Good morning and good afternoon, everyone, and welcome to Millicom's third quarter 2021 earnings call. I am Sarah Inmon, Investor Relations Director at Millicom. This event is being recorded. Our speakers today will be our CEO, Mauricio Ramos, and our CFO, Tim Pennington. Following their prepared remarks, we will have a Q&A session. By now, you should have received a copy of our earnings release, which is available on our website, along with the slides that we will be referencing during today's presentation. If you please turn to slide two, you can see our safe harbor disclosure. We will be making forward-looking statements which involve risks and uncertainties and could have a material impact on our results. We will also be referring to many non-IFRS metrics throughout this presentation.
We define these metrics on slide three, and you can find reconciliation tables in the back of our earnings release and on our website. With those disclaimers out of the way, let me turn the call over to our CEO, Mauricio.
Thank you, Sarah. Good morning and good afternoon, everyone. Thank you for joining us today. We had another excellent quarter in Q3, so let's jump right into it, starting on slide five. These are the highlights for the quarter. One, we had double-digit customer growth in Latin America, both in fixed and in mobile. First, we get the customers, and then the revenue follows, as you have heard me say a few times. With this kind of very strong customer growth, we are well on our way towards our target of sustaining mid-single digit revenue growth. We grew service revenue by 9% in Q3 in Latin America. Two, we're now growing in every country and in every business unit. Three, and very importantly, we are winning in Colombia. Yes, we are in investment and growth mode in Colombia.
Yes, we are using EBITDA and cash flow to get that growth. The good news this quarter is that, A, we're solidifying our subscriber and revenue growth in mobile, and B, we are clearly picking up market share. Four, we also continue to perform strongly in Guatemala and Panama in the quarter. With that, our three largest countries are all growing. Five, we have successfully resumed shareholder remuneration while continuing to further reduce our leverage in the quarter. All of this while we remained as focused as ever on fulfilling our purpose, as you can see on slide six. As you saw from the intro video this quarter, we teamed up with the Fundación Real Madrid to help protect and develop vulnerable children in the region.
We will leverage and increase the Fundación's soccer learning facilities to give children better digital access and digital education there, strengthening our existing programs to combat cyberbullying and to promote a more responsible use of the Internet. This partnership brings together the two things kids love the most, soccer and the Internet, into a single space that will serve as a backdrop to educate young kids to be more digital and better citizens. As you may also know, I am now chair of the U.S.-Colombia Business Council, an important part of the U.S. Chamber of Commerce. A couple of weeks ago, we hosted President Duque in Washington to discuss the success that Colombia has enjoyed in attracting foreign investment. As President Duque said, Colombia is open for business and back to economic growth, and we're investing now more confidently than ever in Colombia.
You will see in a minute that we're gaining real momentum there. In Bolivia, we have recently launched our own TV channel, Educativo, to provide educational content 24/7 for children, filling a need that came to the forefront last year during the pandemic lockdowns. We see this new channel as a continuation of the work we have been undertaking to give teachers access to digital tools for their classroom, and we're very excited about the possibilities of this idea going forward. As you can imagine, we're investing where we think we can accelerate growth in our local economies. After discussions with President Cortizo of Panama, we announced our plan to invest $250 million to expand and upgrade our network in critical areas of Panama to help boost its economy.
to create a fintech hub in Panama, to bring jobs to the country and also to serve our growing Tigo Money business from there, facilitating payment for individuals and small businesses across our footprint. This is simply to give you a glimpse of how committed we are to our purpose and to help develop our communities. Doing good is good for our business, and more importantly, our business is good itself for our communities. Lastly, I wanna highlight that we will now focus even more on reducing our impact on the environment and on increasing our already strong diversity and inclusion programs. I expect to announce our science-based targets for carbon footprint reduction and our specific D&I targets in early 2022. Now let's look at the operational and financial highlights for the quarter, starting on slide seven.
As I said earlier, our customer base is up double digits in all our segments. Home is up 13% year-over-year, mobile is up 11%, and postpaid is up almost 20%. This is driving strong revenue growth in all our business lines, as you can see on slide eight on the left. Home, our residential cable business, continued to lead the way with double-digit growth of 13%. I said this last quarter, we have built an almost $2 billion cable business growing double digits and with a long runway still ahead of it. Our consumer mobile business grew 8% in the quarter, and our B2B business is back to grow with a 3% uptick in Q3. We continue now to see solid customer growth in B2B, particularly in the small business segment.
