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Good morning, my name is Daisy and I'll be your conference operator today. At this time, I would like to welcome everyone to the America and Mobile third quarter 2023 conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. Now I will turn the call over to Ms. Daniela Lecuena. To begin, Head of Investor Relations, please go ahead. Thank you so much.

Good morning, everyone. We're very happy to host this call this morning to discuss our third quarter financial and operating results. We have in the room Mr. Daniel Ash, CEO, Mr. Carlos Garcia Moreno, CFO, and Mr. Oscar Bonjausque, COO.

Hi, good morning. Thank you, Daniela. Thank you for being in this third quarter financial and operating report. And Carlos is going to make a summary of the results.

Thank you, Daniel. Good morning, everyone. Well, more by strong U.S. economic data, particularly on employment levels, and recently also on consumer spending, and lingering inflation concerns, 10-year dollar interest rates shot up by approximately 80 basis points over a 10-week span in the third quarter to 4.6% at the end of September, driving another bout of dollar strengthening. By the end of the quarter, there was practically no more hope that interest rates would decline in the latter part of the year, and there was instead preoccupation that the Fed was still not done raising interest rates. As you can see in the market, the rates have continued to go up to today, and they are about to, you know, close to reaching 5% on the 10-year tenor. We added nearly 3 million wireless subscribers in the third quarter, of which 2 million were poster clients, 1.2 million in Brazil, 460,000 in Austria, which includes IoT devices from A1 Digital. 104,000 from Colombia and 93,000 from Mexico. On our pre-paid platform, we had net additions of 950,000 clients during the period. Eastern Europe led with 210,000 clients, followed by Brazil with 193,000, Colombia with 173,000, Argentina with 93,000, and Mexico with 81,000. In the fixed-line segment, we gained 223,000 open accesses. with 65,000 each from Argentina and Brazil. Both lines and petri units are declared by 150,000 and 58,000 respectively. At the end of September, our subscriber base totaled 306 million wireless subscribers, of which 119 million were posted live. Additionally, we have 73 million fixed-line IDUs, which includes 32 million broadband accesses 13 million Pesos declines and 29 million landlines. Year-on-year, our postpaid base increased 3.7%, prepaid 0.7%, and fixed broadband accesses 3.2%, with fixed-post lines falling 2.6%, as you can see in this slide. Third quarter revenue reached 204 million pesos, a 3.3% year-on-year reduction in Mexican peso terms, with service revenue falling 4.3%. As has been the case throughout several quarters, these figures reflect the appreciation of the Mexican peso versus all other currencies in our regional operations, reducing the Mexican peso value of our international revenue. At constant exchange rates, service revenue growth expanded 3.8% and ended at 5%, which reflects, among other things, the effect of tower sales in Mexico and Peru that took place in the period and one of events in Austria. Rating for these, adjusted EBITDA was up 3.9%, just about the same rate as service revenue, as you can see on this slide. On the fixed-land platform, service revenue remained on trend, increasing 2.2% year-on-year, cutting recent from the 0.2% pacing in the second half of last year, whereas on the mobile platform, it rose 4.8%. Brazil attained a positive fixed-land service revenue growth, or 0.1%. In Mexico and Colombia, fixed-line revenue decelerated, remaining stable in Austria and surging in Eastern Europe to 31% and in Central America to 5%. In both cases, it was the most rapid pace in at least one year. The slowdown in Mexico from 5.6% to 3.6% had to do with corporate network services. In fact, broadband revenue actually accelerated to 8.2%, which is its best showing in a decade. In several countries, Brazil, Peru, Colombia, and Central America, we had among the highest, if not the highest, net broadband addition in the past three years. Others, including Mexico, Austria, Peru, and Central America, posted the most rapid broadband revenue growth in at least one year, as can be seen in the chart, with Brazil and Eastern Europe sustaining strong growth rates. This led to our consolidated broadband revenue expanding at the fastest rate in more than two years, which was 6.4%. On the mobile platform, revenue growth decelerated in Mexico from 6.4% to 4.6%, picked up in Central America to 9.5% from 8.8%, with Brazil adjusting to a normal pace after a hump following the incorporation of all mobile clients in the second quarter of 2022. This is something that you can see here on the slide. But going back to fixed, it's important to note that revenue from corporate network services has been gaining share within our revenue base. This quarter became the second most important revenue line within the fixed-line platform after broadband services, with the consolidated revenue rising 6.5%. It already accounts for 19% of fixed-line services overall, with this year reaching 39% in Austria, 30% in Eastern Europe, and 25% in Mexico. Our operating profit stood at $42 billion in the quarter, a 6.7% year-on-year reduction in Mexican peso claims, which partly stems from the EBITDA decline mentioned before, but also from a 17% increase in depreciation of rights of use associated with tower leases. Most of this effect had to do with successful renegotiation a year before or certain lease agreements in Brazil that reduced Claro's obligations to a tower company. Our comprehensive financing cost totaled 30 billion pesos, including an 8.8 billion pesos net interest expense, which was 3.9% lower than that raised a year before. On the other financial expenses, there is a 4.7 billion pesos charge associated with the partial impairment of our state in Claro, Chile, our young venture with Liberty, Latin America, pursuant to a fair value of the new GED, which, under our FIS rules, had to be defined within a year after its closing. Finally, our comprehensive financing costs also included a 12 billion pesos foreign exchange loss in this quarter, resulting principally from a 3.8% depreciation of the Mexican peso versus the dollar in this third quarter. Net income amounted to 2 billion pesos. It was equivalent to 3 pesos cents per share or 4 dollars cents per ADR. Year-to-date, our net income totaled 58 billion pesos through September, Our net income totaled 58 billion pesos, 2.9% lower than that registered year before. Capital expenditures came in at 100 billion pesos in the nine months to September, where distribution to shareholders reached 34 billion pesos. This includes share buybacks in the amount of 7.7 billion pesos and dividends of 16 billion, and were partly funded by 3.7 billion pesos in dividend income. To cover all of these expenditures, but also labor obligations in the amount of 10 billion pesos. We resorted to overpaying cash flow, 114 billion pesos, and to net financing in the amount of 12 billion pesos in the period, with 5 billion pesos coming in, mostly from the payment of an earn-out on the sale of crack funds. As of September, our net debt exceeded at least a total of 390 billion pesos and was equivalent to 1.4 times the last of Moxibita, As you can see on the chart, it was fairly flat. It was 8.5 billion pesos higher than the year at the end of December. Well, thank you, and I will pass the floor back to Daniel for the Q&A session. Thank you, Carlos. We can start.

