Welcome to the América Móvil second quarter 2017 conference call and webcast. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Daniela Lecuona, Head of Investor Relations. Please go ahead.
Thank you. Good morning, everyone. Thank you for joining us this morning. We're going to be discussing our second quarter results. We have on the line Mr. Daniel Hajj, CEO, Mr. Carlos García Moreno, CFO, Mr. Óscar Von Hauske, COO, and also from Telmex, Mr. Carlos Robles, CFO.
Thanks, Daniela, and thank you everyone for being in the call. I want to pass to Carlos to make a summary of the América Móvil second quarter of 2017 financial and operating report.
Thank you, Daniel. Good morning, everyone. Well, as is customary, we have a web presentation today for those who want to see the slideshow that accompanies this presentation. In the second quarter, financial volatility in Latin America became more subdued in line with the situation in the global market, with world economic growth on a slightly improving path. The U.S. economy continued to hold up, and those of the European Union and China showed clear signs of strength. The appreciation of the Mexican peso versus the dollar, observed in the first quarter, continued in the second one, where the Brazilian real, the Colombian peso, and the Argentinian peso depreciated versus the dollar. Obviously, versus the peso as well.
The first one, mostly on account of new political pressures, as in Brazil, and the other ones, in Colombia and Argentina, reflecting, for the most part, a worsening of the balance of payments position. In the second quarter, our wireless subscriber base increased by 215,000 subscribers, having added 560,000 postpaid subs, including 166,000 in Mexico and 124,000 in Brazil, and disconnected 350,000 prepaid subs. On the fixed line platform, we obtained 209,000 new broadband accesses in the quarter, most of them in Central America, Colombia, and Brazil. Our postpaid base was up 5.1%, with Chile's increasing 17.8%, Brazil's 10%, Colombia 7.7%, and Mexico's 6.4%. Broadband accesses were up 5.7% year-on-year.
Our second quarter revenues rose 6.9% from the year of the quarter to nearly MXN 250 billion, with service revenues climbing 8.1%. EBITDA was up 13.7% year-on-year to MXN 69.4 billion. The increase in peso terms reflect the appreciation relative to the prior quarter of the Mexican peso vis-à-vis most of the other operating currencies, as I mentioned before. At constant exchange rates, this is important, at constant exchange rates, service revenues were up percent year-on-year, their best performance in 10 quarters, and EBITDA shot up 10.4%, marking its strongest climb in the last five years. In several instances, as the revenue base has been rebuilt, the impact on EBITDA has been proportionately greater. Service revenue growth was driven by mobile data revenues, which were up 21.8%, with fixed broadband revenues increasing 7.5%.
Mexico and the South American block, particularly Colombia, Argentina, Chile, and Peru, were the main forces behind the strong expansion of service revenues. All operations, save one, presented ARPU increases relative to the year-earlier quarter. Our service revenues were denominated in 20 different currencies, with the BRL accounting for 25%, the MXN for 22%, and the USD for 21% or nearly 27% if the currencies pegged to the USD are considered. The EUR accounts for nearly 10% of our revenues. The EBITDA margin stood at 27.8%, up 0.7 percentage points from the prior quarter and up 1.7 percentage points from the year-earlier quarter. EBITDA margins increased sequentially in practically all of our operations, I think with only two exceptions.
EBITDA margins were up even though the second quarter seasonally tends to be weaker than the first quarter because of the stronger sales that we have for Mother's Day in particular. Substantially all of our operations observed sequential increases in EBITDA, with very significant moves in Peru, 14%, Chile, 11%, and Argentina, 7.5%. In Europe, Mexico, and Colombia, the quarter-over-quarter rise was 5.8%, 2.7%, and 1.9% respectively. That means in all major operations, we had sequential increases in EBITDA absolute terms. On the following charts on Mexico, Colombia, Chile, and Peru, those people that are watching the presentation can see the acceleration of EBITDA growth that has come about with the recovery in revenues. Our operating profit increased almost 21% from the year-earlier quarter to MXN 31.2 billion.
