Thank you, Howard, good morning, everyone. Welcome to our third quarter 2020 results call. As usual, we're going to be making some references to some slides, which are available on our website. To begin, please start on slide two for our safe harbor disclosure. As usual, we will be making forward-looking statements, which obviously involve risks and uncertainties and which could have a material impact on our results. On slide three, we define the non-IFRS metrics that we will be referring to throughout the presentation, and you can find reconciliation tables in the back of our earnings release as well as on our website. With those disclaimers out of the way, let me turn the call over to our CEO, Mauricio Ramos. Mauricio?
Thank you, Michel. Good morning and good afternoon, everyone. I do hope that you and your loved ones are all staying safe and in good health. As you know, at Millicom, throughout the pandemic, we chose to stay fully committed to our long-term purpose, as you can see on slide five. This purpose is well-known by you and by each one of our 23,000 employees. It means that throughout this pandemic, we have, one, kept our employees safe, engaged, motivated, and productive. Two, we have kept our communities connected precisely because of the commitment from all our employees. Those in the front line and those in the back offices, thank you if you're listening to this call. Our service means that we have been up and running without fault 24/7 every day because of this commitment from our employees.
Because of our rapid deployment of our lifeline product, we have kept every single one of our users connected during the pandemic, and we're proud of this. Because of this, you will see that our paying customers are coming back and the Tigo brand is emerging out of this crisis strengthened and more relevant to our communities. Please turn to slide six for the key points of our call today. One. We had record customer net adds during the quarter, both in mobile and in cable. Our COVID reaction plan has successfully protected our user base and our market leadership position. Two. This user growth, particularly in mobile, helped drive strong revenue on EBITDA growth in Q3 sequentially from Q2. That said, we still have a long way to go to get back to pre-COVID levels. The trends during Q3 were positively strong.
Three, cash flow generation was also strong in the quarter. As a result, our plan to protect operating cash flow for the year is on track, and we further reduced net debt during the quarter. Four, and most importantly, even if we prudently held back some CapEx during the pandemic, we also continued to invest strategically and for the long term, positioning ourselves well to bounce back rapidly when this crisis ebbs. Let's look at some details point by point, starting with slide seven. In mobile, we added a record 1.7 million users in the quarter. This is a very strong comeback. We're now back to the same mobile user base we had at the end of March when the lockdowns were put in place in our market. Our prepaid business came back particularly strong.
Prepaid is indeed the main driver behind our strong revenue growth comeback into Q3. Simply said, when users left their homes, the first thing they did was turn on their mobile phones. As you know, we chose to keep our commercial and distribution and service layers on the streets precisely so that we could come back quickly and strong as we're doing now. We also had solid net adds on postpaid for the quarter, with a net gain of about 140,000 customers. Note that we're still down about 350,000 postpaid users compared to pre-COVID levels. Many of these postpaid customers actually cautiously moved to prepaid. We do expect that it will take a few more quarters for us to reacquire the subscribers back up to postpaid. We also had record net adds in our home business this quarter. We added a record 157,000 customers in the quarter.
Our subscriber count is now about 62,000 higher than it was at the end of Q1. In fact, if you look at our HFC customers, we have almost 100,000 more customers today than we did at the end of March. This strong performance is coming firstly from strong demand for broadband, which is bringing us new customers, and secondly, from our early decision to offer a Lifeline product for a Producto Minimo. This product has allowed us to keep our promise to provide connectivity to our community, retain a good relationship and an overall relationship with our customers, avoid very expensive disconnection and reconnection costs during the pandemic and after the pandemic, keep our real churn levels down, and protect our cash flows.
This was also the right thing to do for our customers and for our communities in this time of need, our brand is continuing and will continue to benefit further from this in the long term. Please turn to slide eight. These record net adds produced a 4% uptick in service revenue in Q3 compared to Q2. We are still well below pre-COVID levels in terms of revenue, much recuperation is still ahead of us. The comeback in Q3 was strong, adding about $50 million of revenue and growing 4% sequentially from Q2. We have also been keeping a very tight control on costs. Almost all of that incremental revenue is dropping to the EBITDA line, which grew 7% in Q3 compared to Q2. I want to be extra clear.