Thank you. As a reminder, if anyone would like to register a question, please press star followed by one on your telephone keypad. When it is your turn to ask a question, please ensure you are unmuted locally. And if you would like to withdraw your question, please press star followed by two. So that's star followed by one on your telephone keypad to register a question. Our first question today comes from Vittal Tamirta from Goldman Sachs. Vittal, please go ahead, your line is open.

Hello, good morning all, and thanks for taking our questions. Two questions from our side. The first one is on capital allocation. Given your healthy leverage position and cash flows, even considering your increased capex budget, do you have any plans to, in any way, further increase cash deployments? So maybe by further increasing capex on fiber or by further increasing equity stakes in specific businesses? as you did in Austria, or by carrying out further M&A, or even by increasing buybacks following the recent decline in share prices and seeing that you already seem to have increased buybacks a bit on the third quarter. The second question from our side would be on corporate networks. You highlighted that there was an increase in relevance of corporate networks in your global revenue mix. Could you give us a bit more color on which types of corporate offerings have been driving that growth and on what their economics and margin profile is like compared to the more traditional consumer-focused telecom offerings. Thank you very much.

Thank you, Victor. On the allocation of resources, there's really nothing we're looking at on the M&A front, as we have mentioned before. I think we're not looking at increasing anything more our capex, certainly this year. And I think we will make some comments later regarding our budget for next year. But as regards to the distributions, as you point out, we have been accelerating our buybacks. I've been reiterating on various calls that our free cash flow is very cyclical. and we basically tend to get most of our free cash flow in the last three or four months of the year. So that's typically when we would want to increase our share buybacks. If you look at the distribution of share buybacks so far this year, we spent about $100 million U.S. in the first quarter, $60 million in the second quarter, $272 million in the third quarter, And so far this month we've increased an addition of $70 million. So basically $350 million between the end of June and so far in October. So still to go. Obviously, in addition to this, we have already paid $100 million U.S. of dividends, and we have another payment of the same magnitude that we will be accepting in the middle of November. But so, again, we can say something on CAPEX budget for next year.