After our comprehensive financing cost of MXN 13 billion, it is helping about a net profit of MXN 14 billion in the second quarter, which was 86% higher than that of the year earlier quarter. We continue our effort to reduce our leverage with a net debt reduction of MXN 27 billion in cash flow terms in second quarter. Our outstanding debt has come down from MXN 630 billion in December to MXN 550 billion in June, which is a 12.5% increase, which reflects first and foremost our debt reduction efforts, also the appreciation of the Mexican peso versus other currencies in the period. Our net debt to EBITDA ratio stood at 1.9 times at the end of June, after accounting for our derivatives position and the equity credit of our hybrid bonds.
Our capital expenditures totaled MXN 51 billion in the first half of the year, whereas our acquisitions reached MXN 3.6 billion. After adjusting for dividends received from KPN, net shareholder distributions totaled MXN 734 million in the period, mostly by way of share buybacks. Our cash flow from operations was almost entirely consumed by our capital expenditures and our net debt amortizations. With that, I would like to pass the floor back to Daniel and the Q&A session begin. Thank you very much.
Thank you, Carlos. I think we can start with the Q&A, please.
We will now begin the question and answer session. To ask a question, you may press star, then two, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Amir Rozwadowski, Barclays. Please go ahead.
Thank you very much, good morning, folks. I was wondering if we could dial in a bit more in terms of the competitive landscape with respect to your Mexican wireless business. When we look at sort of ARPU trajectory, it seems as though ARPU continues to improve, at least relative to our expectations. Could you provide a bit more color in terms of how you see the competitive landscape shaking out when it comes to competitive pressures? Maybe a quick follow-up. We've all seen some of the news with respect to the litigation when it comes to the constitutionality or legality of the interconnection questions around competitive interconnection fees and so forth. Any thoughts in terms of sort of your positioning, what type of benefits that could accrue to the business should the case work in your favor? Any color along those lines would be helpful.
Thanks very much.
On the zero interconnection rate, I just want to tell you that since 2014, we filed some amparos injunctions against the certain articles of then recently enacted Federal Telecommunications and Broadcasting Law. Since we strongly believe that such articles, including those related to the so-called zero interconnection rate, interfere with the constitutional reform of 2013. We understand Telcel amparos filed in 2014 are set to be resolved shortly. Although at this point, there is not a specific day announced by the Supreme Court. Once resolved, we will communicate the outcome of such challenges and the effect of the resolution. That's more or less what I can say about that. There's nothing else that we can talk at this moment. On the landscape of Mexico, Amir, what my view is, I think to start on that, I want to tell you that the rates are very low in Mexico.
As we know, in prepaid and in postpaid in all 2016, we have been reducing all the rates. The rates today are very low in Mexico. I think since the last three, four months, things are a little bit more stable. No more reductions on rates. Even still, some of our competitors are subsidizing still a lot some of the handsets. What is very important is that, in my view, the networks are very important and the customer care centers, and all overall, it's not only in Mexico, all about rate. It's important the service that you give to the customer. At this point, I think Telcel is the superior brand. Very good recognition, very good distribution, good quality. I think that our customers are well satisfied with our service. It's what we have been seeing for the last years.
People is preferring to stay with Telcel than moving to other companies. Data is improving a lot. The rate of data is growing very fast. A lot of prepaids are moving to smartphones, so they are starting to use more and more data. With the network, the coverage, and everything that we're having, the people is staying and happy with the service. It's more or less what I can see. Still, as I told you since the beginning, the rates are too low in Mexico, are very low in Mexico. I think are the lowest by far in Latin America. Other things that, in my view, about the interconnection and zero rate, what doesn't make any sense for me is that the interconnection today in Mexico is two times higher than the average price that we see in the market.
It doesn't make any sense that the interconnection that we're paying is more or less two times higher than the average price that we see in the market. Well, those are my comments, and let's see what does the Supreme Court is going to define.
Thanks very much for the additional color.
Thank you.
The next question comes from Richard Dineen, UBS. Please go ahead.
