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Millicom International Cellular SA (NASDAQ:TIGO)
Q1 2021 Earnings Call
Apr 29, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Michel Morin

Hello, everyone, and welcome to Millicom's first-quarter 2021 earnings call. I'm Michel Morin, head of strategy and investor relations at Millicom. And this event is being recorded [Operator instructions] Our speakers today will be our CEO Mauricio Ramos; and our CFO Tim Pennington. [Operator instructions] By now, you should have received a copy of our earnings release, which is available on our website, along with the slides that we will be referencing during today's presentation.

Now please turn to Slide 2 for our safe harbor disclosure. We will be making forward-looking statements, and these involve risks and uncertainties, which could have a material impact on our results. We will also be referring to many non-IFRS metrics throughout the presentation, and we define these metrics on Slide 3, and you can find reconciliation tables in the back of our earnings release and on our website. With those disclaimers out of the way, let me turn the call over to our CEO Mauricio Ramos.

Mauricio Borrero -- Chief Executive Officer

Thanks, Michel. Good morning, and good afternoon, everyone. Thank you for joining us today on this first videoconference call. I do hope that you enjoyed the video that we just showed.

This video gives you a summary claims into Tigo's vibrant culture. We refer to it as Sangre Tigo. It is our culture, our war cry, our work ethic and our passion and an important competitive advantage. It became more and more important during the pandemic as it rallied all of us to be there and close to our customer base during the crisis.

It helped us navigate well through the same, and we will see in a minute just how extremely well it did, because our purpose as a corporation is clear to all of our 21,000 employees, because our strategy is well known by you, and it can be flexibly adapted to circumstances. Because our culture, this Sangre Tigo, is powerful and perfectly aligned to our purpose and our strategy. The last few years, indeed, we have built one of the leading telecom platforms in Latin America. We are today an employer of choice, a top great place to work in the region.

Our networks now consistently rank best for quality. Our Tigo brand is top of mind in our markets, and we're No. 1 or No. 2 in all of our countries in Latin America.

And now we're 100% focused on this region as we recently signed agreements to sell our two last remaining operations in Africa. These transactions will help us reallocate capital, further delever our balance sheet and focus on building our future in Latin America. Now please turn to Slide 5, as I am keen to highlight our phenomenal and promising results in the region this quarter. This is our Q1 in a single slide.

First, Q1 was nothing short of a fantastic quarter for us. We beat all of our internal projections, and we're now above pre-COVID levels on almost all KPIs, countries and lines of business. Second, we had record net adds in Q1 on both Cable and Mobile. And that came on top of the record quarter we just had in Q4 as a result of our customer base is up substantially year on year in both Mobile and Cable.

So we expect this strong net momentum to drive revenue growth in Q2 and in the second half of the year. Third, our strong performance is very broad-based across all business lines and every country. And fourth, this is investment-led growth. As you have heard me say many, many times, we're a network-centric company.

We continued to invest for the long term throughout the pandemic, and these investments are now beginning to pay off. We have held or gained market share, retained or enhanced customer satisfaction and significantly increased our customer intake as we have regained organic growth, all of this by investing in the networks, in our people and in our long-term relationship with our customers. So let's look at each one of these points in more detail, beginning on Slide 6. One of the key goals we set at the beginning of the pandemic was to protect our market leadership.

We stood by and invested in our customers when they needed us the most. At some point, we are close to 1 million of them on the lifeline product, the Producto Minimo. At that time, our mandate to the teams were simple: protect the customers, be there for them; protect the brand, make it stronger and closer, not weaker or [Inaudible] during the pandemic; and protect our employees with equipment and their purpose, so we could stay on the streets with product and service and with installation and with maintenance. You can see on the left that this has paid off.

Our customer base is up 7% in Home and 8% in Mobile. These are growth rates against pre-COVID customer counts, which means we now have significantly more customers in Latin America than we did before the pandemic. I will expand on this a bit later, but for now, look at the right-hand side of the page. Our Q1 service revenue and EBITDA are now both higher than they were last year before the pandemic, that's true both organically and in dollar terms.

We now have more Cable subscribers, more Mobile subscribers, more dollar revenue and more dollar EBITDA than we did in Q1 of last year before the pandemic. Said differently, we are above current levels in all key metrics. A bit more color on service revenue and EBITDA before we go into each line of business. Service revenue grew 2% organically in Q1.

This is volume driven by our strong customer intake in 2020 and now also in Q1 of this year. Service revenue growth for March was actually up 5.6%. Last year, we explicitly said that the lockdowns in the last two weeks of March had a $10 million impact, and this took away about 0.7% of growth in Q1 of last year and just over 2% in March last year. Adjusting for this, we grew about 3.5% and had our best month of the quarter in March of this year.

So we are above pre-COVID levels and have started the year with very strong revenue momentum, and this is what is driving our EBITDA, which grew a strong 6% in the quarter. Tim will give you a lot more detail on this in a few minutes. Now please turn to Slide 7 to look at our net adds in more detail, starting with our residential Cable business. The number speaks for itself.