I can. What we discussed and we have been saying in the last year is that we have a budget of $24 billion for three years. That's 22, 23, and 24. And so we are on that budget. We increased a little bit the capex this year. We haven't finished our budget for next year, but I think we're going to accomplish with that. So what we increased this year, maybe we're going to reduce that the next year. So that's more or less what we're thinking. We don't have anything extra planned. on capex for 2024 so we are on budget and we think we can do that on the corporate networks i think that's a segment that we're doing well we're increasing in all the countries And Oscar can talk a little bit about what are the new products and the products. What we're looking is to have and to manage the networks of the customers, and that's more or less what we're aiming for. And Oscar can tell you a little bit more on that.

Yeah, thank you, Emil. As you say, the first step is how do we manage the network of the customers? And there is the SD-WAN technology that allows us to do this in an easy way. So when we move the customer to SD-WAN, we try to bring security, cloud services as well, bundled in the services. And as well, we are offering what we call horizontal solutions. We are selling data lake as a services. We are selling AI as a services in our cloud. We develop what we call cloud broker that we We are agnostic at the type of cloud that the customer wants. If the customer wants a hyperscaler or one over cloud, they have a dashboard that could manage both clouds in an easy way. And as well, we are getting into the private wireless network. I'm talking about vertical solutions for mining, for retail, for manufacturing, and has been well received in the market. We see a big opportunity in this in this segment because it improves the efficiency of the customers, brings productivity, and you know, we are all on digital transformation, and these products support that evolution. However, we see that market has a very good trend in the near future.

So all over all, on summary, we are not offering only The classic and connectivity products that is broadband or fixed or wireless or prepaid or postpaid. We're offering all these new services to all the B2B customers.

Another is that we are fully convergent. So in our offering, we offer as well mobile and fixed all together to the customers.

Very clear. Thank you very much.

Thank you.

Thank you. Our next question is from Eduardo Ruby from UBS. Eduardo, please go ahead. Your line is open.

Hi, everyone. Thank you very much for taking our question. I would like to know if you could provide an update on Mexican regulatory environment, discuss the preponderance revision, and if there is an additional regulatory risk for AMX, particularly on the concession, given what happened in airports. And another one, if you could discuss also the spectrum prices, if you see any additional risk there, too. Thank you very much.

Well, on the regulatory side, I think to make a little history, we have been having 10 years of having these regulatory measures. 10 years accomplished all the measures that the ICTL has been putting us. And not too much to say, only I think that we and we think that these regulatory measures should relax in the future. At the end of the day, what the markets need is investment and what the customer wants is quality, price, coverage, that you attend the customer in a good way. So all these things, you cannot put measures on that. So that is what is happening in the last 10 years. And I think in Mexico, in a lot of our products, we have the preference of our customers. And we hope that IFETEL take a very deep revision on what is happening on the market and relax the measures that we have. So that's more or less. We don't know nothing more on that, but we hope that we have that.

Sure, that's clear. Thank you very much.

Thank you.

Thank you. Our next question is from Walter Pysik from LightShed. Walter, please go ahead. Your line is open.

Thanks. Hey, Daniel. And if I look at Mexico, obviously you had good unit growth, and ARPU was also very strong in 21 and 22. Obviously, maybe somehow the pandemic had some impact on that. But this quarter, there shows a little moderation there. Is that just kind of coming out of the pandemic, or is there economic – issues that we need to think about in terms of Mexico. Obviously ARPU is still growing and service revenue is still growing, wireless service revenue specifically. I'm just curious kind of what are your thoughts on some of the moderation of that growth and how we should think about that going into future quarters?

I think what you're saying is right. It's moderation. We're still growing our revenues in Mexico. I think the moderation is more on the prepaid than on the postpaid. So maybe it has to be a little bit with this acceleration of the economy. I don't know. We don't know exactly what will be, but I can tell you that we have... very good 5G network, good coverage. We're working very hard on a control cost platform all around. And I think also could be a little bit on the market. Our competitors could be doing some promotions. So I still feel very comfortable on what we're doing in the mobile products and by far we have the best perception to the customers in terms of coverage, quality and price, attendance, digitalization. So all these things will help us a lot on how the customer is taking the decision As I said, the moderation that we're having is more on the prepaid side than on the postpaid side. So that's what we have been seeing. On the peak side... Just to add something, Walter.

The Apple growth in Mexico was 1.5% year-on-year. But if you look at post, it was actually stronger. It was at 3.1%. This is what Daniel said. The moderation was a little bit more on the prepaid side. In the post, it remains quite firm, not very different from what we have seen in private quarters.