Much is still uncertain, and the news over the last couple of weeks certainly highlight that, but we did see the business begin to come back in Q3. Now, please turn to slide nine for a closer look at our organic service revenue growth and what is behind it in this quarter. Message one, on the left-hand side of the page, is that the improvement in this quarter was broad-based. Every one of our markets showed a solid improvement in year-on-year growth in Q3 compared to Q2. On the right-hand side of the page is the key and take home message. This improved performance came entirely from our mobile business, from prepaid in particular, as I already mentioned. Growth in home remains strongly resilient in Q3, slightly positive and about the same as in Q2. As you know, in a cable subscription business, revenue follows the user base.
Our increased subscriber base in the quarter gives confidence that we'll see growth in our home business re-accelerate going forward. B2B, on the other hand, and as we expected, is still challenging, with revenues down 8.5%. The weak economies in our markets are taking a toll on many of our SME customers. Many have had to shut down either temporarily or permanently. No B2B recovery is in the numbers of this quarter. That recovery is still to happen, still to begin, and we expect this recovery will take some time to come through. In short, on this slide, Q3 showed a strong comeback in a resilient business, but not all of our business lines are recuperating just yet, and there's still a lot of uncertainty for us going forward.
That is precisely why we remain so very focused on cash flow and on reducing leverage, as you can see on slide 10. Over six months ago, we implemented our COVID action plan, which you know very well. We set a hard target to keep operating cash flow, EBITDA minus CapEx, flat at around $1.4 billion. This slide simply shows you that we are right on track and that we are confident that we will deliver on that goal. We also told you that we would prioritize net debt reduction. That is the second point on this slide on the right. We have now brought net debt down by $240 million since Q1, and we will sustain this focus going forward. I would also like to give you some color on our key countries, starting with Guatemala on slide 11. Guatemala continues to perform very well.
This is a stable, rational, two-player market in which we hold a strong market position. We also continue to invest to maintain market leadership and to sustain growth. As you know, the government of Guatemala did not lock down the country as severely as some other countries did. That is one of the reasons why the impact on our Q2 numbers was limited, and is also why in Q3, service revenue growth has turned back to positive. Throughout the year, we have continued to invest in both our mobile and our fixed network and to drive efficiencies and digital adoption. In mobile, we added over 300,000 users to our base in the quarter. Our base is now about 200,000 users higher than it was pre-COVID. Demand for residential cable has also continued to grow throughout the pandemic.
We added 36,000 new customers in Q3, twice the number of net adds we had in Q2. Let's go to slide 12 for a look at Panama. At the macro level, Panama is the wealthiest country in Central America and one of the reasons we're investing so confidently in Panama. The toll of the pandemic in Panama has been amongst the hardest, with its lockdown being one of the most severe and its GDP expected to contract almost 10% this year. Against this very challenging backdrop, we have continued to execute on our game plan, integrating the acquisitions, extracting synergies, protecting our market leadership on fixed and expanding on mobile. We are extremely pleased with the underlying operating results. The subscriber counts tell this story impressively well. In home, we have continued to see solid and consistent growth in our broadband internet subscriber base.
We're solidly holding our market share position and leadership on fixed, and then a little bit more. In mobile, we have now celebrated the one-year anniversary of our acquisition in August. We have modernized the network, rebranded the business, and expanded our market leadership. Indeed, our customer base has expanded in mobile by about 5% over the past year, reflecting a strong bounce back in Q3 as the economy began to reopen. We're also picking up new customers from cross-selling mobile services to our cable customers. As you recall, this was precisely the cross-selling opportunity that our acquisition plan identified and was predicated on. The fun side in Panama is our dollar-denominated cash flow is increasingly robust. We have generated $160 million on operating cash over the past year, even though we have absorbed some integration costs and taking a COVID hit, which we had not foreseen.