I would just start there. We added 166,000 customers to our Cable fiber network in the quarter. This is a new record by far. Before COVID, we were adding about 90,000 customers per quarter, and that was already very, very good.

This is almost double that. This phenomenal Q1 comes on the back of our very strong 277,000 Cable net adds for 2020. So we have added almost 450,000 new Cable customers in the last 15 runs throughout the pandemic. I'm pleased to note that we can only paying subscribers.

So what is driving this high Cable growth, you would ask? We have long said that broadband penetration in our markets in Latin America is very low, ranging from 20% to 50% of households depending on the country, and that it is still at very low speeds compared to more developed markets. The pandemic has simply highlighted the need for speedy broadband everywhere around the world with the key difference that in our markets, the penetration levels are so much lower and their run rate for growth is so much longer. And as I said earlier, we stayed there on the streets to service and install that demand. We put in place a lifeline product, the Producto Minimo, to support our customer base, and we also introduced or increased installation fees.

We did this to ensure the quality of the net adds and to minimize bad debt, and the industry followed. And so we're now seeing lower churn. So our strong net adds reflect a combination of higher gross adds, as well as lower churn. We're seeing this in most of our markets, which is very encouraging.

As you know, we also adjusted our Cable strategy to protect cash flow and to improve our already healthy cable returns. I've been given priority to sales and net adds over our Cable build even as we continued to build at a rate of over 0.5 million homes per year. The result is that our network penetration is increasing rapidly and it is now almost at 33%. The strongest message is actually on the right-hand side of this slide.

Our Home growth is reaccelerating fast, added 8% organically in the quarter. Said differently, our cable fiber business is now 8% bigger than it was before the pandemic, as net adds have been strong and our dollar ARPU has remained stable. The last thing I will add is that Colombia, which is our largest Cable market by far, is driving this growth with about a third of the net adds this quarter. Now let's go to Slide 8 to look at our Mobile business.

I will do the same as I did for Cable and let the number of net adds tell the story. We added 1.1 million Mobile customers in Q1. This is our strongest Q1 in terms of net adds in the past decade. Every country contributed to our strong performance, and Colombia also drove growth with about a third of the net adds.

Our LatAm Mobile user base is up 8% year on year to over 43 million users now. These are also high-quality 4G customers, as you can see on the bottom left of the slide. And in postpaid, quite importantly, we added 140,000 customers. This is a very solid performance for the quarter, and Colombia, in particular, accounted for about half of our postpaid net adds in the quarter as we continue to benefit from having the best network there and our increased commercial distribution.

And as you can see on the right, our strong customer net adds are driving the recovery in our B2C Mobile service revenue, which grew about 0.5% organically in the quarter. Keeping in mind that last year was a rough year and every day matters in our prepaid business. So that's a 1% hit to prepaid in this quarter. With this revenue momentum in Mobile, and with the customers we just added in Q1, we surely will sustain that strong revenue momentum in Q2.

Now let's look at how this broad-based customer growth is driving revenue on our largest countries on Slide 9. The main point on this slide is simply that every country is showing positive trends. Service revenue growth rates in Q1 of this year were stronger than in Q1 of last year in every operation with perhaps the only exception of Bolivia. As you know, the pandemic hit Bolivia very hard, and the COVID effect was compounded by a prolonged period of political and macro uncertainty, and yet it's getting back on track very, very quickly.

As you can see on the upward revenue trend and March in Bolivia was particularly promising. Now let's turn to Slide 10 for a look at B2B. So far, you know that we have strong momentum in every country and in both our Mobile and Cable consumer businesses. And I want to spend a few minutes on B2B, which represents about 50% of our service revenue.

About two years ago, we replaced and enhanced our senior B2B management team, and we reviewed our strategic playbook. We have now better segmented the market. We have redefined, streamlined and focused our product offerings per segment. We have invested in a more knowledgeable and better trained sales force, and we have made significant investments in state-of-the-art fiber networks for B2B and data centers.

Then, of course, came the pandemic, which, as you know, hit our B2B business the hardest. You can see that on the left of this slide, and it was especially true for SME customers. You have heard me say that our prepaid business came back the fastest and the strongest as soon as mobility returned to our markets and that it is now supporting our growth. You have also heard me say that Cable stayed strong and it is now growing almost double digit.

Well, B2B is right behind prepaid and Cable in its recovery. And the reason for this is simply that our B2B customer base is growing again. We supported our SME customers as much as we did our Cable customers, and now they are coming back. We ended Q1 with more SME customers than we had before COVID, some 10,000 more.

This is very important because SME is our largest customer segment in terms of revenue. This segment will need the recovery of B2B in the following quarters. And our enterprise and corporate customer segment remained resilient throughout the pandemic. Our subscriber counts remained stable.

We have sustained or grown our market share, and growth will return once customers in these segments are ready to resume their levels of spending back to pre-COVID levels. This will come with the economy recuperating and business confidence building again, as it appears poised to do in the second half of the year. You can see on the right that revenue growth is already coming back, and we're now confident that B2B will return to positive growth in the second half of the year. Let's take you to the final point I want to make on Slide 11.