And you said also... And you think that... And Daniel and Carlos, you said that with that... You think on the... If you just looked at prepaid, you think that might be more the promotions of the competitors may be impacting prepaid than necessarily some sign of, you know, the economy reducing the usage of some of those...

Yes, I think so. That's what I think, yes.

Okay. Just a similar question. If you look at the equipment revenue line, that actually looked stronger, meaning like if you do the math on it, it looks like maybe people in Mexico are buying more expensive phones. Is there anything you can tell? I mean, because that would suggest that the economy is pretty good, that people are buying or upgrading phones. Just curious on any thoughts you have on your equipment revenue line and why that might show some decent growth.

Yeah, I think on the equipment revenue, we're doing good. What is happening is not only Telcel, the ones, I think we have been having a lot of imports of handsets and this has been decelerating a little bit. Some brands do not like Like let's say Samsung does not like that Samsung phones will come not through their office in Mexico, through other countries. So I think that's a little bit on that. And I think they are cutting and reducing these imports. So that's why you are seeing that there's more sales on equipment this month.

Got it. And just one final question. There's a line on the cash flow statement that I believe you call payments of lease liabilities. This is where some of the payments, I think, primarily to tower companies exist. I'm just curious how we should think about that going forward. Are there normal escalators that should take that? For this quarter, I think the number was 9.7 billion pesos. So I'm just curious if that's that line item on the cash flow statement. Is that something that should grow at a similar rate that it has in recent years? I think it's about 10%. Or is there any opportunity to moderate as you've kind of completed a lot of the 5G deployment in a lot of these markets?

Yeah, I think you are right. I don't think in 5G we're going to need the same amount of towers that we need in 3G or 4G. The new towers should be more on coverage than on capacity, and that's more or less what we have been seeing. So I think that will moderate in the future.

Great. Thank you very much. Thank you. Thank you.

Thank you. Our next question today comes from Marcelo Santos from JP Morgan. Marcelo, please go ahead. Your line is open.

Hi, good morning. Thanks for taking my question. I have two. The first question is about Colombia. If you could please comment on the competitive environment on the fixed market. We saw that you started adding broadband subscribers again, so it was a very strong result. So a comment there would be very helpful. And the second question is, if you could provide us an update on the joint venture with Liberty Latin America in Chile and outlook on potential capital injections that operation might need. Thank you very much.

As you mentioned, in Colombia, broadband on the third quarter, we did it pretty good. And what we did is that we... really changed the way that we go to the market. We did a focus in the area that we have a lot of competition. So we started winning share on both areas. We upgraded the network. And as you know, we are building fiber as well in Colombia. We believe the third quarter is the trend that we are going to see in the next quarter in fixed broadband. And as well, we improve all the quality of services to the customers, time to deliver, time to repair. So we really focus on the third quarter to really change all the structure to go to market for fixed broadband in Colombia.

And on Chile, well, I think Chile is a very important market for us. And we have a program, a synergy program since we get together with Liberty. And we're doing well. We're advancing our synergies and our revenues and sales are going much better. So we think that we're going to really focus on creating value on Chile. And that's more or less. We still think that Liberty will be our partner in the future. We hope so. It's a very good partner. And we're focusing to really get everything, all the cost control, reducing expenses and and moving in the market, we're also putting more coverage, better quality, and we're really focusing in making Chile a much stronger company for the future. So that's more or less what we're doing there.

So could we say that it's on track? You think it's on track or it's above expectations versus what you hoped?

No, I think we're on track. We don't have a synergy program for six months. I think we have a synergy program for two years, very strong, very focused, and we're on track and we're doing very well. We are happy the way the company is evolving here.

We're growing.

We have been losing some customers in peaks. In the last quarter, we're growing customers. So we are improving and improving and improving every day.

Great. Thank you very much.

Thank you.

Thank you. Our next question is from John Ho from Mizuho. John, please go ahead. Your line is open.

Hey, good morning, and thank you for taking my question. Just to get further clarification on the previous question regarding the joint venture in Chile, has America Mobile contributed any more capital during third quarter for the Chile operations? And then one thing to note, the joint venture partner, Liberty, did admit on its 2Q call that that America Mobile has been making most of the contributions to date. Are we to expect that going forward? And more from the perspective of America Mobile's plans, you know, right now, I know you mentioned that your previous statements are that you said that JV is 50-50 and you like Liberty, but considering America Mobile has been making most of the contributions and what you've been doing, would you look to assume control in the future? Would that be a possibility? And lastly, would it be possible to get the Chilean JV's management maybe increase communication regarding what's going on there? Because for bondholders, since the JV has been closed last October, communication has been very low. So we'd like to see an increase if we can get it if possible. Thank you.

