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... I remember it's around 3,000 towers, what Dominican Republic has. Daniela can give you exactly the number, but we're not disclosing country by country, so we already do like a spin-off of everything, selling some things, a spin-off in other ones, and that's what we have been doing. But you can get 3,000 towers. Thank you. I think, sorry, not 3,000, 1,400 towers what we sell in Dominican Republic.

Thank you. And our next question goes to Cesar Medina of Morgan Stanley. Cesar, please go ahead. Your line is open.

Hi, thanks for taking my question. It relates to shareholder distributions and cash flows. So if I understood correctly the comments that Carlos was mentioning, you know, you have 8 to 8.2 billion in capex and then leverage is supposed to be, you know, 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, you know, directionally speaking, the amount of dividends and potential buybacks that you can do this year relative to 2022? Thank you.

Well, the building blocks are always the same, no? So M&A, we have nothing that we are considering in terms of new acquisitions for the year present. And we will continue to have... some income coming from the sale of tract funds, because part of the earn out is still taking place this year. So there will be some amount that will be coming in. So slightly positive on that front. On leverage, which has come out before, I mentioned we don't expect to be as low as 1.3 times, 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. No leakage on M&A. Obviously, Daniel has already mentioned the capex, which is fairly relatively plattish compared to last year. So just minor income for this year. And that's about it.

And then for the rest of working capital, any comments on that front?

I think 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. So it's very, very cyclical, but the increased year-on-year on working capital is relatively small, and it's linked to the overall growth of the company. Perfect. Thank you so much. Thank you.

Thank you. Our next question goes to Pani Kalamuri of HSBC. Pani, please go ahead. Your line is open.

Thanks, everyone, for taking my question. So my question is regarding the pricing power for AMX. So among the major markets, which are the markets where you are able to increase the prices for plants 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.

Well, 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 peaks. There's a lot of competition, sorry, in the mobile, a lot of competition in the peaks. 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 is high. So, of course, we're looking where we're going to increase prices in 2023. So in 2022, yeah, we already do. We already do some countries. And as I said, in Mexico, though, and in other countries also, we don't do. So not only Mexico, in other ones, 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 increase prices, depending on the competition.

As 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.

Thanks for that. So the second question is regarding the labor obligations. I think you had 24 billion of labor 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 that we are presenting there for 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. So I think that we will start to see some reduction. The pension fund of Termex, the assets have increased significantly. I think it's a larger percentage of the obligations. So I think that we are happy to take out a bit more of that fund and a little bit less of our cash flow.

That's very clear. Thanks, everyone. Thank you.

Thank you. And the next question goes to Luca Brentum of Bank of America. Luca, please go ahead. Your line is open.

Hi. Good morning. Thank you for taking my question. So it is related to the Brazilian mobile market. And, well, since the sector consolidation, we saw that both prices, ARPU and NetEdge, have been really strong. So my two questions are, In relation to ARPU, if you believe that there's a strong sequence to 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 that ads, if you believe that those will be sustained at least in the short term. Thank you.

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

Okay, perfect. Thank you.

Thank you. Thank you. And the next question goes to Andres Coelho of Scotiabank. Andres, please go ahead. Your line is open.

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

Well, 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's a conversion of pension rights for Telmex equity, that obviously puts the company on a stronger position because its overall liabilities would be thereby reduced. And to the extent that's the case, well, maybe 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.

Thank you. And my second question will be on Colombia. We've seen weaker results in recent quarters, some margin compression. You mentioned in the press release that you've seen more pressure on the broadband segment. If you perhaps can elaborate a little bit on where that pressure is coming from, if it's from Milicom or if it's from Telefonica, just a little bit more color on Colombia. Thank you.

I think what you see in Colombia is... One starts maybe one, 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 growth again. On the big side, well, it's a decision. I think the market is very competitive. Prices are going down. We decide to compete. So 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 changing. is under big competition in the pig side. And what we're doing is we're competing. So that's what we have. There's fiber. People are constructing fiber. We are also doing fiber. And prices are going a little bit down. So we decide to compete that. more or less why 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.

Thank you.

Thank you. Thank you. And our final question today goes to Marcelo Santos of JP Morgan. Marcelo, please go ahead, your line is open.

Hi, good morning. Thanks for taking my question. I wanted to ask your views on FWA, Fixed Wire Access. How does America Mobile 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 or the speeds are not so good. And the 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 it's 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, no? So it's also important in low and medium density areas, okay, where it's difficult to put fiber. So I think we're going to have a good competition. There's also the satellite business that are putting some. I think this product is better than a satellite business. Also, there's going to be places where we fix wireless access don't go in. So it's also an opportunity for the satellite businesses. So I think to cover all Latin America with broadband, you need to have all these services, noise fiber, fixed wireless access, 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 like relevant? You grow substantially versus the fiber wired broadband or is always going to remain kind of a more niche product?

It's a difficult question. Depending in some places, depending for what you use that, depending if the fiber, you already have fiber in your house, depending if you are going to deploy what. 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 wherever you want in your house. The other one you have to put the Wi-Fi in some 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 satellites and more in Latin America. Well, in all the countries. All right.

Thank you. Thank you very much.

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

I just want to thank all of you 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.