You've heard me say many times that our product is the network, but our strategy is broadband focused, and that therefore, we have a network-centric strategic, which means that we build, own and manage our networks to deliver the best possible connectivity to our clients. We do this by investing consistently in our networks over the long term, and we did just that throughout the pandemic. In 2020, the year the pandemic hit, we spent $1 billion on capex or a healthy 16% of sales. As usual, the biggest lives went for our Cable business largely to support our customer growth.

And we also invested heavily in our Mobile networks to add or upgrade thousands of sites and to take advantage of newly acquired spectrum in some of our markets. These investments have given us network superiority in many markets. This is key, and it's now widely recognized with the firms that are tracking network quality around the world, including Opensignal, Tutela and Ookla, among others. These many awards for both our Mobile and our fixed networks validate what our internal data and our customer feedback is telling us and what the phenomenal customer intake that we have had over the last quarters demonstrates.

Before I hand over to Tim, I want to again publicly thank the entire Tigo team for making this outstanding performance possible during the pandemic. It is our purpose and our strategy that is giving us direction, but it is our people and our Sangre Tigo that are making the difference. We now have more revenue, more EBITDA, more customers, higher customer satisfaction and more growth than we had before COVID hit. We did not only recover, we grew during COVID.

And the reason for that is our Sangre Tigo. Now I'm conscious and aware that the pandemic is far from over, that new waves and mutations are happening, that vaccination in some of our countries will be slow and that new mobility restrictions are being put in place or may be put in place in some of our markets. But a quarter ago, I was not as certain as I am now that the worst of the economic impact is behind us, that our business is bigger and stronger than it was, that it is growing faster and that our countries are finding their way out of the pandemic, with all of our governments balancing the appropriate policies to protect our citizens, while also allowing their economies to remain open and return to strong growth later this year. Some countries will still need to use nightly curfews or mobility restrictions around weekends or holidays, and some are already doing that.

But we don't expect a return to a total and prolonged lockdown in any of our markets. And where those mobility restrictions are put in place, we expect those to be limited in time and geography, and more importantly, we expect the effect on our business to be very limited. Now let me turn it over to Tim to go over the financials.

Tim Pennington -- Chief Financial Officer

Thank you, Mauricio. Well, what a difference a year makes. This time last year, we started the quarter strong, but we exited with great uncertainty. This year, we came in to the quarter strong, and we have exited it even stronger.

On Slide 13, you see our usual bridge from IFRS reported numbers to the LatAm segment numbers we are discussing on this call. On Slide 14, you can see the breakdown of the 2.2% year-on-year organic growth for LatAm. Very importantly, Mobile reported a positive year-on-year growth largely due to extremely strong prepaid performance. Volume was very strong, as Mauricio has explained.

ARPU fell a little, but that was largely to reflect the mix shift between pre and postpaid, and in fact, pricing has remained robust across most markets. Now Mauricio has talked about the fantastic Home KPIs. This fueled the Home revenue acceleration to just under 8%. In B2B, while we are still negative, we've made substantial progress in the quarter, and we are expecting to see the growth rates turn positive in the coming quarters.

On Slide 15, you can see more detail on a country-by-country basis. Now please note that we have adjusted our earnings presentation to report local currency growth rates rather than organic growth rates. The main difference being changes in accounting or perimeter, neither of which was a factor in Q1 2021. And in fact, you can find more details on our website.

So from the slide of local currency growth rates, we saw once again Guatemala and El Salvador posting very strong revenue growth. Guatemala benefiting from extremely good Home and B2B numbers, offsetting a slight deceleration on the Mobile business. Whilst in El Salvador, the recent network and spectrum investments have fueled very robust mobile growth. In Colombia, growth improved in every business unit and, in particular, in our Home business, which grew more than 7.5%.

And that's our fastest growth rate in more than five years. We also saw good sequential improvement in Honduras, almost a breakeven, as we did in Paraguay. Now we are slightly behind in those markets that were more affected by COVID, panama and Bolivia, but the gap is narrowing very rapidly. Turning to EBITDA on Slide 16.

You can see that we reported LatAm EBITDA of $638 million. This is up $38 million from a year ago and $4 million compared to Q4 '20, which is traditionally our strongest quarter. The EBITDA margin was also up strongly at 41.7%, and this is the highest margin we have posted at least during my time at Millicom. Now the underlying organic growth at just under 6% was mainly thanks to revenue growth and our continued focus on costs.

In fact, some of our costs are running ahead of budget, but these are all related to higher commercial activity and to the record level of net adds. On Slide 17, you can see the EBITDA by country, and I think it's fair to say that we have had a very good performance across the board. Double-digit growth in Guatemala and El Salvador, Colombia up 3.6%, with no impact on the new entrants in the quarter, and Honduras and Bolivia coming back strongly. And finally, Panama and Paraguay both improving sequentially.