Well, thank you. Let me begin with the last part of your comments or questions. I think we've heard some of these comments to the effect that maybe the company should improve a little bit its visibility that it provides to the market. We are already talking to the partners so that together we can see to it that from here on we can provide a bit more color than is strictly necessarily from the from the perspective of the guidelines of the bonds, but we could provide a bit more color on the operations themselves. So I think we will be tending to your comments and those of all the investors to make sure that you have a clear view of the developments of the Chilean operation.

We would appreciate that, and I thank you for that.

So I would expect that probably before the end of this month, we can provide the financial statements through September, and that in the context of this release, that we can provide also more color, more information on the actual operations. In terms of the – I think it's very important what Daniel mentioned to the effect This is a 50-50 joint venture, and the partners needed to agree on a business plan, which we did at the beginning of the year. The business plan, as he mentioned, is not for a year. It's a medium-term business plan, and we are focused on executing on it. I think the execution has been fine, as Daniel mentioned. uh uh you know on the operational side it's very clear we are beginning to get some of the synergies that we expected first quarter or even first half of the year there were some one-offs because of the when you get these companies together there's always one of expenses there's people that leave the company etc but we don't have many most of that i mean most of that is really behind us so i i'd say that in a green a business plan. We have also agreed on what it takes to execute this business plan, and that requires also some funding. So we have put in place the appropriate mechanism that should see to it that the company gets the funding that it needs in the time that it's required. And that's basically what we have. At this time, it's only a mechanism that provides for financing throughout the period. At some point, you know, we at some point, at this point, have not envisioned any change in stakeholders, and there has not been any change as of today on any of the stakeholders. So that's all that we can say on this regard.

And one more thing. On Chile, I think I haven't mentioned that, but we're already put, We're very happy in American Mobile with the management that we have there. As Carlos said, we have to structure and to take out some people and put other ones, but right now we feel that the management that we have there is in place, working, and focusing on executing that. So that's also something that we are happy in there.

Has there been any other further capital in the 3Q results for America Mobile to VTR? I mean, to the joint venture?

There hasn't been any capital raised at the level of VTR, so there hasn't been any equity provided. And as I said, and I don't think we can go beyond that, I think there's been financing mechanisms that have been put in place to ensure that the company gets the funding required to execute its business planning. That's it. At this point, we're not envisioning any capital contributions.

That's it. Okay. Thank you.

Thank you.

Thank you. Our next question is from Sumit Dutta from New Street Research. Sumit, please go ahead. Your line is open.

Yeah. Hi. Hi, guys. A couple from me, please. One, just on the group prospects for service revenue and EBITDA, your medium term guidance or your 2022-2024 guidance has seen EBITDA running ahead of service revenues. The guide, I think, is 4% to 6% versus 2.5% to 4%. So service revenues and EBITDA run rate is similar today. I just wondered, do you still see the opportunity essentially for margin expansion? Do you see the opportunity for EBITDA run rate to come in ahead of service revenues as we look forward? That's the first question, please. And then the second one, if I could, on Mexico, I think you have been resistant to increasing prices over the last few quarters. I just wondered how you're looking into 2024. Do you still think that's the right strategy or is there room to consider lifting prices, or do market conditions not allow for that? Thank you very much.

On the first question, I think the revenues that we're having, the service revenues that we're having, are running at Carlos' 3.8%, and the EBITDA is going and increasing 3.9%, taking all that one-off and everything. I think we have a very good platform. We're very focused on controlling costs and expenses. In every country it's a little bit different. In every country you have managed to increase a little bit uh the uh and pass through uh the inflation to some prices uh to some segments uh in other ones no uh we can't uh we haven't done that done that and uh but in every country we have a big platform controlling cost controlling expenses and digitalize more, reducing people. So we have a very focused controlling cost strategy on the company. So that's something on that. And in countries where competition allow us to do that, then we can pass through a little bit on that. The second question, can you repeat that?

It was a question on Mexico and on a similar theme, price increases. I just wondered how you're looking at the outlook for potential price increases. On the fixed side, we know your competitors have moved up prices and you have not. I just wondered broadly across wireless and fixed, do you see the opportunity to increase prices at all in Mexico?