This is most visible in our B2B business in Panama, which has been very hard hit since the beginning of the pandemic. B2B is the only area of the group that did not recover in Q3 compared to Q2. All in all, we're not yet firing on all cylinders in Panama, but very pleased with the underlying performance there, particularly in the B2C segment. Colombia. Let's look at Colombia on slide 13. We are regaining some good subscriber momentum in Colombia as well. On the mobile side, we expanded or upgraded our network by more than 1,000 sites as we have put through the 700 MHz spectrum we bought earlier this year. Remember that we're now the largest holder of 700 MHz spectrum in Colombia, which gives us better indoor penetrations in the area where we previously only had high-frequency spectrum.
It is also helping us expand coverage and cost-effectively so into geographic areas in which we have no coverage. You can see that we peaked at about 450,000 mobile customers in Q3. Some of this is related to increased mobility for sure, but our gross adds and our NPS scores are high in the areas where we have already deployed the new network, which is a very promising sign. In home in Colombia, we continued to expand our fiber cable network, adding about 60,000 home passing this quarter. This is a bit less than usual, but very consistent with our tactical delay in network growth during COVID so that we could focus on filling the existing network for a better return on capital and more cash flow in a tricky year. That is exactly what we did.
We added in Colombia more than 80,000 fiber cable customers this quarter. Driving network penetration higher, helping us with cash flow this year, and strategically enhancing our converting capabilities in Colombia. This strong user growth in Colombia is a good segue for the last section of the presentation, focusing on the long-term investment we continue to make, beginning on slide 14. The growth in our fixed broadband business is a key driver of long-term shareholder value creation for our business. Let me say that differently. We are in the business of creating shareholder value by increasingly generating long-term valuable customer relationships. That's what cable is all about. Year-to-date, we have built an additional 300,000 fiber cable home passes. That's year-to-date. This is lower than our typical run rate of about a million per year, simply because during the pandemic, we shifted our focus to building our existing network.
I just showed you the positive results for Colombia. For the whole region, the results are equally positive. Year-to-date, we have added about 174,000 new fiber cable customer relationships. About half of those in Colombia, and the rest split between Bolivia, Panama, and Guatemala. That's year-to-date, 174,000 new fiber cable customer relationships. A net positive year-to-date. Interestingly, we increased the installation fees during this quarter, aiming to minimize churn down the road, avoid bad debt, and hopefully drive better industry practice for the long run. Our focus this year on increased network penetration, which is up significantly year-to-date, is helping us drive better operating leverage, cash flow, and return on capital. Going forward, as governments do continue to open up their economies, we will gradually ramp up our home build back up again as broadband demands continues to stay strong.
We will, of course, continue to keep an eye on our network penetration rates. In mobile, you can see on slide 15 that we continue to move forward with the very strategic investments we have been making to upgrade our mobile networks. We have added over 1,100 points of presence this year, mostly in Colombia. We have upgraded 4,000 sites in the core countries where we have been deploying new spectrum holdings or modernizing networks. These network upgrades expand both coverage and capacity and improve both user experience and core operating efficiency. In Colombia, as you saw, this is already providing key to improving our competitive positioning. Our investments this year have centered on a more focused cable fiber network rollout and on the mobile network expansion and modernization that I just talked about. There are two other areas where we have been focusing significantly.
One is Tigo Money, and the other one is our digital roadmap. Let's talk about Tigo Money first on slide 16. We have been very quietly building our mobile unit money user base. We now have about 5 million active Tigo Money users in Latin America. That's up about 20% over the past year, and yet only a fraction of our overall mobile user base. Usage is increasing dramatically. The number of financial transactions with Tigo Money has more than doubled over the past year, and so have the volumes that the platform is now transacting. Tigo Money is now transacting well over $2.5 billion annually. Our Tigo Money platform is now evolving from being a simple value-add service for our customers to gradually becoming a business in Latin America with high potential for us.
Of course, we look forward to updating you on our strategic progress on Tigo Money Latin America in the coming quarters. Lastly, we have continued to invest and move significantly forward in digital adoption. You can see the progress on slide 17. Simply said, the pandemic has forced many of our customers to embrace the use of digital tools and channels. Our digital readiness allowed us to respond accordingly. Just in the six months since the beginning of the pandemic, digital collections are up 50%, e-sales are up more than 80%, and digital prepaid reloads are up 60%. We have also repurposed our corporate responsibility programs to better support our communities digitally during the time of need. Our Maestr@s Conectad@s program, which means Connected Teachers, was initially rolled out in Bolivia, where we trained 140,000 teachers on the use of state-of-the-art online educational tools during the pandemic.