And so on Slide 18, you can see how this has filtered down to our operating cash flow, which we define as EBITDA less capital expenditure. Keep in mind that there is some seasonality here given that our capex is usually back ended, but I wanted to show you that we have had double-digit OCF growth in the quarter, and this growth is coming very largely from the growth in EBITDA and not from lower capex. Now please turn to Slide 19, where you can see how our debt position changed during the quarter. Underlying net debt was relatively stable at just over $5.3 billion.

Now this is typical for the first quarter where we usually see a fairly big working capital outswing with the following inswing in the second half. The strength of the EBITDA growth resulted in proportionate leverage, excluding leases dropping to three times despite that slight increase in net debt, and with leases broadly the same as last quarter, our overall leverage has reduced to 3.13 times. Now as you know, we make it a priority to reduce our leverage, we've made that a priority during the pandemic, and you can see the progress on this front on the next slide on Slide 20. Last year, we focused hard on reducing our net debt, given the uncertainty around EBITDA, and we reduced net debt by around $0.5 billion, and this supported the leverage reduction in the last two quarters.

As we progress into 2021, we expect EBITDA will continue to improve. That reflects a stronger recovery than we might have expected, and this will support more flexibility in our capital allocation. As Mauricio said, even more confidence in the macro outlook, our businesses are performing well across the board, and our EBITDA is growing. So we intend to prioritize profitable investment, as Mauricio said, we will continue to focus on deleveraging, and we will also resume our share buyback program later this year.

So with that, let me hand back to Mauricio to wrap up.

Mauricio Borrero -- Chief Executive Officer

Thank you, Tim. Before we take our questions, let me recap the quarter. First, this was a very strong Q1 with record net additions and excellent operational performance across all our markets and businesses. Second, our growth is accelerating, with organic service revenue growth returning, which is driving both our strong EBITDA and operating cash flow growth in the quarter.

March was particularly strong, as I've already said, and this momentum has continued into April. We're feeling a lot more confident about our outlook today for the rest of the year than we did just a quarter ago. Third, our leverage continues to decline, and we expect to make a lot more progress on this front by the end of the year, particularly as we now have EBITDA growth in the system. Fourth and finally, our priority will remain to invest in the business and in our networks to drive faster organic growth.

We're emboldened in this approach by the results of the last couple of quarters. Because of that, we want to keep the immediate flexibility to invest more this year in business as we see the clear opportunity to capture more growth. As a result of all this, we are confirming our goal to deliver at least $1.4 billion in operating cash. You all know that we could deliver much more, but we feel it is best to retain the flexibility that has worked so well for us.

And with that, we're now ready for your questions.

Michel Morin

Thank you, Mauricio, and thank you, Tim. We will now begin the Q&A session. [Operator instructions] So with that, our first question will come from Stefan Gauffin at DNB. Stefan?

Stefan Gauffin -- DNB Markets -- Analyst

Yes. Hello. So a strong set of numbers, both on subscriber intake, service revenue and EBITDA, and you talked a little bit about your outlook, but perhaps not as outspoken as you have been earlier. And in Q4, you commented that you were unlikely to meet the medium-term targets regarding service revenue growth, mid-single digit and high single digit -- mid- to high single-digit growth for EBITDA in 2021.

Given the solid start and much easier comps, solid subscriber intake, do you still think it is unlikely that you can meet these targets? Or are you just being cautious? I'll stop there with the first question, and then I have a country question as well.

Mauricio Borrero -- Chief Executive Officer

So let me start with a little bit of -- kind of our view on what has changed. And then I'm sure, Tim, you can add. What we have seen during the last 15 months, pandemic plus this quarter, is prepaid coming back very, very quickly as soon as there's mobility allowed. And as we look forward, even with limited curfews or nightly curfews here, we find that consumers on prepaid adapt very, very quickly.

We're seeing that they top-up more, which is good for the prepaid business, and our connectivity has remained particularly important for them. Home, as you've seen, because penetrations are so low and people want broadband, and we've been providing that service, is growing rapidly. And so -- and B2B, as I said, is coming back. So we feel a lot different from the way we felt certainly a year ago, and certainly, the way we felt one or two quarters ago, because we've seen that the teams and the strategies that we put in place to manage the pandemic has reacted so strong.

So we're ahead of pre-COVID levels with growth now stronger than it was before. And we see a strong and healthy runway for us to continue to grow. As we become more and more emboldened, as we said a quarter ago, we're likely to invest more this year to capture more of that growth going forward because everywhere we've build Mobile or everywhere we've build Cable network, we see the results immediately. And whereas last quarter, I was talking about keeping flexibility, because there was a lot of uncertainty about macro and where we would be with regards to COVID and because we wanted to keep some flexibility in that if we needed, now, Stefan, we're keeping up flexibility largely because we want to invest to capture growth, and a lot less because we're uncertain about our ability to manage through the remaining part of the pandemic.

So our outlook is, as you've noticed, certainly improved and pretty positive. Tim, do you want to add anything to this?

