America Movil SAB de CV
BMV:AMXB
Earnings Call Analysis
Q3-2023 Analysis
America Movil SAB de CV
The company has experienced substantial growth, boasting nearly 3 million additional wireless subscribers in the third quarter alone, with significant gains in Brazil and Austria, among other markets. The total subscriber base now stands at 306 million, with postpaid clients making up 119 million. Impressively, postpaid subscribers increased by 3.7% year-on-year, while prepaid clients grew by 0.7% and fixed broadband accesses by 3.2%.
The company reported revenue of MXN 204 billion for the quarter, a 3.3% decrease year-on-year primarily due to currency fluctuations. However, adjusting for exchange rates, service revenue grew by 3.8% and EBITDA by 5%. Notably, service revenue on the fixed-line platform increased by 2.2% and on the mobile platform by 4.8%. Brazil saw a modest increase in fixed-line service, with substantial growth in Eastern Europe. The company's net income reached MXN 2 billion, indicating a focused control of operating costs despite the revenue drop.
Capital expenditures amounted to MXN 100 billion over nine months, with shareholder distributions hitting MXN 34 billion, including a MXN 16 billion dividend and share buybacks worth MXN 7.7 billion. Net debt, excluding leases, was reported at MXN 390 billion – maintaining a stable leverage ratio of 1.4x LTM EBITDA. The company's year-to-date net income totaled MXN 58 billion, reflecting a slight decline of 2.9% compared to the previous year.
The company has taken a prudent approach to capital deployment, not seeking any immediate mergers or acquisitions and carefully considering its CapEx budget adjustments for the upcoming year. Although CapEx was slightly increased this year, a reduction for the next year is anticipated, aiming to adhere to a three-year budget strategy that commenced in 2022.
Despite facing increased competition, the company remains confident in its strong 5G network and its comprehensive cost control measures. With exceptional customer perception in coverage, quality, and digital services, the company is observing more moderated growth in prepaid segments than in postpaid. Equipment revenue has shown decent growth, suggesting healthy consumer spending on new handsets, although it may be slightly tempered by reduced handset imports.
The company is actively improving its market strategy in Colombia, with a renewed focus that resulted in strong broadband subscriber gains. A joint venture with Liberty Latin America in Chile is on track, with a clear two-year synergy program aimed at improving revenues, controlling costs, and enhancing service quality to solidify the company's position in the market.
You don't have any saved screeners yet
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 Movil Third Quarter 2023 Conference Call and Webcast. [Operator Instructions]. Now I will turn the call over to Ms. Daniela Lecuona, 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 Hajj, our CEO; Mr. Carlos Jose Moreno, CFO; and Mr. Oscar Von Hauske, 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 US economic data, particularly on government 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 through today. And we are about to close to reaching 5% on the 10-year turnoff. We added nearly 3 million wireless subscribers in the third quarter of which 2 million were postpaid 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 prepaid platform, we had net additions of 950,000 clients during the period. Eastern Europe led with 210,000 clients, followed by Brazil were 193,000, Colombia with 173,000, Argentina with 93,000 and Mexico with 81,000. In the fixed line segment, we gained 223,000 total accesses with 65,000 each from Argentina and Brazil. Voice lines and PayTV units decreased by 160,000 or 58,000 respectively. At the end of September, our subscriber base totaled 306 million wireless subscribers, of which 119 million were postpaid clients. Additionally, we have 73 million fixed line RGUs, which includes 32 million broadband accesses, 13 million Pay TV clients and 29 million landlines. Year-on-year, our postpaid base increased 3.7%. Prepaid 0.7% and fixed broadband accesses 3.2%, with fixed postpaid clients falling 2.6%, as you can see in this slide. Third quarter revenue reached MXN 204 billion, 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 region of operations, reducing the Mexican peso value of our international revenue. At constant exchange rates, service revenue growth expanded 3.8% and EBITDA 5%, which reflects among other things the effect of tower sales in Mexico and Peru that took place in the period and one-off events in Austria. Correcting for these, adjusted EBITDA was up 3.9% just about the same rate of service revenues, as you can see on this slide. On the fixed-line platform, service revenue remained on trend, increasing 2.2% year-on-year, having risen from the 0.2% pace seen in the second half of last year whereas on the mobile platform, it rose 4.8%.
