Okay. Hi, good afternoon. Welcome to our first quarter 2023 results conference call. We have the executive team all together. Silvio will, Silvio Pereira da Costa, the CFO, will give a brief summary of the results and a presentation that's available on our website. We're all available for your questions.
Good morning, everyone. As usual, we'll start with the highlights of the quarter. Starting with the operational highlights, we would like to stress that we started 2023 in a very good shape with solid commercial activity, very much in line with the first quarter of last year, with around 90,000 RGU net adds. Like in previous quarters, main area of growth has been mobile, with close to 80,000 net adds. Postpaid mobile representing almost 90% of these net adds. Convergence continues to lead consumer preferences. We have added this quarter 15,000 convergent net adds.
This very positive mobile performance has been benefiting from what we consider best-in-class customer experience, in particular in 5G with the accelerated rollout of our network, which is now reaching 88% of the Portuguese population. Also, we continue our recovery in terms of cinemas activity. Again, we have our best quarter so far, still benefiting from the strong lineup of blockbusters released at the end of last year. Attendance and revenues growing very strongly year-on-year. In terms of financial highlights, this very positive operational performance, in particular in the telco unit, but also in cinema and audiovisuals, has allowed consolidated revenue growth of 6.6% if adjusted for the low margin resale revenues booked Q1 2022.
The telco unit growing in this quarter, 5.4%, again, adjusting for resale revenues. This has translated into very nice EBITDA trends. Consolidated EBITDA grew 8.8% year-on-year in the quarter, and consolidated EBITDA after leases also grew 6.2%. Total CapEx in the quarter came down very significantly as expected to EUR 97 million following the deceleration in deployment of 5G and fiber. Finally, also as expected, significant free cash flow generation in the quarter of EUR 28 million or EUR 39 million if adjusted for the non-recurrent VAT payments related with the tower sale. Now, giving a bit more color in terms of operational trends. Again, as we said, we started this year in very good shape. 90,000 RGU net adds this quarter.
Year, year-on-year growth in terms of total RGUs was 4.6%, translating very nice operational trends. As we said, mobile was the driver of this growth. Very positive mobile numbers. 78,000 mobile net adds, again. 67,000 postpaid net adds, 11,000 net adds in prepaid. First quarter usually a seasonal weaker quarter. Still these numbers being above the net adds of first quarter last year. Also, on the fixed area, we have posted also nice numbers. Solid fixed broadband net adds of 6,000 and also positive fixed PayTV net adds of 7,000 benefiting from selling in new greenfield fiber areas.
In terms of convergence, we have added this quarter 15,000 convergent customers, in line with last few quarters, ending the quarter with above 1.1 million convergent and integrated customers, now representing around 68% of the fixed base. In terms of our cinema operations, as we said, we had our best quarter post-pandemic so far in relative terms versus 2019 in attendance and revenues. Versus 2019, attendance only down by 19%, revenues only down by 7%, with Avatar impacting very positively December and January numbers. Both months we have higher revenues than in the same months of 2019. Avatar becoming the highest gross box office revenue movie ever in Portugal, showing that provided there are strong titles, customers go back to the cinemas.
February and March were not so positive, -17% and -19% in terms of revenues versus same months, 2019, given the lack of blockbuster movies. As we have seen before the pandemic, this business is somewhat volatile depending on the movie lineup. Still, we have very promising titles ahead of us for the rest of the year. Now, moving to a quick update in terms of the our strategic projects, we have been developing in terms of deployment of the mobile network, we continue with the 5G rollout and this is providing us with a good number of awards.
Following our accelerated 5G rollout, we continue to be recognized as the best network in Portugal with the highest coverage in terms of 5G, 88% of the Portuguese population, and this quarter we highlight the Ookla Speedtest Award for the fastest 5G mobile network. In terms of deployment of the fiber network, we continue our FTTH rollout at a strong pace, reaching a total of 3.6 million homes passed. That is around 67% of total coverage. Over 200,000 FTTH homes passed added in the quarter of which around 50,000 were greenfield homes passed. In terms of ESG progress, again, we continue to execute our strategy.
We would like to highlight a number of the more relevant developments first and following the successful refinancing, EUR 350 million refinancing banking lines concluded this last quarter. We now have 70% of our debt indexed to ESG objectives. Also we are launching Eco Rating labels in our stores to help customers choose the more climate friendly types of equipment. We have developed a partnership with ICF Nova to recruit employees with disabilities. Finally, we continue to transition to a fully electric fleet. Now moving to the financial review. We have again strong revenue growth, as we said, 2.2% at the consolidated level, 0.9% in the telco unit. Again, adjusting for low margin resale revenues, we had a very tough comp in the first quarter of 2022.