Tim Pennington -- Chief Financial Officer

Yeah. I would just -- I would say -- I think I said to you guys last quarter that my litmus test for Q1 would be that we have higher growth than Q1 '20 because that was pre-COVID, and we did deliver that. So clearly, Stefan, you're right that the outlook is looking strong for us. Q2 and Q3 are going to be -- because there was such difficult quarters for us last year, I think the comp there is not going to be that meaningful in reality, and certainly, from an internal point of view, we're not sort of patting ourselves on the back to step over the Q2 '20 comp.

Yes, we're looking at sequential growth, and we're looking at the growth against 2019. So yes, on those headline numbers, we're going to have a good year in 2021, but I think in terms of our outlook, it's about sustainable long-term growth rates. And I don't think that we can sort of take a lap of honor on hitting a 2021 number. We're building a business to drive to those medium-term growth rates on a sustainable basis in the future.

Mauricio Borrero -- Chief Executive Officer

I think, Stefan, what I said was, I think on the prepared remarks, which I believe is true, is that, in developed markets, you saw sort of a COVID bubble, if you will, for broadband. We view it very differently in our markets because penetrations are low and speeds are low and demand is so high. For us, I think, the runway is much longer. And as I think that's very, very important for us.

There really is just a long runway for broadband adoption in Latin America. So what this couple of quarters have shown is, if you're on the street, if you build a network, that demand will come sustainably to us into the future.

Stefan Gauffin -- DNB Markets -- Analyst

Yes. And then just a question on Colombia. There's a new competitor. You stated that you have seen limited impact in Q1.

But what have you seen in terms of operations, changes in price plans, marketing activity, etc.? Any flavor would be helpful. Thank you.

Mauricio Borrero -- Chief Executive Officer

Yeah, sure. So first, a little bit about the new entrant and then a little bit more about Colombia. So for clarity, the new entrant launched right after Easter in early April. It's actually some six months later than they had announced they would launch, so obviously, there were some hiccups there.

The launch itself, in terms of the product offer, was exactly as we had expected given all the work that we had done to see what they have done elsewhere. Effectively, they did something similar to what they did in Chile in terms of the product offer. There was no difference, nothing unexpected there, which is basically three more times data for the same price. And the market matched immediately.

Literally, we were so operationally prepared, that we matched within a matter of hours. And of course, you -- as we expected, it's pressure on ARPU, and that's completely within the expectations. Let's put that into context for us rather than what they did. We're not an incumbent in Mobile in Colombia.

We only have 15% market share. So we'd be opposite. We are a challenger, and that's what the team has been preparing to do regardless of the new entrant, because we have that brand-new network with very low payloads on it. So our network is not legacy constrained at all.

So we can play the high allowance game, that is what the market is playing now, specifically high allowance on the data game, because we have this brand-new MT network on it. So we're well-positioned -- extremely well-positioned to play what I call the volume game now, because we increased commercial distribution, as you know, and we have this brand-new empty network with full-spectrum capacity, and you will develop it faster than anyone else. So what this is going to be is pretty much a volume game, and we need to focus on that for the period throughout which this sustains. Now it's still early, but the launch has had little impact so far on our net adds and on our gross adds.

We are growing through April in Colombia strongly, both on postpaid and on prepaid. We're expecting that Q2 prepaid gains will be in line with 100,000 to 200,000 that we're expecting, and our postpaid in Colombia through April after launches remain extremely strong as well. Now it's early days, but that's what we're seeing. And we're focused on gaining subscriber base, because we are not an incumbent in Colombia.

And in the meantime, our Home business in Colombia has remained very, very strong. It's actually our biggest Home business, and it's growing very, very well. You've seen the numbers. That's largely because we built all that network and corporate attrition on our system in Colombia is now very, very limited.

And our B2B business in Colombia is also picking up. Now strategically, big picture, in Colombia, number one, we have an empty mobile network that we're putting to use in this future volume gain that we see evolving. Two, we have a state-of-the-art Home network in Colombia that we've basically reengineered to get rid of the copper, and now it's giving us a lot of growth. And three, throughout the last year, we increased not only network but also commercial capacity and distribution.

And number four, in Colombia, we will now have, and this is why you're seeing us pick up volume, access to Bogota. Bogota is about 30% to 35% of Colombia. A year ago, we had little Mobile access, because we were using high-frequency spectrum in Bogota. Now we have low-frequency spectrum and empty network and access to Mobile in Bogota.

That is huge, Stefan. And I was sure you've also noted that fiber in Bogota has been opened. The fiber owner in Bogota has opened a network to new entrants. So we have now access to Bogota both on Mobile and on fixed.

And largely, point number five on Colombia, big picture, is we have a team that's executing extremely well. We got our act together in Colombia. Now there's a new entrant. It's a volume game, but we're not an incumbent, and we got all the goods to play really, really well in that market.

That's the entire Colombia story, Stefan.

Stefan Gauffin -- DNB Markets -- Analyst

Thank you. That's very clear.

Michel Morin

Thank you, Stefan. Our next question is going to come from Marcelo Santos at J.P. Morgan. Marcelo?

Marcelo Santos -- J.P. Morgan -- Analyst

Hi. Good morning to all. Thanks for taking the questions. I would like to ask for competitive updates specifically on Paraguay and Bolivia.