Some sectors of the economy, like travel and hospitality, still have not yet recovered. When they do, growth in our B2B business will further strengthen. As you can see on the right, every country operation grew strongly in the quarter. On slide nine, you can see our Latin service revenue evolution. Three points here. One, this chart is in dollars. Two, Q3 was our fifth consecutive quarter of sequential revenue growth. Three, given usual seasonality, we expect the sequential trend to continue positively in Q4, especially given the investments we have been making, as you can see on slide 10. We have told you throughout this year that we would invest more than usual in 2021, between $100 million-$200 million more than last year. CapEx to sales will therefore end the year at around 18% of sales.
This is higher than our historical average of between 16%-17%, and I know that this level of investment this year has surprised some of you. Two key comments on that. One, these investments are paying off. We're gaining market share in key countries. Our NPS scores are up across the board, and we have strong subscriber and revenue growth in all countries. Two, this CapEx intensity as a percentage of sales will go down next year for two reasons. One is simply the strong revenue growth that we are seeing, and two, also because many key investment projects are now winding down. Indeed, over the past two years, we have invested heavily to roll out our 700 MHz network in Colombia. We are well over two-thirds of the way done with that.
By 2021, we will have also largely finished our network modernization programs in El Salvador, Panama, Honduras, and Paraguay. Note lastly, that we have also anticipated and accelerated purchases of key equipment this year to protect the business from possible supply chain disruptions later this year, and more importantly, next year. Let's now take a minute to look at our three largest operations, beginning with Colombia on Slide 11. On the left is the network less than two years ago. On the right is the network today. The pictures tell the story. For more than a decade since we entered the Colombian market, our profitability in Colombia suffered from a lack of scale in mobile. As you surely know, it is next to impossible to be profitable in mobile with only 17% market share. This is what we had historically in Colombia.
That was one, because we had a spectrum disadvantage. For years, the only player in the market without low-frequency spectrum was Tigo. We have now fixed that, and we are now the largest holder of 700 MHz spectrum in Colombia. We were also handicapped because two, we had a network disadvantage. Without low-frequency spectrum, we could not build a competitive network. Today, with spectrum at hand, we now have fixed also for the network disadvantage. Today, ours is, as independently measured, the best network in Colombia. Three, because we also had a commercial distribution disadvantage. Without good network coverage, there was no point in scaling up our commercial distribution. Now, with tons of spectrum and the best network, we have doubled the size of our commercial and service footprint.
We have ramped up our sales and marketing efforts, opened up new stores, added independent dealers, and hired more salespeople. Why? Because the historical barriers to our growth, those that I just described before, the ones that kept our profitability subdued no longer exist. No doubt, this is a bold move, but I want our message to be very clear. One, this is the right move. Two, and most importantly, it is working. We are winning subscribers, share, and most importantly, revenue. Three, the fixed part of the investment is behind us. The investment going forward is largely growth driven. This is what slide 12 tells you. One, on the top left, our mobile customer base is surging. We added 250,000 postpaid subs just in the quarter. That's a new record. Our postpaid base is up 36% year-on-year.
Two, on the top right, our revenue has inflected. We're getting both volume and revenue growth, despite lower ARPUs in the market. Now, I wanna let you know that we monitor the profitability of our growth constantly and consistently. Our cost per gross addition is down, and so is our early churn. Although ARPUs are lower, we're adding good quality customers. As a result, we're getting what matters, increased revenue. It is working. Our home business continues to grow. We added 32,000 net customers and grew our top line. The copper network is now almost totally upgraded to cable fiber, and the copper customer base is now almost totally migrated. As a result, we're now in solid and sustained growth territory in home in Colombia.
Just like we have done everywhere else, we're building a profitable business in Colombia by investing to gain scale in both mobile and fixed. Now please turn to slide 13. This is a snapshot of Guatemala. Simply said, it is our largest and most cash-generative market. Our customer base is growing very rapidly at 7% in mobile and with 30% growth in home, which is all organic. Service revenue, EBITDA, and OCF all grew throughout the pandemic and continue to show very strong growth in 2021 in what is a good and well-managed two-player market. Now let's take a quick look at Panama on slide 14. We made roughly a $2 billion investment in Panama two years ago. Today, Tigo is number one in an investment-grade and dollar economy with an improving industry structure and an economy that is going back to strong growth.