Consolidated revenue growth would have been 6.6% and telco revenue 5.4%. Benefiting from strong operational activity and also the price adjustments that were implemented. The consumer segment posted a very impressive 7% year-on-year growth on the back of RGU and ARPU growth, accelerating versus last quarter and showing very positive trends. The B2B segment declined by 18% in the quarter. This was clearly impacted, as we said, by the tough comp of the resale revenues in the first quarter last year. Adjusting for that we should have had a slight decline of around 2.7%. Again, the performance in large corporates being impacted by a one-off large project.
If we adjust for this recurrent B2B revenue would have been close to 4% with the performance of SMEs being very positive and very much in line with the consumer segment. The tougher comps in terms of resale in B2B were mostly the last quarter of 2021 and the first quarter of 2022. For the rest of the year, we should have a much more normalized progression of revenues in the B2B segment. Finally, the wholesale segment posted a 17% year-on-year growth, continuing to benefit from roaming in and recovery and also increase in low margin mass calling services.
In terms of EBITDA performance in the quarter, we grew this quarter an impressive 8.8%, driven by strong telco EBITDA growth of 9.4% above last couple of quarters growth benefiting from operating leverage also helped by cost contention efforts and efficiency gains achieved despite the overall inflationary pressures that we continue to see and feel in some areas, more relevant being indirect and direct salaries and customer equipment costs. Cinemundo Visuals EBITDA increased by 0.7%. Adjusting for the rent discounts, EBITDA would have grown close to 17%. Just a quick note, we have been giving out some detail regarding the impact of energy costs in terms of EBITDA. During last year, full year 2022 energy costs represented a drag to EBITDA of around 1.5%.
As we said before, our energy provisioning strategy with 35% of total consumption in a long-term PPA, which was contracted well before the energy crisis, leave us well positioned for this year. We were able, during the quarter, to transfer the remaining 65% of energy to the spot market, we are now benefiting from the considerably lower energy prices in the market. This last quarter, energy costs actually represented a tailwind, in terms of EBITDA evolution of a little bit over 1%, helping us to mitigate the inflationary impacts that we see in other items as we referred. This quarter, we start giving out more focus on EBITDA after leases, equivalent to pre-IFRS 16 EBITDA. We believe it provides a better reading in terms of operational profitability.
Consolidated EBITDA after leases in the quarter grew a solid 6.2% on the back of strong telco EBITDA after leases growth of 6.3% despite the increase in leasing costs as a result of the additional tower sales executed in 2022 and to the inflationary environment. In the case of tower leasing costs, inflation adjustments are kept at 2%. Cinemundo Visuals EBITDA after leases increased by 5.8% in this caseUsing these metrics, we don't need to adjust for these rent discounts. In terms of net income, we have reached this last quarter a net income level of EUR 35 million. Despite the strong performance at the EBITDA level, net income decreased as a result of a number of negative impacts below the EBITDA line. The most relevant being depreciation.
Of course, as a result of the strong levels of CapEx in the last two years, also on the negative side, as expected, we had financial expenses increase given the interest rate environment. Also other expenses item which have decreased since last year, we booked a non-recurrent gain relating to a judicial process we won. In terms of CapEx, as expected, total group CapEx in the quarter came down quite substantially to EUR 97 billion. This strong decrease in CapEx reflects mainly a strong decrease in terms of technical telco CapEx to around EUR 53 million in the quarter, reflecting particularly the deceleration in 5G deployment. Also, considering that we are considerably ahead of our direct competitors in terms of 5G effort, where we continue to lead versus peers.
Also relevant to technical CapEx, the fiber rollout. We expect to get by the end of the current quarter, the full execution of the fiber partnership agreement, where we expect to reach close to 70% FTTH coverage over our total footprint. Also, customer-related CapEx reached around EUR 39 million in the quarter. Same level of last couple of quarters, reflecting already some inflation in terms of customer equipment, unit costs and also indirect salaries related to sales and installation service providers, despite the continuing low levels of churn and also despite the efficiency gains achieved. In terms of cash flow, following the strong EBITDA increase and also the strong CapEx reduction, EBITDA minus CapEx reached EUR 77 million. Operational cash flow after leases reached a solid EUR 44 million.
Finally, free cash flow after interest and taxes generated in the quarter reached EUR 28 million. Again, adjusting for the VAT related to the tower deal, free cash flow in the quarter would have been EUR 39 million. This free cash flow evolution allowed us to decrease net financial debt to around EUR 970 million, representing 1.74x EBITDA after leases, well below our stated target of 2x. Average cost of debt increased as expected to 2.3%, following the current interest rate context. Finally, our liquidity remains at very healthy levels, around EUR 400 million at the end of the quarter. With this slide, we finish the presentation and we are now ready to take questions you may have.