Paraguay, more on the fixed segment. And in Bolivia, how is the behavior of state-owned Intel?

Mauricio Borrero -- Chief Executive Officer

Sure. So let's start with Paraguay. Macro in Paraguay, COVID has been managed quite well. And we're now seeing a little pleasure for the government to accelerate vaccinations.

But overall, Paraguay has remained very resilient and you know this. If you go back to what we've done in Paraguay, to answer your question more specifically, we've put in a new teams two or three years ago, we acquired spectrum, we put a new network, and we've significantly increased our quality of service. At the same time, we continue to build Home, and we've been closing that price gap that existed in Paraguay to basically defend completely our market share with a better value proposition. GDP is expected to grow in Paraguay, 4%.

So we've now basically stabilized Paraguay in terms of volume, and you see that in the numbers. And we think we've reduced our price gap. And with all the goods that we have, the network, the teams and the content rights, we think we can begin to see that business grow into the future, particularly to answer your question, because we've seen competition be more rational. It isn't that it isn't there, but it is more rational, Marcelo, and that's largely because they've seen us, I think, really strong in defending our position and our market share, giving little room to the others to play anything other than a more stable, more rational game.

And you've seen the quarter numbers. I think they had a speak to this point, the net adds are positive, both on Mobile, some 60,000, and now the base up it's 6% year on year. And Home as well is growing quite nicely, the base is up 4% with almost 20,000 net adds. So Paraguay is more stable.

Bolivia, as I said on the prepared calls, it had a double whammy, political and economic uncertainty and then competition. Just to say it very quickly, there's new management at Intel, and that new management has appeared to be a lot more rational in their pricing. And I think that's with the view that I think the government needs the company to produce, and as a result is a lot more rational. And you saw that in the quarter actually in terms of the net adds.

Mobile is 50,000 net adds, and Home is phenomenal with 50,000 net adds, strongest quarter since 2018. And March, as I said on the calls, was particularly strong. So we see Bolivia certainly more rational on pricing and coming up. Tim, maybe you want to add a little bit of color from your point of view.

Tim Pennington -- Chief Financial Officer

Not to what you said, Mauricio. I think just maybe more generally, pricing has been pretty stable across all of our businesses in the quarter, kind of prepaid in particular has been -- we've actually seen some price rises in some markets. So now fingers crossed, there's some kind of stability out there.

Marcelo Santos -- J.P. Morgan -- Analyst

Perfect. Thank you very much.

Michel Morin

Thanks, Marcelo. So next, we have a question that came in via email. I'm just going to read it for you, Mauricio and Tim. It's from Johanna Ahlqvist with SEB.

She's asking, maybe this is for you, Tim, how big is the impact from lower bad debt in the quarter? And whether or not we expect this trend to continue going forward? The second question was on competition in Colombia, but actually, I think we just answered that one, so we can probably ignore that for now.

Tim Pennington -- Chief Financial Officer

So on bad debt, I mean, we did have a lot of our debt charge than we had a year ago, probably about $10 million lower. But it's kind of sustainable. I think the thing that we're seeing is that our collections are really very, very good, and they've been improving. We've seen churn reducing, so people aren't leaving as much.

And we have introduced things like installation fees, front-end payments. So our customers are more committed. So while our bad debt charge is lower than it was a year ago, I think this is an underlying sustainable sort of lowering of our bad debt charge, at least during this next period.

Mauricio Borrero -- Chief Executive Officer

So what happened during the pandemic is that we got better on our collection path and our processes. We put those upfront installations, the industry followed, and we just got increasingly better because it was critical. And all of those improvements we've kept going forward, and they seem to be making -- creating a better industry.

Michel Morin

Great. Thank you. I think that should answer the question from Johanna. So next up, we have Sergey Dluzhevskiy from Gabelli.

You can go ahead with your question.

Sergey Dluzhevskiy -- Gabelli Funds -- Analsyt

Good morning, guys. Thank you for taking the questions. My first question is on Mobile Financial Services, I think you provided an update a few quarters ago. I was just wondering, has anything changed now that you're out of Africa? And I guess I was wondering about the Mobile Financial Services business in Latin America, where do you expect it to go? I guess what is the size now? And where do you expect to be in five years?

Mauricio Borrero -- Chief Executive Officer

That's a great question, Sergey. Of course, just on building the business, the MFS or fintech business, and as we build it from a very strong base, by the way, as you know, we've got 5 million users, we're going to give ourselves a little bit of time to get that properly built, and we eventually will start reporting on it more on a quarterly basis. We just don't think it's important for us to be focused on the quarterly gains, where we're looking at the -- building the business long term. And that's true for -- actually, the two platforms, Sergey, that we're trying to build as we grow Cable, Mobile and B2B, there's a couple of platforms that we're building.

One is infrastructure, of course. As you know, we have a ton of towers and now a dozen data centers. We installed one in Bolivia just yesterday, actually. We got about 100,000 kilometers of fiber.

So we have an infrastructure platform there that we're strategically figuring out how to best optimize and put out. And then we have this fintech platform. We brought in, Sergey, new management. So we've got an entire new management for our fintech platform.