We have sustained our market share in fixed, and we have grown our mobile market share to more than 40% with solid customer growth in both segments. With the integration successfully completed, synergies delivered, and the Tigo brand now very strong in Panama, revenue and EBITDA are now both growing nicely and margins are expanding. Here's the punchline. Panama is now our third largest operation with a run rate of about $300 million in dollar EBITDA and about $200 million in dollar operating cash flow. We are well on our way towards earning a very attractive return on the capital that we invested there. Thanks to all of you who supported us in creating Tigo Panama. Now let me turn it over to Tim to go over the financials.
Thank you, Mauricio. I'm gonna start on slide 16 with a bridge between our reported numbers and the LatAm segment. From the sub-chart, you can see reported revenues were just under $1.1 billion. When you look at the business holistically, and that's including Guatemala and Honduras as they're fully consolidated, underlying revenues were just over $1.6 billion. Now to get to underlying LatAm service revenue, we exclude Africa, which was a little over 5% of our revenues today, and telephone equipment sales, which are not important drivers of profitability. On slide 17, you can see that our LatAm service revenue grew by 8.2% in real terms and 8.5% organically, and remains strong across all segments and all markets.
This is the fifth sequential quarter of growth and represents some of the best sustained performance we've seen since we started this transformation of Millicom into a leading LatAm operator. Economic activity has continued to recover in our markets. Remittances from the U.S. to Central America sustained double-digit growth. Vaccination rates improved significantly in most countries, and currencies in our markets were generally stable both during the quarter and over the past year. This provided the basis for a strong performance in our consumer mobile business, up 7.5%, while Home maintained double-digit growth, and we also showed positive growth in the B2B segment. On slide 18, all our LatAm operations delivered positive service revenue growth. Once again, El Salvador registered the fastest growth of 18%, driven by mobile and stemming from network investments.
Panama also had double-digit mobile growth, again on network investment, and importantly, a return to growth in our B2B business. This resulted in 9.5% overall growth. Now you've heard about Colombia and Guatemala's strong performance. That was up 6% and 9.2% respectively. Again, both on home and mobile growth. On slide 19, you can see the EBITDA for our LatAm segment. At $622 million, this was up 7.1%. The margin was stable at just over 40%, and this was despite incurring higher sales and marketing costs associated with the mobile customer intake. Turning to slide 20, we have the LatAm EBITDA by country. I'll start with Colombia. We saw a 5.6% decline in EBITDA year-over-year.
I think we've explained this, but to repeat, this is due to a significant increase in selling and marketing expenses. This is what has driven the very strong mobile customer intake during the quarter and has resulted in improved market share. Otherwise, growth was positive in all countries. El Salvador had its fourth consecutive quarter of growth driven by a strong top line. Both Guatemala and Panama delivered double-digit EBITDA growth again. We saw positive growth from all other operations. On slide 21, we show the operating cash flow, and this is our underlying EBITDA less CapEx for the group, including Africa. Year to date, as of the end of September, our OCF is just below $1.25 billion, and we are now expecting to be above the $1.4 billion that we've been guided to since the beginning of the year.
Now turning to our leverage position on slide 22, we have reduced underlying net debt by $300 million this year to just over $5 billion. That gives a proportionate leverage of 2.67 times. When leases are added, our net financial obligations are around $6.2 billion and a proportionate leverage of 2.81 times. As you know, we've made reducing leverage a key priority of the business. We aim to bring leverage down towards two times. On slide 23, you can see that we've brought our leverage down every quarter since this peaked at the height of the pandemic. Overall, we've brought leverage down by nearly 50 basis points over the course of the year, and we've been able to restart our share buyback program.
On the right-hand side of the slide, you can see that we've repurchased around 0.8% of our share capital as at the end of the quarter, and today we're just over 1%. As a reminder, we've got authorization to repurchase up to $100 million until the AGM in May. We expect to invest $50 million during this calendar year and the remaining $50 million in the first four months of 2022. With that, I will hand back to Mauricio.
Thank you, Tim. Before we take your questions, let me take a few minutes to refresh everyone on our simple value creation model. It starts with a very clear sense of purpose, to make sure that all key stakeholders see value in what we do. The first building block is our network-centric organic growth strategy. The demand for connectivity is large in our markets. Our ambition is to turn that demand into service revenue growth in the mid-single digits%, drive margin expansion as we have, and grow our OCF by about 10% every year. With the investments we have made over the past year, this is now well within short-term reach. The entire organization is working towards delivering on that very same ambition in 2022. The second building block is our capital allocation strategy.