The program was so successful that we have expanded it to Guatemala and Nicaragua and Paraguay, and we're looking to expand the program to all our operations in 2021. This program is an additional source of pride for many at Tigo, who are personally involved with the programs, and are part of this Sangre Tigo culture that you have heard me talk about before, and you will continue to hear me talk about in the future, too. Now let me turn it over to Tim to go over the financials for the quarter.
Thank you, Mauricio. I'm going to start on slide 19 with the bridge between our reported numbers and the LatAm segment. From the top of the chart, you can see our reported revenues were just over $1 billion. When you look at the business holistically, and that's including Guatemala and Honduras as if fully consolidated, our underlying revenue was just over $1.5 billion. To get to the underlying LatAm service revenue of $1.3 billion, we exclude Africa, which now is a little over 6% of our revenues, and telephone equipment sales, which are not an important driver of profitability. On slide 20, you can see that LatAm service revenue fell by 3.1% on an organic basis compared to Q3 last year. We'll look at that in a bit more detail on the next slide.
EBITDA was down 5.6% organically. Again, as Mauricio highlighted, it was up on a sequential basis compared to Q2 on better service revenue and lower bad debt. Our operating cash flow, which is EBITDA minus CapEx, was a little down. On a year-to-date basis, almost exactly in line with last year. We're on track to meet our target for the year. On slide 21, you can see that whilst our service revenue fell by 4.7% in real terms and 3.1% organically, it was better than the Q2, as we saw improvements in economic activity. In our businesses across most markets, again, as Mauricio has pointed out. Mainly driven by the improvements in mobile B2C, which declined by 4.3%. That is considerably better than the 11% drop we saw in Q2.
Mauricio explained this was largely as a result of the prepaid business rebounding, reflecting the easing of lockdowns primarily. Our home business continues to show year-on-year growth, again, broadly in line with what we saw in Q2. B2B also in line with Q2, down 8.5%, where we're seeing weakness in the small and medium-size enterprise sectors. On slide 22, again, as Mauricio has highlighted, we've seen an improvement in all operations compared to last quarter, but we are still down in most operations, with the exception of Guatemala, and we're still below pre-COVID levels. The relatively stronger performance in Guatemala, it was up 3.9% organically, is driven by an improvement in prepaid and the continuing strength of the home business. Colombia, where we were broadly flat organically with a good performance in home, offset by mobile and B2B. In mobile, it was better than it looked.
Last year in Q3, we were still booking Avantel revenue prior to that company filing for bankruptcy. This is the last quarter where this will be a factor. In dollar terms also, we reported revenues of 11.4% down in the quarter, this is entirely due to FX. Also facing FX headwinds were Paraguay, where reported service revenue was down 15.2%, excluding the FX impact and the one-offs we saw in the last year numbers. Our service revenue was down just under 2%, this is a significant improvement compared to the last quarters. On slide 23, we've got the LatAm EBITDA by country. Again, we have seen sequential improvement with cost-saving measures benefiting most markets. Guatemala continues to lead the way with 3.2% year-on-year growth, whilst elsewhere, the picture largely reflects the revenue impacts discussed in the previous slides.
I want to turn to the balance sheet on slide 24, and you will have seen that we have been very active. Specifically, we have called the Comcel bond in Guatemala. That was our most expensive financing. We will refinance that with a combination of local currency bank loans, existing cash resources, and some shareholder loans. We've also taken advantage of favorable market conditions to issue new bonds maturing in 2031, and this will replace an existing bond that matures in 2025. The impact of these and other measures means that our average maturity is now 6.4 years. The average cost of debt is 5.7%. You can see from the slide that we really have very little in the way of refinancings before 2024. To finish off on slide 25, looking at our current debt and leverage position.