Hi. Thanks for the question. This is actually Maria Azevedo on behalf of Richard. You've obviously done a great job reducing leverage, but with CapEx sales around just 10%, we would like to know whether this might rise a little in years to come, or if you think that 10% is sustainable going forward, in your view.
Well, I think what you're saying, the first half is partly reflecting the seasonality in terms of the execution of CapEx. It happens every year. It's not linear. I think the guidance that we have given for the year is a CapEx in the neighborhood of USD [inaudible] billion. You can come out with your numbers, but it's obviously not a 10% of sales number. It's higher than that. Again, don't make too much of the seasonality in the execution of the CapEx plans.
What we want, and I think with this more flexibility that we have in terms of our balance sheet, things are getting much better. As Carlos said, we are 1.9 times debt to EBITDA, we're returning to the numbers that we like. We have more flexibility to invest where we see opportunities to have the best networks, to have the best coverage, to give the best speeds in data. Well, we have more flexibility. We still don't know what we're gonna do next years, we don't have any change for this year. We have more flexibility, and that's good.
Perfect. Then as a follow-up question, if you could please share with us if you're seeing any developments in the local loop unbundling and opportunities with the MVNOs. That would be very helpful. Thank you very much.
Well, in the MVNOs, I think there are three or four MVNOs, I don't remember exactly, or five MVNOs working here in Mexico with us. They're fine. We're following the rules that we have with the IFT. I think, in terms of the MVNO, it's okay. They are growing and, well, that's more or less what I can say. In terms of the local loop, I don't know if there's some comments.
Also, in the local loop unbundling, there are about five operators are using it, we're providing those services as it is stated on the ruling of IFT.
There are five operators using the local loop of Telmex also.
Perfect. Thank you very much.
Thank you.
The next question comes from Walter Piecyk, BTIG. Please go ahead.
Thanks. Daniel, you're seeing a lot of good ARPU growth, presumably from all the data growth that you're seeing. I was noticing that in Brazil, the ARPU was down 3% sequentially. Is there anything different happening there in Brazil as far as how people are using the product or how pricing is working in the market that might have explained that kind of sequential decline in the wireless ARPU there?
Yeah. Let me talk a little bit about Brazil, okay? On Brazil, I think we're doing very well on the fixed line. As the Pay TV, fixed, and broadband, I think we are doing well. We are reducing our growth because the economic situation that is in Brazil, we don't want to grow, and then with this economic situation, have expenses or disconnections. We have been very careful at this moment with the growth of Pay TV and broadband, but still growing and maintaining market share. In the, let's say, wireless side, in the wireless, we are doing very good on controle. Conta means the postpaid that doesn't have any limits. We're doing great. We are growing, and we're performing very well. Even in prepaid, we are also growing our revenues. We stopped decreasing and growing the revenue. I think all overall, we are performing good.
Still in Brazil, a difficult situation on the political side, and doesn't help us on the economy of the country. I think we are making the investments. We are trying to reduce costs, making all the synergies. It's not from one day to the other one, but we are performing. We are growing our EBITDA from last year more than 1 point. Still a lot of unemployment in Brazil. The other important issue is if you divide the two markets, consumer and corporate, I think on consumer, we're also doing very good. On corporate, we are doing good, but the prices on the corporate side have been going down very fast.
With these things, companies try to get the best of that, so the competition is very intense and the competition is very intense on all the corporate market, and well, that makes that the revenues with the same customer are decreasing. Óscar can help us to make more comments on Brazil. Óscar, I don't know if you have something else.
Sure. As you mentioned, when you look at the total market, the total market is shrinking a little bit in the fixed world. When you do the breakdown of the revenues, we are doing pretty well in fixed broadband. We are growing 17%, so we've been working on ARPU in order to move-
The next question comes from Alejandro Gallostra, BBVA. Please go ahead.
Sorry. Óscar, something happened here. Yes, you can talk, Óscar.