This starts with a healthy balance sheet and a clear focus on the Latin American region. We're coming out of this harsh pandemic with more organic growth and lower leverage, and we're now able to return capital to shareholders every year. Three, we're now building new ventures that create value beyond our core connectivity business. Our Tigo Money venture is already the largest fintech in our markets. We're investing more in it now than we have done in the past to accelerate its growth potential and capture the large fintech opportunity in our markets. Because indeed, no one is doing mobile money payments like we can in our markets, and this makes it a unique fintech opportunity for us. Our growing tower, fiber, and data center infrastructure also carries important strategic optionality for us to create value.
It includes more than 9,000 towers, a dozen Tier III data centers, and approximately 170,000 km of fiber. We now have projects underway to carve out both of these valuable assets from our core business and to manage them separately. This, in turn, will give us optionality to bring in partners for either venture to monetize or further grow both of them. I hope our model is crystal clear in what it means for value creation. Before I finish, please allow me to thank and recognize our amazing team, everyone, individually and collectively, because it is our vibrant culture, our unique Tigo, which gets the job done every day and the right way for all our stakeholders. We're now ready for your questions.
Thank you, Mauricio and Tim, for your remarks. We will now begin the Q&A session. As a reminder, if you would like to ask a question, please let us know by emailing investors@millicom.com, and we will add you to the queue. When I announce your name, please unmute your line and make sure that your video camera is turned on. Please limit yourself to one question and to one follow-up so we can give everyone an opportunity to ask a question today. Finally, please mute your line after you've asked your question. Our first question today will come from Soomit Datta at New Street Research. Soomit?
Hi. Whoa. Sorry, guys. My technical skills there are not very good. Thanks very much for the call. Yeah, a quick first question, please, on inflation and energy costs, if that's okay. We're seeing inflation rising across the region, presumably in some countries across the footprint more than others, but it doesn't seem to be evident in the Q3s. I wonder, as you look into 2022, do you see any kind of risks? Are there any particular markets where you would want to highlight that as an issue?
Sure. I'll start a little bit, and I'll hand over to Tim 'cause he's been doing, you know, quite a bit of good work on that. As you can imagine, Soomit, we've just gone through our budget process, so we've had live conversations on that. Indeed, it doesn't come through the results today, and that's because we're not hearing from the teams any significant concerns on inflation at this moment. It just doesn't really come up at this point. If you look at the official projections by International Monetary Fund and others, it doesn't seem to be something that weighs heavily on the horizon. Having said that, you know, we've been doing quite a bit of work ourselves internally to prepare for an inflationary environment, particularly when it comes to pressures that affect worldwide supply chains.
By that I mean, at the group level, we've been buying as much as we possibly can in terms of equipment, and that's, you know, part of why you see us bulking up, if you will, in CapEx. As somebody said internally, we started buying our Christmas campaign gifts back in February, and I think that turned out to be a really good decision because, as you know, there are shortages around the world on chips and handsets and a lot of equipment. I think we've prepared ourselves quite a bit for that.
At the group level, you know, as I said, we're not seeing a lot at the local level, but at the group level, we've been doing the things that you would expect us to do to better prepare for that environment, and that is making use of our scale to mitigate any cost pressures. I already talked about loading up ahead of time, which we've been doing. We've also been optimizing our reverse logistics as anticipation so that we have more equipment available simply from a circular economy point of view. We're pushing back on our vendors and optimizing specs, in addition to adding alternative vendors, so as to prepare the business for indeed some pressure at the group level. Tim, any more insights?
No, I think you've covered it pretty well. I concur. I mean, we're not really seeing a lot of inflationary pressures at the moment. That said, Soomit, I think we're very aware of it. You know, clearly Latin America is not immune to the global inflationary pressures that are out there. We've certainly seen a few central banks pushing rates up. Colombia in particular moved its rates up. But you know, the main areas we will be impacted will be on people, on our employment costs. We're not seeing that coming through just at this point. You mentioned fuel, but you know, bear in mind, although obviously network is a key part of our business, it only really represents about 5% or 6% of our overall OPEX as a percentage of the revenues.
The fuel component of that is a subset of that as well. You know, kind of we're aware of it, but it's, as you say, it's not very noticeable at the moment.
In some countries, Soomit, like Colombia, we just took a price increase. You know, we do have the ability, you know, to protect ourselves and our revenue on the subscription part of our business for sure.