Brazil attained a positive fixed-line service revenue growth of 0.1%. In Mexico and Colombia, fixed-line revenue decelerated, remaining stable in Austria and surging in Eastern Europe to 21.5%, and in Central America to 5.0%. 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 networks 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 additions in the past 3 years. Others including Mexico, Austria, Peru and Central America posted their most rapid broadband revenue growth in at least 1 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 2 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. Is something that you can see here on the slide. But going back to -- it is important to note that revenue from corporate network services has been gaining share within our revenue rate. This quarter it became the second most important revenue line within the fixed-line platform after broadband services with the consolidated figure rising 6.5%. It already accounts for 19% of fixed-line services overall, with this share reaching 39% in Austria, 30% in Eastern Europe and 25% in Mexico. Our operating profit stood at MXN 42 million in the quarter, a 6.7% year-on-year reduction in Mexican peso terms, which partly stems from the EBITDA decline mentioned before. But also from a 17% increase in depreciation of rights of use associated with our leases. Most of this effect had to do with successful renegotiation a year before of certain lease agreements in Brazil that reduced Claro’s obligations to a tower company. Our comprehensive financing cost totaled MXN 30 billion, including MXN 8.8 billion net interest expense, which was 3.9% lower than that registered the year before. On the other financial expenses, there is a MXN 4.7 billion charge associated with the partial impairment of our stake in Claro Chile, our joint venture with Liberty Latin America pursuant to the valuation of the new JV under IFRS rules had to be defined within a year after disclosing.
Finally, our comprehensive financing costs also include MXN 12 billion foreign exchange loss in the quarter, resulting principally from a 3.8% depreciation of the Mexican peso versus the dollar in the third quarter. Net income amounted to MXN 2 billion. It was equivalent to MXN 0.03 per share or $0.04 per ADR. Year-to-date our net income totaled MXN 58.0 billion. Through September, our net income totaled MXN 58 billion, 2.9% lower than that registered a year before. Capital expenditures came in at MXN 100 billion in the 9 months to September, where distribution to shareholders reached MXN 34 billion. This includes share buybacks in the amount of MXN 7.7 billion, a dividend of MXN 16 billion and were partly funded by MXN 3.7 billion in dividend income. To cover all of these expenditures, but also labor obligations in the amount of MXN 10 billion, resulted to our operating cash flow of [indiscernible] and to net financing in the amount of MXN 12 billion in this quarter in the period, with MXN 5 billion coming in mostly from the payment of an earn-out on this area of platform. As of September, our net debt-excluding leases-stood at MXN 390 billion and was equivalent to a 1.4x LTM EBITDA, as you can see on the chart, it was fairly flat [indiscernible]. It was MXN 8.3 billion the figure at the end-of-December. Okay. Well, thank you, and I will pass the floor back to Daniel for the Q&A.
Thank you, Carlos. We can start.
[Operator Instructions] Our first question today comes from Vitor Tomita from Goldman Sachs.
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 deployment -- 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 our 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.
Well, 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 are not looking at increasing more our CapEx, certainly this year. And I think we will make some comments later regarding our budget for next year. But as regards 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 3, 4 months of the year. So that's typically when we would want to increase our share buybacks. If you look at the distribution or share buyback so far this year, we spent about USD 100 million in the first quarter, USD 60 million in the second quarter, USD 272 million in the third quarter. And so far, these months with increased an additional USD 70 million basically USD 350 million between the end of June and the -- and so far in October. So still to go. Obviously, in addition to this, we have already paid USD 200 million of dividends and we have another payment of the same magnitude that we will be expecting in the middle of November. But so again, so 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 MXN 24 billion for 3 years, that's '23 -- '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 are 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 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 are aiming for, and Oscar can tell you a little bit more on that.
Yes. Thank you. As you say, the first step is how do we manage the network of the customers. And there is the SD-WAN technology that allow us to do this in an easiest way. So when we move the customer to SD-WAN, we're trying 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 like as a services. We are selling AI as the 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 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 segment because it improves the efficiency of the customers brings productivity. And we are all on digital transformation and this probably support that evolution. However, we see that market has a very good trend in the near future. So overall, on summary, we are not offering only the [indiscernible] and connectivity products that is broadband or fixed or wireless or prepaid [indiscernible] or 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 altogether to the customers.
Our next question is from Edward Ruby from UBS.
I would like to know if you could provide an update on Mexican regulatory environment, discuss the proponent revision and there is an additional regulatory risk for AMX, particular 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?
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 accomplish all the measures that IFETEL has been putting us. And -- not too much to say only, I think that we expect 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 the IFETEL take a very deep revision on what is happening on the market and we lack 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.