As I mentioned, when you look at the total fixed market, it is shrinking. When you make the breakdown of the revenues, we are doing pretty well in fixed broadband. We are growing more than two years. We are growing like 17% accumulated figures in revenues. In Pay TV, we've been having a lot of disconnection, mainly in satellite TV in the low end of the market. We've been working in increasing the ARPU in all the platforms in Pay TV. The main impact that we have is like what Daniel Hajj mentioned, we have a lot of price erosion in the enterprise market, given the economic situation. Secondly, the voice traffic has been decreasing very importantly. When you add it all, the market is shrinking in Brazil.
The way that we are approaching the market is to improve the ARPU in all the products. In the enterprise market, we are complementing the offering with IT services in order to compensate the price erosion that we are suffering in Brazil.
Thank you, Óscar. Just to finalize your specific question, I think the ARPU in Brazil is growing from the second quarter of 2016 that we have BRL 13 to second quarter of 2017 to BRL 15. The ARPU in Brazil is growing 9.1% year-over-year. I don't know why is the-
Mentioned
mentioned that it's reducing. The ARPU is growing in Brazil.
I think I was mentioning sequentially, not over year-over-year, that's fine.
Okay.
Just one other question for Carlos. The debt leverage of the company is now below two, and if you look at the share repurchase you guys did in 2013 and 2014 and 2015, very high. It obviously slowed down in the last four quarters or so. Would you anticipate now that your leverage is at that level and your operations are performing so well that maybe we see some more share repurchase going forward?
Well, certainly, I think that open to that possibility for next year. I think that we are still set on getting to one and a half times net debt to EBITDA. I think it's something that we should be able to achieve in the next three quarters or so. I think once we have what we want, I think we are open to other uses of our cash.
Great. Thank you, Carlos. Thanks, Daniel.
Thank you. Thank you very much.
The next question comes from Alejandro Gallostra, BBVA. Mr. Gallostra, your line is open.
Hi. Good morning, Daniel, Carlos, and Daniela. Thank you very much for taking my question. Carlos, you just mentioned that you have leverage target of 1.5 times net debt EBITDA for the next two to four quarters. Is that correct?
No, the target is the one and a half, what I said is that I expect that we should be able to get to that target within the next three or four quarters.
Within three to four quarters. Good. I was wondering if you have a plan to hedge your debt or interest expenses at the current FX rates? If we should expect profits to reverse if the Mexican peso depreciates again?
Well, I think you cannot be expecting currency to depreciate to appreciate. I think that we tend to do some rebalancing of our positions over time as the mix of our revenues changes. I think that you just saw in my presentation that América Móvil has revenue denominated in 20 different currencies. The most important ones, 50% of our revenues are the pesos and the reals, okay? We have another 50% that is mostly dollars and euros. Our debt exposure very much reflects
This kind of revenue mix that we have, that we aim to have.
Okay. I understand you're not engaging into significant currency hedging at this time.
We do rebalancing of positions from time to time. Yes.
Okay. My second question is actually, because I would like to have a better understanding of the driving forces behind the strong ARPU. Is it simply the exponential growth that we are seeing in wireless data, perhaps linked to higher smartphone penetration, or maybe the implementation of shorter expiration times in prepaid cards, as was the strategy that you recently implemented in Mexico?
What we're trying to do all over Latin America is to try to drive the customer to have more data, more minutes at a higher ARPU. It's what we're doing, focusing a lot on the postpaid segment, driving promotions on the postpaid side and in the other way, in the prepaid, what we're doing is. Recently, we don't do anything, but at the beginning of the year, we cut some data on the prepaid cards in Mexico. Well, that's also a part that is helping to drive ARPU higher. Are both now making some promotion, driving the customer to get a better plan and spend a little bit more, but having much better, a lot more data, more minutes, and other value-added services. That's what we're trying to do all around Latin America.
Daniel, are you also lowering the expiration times in prepaid cards in the rest of Latin America?
No, we're not. As I remember, in this quarter, we don't reduce any expiration date in the rest of Latin America. No.
Is this something you plan to do in the short term?