Well, we still don't know. At this time, we are not thinking to increase prices at this moment, and we are focusing on putting a lot of fiber. I think we have 16 million home passes on fiber and giving to all our customers the chance to move from copper to fiber and have new customers with fiber. So we are We have 76% of our customers connected with Fiverr, and we're going to follow that. So I don't know, and I cannot tell you what we're going to do in 24, but until the end of this year, we haven't had any for the fixed. We haven't increased any prices all this year.

Okay, thank you. Thank you.

Another question? Hello?

Daisy, can you hear us?

Apologies. I was muted. We have a question from Cesar Medina from Morgan Stanley. Cesar, please go ahead. Your line is open.

Great. Thank you so much for taking my question. I have two related questions. The first one is, what is your read on the stock performance today after the print is down 6%? And then related to that, If I hear all the commentary around, it seems the following. Service revenue is going well. You have room for market expansion. CapEx is on a positive trend. It's not lower. So is there room to increase or like to start a discussion of increase in shareholder remuneration given that two-year yields are like north of 5%? Thank you.

Okay, Cesar. You're asking for a question of what we think, and I'll tell you what I think. I think there's a lot of stress today in the market. You see 10-year interest rates have been climbing sharply the last day, the last couple of days. They are now, last time I saw it, 490. That's the highest level they've been. since all of these prices for weights started to rise. So they are now close to 5%. This in spite of the Fed having been saying that they probably didn't need to raise weights once again because the market was doing the work for them. So, you know, my view is that there's a lot of stress in the market. That means that it's a risk-off. And when people want to go to de-risk, often they sell for this liquid. And I don't think that, you know, sometimes I make them all utilized as a proxy for other things, given the liquidity. That's my take. And I think it has less to do with the actual results. It has more to do with the move to the risk given stress in the market.

In my view, I think, as Carlos said, he gave his view, my view is that the results were consistent with what the market thinks, and I think the fundamentals are okay, and the business in America mobile is growing, and it's okay, so that's my view.

No, no, no, I'm with you, so this is why I was just flagging, you know, If you look at margin trends, revenue trends, is there scope for you to evaluate perhaps increasing shareholder remuneration?

Yes. So, again, that takes us back to one of the prior questions that we were saying. We typically tend to pace our share buybacks with materializes mostly the last third of the year. I had already said that since July we have had a significant deployment of resources in Share Buybacks. We have had since the end of June till today $350 million in Share Buybacks and we're still not done. And obviously we still have another big payment of dividends, $800 million or less in the U.S. that will be made in November. But certainly Share Buybacks, you know, We can continue with them because this is the time when we can get the funding, the leverages where we want it to be, and the cash flow is coming in as we expect it to.

Thank you. Thank you.

Thank you. Our next question is from Andres Ulrich from BTG. Andres, please go ahead. Your line is open.

Hello, thank you for taking my question. I would like to ask a question related to margins in Mexico. Last year, we saw good expansion across the year, and this year has been quite volatile. The first quarter posting quite large margin contraction and happening again this quarter. So what's your view on the level, sustainable level of margins in Mexico going forward? That will be my first question. Thank you.

We're checking a little bit. I think the adjusted margins, I think that maybe you have to look at the adjusted margins because we have done from time to time some tower sales. So that has had an impact on the margins. So if you look at adjusted margins, in 3Q22, it was 41.0%. In second quarter of 23, it was 40.9%. And we did have a direction from 40.9% to 40.0% in this quarter. But I don't see a lot of volatility. I think margins have stayed in the 40% to 41% range at Justice Marine for the last five quarters.

And the growth is 5.9%, second quarter 5.1%, and this quarter 3.6%. It's more or less the growth is there and I don't think it's volatile. It's more or less following the increase in revenues.

Understood. What should we think going forward given the possible increase in minimum wages or gain of 20% on your labor costs? and the possibility to see the labor weeks reduced by one day, how should we, could this impact the operations in Mexico?

Well, we already have that increase at the beginning of the year, so it's part of the cost that we're having, and as I told you, we have been focusing a lot on taking care about the cost to have a very good cost control in all the operations. So it's not only in Mexico the increase in salaries, it's all around Latin America and we're focusing on that, being more efficient, being more digital, I see this number, I think, in America, in 19, in 1219, we have 190, let me tell you, we have 94,000 people in 2186, in 2181. In 2022, 178, and in August we have 176,000 people. So the reduction, we're not hiring people, we're being more efficient and we're training more our people. So all of that is giving us that control of the costs, no? So the reduction and retraining the people has been for the last four years, no?