Great. That's clear. Thank you. Can I have a quick follow-up, please? This might be one for Tim, but just on the Guatemala performance is very good, but on the dividend, you know, you've signaled that you're looking to pay down gross debt. Is that. I was a bit surprised by that, and I wondered, is that likely to be an ongoing policy in that market? Thanks.
No. When we redeemed the $800 million bond in Guatemala, we used a combination of existing resources, some new borrowings, and also some loans from shareholders. We just about finished paying off all of those loans, particularly the shareholder ones. I think the last payment was actually October. We've diverted the cash flow to paying down the loans, and we will resume the dividend flow from November, actually. It's just really a, you know, the way we chose to allocate the capital.
Okay. It's clear. Thank you very much.
Thank you, Soomit. Our next question will come from Marcelo Santos at JP Morgan.
Hi. Good morning. Thanks for taking my question. I wanted to ask about two operations that went a little bit softer, especially on the EBITDA side, Honduras and Paraguay. If you could, is this more of you trying to boost up commercial efforts like you do in Colombia, or is this more a competitive reason? Could you please throw some light on those markets? Thank you.
Let me take those because I think they are similar but different animals, Marcelo. I think on Honduras, what you are saying is perhaps the situation we had in El Salvador some two or four years ago. It's a business that we're not happy with the performance we're getting, that's for sure, in Honduras. We're also taking all the corrective measures like we did in El Salvador some years ago. By that I mean, we're modernizing the network. I made a reference to that on the prepared remarks. We're pretty positive that in combination with the fact that this is a two-player market in which we have significant scale, would allow us to correct for the shortcomings in performance that we see in Honduras today.
Pretty positive that once we make these investments, you know, as I said, that we've been doing on modernizing the network, Honduras will become a strong performer for us. Paraguay is a little bit different because I think Paraguay is further ahead in the change conversion cycle, if you will. We have made some significant investments in Paraguay. We have tons of scale, and as you've heard me say a number of times, all the toys in Paraguay. What we're beginning to see now in Paraguay is competition becoming quite more rational, so it's more stable today. Still a difficult environment from a competitive point of view, but certainly much more stable than it has been in the past.
If you look at the subscriber numbers in Paraguay, you can see that the business and the market there is a lot more stable. I would even venture to say that it's stabilizing significantly. You see that our mobile market share is now stable, even slightly up, because we're picking up subscribers in Paraguay. We picked up 120,000 this quarter. They're up 7%. Homes also becoming a little stronger. Service revenue in Paraguay is, you know, moderately up, and I think we're stabilizing significantly in Paraguay. Obviously, you see at the EBITDA level that we've paid for the soccer rights, and that's why EBITDA looks a little bit weaker than it would normally look. That's very good because it helps us very much stabilize that business.
Perfect. Thank you very much.
Thank you, Marcelo. Our next question will come from Diego Aragao from Goldman Sachs.
Yes. Thank you. Good to see you all. Look, the first question is related to the competitive landscape in Colombia, especially mobile. It seems that, you know, Tigo and some of the other players are still, let's say, performing well, despite a new entrant in the market. I'm just wondering if you can comment about your strategy and expectations in there. The second question is related to the shortage of semiconductors that is, you know, hitting, let's say, global supply. I guess are you seeing any potential impact for your CapEx plan as we approach 2022? Also, maybe just a third question here, sorry. Any initial thoughts on the proposed transaction between Liberty and América Móvil in Panama?
I would love to hear your thoughts on this. Thank you.
Sure. Good to have you here, Diego. So on Colombia, as you saw in the prepared remarks, given everything that's going on in the country, we think our performance and our Q2 was quite strong, but I think Q3 in Colombia is outstanding in terms of demonstrating that our strategy is working. As I said on the call, we set out to buy spectrum. We set out to build a network. We set out to increase the commercial distribution, and the last shoe to fall needed to be particularly that we do get the subscribers and we get the revenue. That's happening, as you can see on the numbers that we showed, Diego. We're up 18% on the mobile subscriber base.