Our next question is from Walter Piecyk from LightShed.
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.
Well, I think what you're saying is right, it's moderation. We are still growing at 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 a very good 5G network, good coverage, we're working very hard on a controlled cost platform all around. And I think also could be a little bit on the market. Now 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, as Carlos.
Just to add something here. ARPU growth in Mexico was 1.5% year-on-year. And -- but if you look at cost, it was actually stronger. It was at 3.1%. So this is what Daniel said. The moderation was a little bit more on the prepaid side. In the quarter, it remains quite firm, not very different from what we have seen in prior quarters.
And you said also...
And you think that Daniel, you said 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 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's -- 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 decent growth?
Yes. I think on the equipment revenue, we're doing good. What is happening is not only Telcel, the one. I think we have been having a lot of imports of handsets and this has been deaccelerating a little bit. Some brands does not like, let's say, Samsung does not like that Samsung phones will come not through the 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 is more sales on equipment this month.
Got it. And then just one final question. There's a line in 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 MXN 9.7 billion. 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 than 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.
Yes, I think you are right. As you -- 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.
Our next question today comes from Marcelo Santos from JPMorgan.
I have 2. 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 which 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 and Chile and the outlook on potential capital injections that operation might need.
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 [indiscernible] focus in the area that we have a lot of competition. So we start winning share on both areas. We upgrade the network. And as you know, we are building fiber as well in Colombia. So we believe the third quarter is the trend that we are going to see in the next quarters in fixed broadband. And as well, we improved all the quality of services to the customers, time to deliver, time to repair. So we're really focused 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, 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 are 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 moving in the market, we are 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? Do you think it's on track? Or is above expectations versus what you hope?
No, I think we are on track. We don't have a synergy program for 6 months. I think we have a synergy program for 2 years, very strong, very focus and we are on track, and we're doing very well. We are happy with the way the company's volume -- we're growing -- we have been losing some customers in peak. In the last quarter, we're growing at the customer. So we are improving and improving and improving every day.
Our next question is from John Goh from Mizuho.
Just to get further clarification on the previous question regarding the joint venture in Chile. Have you -- has América Móvil 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 América Móvil has been making most of the contributions to date. Are we to expect that going forward? And more from the perspective of América Móvil's plans, right now, I know you mentioned that your previous statements, that you said the JV is 50-50 and you like Liberty, but considering América Móvil 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 JVs management maybe increase communication regarding what's going on there because since -- for bondholders, since the JV has been closed last October, communication has been very low. So we'd like to see an increase if there's -- if we can get it if possible.
Well, thank you. Let me begin with the last part of your question. I think we've heard some of these comments to the fact that maybe the company should improve a little bit, [indiscernible] 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 that is strictly necessarily from the perspective of the guidelines of the bonds, but we can provide a bit more color on the operations themselves, okay? So I think -- we will be attending to your comments and those of our investors to make sure that you have a clear view of the developments of the Chilean operation, okay, which I think... So I would expect that probably before the end of this month, we can provide the financial statements for the -- through September and that in the context of this release that we can provide some more color, more information on the actual operations. In terms of the -- I think it's very important what Daniel mentioned to the fact that this is a 50-50 joint venture, and the partners needed to agree on our business plan, okay, 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, on the operational side, it's very clear. We are beginning to get some of the synergies as 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-off expenses. These people that leave the company, et cetera. But we don't have any -- most of that -- I mean, most of that is really behind us. So I'd say that in a green 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 fit to it that the company gets the funding at each time that is required. And that's basically what we have, okay? At this time, it's only a mechanism provides for this -- for financing throughout the period. At some point, we at some point -- at this point, have not envisioned any change in stake holdings, and there has not been any change as of today on a stake holdings. So that's what we can say on to do that.
And one more thing. On Chile, I think we -- I haven't mentioned that, but we're already put -- we're very fast in America Model with the management that we have there. As Carlos said, we have to do a 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 on that.
Has there been any other further capital in the 3Q results for América Móvil to VTR -- I mean to the joint venture?
There hasn't been probably any capital raise at the level of DTR, 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 has the funding is required to execute its business plan. That's it. At this point, we are not envisioning any capital contributions.
Next question is from Soomit Datta from New Street Research.
A couple from me, please. One, just on the group prospects for service revenue and in EBITDA, your medium-term guidance or your 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 wonder, 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 a 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?