And I'd just like to stress again that regarding Mexico and sometimes other countries, it's important to normalize from the effect of extraordinary things like the self-towers. Because they have been important in Mexico last year, they've been important this year, and I think you have to correct for that because the volatility in the margins you're referring to has to do with the self-towers.

Understood. Thank you very much. Thank you.

Thank you. Our next question is from Alejandro Azar from GBM. Alejandro, please go ahead. Your line is open.

Hi, good morning, Daniel, Carlos. I'm sorry I joined a little bit late, but I was wondering if you guys mentioned something about the Verizon earn out that I believed the deadline was September of this year. Could you give us some color on that if it's possible? Thank you.

Hello. We did get a payment for the earn out. It was 3.3 billion pesos. And the quarter is part of the $5.5 billion that we mentioned here in the cash flow. There was a slide there that we would be happy to provide you this slide. Thank you. Thank you. Thank you.

Thank you. Our next question is from Fanny Kanemuri from HSBC. Fanny, please go ahead. Your line is open.

Thanks everyone for taking my question. My first question is on Brazil. It seems that you're growing very well in Brazil and your ARPU is up nearly 12%.

Can you speak a little bit louder?

Can you hear me now?

Yes.

My first question is regarding Brazil. It seems that you're doing really well in Brazil and your mobile ARPU is up nearly 12% in the third quarter. Is it driven more by price increases or more by volume increases? And how do you expect this trend to go going forward? That's my first question.

Well, I think in Brazil we're doing well in market share. We're doing well, as Oscar has mentioned and Carlos mentioned also, we're starting to grow in broadband again. reducing the losses in TV, improving like 1.1 million subscribers in post-paid. So we are doing very well in Brazil. the synergies that we have and the control costs that we have. Also, we have a pass-through on part, not on all our products, but in part of our products, I think, at the middle of beginning or middle of this year. So in Brazil, we are doing okay, improving, growing revenues, and controlling costs. So that's what we're seeing in Brazil right now.

The second question that I had is on the Mexico corporate segment. The revenue growth has decelerated this quarter. Is it because it's more of a lumpy quarter or what is driving that revenue growth deceleration in the corporate segment in Mexico?

Yeah, well, as I mentioned before, in Mexico we are doing exactly the same selling those products, SD-WAN security, outsourcing of the networks, cloud services, vertical solutions. So we are doing pretty well in Mexico addressing those markets. And it's growing around 12% the revenues in corporate. So, you know, when you look at Mexico, corporate is growing. Broadband as well is growing 8.5%. So I think we are doing well in Mexico. We feel that we continue with that. We have the base of the network. We did the right investments in the network, not only in fiber. We reskill the people to sell these new set of products. So we bring people with experience in cloud services, in vertical solution. So I think... we see this market trend pretty optimistic. Thanks for answering my question. One question, one comment on what Oscar said. Because the issue with corporate networks are very new, which we mentioned. In gaming, shares become more important in most operations. but it can be sometimes volatile. Sometimes you get a new contract and you book all the revenues at once. But if you look at the full nine months of this year, so the volatility, you have the increase in revenues 10.3%. So the year to September, Corporate medical weather in Mexico is 10.3% larger than the prior year.

Yeah. Yeah, thanks, everyone. Thank you.

Thank you. Our next question is from Andres Cordona from Citi. Andres, please go ahead. Your line is open.

Good morning, Daniel. Good morning, Carlos. Thanks for the preliminary comments about 2024 CapEx program. Let me ask you about 2023 Networking Capital. If you can comment about what do you expect for the full year and if there was any event that explained a slower reversion on the third quarter. Thanks a lot.

Andres, I don't know if this is the question, but basically what we've been saying for a long time is that our cash flow is very cyclical because of working capital. So the first several months of the year, we require a lot of working capital, and then we get it back particularly the last third of the year, let's say. So typically, when we begin having a regression of working capital, we're beginning to get back the working capital that we contributed in the first half of the year.

Thank you. Our next question is from Till Moers from Schroders. Till, please go ahead. Your line is open.