We're also developing local capabilities. And the key point here is that those 5 million users are growing, their ARPU stable and growing. We're doing over $2.5 billion of transaction. But as I said on a couple of quarters ago, we're still in a low-margin, high-volume peer-to-peer game.

We want to build that platform, be the payment platform or choice on all of our markets, and then on top of that, we're going to build the fintech business. So we'll give you more color in the following quarters.

Sergey Dluzhevskiy -- Gabelli Funds -- Analsyt

All right. Thank you. And my second question is M&A. I think over the past few quarters, you guys have been pretty clear that the near-term focus is on, whether or not the crisis, reducing debt, delivering on synergies, making the right investments for the future.

But I guess my question is, given all that, are there still assets that you would be interested in, given this pandemic-affected environment? And also has anything changed -- has the pandemic or any other event over the past 15 months changed how you think about M&A and relative attractiveness of certain markets or certain assets?

Mauricio Borrero -- Chief Executive Officer

So we don't have a current M&A focus, Sergey, because I think, as I've said many, many times, that our greatest opportunity is in-house. Now we're putting our money, as you see, to grow the business organically. And then as I've said, we want to keep the flexibility this year to put more money into better coverage, wider coverage, both on Cable -- and particularly on Cable and Mobile. So that's where we're going to focus our money.

And we also have, as you've heard me said a number of times, internal M&A, which I think is very accretive to us. So we want to keep our eyes focused on that.

Sergey Dluzhevskiy -- Gabelli Funds -- Analsyt

Great. Thank you.

Michel Morin

All right. Thanks, Sergey. [Operator instructions] And actually, the next question, I'm going to read it for you, Mauricio. I think this one is for you.

It's from Bill Miller, a longtime shareholder. He's saying that we've done a lot of strategic things recently. What are our next strategic endeavors over the next one to three years?

Mauricio Borrero -- Chief Executive Officer

Great question. I think I addressed it already. I mean our strategic focus remains to grow our core business. We have great, great broadband demand, which I believe is sustainable and long term.

I've said this for a number of years. It is just now being crystallized. So we will continue to remain focused on great network, great customer service and customer intake on a very network-centric platform. We'll continue to build and add customers for us.

Strategically, we're now only Latin America. So over the last five to six years, we've completed the exit product that we allocated capital to Latin America, and our organic growth opportunity is strong. Our inorganic growth opportunity is also strong within the business, as I said earlier, because there's a lot of EBITDA, almost $800 million of EBITDA that we manage, but we don't own. So that's a tremendous organic opportunity that's in-house.

And we're very focused on building strategically these two new platforms: our infrastructure platform and our fintech platform, and those are important strategic moves for us. And we're building this unique telecom infrastructure and fintech platform. That's what our focus is on.

Michel Morin

Great. Thanks, Mauricio. We did get a follow-up by email, again from Johanna Ahlqvist at SEB. She's asking about Tanzania expected proceeds and the timing.

I think she was also curious as to when we might deconsolidate the results from Tanzania. So perhaps that's more for you, Tim.

Tim Pennington -- Chief Financial Officer

Yeah. So we have now signed the sale purchase agreement. The -- there was a period now that takes place, which is to go through regulatory approvals. It's very typical in all telco deals.

These things don't have defined time lines, but we'd expect on a normal basis would take six months to go through those processes. We will not be deconsolidating until we have gone through the process and we have regulatory approval. That's just an IFRS thing, and we will continue to hold it in our numbers until then. But I think, frankly, we've got enough disclosure for you to understand the impact on the group anyway and make your own adjustments.

And as to the proceeds, we will be using those to effectively pay down debt, reducing leverage. We haven't -- as with all of our previous Africa deals, we haven't announced a price. We won't do that until we get to the end of the process. So hopefully, Johanna, that covers it.

Mauricio Borrero -- Chief Executive Officer

You're going to have to just trust us a little bit that this is a competitive process with multiple bidders. You can see that we're happy with the outcome strategically as we are also financially, because it helps us delever and it helps us focus on our strategic future, which is Latin America.

Michel Morin

Perfect. Thank you. We have Stefan Gauffin from DNB back with us for a follow-up question. Stefan?

Stefan Gauffin -- DNB Markets -- Analyst

Yes. I refrained from asking this question earlier, so now I have the chance. So it's on Panama. It was actually that market that surprised me the most given the really, really strong recovery.

And you state that the consumer business is back to growth and compensates for weaker in B2B. I can see the subscriber numbers, both Cable and Mobile, are strong. But can you give some more flavor on the overall development for you in Panama?

Mauricio Borrero -- Chief Executive Officer

Yeah, absolutely. When the dust settles on the pandemic and the impact it had on Panama, which, as you know, GDP came down 18% last year. That's not small. When the dust settles on that, it will be clear that this was a phenomenal strategic move for us.

Dollar-denominated No. 1 market position, executed strategically through M&A in less than 18 months. You will have seen perhaps, Stefan, that yesterday, we changed the brand to Tigo after a very successful integration process. So we've now really created a single platform in Panama that did not exist two and a half years ago, and it's branded Tigo.