On the first question, I think the revenues that we're having, the service revenues that we're having are running as Carlos says 3.9% -- 3.8% and the EBITDA is going and increasing 3.9%, taking all that one-offs and everything. So I think we have a very good platform. We're very focused on controlling cost and expenses and every country is a little bit different. In every country you have managed to increase a little bit the -- and pass through the inflation to some prices to some segments and other ones now. We can't -- we haven't done that and -- 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 the 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 that at this time, we are not thinking to increase prices at this moment. And we are focusing, we're 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 fiber 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. [Technical Difficulty]
We have a question from Cesar Medina from Morgan Stanley.
I have 2 related questions. The first one is -- what is your read on the stock performance today, after the printing 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 margin expansion. CapEx is on a positive trend, if not lower. So is there room to increase or like to start a discussion of increase in shareholder remuneration given the 2-year yields are like north of 5%.
Okay. Cesar. You're asking for a question, but we think not about, and I'll tell you what I think. I think there is a lot of stress today in the market. If you see 10-year in progress, I have been planning sharply the last day, we have a couple of days. They are now -- last time I saw at 490, that's the highest level they've been since all of these [ patients ] for which since we started to rise. So they are now close to 5%. This in spite of the having been saying that they probably didn't need to raise rates once again because the markets are going to grow for them. So my read is that there's a lot of stress in the market. That means that it's a risk cost. And when people want to go to the risk, often they settle for this liquid and I don't think that sometimes America Movil last 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, have more to do with move to the risk business stress in the market.
In my view, I think, as Carlos said, he gives 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 América Móvil is growing and it's okay. So that's my view on that one.
I'm with you. So this is why I was just flagging if you look at the margin trend, revenue trends, is there a scope for you to evaluate perhaps increasing shareholder remuneration?
Yes. So again, that's -- then back to one of the prior questions. We were saying we typically tend to pace with share buybacks with materializes mostly the last 1/3 of the year. I had already said that since July, we have had a significant deployment of resources in share buyback. Since the end of June till today, MXN 350 million in share buybacks. And we're still not done and obviously, we still have another big payment of dividends, MXN [ 800 ] million or less in U.S. that will be made in November. But certainly, share buybacks, we can continue with them because this is the time when we can get funding the leverages what we want it to be and the cash flow is coming in as we expect it to.
Our next question is from Andreas [ OX ] from BTG.
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 in the first quarter, posting a margin -- 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 -- well I mean I have to hear the -- [indiscernible] adjusted margins, I think that maybe you have to look at the adjusted margins because we have done from time to time some lower sales. So that has had an impact on the margin. So if you look at adjusted margins in 3Q '22, it was 41.0%, in second quarter of '23 it was 40.9%. And we did have a reduction from 40.9% to 40.0% in this quarter. But they've been -- I don't see a lot of volatility. I think margins have stayed in the 40% to 41% range adjusted margin for the last 5 quarters.
And the growth is 5.9% second quarter, 5.1% and this quarter 3.6%, so it's more or less the growth is there. And it's not -- I don't think it's volatile, it's more or less following the increase in revenues.
Understood. And what should we think going forward, given the possible increase in minimum wage or gain of 20% on your labor costs and the possibility to see the labor week to reduce by 1 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 are 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.
Our [ ICB] number I think in América Móvil in [indiscernible] let me tell you, we have 94,000 people, in '20 186, in '21, 181, in '22 178. And in August, we have 176,000 people. So the reduction. We're not hiring people. We're getting more efficient and we're training more of our people. So all of that is giving us that control of the costs. The reduction and retraining the people has been for the last 4 years.
And we would like to stress again that -- regarding Mexico and sometimes other countries -- it's important to normalize from the effect of extraordinary things like the sales towers, okay? Because they have been important in Mexico last year, getting 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 tower levels.
Our next question is from Alejandro Azar from GBM.
I'm sorry, I joined a little bit late, but I was wondering if you guys mentioned something about the Verizon earnout that I believe the deadline was September of this year. Could you give us some color on that if its possible.
We did get a payment for the earnout, it was MXN 3.3 billion in the quarter as part of the MXN 5.5 billion that we mentioned here in the cash flow. There was a slide. We will be happy to provide you the slide.
Our next question is from Phani Kanumuri from HSBC.
My first question is on Brazil. It seems that you're growing very well in Brazil and the ARPU is up nearly 12%.
Can you speak a little bit louder, we can hear you.