Hello, and thanks for taking my question. It's about Guatemala. You've been fighting to get to more balanced market share there, and I was wondering where you stand currently in the process. How long do you think the remainder is going to take and what additional measures, if any, should we expect?

I think in Guatemala we're doing well. We are investing. We just get the 700 frequencies. We have a little bit lack of coverage in wireless. And with the 700 frequencies, I think we can get a little bit more coverage on that. We can get better quality. and attend more customers there. In the fix, we are putting more fiber. We're changing a little bit more copper for fiber. giving more speed to the customers. So we are doing that. We are not being so aggressive. We are not reducing prices. So the only thing that we're doing in Guatemala is we are being more focused on quality, better service, more speed in the fix, and changing our copper to fibers. and do the convergence. Also in the corporate side, we are doing also good. So we are improving our operations in Guatemala.

On the FIG line side, we have been improving on the service revenue growth. It has been negative, and now we are in positive. But it's been an improvement for the last five years that we can see.

Okay, thank you. Another question, if I may. In Mexico City, megacable is increasing its penetration and I was wondering what do you think does it mean for the competitive landscape there?

Yeah, megacable, they are built in fiber in Mexico. Some of them is overlapping the cable networks. Some of them is a greenfield. But to be honest, we have a great platform in Mexico. We have 16 million home passes with Fiverr. As I mentioned, we have 76% of the customers already connected with Fiverr. Let me add that we've been doing very well to bundles with streaming platforms as HBO, Netflix, Claro Video. So we bundled the broadband with this streaming and has been very well-received in the market. I agree, megacabri is growing with fiber, but I think we have the right network to compete. So we already have fiber. So I think we have a good proposition in the market to compete with the other competitors, not only with megacabri.

All right. Thank you. Thank you.

Thank you. Our next question is from Jesus. Our next question is from Jesus Romo from Global Data. Jesus, please go ahead.

Good morning. Thank you for taking my questions. I have a quick question regarding domestication. I wonder if you could provide additional color on the acceleration in Mexico for appropriate network services. you know, a bit of color of what's happening there or some context. And what's guiding the broadband revenue, given that, you know, you do less in this quarter? What's wrong with the revenue over there? And the second question is for wireless. Just a bit of color of what's guiding phosphate net ads in Mexico and art to grow in Mexico. Thank you.

Well, I'm going to start with wireless. I think what wireless is driving a little bit better ARPU and growth is our 5G network. I think we have more coverage, better quality, and we are really the only one that has been investing in Mexico in 5G. So customers are using that network, using more data, and sometimes upgrading their plan to have more data. So that's more or less what we're seeing there. and in the fixed side, in corporate?

Well, as you know, the corporate market, it's a totally different market than the mass market. The negotiations take many months to really get the projects. In some quarters, we won a very large project, and in other quarters, we don't. But what we see is that we have a great pipeline in place. So, you know, this kind of selling is... different approaches. You need to go to the customer to show a business case of the efficiency, the cost reduction, the productivity, and it takes a while to convince the customer. Sometimes we want a very large project and some quarters we don't, but what we have is a very good pipeline that we are following, so that's why we are optimistic on this market. Just to repeat what we said before, if you look at the nine months to September, Corporate net worth revenue in Mexico increased 10% year-on-year. OK, so when you look at long enough periods, then you can make .

Yeah.

But what is important is to have a good pipeline of opportunities, right?

Thank you. Thank you.

Thank you. Our last question is from Alejandro Lavin from Santander. Alejandro, please go ahead. Your line is open.

Hi, good morning. Thank you all for taking the questions. Thank you for the call. I just have a quick question on Argentina. You're seeing good growth there. So could you please expand on what kind of opportunities you're seeing there over the medium term and how do you balance that versus the current macro environment and FX depreciation? Thank you.

We know what is happening in Argentina with the micro-environment. But where we're seeing good opportunities is in the fixed line. We have been running the wireless for a long time. We have a decent market share. We're growing. We're doing well. And we started maybe four years ago in putting fiber, and it's given very good returns, this fiber. We have like 1.2 million broadband subscribers in Argentina right now, and that's where we see good opportunities in all the PIX platforms. Pay TV, PIX, and broadband is where we see that. Okay, thank you. Thank you. Thank you very much.

Thank you. This is all the time we have for the Q&A session today, so I'd like to hand back to management for any closing remarks.

No, just thank you, all of you, for being in the call. Thank you.

Thank you, everyone, for joining today's call. You may now disconnect your lines and have a lovely day.