Postpaid, in particular, has had two record quarters, and this one was better than the last quarter with almost 150,000 net adds and about 110,000 prepaid net adds. We're very happy with the way Colombia is performing. As you can gather from the prepared remarks, the issue we historically had in Colombia is that, you know, with such limited market share, we couldn't possibly be profitable. Our strategy is to find some scale, and everything that is happening in the market is allowing us to gain that scale. You've heard me say that it's a volume game which will allow us to pick up a little bit of market share, and that's exactly what's happening.
what I added, and I think the numbers quite significantly show, is that we come out ahead on the revenue proposition despite lower ARPU in the market. We're very pleased with the way Colombia is working for us. It's exactly what the strategy was supposed to do. If you add to that the fact that home, again, the strategy that we laid out five years ago is also performing, you know, it's increasingly certain what we're doing in Colombia. We reconverted a ton of copper, as you know. We're largely done with that. Now the customer net adds are strong, and they're bringing revenue in Colombia. Home service revenue growth in Colombia is double digits. If you look at what we're doing in Colombia today, we have both mobile and home working. We're the best network in the country.
Our NPS results are significantly moving up. If you look at the portability in Colombia, we're clearly the winner. If you look at where we come out in the price versus quantity game, we come out with increases in service revenue. Overall, very, very pleased. We're basically net winners in a competitive landscape. On the second question, on 2022, I think the first thing I'll add, and you know, Tim's been looking at our budget in a lot more detail, so I'll hand it over to him. I'll tell you this, in this business, we've already acquired a ton of our 2022 CapEx, right? If we hadn't done that, we wouldn't be good at this business.
That's, you know, we've not only loaded up in the fourth quarter of 2021, and that's, you know, partly why we keep saying, you know, that we're gonna load up on CapEx this year. But we're already putting the orders for 2022, so we can start, you know, affecting all that 2022 CapEx already. Then maybe, Tim, you can add a little bit to that before we go into the Panama matter, just to give-
Yeah. You know, kind of the chip shortage has been, you know, kind of facing us for a while. We've been forward buying. The big issue for us, Diego, is set-top boxes. That's probably the area where there's been the most acute shortages. Handsets are a bit more fungible, a bit easier for us to deal with. Network equipment, you know, we have long lead times on that. We saw the risk area was in the set-top boxes, and we put a lot of forward purchases in on that. I haven't got the exact details, but we've probably committed at least half of our CapEx for next year already in terms of contracts, purchase orders, et cetera. That's how we're trying to mitigate being rescued.
Right. Lastly on the Panama matter. It was part of our investment thesis when we went into Panama, if you recall two years ago, that mobile market, which had four players, a couple of them with size and a couple of them with limitations on scale, would eventually rationalize down. What you're seeing is precisely that it's been rationalized to three players from four. That was part of our investment thesis, and as a result of that, we think it's just a sensible thing for the country to do. With that in mind, it's just a further element of what was our investment thesis.
Very helpful, Mauricio and team. Thank you very much.
You bet.
Thank you, Diego Aragao. I'm going to read a question for Stefan Gauffin at DNB, who's having some technical issues. His question is, if we are being cautious on our OCF guidance at $1.4 billion, we are saying that we are targeting 18% CapEx to sales in 2021, and that would put our Q4 CapEx levels higher than what we had in 2020. He's saying even if he puts these CapEx estimates into his estimates, he's coming to an OCF guidance a little bit closer to $1.5 billion.
All right. I'm gonna give it a shot and then Tim's just gonna, you know, kind of, you know, validate, correct, adjust the numbers. Let me give you the big picture here. All right, let's just be clear. We are on track to be surpassing the 1.4. Okay, that's fair. You know, everybody needs to understand that this year we are gonna spend more CapEx than we historically have to the tune of $100 million-$200 million. You know, we've already had in this call conversations around why that is important. Just to re-emphasize that, you know, we are finishing out the Colombia network. We're amidst key network modernization programs. You know, we talked about Honduras and we talked about Paraguay.
Those are all coming to completion this year. This year, for sure, we're gonna be a little higher than normal to the tune of $100 million-$200 million. As a result of that CapEx to sales ratio is gonna be around 18%. Now, these projects are not with us into next year, and we've already bought a lot of the CapEx or secured a lot of the CapEx for next year. We're pretty comfortable knowing that next year our CapEx to sales ratio will come down to that 16%-17% ratio that we've been talking about. I think that's the most key and important point here, is to understand that.
I wanna use the moment to go perhaps a little bit big picture on this conversation rather than, you know, spinning my head around the Q4 numbers. I think what's behind all of this is that the business model that we set out to put in place is coming to fruition pretty much right now. Let me explain what I mean by that. We set out a model, a ambition, if you will, to achieve top line growth. We're pretty close to that. If you do the math against our 2019 numbers, you'll realize that our service revenue growth this quarter was around 5%, which is that mid-single digit level that our model predicates.