The outcome once the dust settles is going to show very, very strong for us. I think we're outperforming in every segment in Panama. And as you know, customer intake is followed by financial results. Both our Home and Mobile businesses in Panama had significant important intake.

Mobile is up 130,000 net adds just this quarter. The base is up 18% from what it was a year ago, pre-COVID levels. Mobile up 18% from what it was before, because the cross-selling, which was the strategic move we wanted to implement, is working. Remember, we bought an asset that has significant Home market share, state-of-the-art network and the Mobile asset had much lower subscriber base.

So we're cross-selling. Every time we go to a home, and we did this throughout the pandemic, we sell sim cards into that home. It's cross-selling at its best. But the Home business itself is actually being very, very strong.

We added 13,000 net adds. The base is actually 8% year on year, and ARPU is down slowly. So what does this tell me? That once the impact of COVID is behind, this business is going to blossom, and it's going to show all the potential that we thought it had when we acquired the assets before COVID hit. Now lastly, Panama was hugely hit by the pandemic, we all know that, but it's also recovering super, super fast.

The government has reacted strongly, and has one of the better vaccination programs that we're seeing in the region. The numbers for COVID were high in Panama, the impact was high, but the vaccination has been secured, and vaccines have been secured and a vaccination program is in place. And a result of that, we'll also see, we expect, B2B rebounding in Panama. I don't know exactly when it will be, but with the economy it will come back.

So you can see, I think, that we believe we've put all the pieces of the puzzle in Panama to be ready for a strong comeback.

Stefan Gauffin -- DNB Markets -- Analyst

OK. Sounds great. Thank you.

Michel Morin

Thank you, Stefan. So we'll go from one Stefan to another, Stefan Billing from Kepler Cheuvreux. You're on.

Stefan Billing -- Kepler Cheuvreux -- Analyst

Thank you very much, and hi, everyone. Yeah, I have a couple of questions. One is that it seems to me that your Central LatAm markets have benefited quite significantly from rapidly growing remittances. I think there is some data out there as well.

Just curious if you agree on that. And also how sustainable do you think this trend on remittance growth is? When will you meet, let's say, tougher comps on that side? That's one question. And the other one is, once again, if you can share some details on M&A synergies, and also, how much integration costs you have incurred? And how much is left? Thank you.

Mauricio Borrero -- Chief Executive Officer

I'll give you, Tim, a few seconds to prepare number two. On the first one, Stefan, yes, remittances have been very strong throughout COVID. We expect remittances to continue to be strong. They seem to grow every year high single digits.

And the interesting thing, and this is why we think it will continue to grow, is that this trend goes back 15 years, and they remain strong. There were question marks around whether they would weaken throughout the pandemic. The pandemic demonstrated that they didn't. So going forward, we expect them to continue to be strong.

It just seems to be a natural, very important part of what they are. And as you know, in most of the countries, perhaps with the exception of Panama and Nicaragua, remittances are 10% to 20% of GDP and growing low to high single digits. So it is just a structural part of those economies, which is very positive.

Tim Pennington -- Chief Financial Officer

And on the synergy question, Stefan, well, run rate now is around about $35 million. That is basically a target level of opex, capex synergies that we set out as adjusted for Costa Rica. We've got them by the end of the second year. We had planned to get the full run rate by the end of the third year, so into the fourth year.

So we're ahead of that. We have said around about $40 million, 4-0, on the costs of the integration. We think we'll spend about $60 million, so another $20 million to go. If you remember, the original estimate was $100 million albeit that did have costs to recur.

So actually that bid has gone really, really well, and we've now effectively dismantled the integration team that we had because the business is running very well on a BAU basis. A few -- but there's a lot of nitty gritty stuff to do, we've just migrated to an SAP CRM system. And so kind of a lot of stuff like that. There's an awful lot of work done.

But I do think that is very evident that we've been getting high levels of synergies than we originally expected, and we've got them faster.

Stefan Billing -- Kepler Cheuvreux -- Analyst

OK. Thank you very much.

Michel Morin

Thank you, Stefan. That is all the time that we had. Mauricio, I'm going to turn it back to you for some closing remarks, and I also just want to mention that anyone who missed the video that we showed at the beginning, you can get to see it again at the end. So Mauricio?

Mauricio Borrero -- Chief Executive Officer

Well, just two big thank yous: one to the entire Tigo team, thank you for a job really well done; and thank you to you all for participating in today's call and keeping an eye out on how we do. Thank you very much, and we look forward to speaking to you one-on-one in the next quarter. Thank you.

Duration: 56 minutes

Call participants:

Michel Morin

Mauricio Borrero -- Chief Executive Officer

Tim Pennington -- Chief Financial Officer

Stefan Gauffin -- DNB Markets -- Analyst

Marcelo Santos -- J.P. Morgan -- Analyst

Sergey Dluzhevskiy -- Gabelli Funds -- Analsyt

Stefan Billing -- Kepler Cheuvreux -- Analyst

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