I don't know if we want to do that. What we're doing a lot is making some packages, okay? Instead of reducing, we give packages to the people in the prepaid with better terms, better conditions, more minutes, more data, and to spend a little bit more. People is driving to use those packages. Instead of having, let's say, 100 megs for 30 days, maybe you can have 300 megs for seven days in a package and at a better price than the other one. Those type of packages are the ones that are driving higher ARPU.
Okay. Thank you, Daniel and Carlos, for the call.
Thank you. Thank you very much.
The next question comes from Fred Mendes, Banco Bradesco. Please go ahead.
Good morning, everyone. Actually, I have two questions. Number one, if you can get back to Brazil, you changed the leadership of Claro in Brazil in April, and on May you announced an aggressive pricing strategy, particularly in the prepaid segment. I just want to understand about in terms of your strategy, what can we expect in Brazil and of course in prices for the next quarter? That would be my first question. My second question is, look at the margin of the sale of the equipment, it improved versus the average of the last quarters. Also, when you look at less representative countries in terms of the EBITDA contribution, we see an increase in sale of equipment and still an improvement in EBITDA margin. Just want to get a better understanding of the dynamic.
On the same line, just to understand how much of that is a change in commercial strategy that you are giving less subsidy, and how much the effects impact consider, of course, the Mexican peso versus the dollar. Thank you.
The first one is Brazil postpaid. Well, we get a little bit more aggressive, but it's not so much aggressive. I think we are doing some unlimited voice in Brazil in postpaid. There's something that is coming. We have it in the really higher plans. We reduce to some lower rent plans, and I think it's working very good. People like that, and it's on the reasonable prices. It's not that we're dropping the prices down. These promotions are good promotions, driving higher ARPUs, and people is happy with what we are presenting. For us, I think it has been a very good promotion and people is coming in Brazil. Today, in number portability, we have one of the highest number portabilities that we have in Brazil at this moment.
People is preferring, at this moment, these type of plans and the promotions that we're putting in the market. That's one thing. Second, what you see in the subsidies and margins in all the handsets, the smartphones, feature phones, everything, the strategy is, and I think it's going to be all around the world, the strategy is not to subsidize. We think that subsidies are in prepaid. Well, you never know how long the people is going to stay with you, so it's very difficult to see Would be the subsidy if you don't know how much it's going to consume or for how long it's going to stay with you. We're trying to take out as much as possible the subsidies on the prepaid segment. I think as the market is giving us that possibility, we're doing that.
Depends a lot on the competition in each country, but our strategy in the next years is to take out subsidies in the prepaid side. In the postpaid side, you know where you have a contract, you know where you can subsidize, but also the strategy would be to reduce those subsidies in the postpaid side. That's the strategy on América Móvil. I think that's the right strategy for all the telecom companies, because to give big subsidies and this type of prices that we're giving in all Latin America doesn't make any sense. In terms of margins and subsidies, I think we're going on the right direction. The last question, I don't get it. Can you ask again, please?
Yes, Daniel, I think you answered both questions. If you just allow a quick follow-up on the first one about Brazil. You mentioned that portabilities are doing quite well after the change. Is it right to say that at this point you find your price are quite competitive and we should not see, I guess, any more moves, offering more data for the same price? You think you're already competitive, you shouldn't see any change in the short term, at least for now?
I don't know. I cannot say anything because I don't know what those my competitors are gonna do. When you do things internally on the company, you can plan for two, three, four, five months, one year, when you have. When the market is open and you don't know what is going to do your competitor tomorrow or the other competitor in two months or increase mass or, well, I cannot assure you that we're not gonna move, but what I can tell you is that we are gonna be competitive and we don't want to grow being not profitable, but we want to be competitive in the postpaid market. Remember something that is very important. Our network today in Brazil is the best network in terms of quality. We are ranked the best network in the quality in Brazil.
We have very good speeds, we have very good data. The perception on Brazil on our network is very good. We're working a lot on the coverage. I think we're getting there, but in terms of quality, we're doing very good. We're investing in Brazil, and I feel personally, I feel very comfortable on our strategy in Brazil with our management in Brazil, with everything that we're doing in Brazil, and it's going to take some time to see better and better numbers, okay. That's my comment on Brazil.