If you look at our margins, we have said some years ago that we would seek margin expansion to get to EBITDA margins of around 40% and operating cash flow margins of more than 20%. We've reached that. We're there in terms of our EBITDA margins at around 40% and a margin expansion of the operating cash flow level. We're at margins of profitability that are in the 20%-25%. The last shoe to fall here, and this is why the CapEx conversation is so important and the fact that it is coming down next year for the reasons that we've discussed now, significantly. The last shoe to fall here is simply that target of operating cash flow growth of 10%, it's no longer something that sits out there in the horizon. It's around the corner.
On the prepared remarks, I thought it was very clear in saying that we're looking at it for the short term, and that's all part of the equation here. I want that focus to be clear that we're getting to our target model very quickly into 2022. Tim can correct now my Q4-
No, no. In fact, I wasn't gonna correct anything. I was gonna give you a little bit more specifics, I guess, in... You know, if we look at the components here, we've talked about a high level of CapEx, and I know kind of the market generally doesn't believe us, but we will, you know, probably spend about $450 million in CapEx in the fourth quarter. Now, this isn't, you know, all of a sudden we're spending that amount. This is to do with projects we started in the first and second quarter, where we effectively get to acceptance and therefore the bookings. That's why the number is higher.
You know, if I look at the other part of the components, I see no big sort of red flags on the LatAm EBITDA side. I think, you know, we've talked about that performing well. You know, if I've got one area of caution that I'm a little bit more concerned about, that will be on the Africa EBITDA number for the fourth quarter. Now, I realize we haven't talked about it too much. It's subject to a sale and purchase agreement, but it is still part of our numbers, and it's still part of the OCF number. There has been a significant impact on the MFS business because of a levy that was imposed by the government, which has had an impact.
You know, kind of at the margin, Stefan, that will have an impact, I think. Overall, as we said, you know, we're now very confident that the number is above $1.4 billion. Whether we kinda meet in the middle as to where you are, I'm not too sure. Certainly we remain very sort of optimistic about the LatAm performance.
I'm gonna.
Well, thank you both. I'm gonna verbally ask another question for Bill Miller. He is wondering if you could expand on the fintech and money transfer business and how soon we could expect this to be an independent entity.
Very good. Great question. I take, you know, I look at our Tigo business a little bit like perhaps what we, you know, back in the days when we talked about cable, and we said we're gonna build a cable business and this is pretty much where we are today. We built a $2 billion cable business with phenomenal margins, phenomenal service revenue growth, and a lot of runway into next year.
Tigo Money is today what cable was, you know, three to four years ago, when we put it out as a toddler that we would build into a young independent individual. What we have today with Tigo Money, as you know, is already a pretty sizable fintech, 5 million users, $50 million of revenue with launch in five countries. It's not small, but it hasn't received all the attention that something that's already a pretty scaled-up fintech could. That's exactly what we're aiming to do. Because we feel that we're barely scratching the surface of the fintech opportunity that's available in our countries today. Because the reality is no one really is doing mobile financial payments in our markets, and certainly not taking care of this fintech opportunity.
What we aim to do is first become the preferred digital mobile platform in all of our markets so that we fill that gap in financial payments, digital mobile payments in our markets. For that, this year we'll be launching QR codes across our markets and reaching out to thousands of merchants so that we become that preferred digital mobile platform. That's point number one. Point number two of the strategy is to expand geographically. We've only launched in five countries, not in the others, but in some of the countries where we launched, we can relaunch more forcibly. Then, of course, the third layer of the strategy would be to expand into the other fintech opportunities with lending and insurance. That's the overall picture of what we're trying to do with Tigo Money.
The opportunity is available to us because we have such significant presence in the markets we operate with agents that cash in and cash out our existing prepaid business. As a result of that, we can build a fintech that's tethered to the real economy via the cash machines, if you will, that we have, the little ATMs that we have everywhere. That's the vision for you, Bill. Now, what we're doing today is we've been investing heavily in building out the team, setting up the strategy, pumping up the capabilities that we have both on the IT level and others. By the way, that's also part of some of the investment that you're seeing in Q4, much more than ever before, because we're investing in Tigo Money.
In parallel to that, what we're doing is we're carving out that business so that we have the optionality to potentially bring in a partner that would help us develop that business. As I've said before, I'm very enthusiastic, and I believe we have tremendous opportunity to create another value driver for us here.