Our operator, we're available to take questions, if you like. If there are any.
Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, you can please press star 1 and 1 again. Once again, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, you can please press star 1 and 1 again. Please stand by while we compile the Q&A roster. This will take a few moments. Thank you. We are now going to proceed with our first question. The first question come from the line of Clara Ning from JP Morgan. Please ask your question. Your line is opened.
Hi, can you hear me well?
Yes, yes.
Okay, great. Yeah, just 2 questions. The first one on CapEx. With the 5G rollout mostly done, are there any areas that you intend to spend more CapEx on? The second question is there any kind of like one-off personal costs that you will be spending on in a particular quarter this year? I mean, some companies kinda do a bonus. Yeah, just a question on phasing, I guess, of these kind of costs.
Okay, thank you, Clara, for the questions. In terms of CapEx, basically we are, the trends we highlighted this quarter, so the deceleration in terms of 5G and also fiber rollout will remain for the rest of the year and also say for the coming years, there's no other new area where we expect to spend more than we are spending right now. Also, in terms of personal costs, we have highlighted in the last call that we have increased on average, salaries by 6%, so there's no one-off payments. Personal costs at this quarter already reflect the level of personal costs we expect for the remaining quarters of the year.
Okay, great. Thank you.
We are now going to proceed with our next question. The questions come from the line of Martin Hammerschmidt from Citi. Please ask your question.
Hello. Yeah, thank you for taking my questions. The first one is on the energy cost, please. I mean, you mentioned energy costs in the first quarter and provided a bit of a tailwind to EBITDA of roughly 1%. Given the comps should get easier from the second quarter, how much should we sort of think that from the second quarter onwards, energy tailwinds are gonna sort of materialize given where current spot markets are? I mean, you mentioned the 1.5% drag in 2022. Should that 1% tailwind in the first quarter become sort of more than 1.5%, or should it sort of somewhere between those 1% and the 1.5%? The second question is on B2B.
Excluding resale, I think in the, in the reported stages, it was a decline of 2.6%, 2.7%. Given where we are in the macroeconomic environment and possible, recessionary scenarios, how should we think about that B2B line going forward, over the next, let's call it, like 12 months? Thank you.
Okay. Thank you, Martin, for the questions. In terms of energy, as we said, we are now with the 65% of the energy which is not in the PPA, we are currently on the spot market. Clearly the level of tailwind for the rest of the year will depend on how energy prices will progress. I'd say that given the comps we have from last year, I'd say that assuming the 1% type of EBITDA impact that we had this first quarter seems a reasonable assumption for the rest of the year. In terms of B2B segment, as you know, we have booked these very large resale contracts in a number of quarters, which made the evolution of B2B revenues a little bit lumpy.
If we adjust for that, the recurrent revenues continue to grow at relatively healthy levels. As we said, close to 4% in aggregate terms. With SMEs, I didn't give out the numbers, but basically we're growing more or less in line with consumer revenue, so very high single digit numbers. That is on the basis of current operational trends. RGU growth, of course, price adjustments, which we expect to flow for the rest of the year. I'd say that in terms of revenues, if we are to adjust for these lumpy resale contracts, the type of performance that we had in this first quarter, the 5.4% in the telco unit, we don't see any reason why it shouldn't be repeated in the next coming quarters.
Also to that point, I'd say that in terms of EBITDA progression, we are not seeing any reason why we shouldn't repeat the type of performance that we had in this first quarter. We had around 8% EBITDA increase in the first quarter. Given what we are seeing in terms of impact of inflation, the energy tailwinds, the growth of revenues, we believe that it's doable to do the same type of performance, the same 8% on a consolidated basis for the rest of the year, which is clearly above the consensus numbers, so.
That's very clear. If I can just maybe dive deeper into sort of the B2B specifically. I mean, you mentioned that, so if you're growing on SMEs, I think you mentioned you're growing on the large accounts as well? I'm just a bit maybe help me understand in the, in the press release, you said that B2B resale revenue, B2B revenues excluding the resale component decreased by 2.7%. I'm just trying to understand what component was decreasing this quarter?
Yeah.
within adjusted B2B.
Yes. We have in the large corporate segment, we have a large project which we have also booked some revenues last year, basically first half of last year, which did not translate with the same level of revenues this year. It was a one-off project. We expect for the second part of this year, clearly to have a more normalized progression in terms of revenue. Apart from resale, we have this one-off large project which mostly affected first quarter, but also a little bit the second quarter of last year. Not in any sense the second half of last year. Again, we expect a more normalized progression for the second half of this year.