Can you hear me now? My first question is regarding Brazil. It seems that you're doing really well in Brazil and your mobile ARPU is up nearly 12% year-on-year in the third quarter. Is it driven more by price increases or more like volume increases? And how do you expect this trend to go going forward? That's my first question.
Well, I think on Brazil, we're doing well in market share. We're doing well. As Oscar mentioned and Carlos mentioned also, we are starting to grow in broadband, again, reducing the losses in TV improving like 1.1 million subscribers in postpaid. So we are doing very well in Brazil. The synergies that we have and the control cost that we have. Also, we have a pass-through on part, not on all our products, but in part of our products. I think mid of beginning or mid 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.
The second question that I had is on the mix to 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. This is in the corporate segment in Mexico.
Yes. Well, as I mentioned before, in Mexico, we are doing exactly the same selling those products as the one 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 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 with the right investments in the network, not only in fiber, we reskill the people to sell these new set of products. So we're winning people with experience in cloud services, in vertical solution.
So I think we see this market trend pretty optimistic. One comment on [indiscernible] because the issue with our corporate networks revenue, which we mentioned, it's been gaining shares, is becoming more important in most operations. But it can be sometimes volatile. Sometimes we get a new [ concert ] and then you will call all the revenues at once. But if you look at the full 9 months of this year, so to erase the volatility, you have the increase in revenue is 10.3%. So the year to September, corporate network revenue in Mexico is 10.3% larger than the prior year.
Our next question is from Andres Cardona from Citi.
Thanks for the preliminary comments on our 2024 CapEx program. Let me ask you about 2023 net working capital if you can comment about what do you expect for the full year? And if there was any events that explain a slower reversion on the third quarter.
On working capital. Is it the reversion on working capital. Can you explain again -- we don't understand. Andrea, I don't know if this is the question. But basically, what we've been seeing in 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 required a lot of working capital, and then we get it back totally the last third of the year, let's say. So typically, when we have we begin having a reversion of capital, we're beginning to get back the working capital that we contributed in the first half of the year.
Our next question is from [ Till Merz ] from Schroders.
It's about Guatemala you've been fighting to get two 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 Guatemala we're doing well, we are investing. We just get the 700 frequencies. We have a little bit lack of coverage in some 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 fixed, we are putting more fiber. We're changing a little bit more copper for fiber, giving more speeds to the customers. So we are doing there. We are not being so aggressive. We're not reducing prices. And just the only thing that we're doing in Guatemala is we are being more focused on quality, better service, more speed in the fixed and changing our fiber -- our copper to fiber. And to the comparison all showing the corporate side, we are doing also good. So we are improving our operations in Guatemala.
On the [ filing ] side, we have been improving on the service revenue growth. It has been negative and now we were positive. But it has been an improvement quarter to call for the last 5 quarters that we can see.
Okay. Another question, if I may. In Mexico City, Megacable is increasing its penetration. I was wondering what do you think does it mean for the competitive landscape there?
Yes, they are building 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 fiber. As [ Daniel ] mentioned, we have 76% of the customers already connected with fiber. Let me add that we've been doing very well to bundles with streaming platforms as HBO, Netflix, Claro Video. So we bundled the program with this. Streaming has been very well receptive in the market. So I agree, Megacable 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 Megacable.
Our next question is from [ Hazards Gromer] from GlobalData .
I have a few questions regarding the Mexican operation. I wonder if you can provide additional color on the deceleration in Mexico for corporate network services. Color on what's happening there or some context? And what's guiding the broadband revenue, given that you mentioned this quarter. What's wrong with the revenue over there? And the second question is for wireless -- just a bit of color of what guiding postpaid ads in Mexico and a growth in Mexico.
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 negotiation takes many months to really get the projects. In some quarters, we won a very large projects and in other quarters, we don't. But what we see is that we have a great pipeline in place. So this kind of selling is a different approach. 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 these markets.
Just to repeat what we said before, if you look at the 9 months to September, corporate networks revenue in Mexico increased 10% year-on-year, okay? So it's -- when you look at long enough period, then you can make really volatile. Yes. What is important is to have a good pipeline opportunities, right.
Our last question is from Alejandro [ Lavin ] from Santander.
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?
We know what is happening in Argentina with the macro environment. So -- 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 start maybe 4 years ago in putting fiber and given very good returns this fiber. So we have like 1.2 million broadband subscribers in Argentina right now. And -- that's where we see good opportunities in all the fixed platforms, all fixed, Pay TV, fixed and broadband is where we're seeing that. Yes.
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. 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.