Thank you, Bill, for your question. Our next question is from Stefan Billing at Kepler, and this is our last question, I believe.
Thank you. Hi, everyone. A couple of questions from my side. First of all, a nitty-gritty one, El Salvador. If we look at the cost base, it seems to be still a bit elevated. I think you had some accruals or something like that in Q2. Anything you wanna comment on that?
El Salvador is, you know, just an incredible comeback story, for us. You know, it is hopefully the template to what we need to do in Honduras, as I said earlier. It's become our highest growth business, phenomenal NPS, all on the back of changing the network, getting spectrum, putting a phenomenal team in place. If you look at the Q3 numbers, they keep getting better with net adds that are, you know, 13%, if I recall correctly, and an EBITDA that's not only double-digit, but in the 20%. You know, going forward, we're gonna keep in Salvador, you know, putting the same recipe in place on and on because it really is working.
To be honest, I'm not really too worried about the OpEx in El Salvador at the moment because the area that it's mainly coming through is dealer commissions, and dealer commissions are associated with gross additions. They basically are to support the growth in the customer base. I think that's the major reason why it's slightly elevated. For me, this is good OpEx.
All right. Thank you. Next is on Colombia. I was just curious on two things there. The Bogotá region. Are you now, you know, gaining good traction on the mobile side, thanks to the low-band spectrum, or is that yet to come? Also, if there's any news on the potential cable reseller opportunity in Bogotá that you can share.
The answer to the first part is the pickup in, you know, the strong pickup in subscribers, largely post-paid in Colombia, is reasonably broad-based, because we now have a network that covers the entire country. Yes, we are able to better service Bogotá now because we have a low frequency network available in Bogotá, so we are picking up subscribers in Bogotá. It's more broad-based across the country than it used to be. Yes, we have corrected for a technical handicap or a network handicap that we had in Bogotá. The net adds are coming from the entire country because we've also increased distribution. That's the answer to the first part of the question.
The answer to the second part of the question is, if you're referring to the deal between Ufinet and ETB to create a fiber co that would give access to third parties in Bogotá, that has run into some legal problems in Colombia. I don't know whether they will be sorted out or not. That also leaves ETB with the ability to itself resell the fiber to third parties. That would be the, you know, the fallback position. What it means for us is that whether it's a joint venture or not, sometime next year, we would be in a position to buy resold fiber services from either the joint venture or from ETB directly.
Sounds good. Thank you very much.
Mm-hmm.
Thank you, Stefan, for your questions. We have another question from Anders Wennberg. He is asking if MercadoLibre is active in payments in countries like Paraguay, Bolivia, and Colombia. How do we compare to them in terms of mobile payments? Could Mercado Pago be a potential buyer of the mobile payments in South America?
Listen, Colombia of course is a little bit different. Colombia is a bigger market and one in which indeed Mercado is. The opportunity for us, for Tigo Money, exists in all of our countries. The one that has the most competition today is particularly Colombia. Everywhere else, it's pretty much a blue ocean for us to, you know, conquer the digital payment space. Because we have unique capacities that others don't really have. We already know the mobile payment business because we've been in it for a while. We're increasing the technology, increasing the distribution, increasing the teams, increasing our platforms and obviously our product proposition. In all the countries outside of Colombia, it really is a blue ocean for us to build that digital payments business. No one's doing it, neither other mobile operators, not any strictly fintech.
As I said earlier, we have a unique advantage, which is the fact that we have a large Tigo Money distribution platform. It's not small. It's about 20,000 points in the markets that I've just described where we've launched Tigo Money, in which Tigo Money can be cashed in or cashed out. That basically connects our fintech to the real economy, and it's an advantage that nobody really has. We need to make significant use of that. On the last little bit, it's just, this is such a young, tiny baby, so we're not yet thinking about, you know, who's gonna marry it or take it away from us. That may happen once we've sort of put him or her through primary school and high school.
Thank you, Anders, for the question. That was our last question. Mauricio, if you'd like to make some final remarks, I'll leave the floor to you.
Thank you, Sarah. I think I'm really going to «llover sobre mojado» rain over wet pavement. We're getting to the model that we wanted to create with service revenue growth, margin expansion, and operating cash flow growth. It's now very much around the corner. I'm thankful to all of you who believed in the story, and I'm thankful to the team who's putting it together. I'm pretty pleased that we're building a model that does have better operating cash flow growth ahead of us. Thank you for, you know, just waiting for us to deliver on it as we are.