Awesome, Daniel. Thank you very much for the extra call.
Thank you.
The next question comes from Rodrigo Villanueva, Merrill Lynch. Please go ahead.
Thank you. Good morning, Daniel and Carlos. My question is related to Colombia. I was wondering if profitability at levels of around 40% are sustainable in this country, and what has been driving this? Thank you.
Well, I think, yes, we used to have 40%. We have a very good cost reductions in taking care about our cost and our expenses in Colombia. We're having good growth in the fixed side, in TV, broadband, and fixed. It's growing maybe six points of the EBITDA year-over-year. In the wireless side, the postpaid is growing also our revenues. Data is growing very good also in prepaid and postpaid. I think we are there, and I hope we can sustain and still improve what we have right now.
Understood, Daniel. Thank you. I have another question related to Guatemala. There has been some news reports suggesting that AMX has been involved in a corruption case there. Could you be able to elaborate a little bit on this? What is the reasoning behind this investigation? Is it the government the one that is doing so? Any additional color would be helpful.
What I can say is that the Guatemalan authorities have determined that certain payments made back in 2011 by our Guatemalan subsidiary, Telgua, did not comply with the Guatemalan laws governing contributions to political parties. We are conducting right now a review of the circumstances of these payments, and we are cooperating with the investigation. Our review is ongoing, and at this point, I don't have any further comments on it. We are reviewing that, and we don't have any more comments. No.
Understood. Thank you very much.
Thank you.
The next question comes from Julio Arciniegas, RBC. Please go ahead.
Yes. Hello. Thanks for taking the question. Coming back to the ARPU evolution and in general service revenue evolution across the board, which actually has been quite good in Mexico and Colombia. Just to have a clear view, is the company increasing the prices following a more for more strategy? Basically, does the customer have the optionality to subscribe to these bundles of services, or just the company's increasing the price to any specific base in exchange of more for more services? My second question is if you could give us more color on the competitive dynamics in Colombia. I see that the market is actually quite stable. Do we expect this stability to continue going forward? Thank you.
Well, on the first question, I think, yes, we are doing promotions more for more, as the people pays a little bit more and then you get more. This is helping all overall. The thing that is helping us a lot is that people is using more and more data. It's very important that if you have a good network, if people relies on your network, then people use your data, and then it's what is happening. We're giving promotions, as you said, more for more. Yes, we're giving, and people is getting those because they need to use more and more data. In the other side, in prepaid, where we are growing our penetration in the smartphones, and that is helping us that they drive more data and they pay a little bit more.
That's more or less our megabytes of use, across América Móvil are growing around 80% year-over-year. It's a lot. You are almost doubling what they used to use one year ago. As you could see, people are using more, and more for more are our promotions that we're having. The other question was.
It's demand driven. It's not just price increase. It's demand driven, this.
No, it's demand driven. Of course, it's demand driven. Price increase, I don't think we have any country where competition let us only increase prices and that's all. I would love to have that, but unfortunately, it's not easy to have, and very competitive markets in all Latin America. It's more for more, of course.
Thank you. About Colombia?
Well, Colombia, I think, as I said, maybe one year ago, we make some changes in the organization. I think these changes in the organization are helping us. We put a very cost control in the company and very focused on the markets to grow distribution, to grow customer care, attention our customers a little bit more care centers. A lot of online also helping us to attend our customers. We are evolving very well. We are really focusing on Colombia, and I think we can sustain what we achieve at this moment.
Thank you very much.
Remember that in Colombia, we have having a lot of things, a lot on the regulatory side, asymmetric interconnection that today is not anymore. Also we have a fiscal reform on January, and, well, that also it increased the tax to the end customer like 3 points from 16% to 19%. Well, that reduce even with that, we are think we are performing very well.
Yeah. Thank you very much.
Thank you.
The next question comes from Daniel Federle, Credit Suisse. Please go ahead.