That's very clear. Thank you very much.
We are now going to proceed with our next question. The question's come from the line of António Seladas from AS Independent Research. Please ask your question.
Good afternoon. I have just one question is related with prices. Prices already improved in the first quarter. However, take in consideration that you just increased your prices to customers, I think at the beginning of February. This improvement over the first quarter, it should be even higher in the coming quarters, I guess. Just to confirm it.
Yes, at least, I'd say the current quarter, second quarter, third quarter, it should be a little bit higher. As we said, we are looking at adjusted level of growth of revenues of the first quarter as a good basis to project the rest of the year. You're right in the sense that probably in the second quarter it will be a little bit better than this.
Okay. Thank you very much.
We are now going to proceed with our next question. The question comes from Fernando Cordero Barreira from Banco Santander. Please ask your question.
Hello. Good afternoon. Thanks for taking my two questions. The first one is as a follow-up on the B2B segment. Just to reiterate, to understand the different dynamics there, can you give us the weight of SMEs and large corporate within the total segment? The second question is regarding leases. We have seen the impact of the change of perimeter or the large contrast with your tower provider in this quarter. I would like just to understand what has been the underlying driving your operating leases cost in the quarter. If you prefer, what could be the best guess for the total figure of operating leases at the end of this year?
A final point also, regarding price increases impacting or translation into the ARPU. Just would like to understand that, considering that volumes have not materially suffered from the price increases, we have to understand at this time you have seen any kind of down trading effect also, from them. Thank you.
Okay. In terms of weight of SMEs, in terms of B2B, we're talking about more or less a third, 35% more or less of total B2B segment, which is growing pretty much similar to consumer. The rest of the segment, as I said, could potentially have some more one-off non-recurrent items that adjust little bit the progression of this segment. Overall, if we adjust for these projects, we continue to see healthy growth in terms of total B2B segment. In terms of leasings, I've seen your notes this morning, so ballpark numbers, you're more or less in the right number for this year.
The way to measure these leasing costs, I assume that typically we should have around 1% to 2% inflation increase. The tower leasings, as we said, there is inflation adjustment but capped at 2%. Then you have to add up the impact of the tower sales of last year. We have highlighted that the multiple we have is a little bit over 20. If you do the cash out of last year and divide by 20, more or less you get the type of impact in terms of leasing costs, additional leasing costs that we should have for the fact that we have sold a portfolio of towers last year.
In terms of operational trends, we are not seeing any type of downplay in terms of the packages that we sell. We continue to see relatively low levels of churn and we continue to see more or less the customers with the type of packages they had and, no significant downplay for the moment.
Many thanks, José. Useful.
Once again as a reminder, if you have any question or comment, please press star one and one on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our next question. The question comes from the line of Roshan Ranjit from Deutsche Bank. Please ask your question.
Afternoon, everyone. Thank you for the questions. I've got two, please. Just going back to the question on price. I think in your press release, last night you talked about a better customer value mix. I guess the question is, price increases aside, are you seeing customers actually take bigger packages, faster download speeds, more data within a convergent plan, please? Secondly, on CapEx, as you highlighted, we saw a strong decrease this quarter, 26% down. Based on your previous comments around the full year expectation, I think you said EUR 375 million to EUR 390 million. It's around 20% down or so.
Is there any phasing in the CapEx decrease through the year, anything particular in this quarter or, you know, should we be expecting to be at the lower end of that range? Thank you.
Okay, thank you, Roshan. In terms of when we say basically that we see improving customer value mix, of course that we consider the RGU growth, in particular the mobile component within the convergent bundle that we continue to see very, very strong take up. We continue adding new services on top of the services that we now have. That is also providing, apart from price adjustments, is also providing some tailwind in terms of revenue uplift. That's the type of trend that we continue to see. In terms of CapEx, also the number in absolute terms that we had this last quarter, we think it provides a good base to project the full year number for this year.
Probably we'll have a bit more in terms of phasing in the second quarter, for in average, I would assume the EUR 97 million that we have released for this quarter is a good base to project for the, as a average CapEx per quarter for the rest of the year. As I said, probably with a bit more in the second quarter coming, with the end of the fiber partnership agreement, trending out and averaging down to the more or less to the same, to this value, the EUR 97 million for the rest of the remaining three quarters.
Great. That's helpful. Thank you.
We have no further questions at this time. I will now hand back to you for closing remarks. Thank you.
Okay. Well, thank you everybody for being on the call today. As usual, you can always reach out to us if you have any further questions, and the team is always available to meet if required. Look forward to hearing you next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.