Hello. Good morning, everybody. Could you please provide us with an update on the functional separation plan in terms of timing and which are the main points in discussion? Also, if you could comment the chances of including the Pay TV license in the negotiation would be very good. The second question is more like a follow-up on a previous question on CapEx. I'd like to know if this CapEx reduction has been more concentrated in any specific markets or any specific segment. Thank you very much.
On the separation proposal, just what I can tell you is that it's been reviewed currently by the IFT, by the IFT. A group of representatives of Telmex and also from the IFT have been discussing the different aspects of the separation. Telmex is in the process of providing additional information requested by the IFT. At this moment, we are presenting and providing more information, we expect the approval process at the IFT to be resolved, maybe in the fourth quarter of 2017 or the first one of 2018. I think that's the timing. I don't have anything else to say, that we are providing more information to them it's going to go to the fourth quarter or to the first quarter of this year. That on the Pay TV license, we haven't talked anything on that. We're talking about the separation.
As I can tell you, I think in Mexico is the only place where there's a limitation for the telco to give TV, and it doesn't make any sense. I hope that the IFT understand and review that and give us the permission to give TV. That's what I have. In terms of CapEx, it's very important to remember what we do the last three years. In 2013, 2014, and 2015, we do a very big CapEx investment. Okay? We do more than USD 30 billion in three years, maybe USD 31 billion or USD 32 billion in three years. That give us the basis to do what we're doing today. Still we feel comfortable with the CapEx. Revenues and data.
Data is growing a lot, maybe we're going to need to put a little bit more CapEx in the next years, but we don't know. Still, we feel comfortable with our budget that we have this year. Of course, maybe we are giving a little bit more CapEx to one or other country, depending on the demand, depending on the growth of data. All the countries are important and we're focusing in all of them. The big investment that we do years ago, we do it all over all Latin America, and that give us the support to do what we're doing right now.
Perfect. Very clear. Thank you.
Thank you very much.
The next question comes from Carlos de la Garza, GBM. Please go ahead.
Thank you for the question. Just very quickly, in the U.S., we saw a very important increase in EBITDA margin. You guys also mentioned that without the inorganic growth, that would actually been higher. I just want to understand what is the nature of this and if it's sustainable going forward. That will be the first question, please.
Well, on TracFone, I think as we have been talking, the competition is being important in the prepaid segment in the U.S. I think TracFone is performing well. We are being a little bit more profitable than what we do last year. At this moment, end of the second, I think in the third quarter, we haven't been so competitive, right now we are competitive again in the market. We launch new plans with more data, that is giving us to be more competitive in the market. We feel comfortable on what we're doing in TracFone. We expect a good next 2 quarters. As we grow more, of course, it goes directly to the profitability, we feel that we can achieve a better EBITDA than what we do last year.
Even if we grow, we have been doing new agreements with T-Mobile, with Verizon, with everybody, all our carriers, that give us the possibility to be more competitive in the market.
That's perfect. Thank you. The follow-up would be regarding Argentina. What do you make of the merger between your competitor, Cablevisión and Personal? I know you guys also will be able to offer Pay TV by 2018, how does these moves affect your outlook for the country going forward? Thank you.
Well, what we're going to see is we're going to have a player that is convergent. They have a fully integrated competitor. What we are going to do, well, what we're going to need is we're going to have the permission to give TV at the beginning of next year, and we're preparing the company to do that. That's at this moment what we can say. We already have some households, we already have some fixed in Argentina, with fixed voice and broadband, not with fiber. We are preparing our network, growing a little bit our network to do more and more, and to be able to give in our network TV at the beginning of next year. It's what you could see.
Okay. Thank you very much for the comments.
Thank you.
The next question comes from Marcelo Santos, JP Morgan. Please go ahead, sir.
Hi. Good morning. Thanks for taking the question. I just wondered if you could comment a little bit more on the Peruvian recovery. We see a much better margin, and there's additions in prepaid, but postpaid is still seeing some decline. If you please give a little bit more detail on what has been the drivers.
Yeah. Let me make you a small summary of Peru. I think the last years, we have two main things. It's we have one new company entering the market. They bought Nextel, they get in the market, and they've been very aggressive. The second one, we lose the auction maybe three years ago, the auction of the spectrum for the 4G license. For that time, the competition has been very strong in terms of subsidies. I think they lose a lot of money. The competitor lose a lot of money giving handsets for free. We haven't been able to give the speeds and the quality of the network because we don't have the spectrum that we need. In 2016, we buy a company, Kololo. We have the spectrum for 4G. We start to invest.
I think the market is much more stable and rational in terms of that. It's also very competitive, but it's more stable. The good thing is, in all those years, we don't lose a lot of market share. We sustain our revenues. We have the same amount of subscribers that we used to have three years ago, more or less. Other thing that hit us a little bit is some interconnection rates that goes down, that also hit our revenues. All overall, 2016, we invest, we correct some of the things that we have, we put some cost controls. And today, well, you could see that Peru is growing 50% EBITDA, it's growing post-paid, growing in pre-paid.
All the things, the difficulties that we used to have three years ago, I think we work very hard on 2016. 2017 has give us the return on what we have. I think we can sustain and do better than what we have been doing until today. It's what Peru, I don't know exactly what is gonna happen with the competition in the next months, so it's difficult to say. The trends that we're having in Peru are very good trends, and I hope we can sustain those trends. Carlos wants to give you some numbers.
I think it's important to highlight that there's good growth in ARPU. I think ARPU is growing 7.5% year-on-year. I think that this is, as Daniel said, very much supported by the fact that we're not spectrum constrained anymore. We are providing more services both in voice. Okay, voice minutes have gone up 21% year-on-year. Also in data, okay? The expansion in data per users has been very significant in Peru. Again, as in other countries, we had a good network. We had invested a lot throughout the years. All of a sudden, we run into a spectrum constraint. That has gone away, and now we are benefiting from these past investments, and we're at good position in the market.
Thank you very much.
Thank you.
There is only time for one more question, coming from Mr. Diego Aragon, Morgan Stanley. Please go ahead, sir.
Hi, good morning, Daniel, Carlos, and Daniela. Thanks for taking my question. After the spinoff of your tower business in Mexico, I was wondering if you have any plans to divest from towers in other countries anytime soon. Thank you.
I mean, this something that we have been asked repeatedly, which is with the Telesites spinoff. I mean, one reason for doing the Telesites, the one that we initially had when we got into it was it was a more efficient means of administering your balance sheet. It's a more capital light model, and that made a lot of sense. Having done it, we know that it's very difficult to get through all the tax issues or all the legal issues. Contracts can be quite cumbersome. I think the short answer is it's something that we are obviously willing to keep on considering because of the advantages from a balance sheet point of view. It's also something that is not easy to get done, and we have to see what are the other countries that may lend themselves better to these kind of transactions.
Okay, thank you. Just quickly, actually a follow-up regarding Argentina. What will be a timeline for you to provide video service in that market? Thank you.
Can you repeat it again? I don't hear.
Yes. I was wondering how long it will take for you to provide video service in Argentina in 2018.
In January, when we have the permission, I think we can be ready to give TV, okay? We already have fiber to some houses, and we have the technology. We do it in other countries. I think in January, we can start give TV. When we have the right to do it, we can do it.
Okay, perfect. I would assume that probably this is the same case as of Mexico, right? If you get a license in Mexico, probably on the very next day, you'll be able to provide video service as well, right?
Yeah. Not on the very next day, but yes, we can provide the video very fast.
Okay, perfect. Thank you very much.
Thank you. Thank you very much.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Daniel Hajj for any closing remarks.
Just thank you, everybody, for being in the call.
We just want to remind everyone we are holding an Investor Day this year. It's going to be held in Mexico City on October 11th. The link to register for the event will be available in the next couple of days. It will be by invitation. If you have not received one, please feel free to contact myself or anyone from the team. Paloma will be helping us on this. Hope you could join us.
Okay. Thank you. I think you will send all the details to them, no?
Okay.
Thank you very much.
Thank you all. Goodbye.
Thank you.