Again, aligned with our strategy of preserving cash and paying down debt, we've reduced our underlying debt by $239 million in the last six months. Our underlying net debt is now at $5.7 billion, giving us proportional leverage of 3.16x . When leases are added to our net financial obligations, these are now a shade under $7 billion, and the proportional leverage, including leases, at 3.29 x. With that, I'd like to hand back to Mauricio to wrap up.
Thank you, Tim. Before we take your questions, let me wrap up with recap of the key messages. First, our customer base is growing again. In mobile prepaid, we are at pre-COVID levels. In post-paid, we still have some work to do, and in home, we've continued to grow through and despite the pandemic. We expect that today's user growth will drive tomorrow's revenue growth, and that's the key moment in our Q3 numbers. Second, revenue and EBITDA improved in Q3 compared to Q2. We still have a way to go before we get to positive year-on-year growth, and we know this pandemic is far from over, but we are getting back on track, and we remain positive, yet very cautious. Third, we have made it a priority during the pandemic to protect our cash flow and to reduce our net debt. You know that.
We're well on track to deliver the $1.4 billion of operating cash flow that we guided towards, we continue to reduce net debt in the quarter. Fourth, we continue investing. We're doing so in the areas that are aligned with our long-term strategy and in ways that position us to bounce back stronger than ever after the pandemic passes. You can already see that starting to happen in our Q3 results. We're all doing these things with a clear sense of purpose. With that, we're ready for your questions.
Our first question or comment comes from the line of Stefan Gauffin from DNB Bank. Your line is open.
Yes. Hello. A couple of questions, please. First, included in your target to keep operating cash flow stable was to cut cost with at least $100 million and to cut CapEx with $200 million-$300 million. So far, you have only cut CapEx with some $75 million year to date. With the current improved development, are you still aiming to cut CapEx to this extent, or have you changed that target? If you cut CapEx to that extent, the operating cash flow targets do seem conservative. Secondly, next year you have increased competition in Colombia with WOM likely to launch. How are you preparing for this increased competition? Are you looking more towards converged offerings in that market? Any other flavor that you can give there would be appreciated. Thank you.
Thank you, Stefan. Great questions. Wish we had a couple of hours to address them both. Let's start with the first one. I think Tim's team and I can do a good job of that. I'll start out generically what's happening. We're managing the business to that 1.4 on literally a weekly basis. When we see that we have room to put a little bit more CapEx into the business while still delivering the 1.4, we go ahead and do it, particularly if we see the broadband demand is happening quite strongly as we see it's happening. We actually have in our hands what I call a good kind of problem, which is we can put a little bit more going CapEx into the business this year, try to position ourselves better for when the pandemic is over and still deliver a 1.4. That's what we've been doing.
We've been able to do that because we've been so strict on cost cuts significantly. Because, this is the most important part of our plan, Stefan, the way we designed our budget plan, we decided with the knowledge that we as a company can react one way or the other pretty quickly. That year, we can slow down pretty quickly, we can ramp up pretty quickly, which means we can keep a pulse on what's happening in the markets. That's exactly what we're doing. We're cutting back on costs significantly, but we retain the ability to ramp up gradually if we need to. As a result of that, we're pretty confident we're going to get that 1.4 and be able to invest into the business anything that's over that. With that, I'll hand it over to Tim for more details. If you have any.
I would only add one quick one. I think as Mauricio said, our costs are running a lot lower than we had anticipated at the time. They're probably down just over $170 million in the last six months. Some of that is activity-related, some of it is FX, a lot of it is also management. As Mauricio said, if we can find excess savings on the cost side, then clearly we want to invest and continue to invest in the business, provided we can deliver that 1.4 of operating cash flow. Back to you, Mauricio.
Yeah. Perfect. On the second, Stefan, I think you've seen us over the course of this year really put focus on our ability to drive a better business in Colombia. That's really the overall answer to your question. I'll go into a detail in a minute, but all throughout the pandemic, we've been building the 700 MHz network. We just showed you the numbers. As of today, it's actually much more than 1,000. It's closer to 1,200 as we speak today. The number of additional sites which give us indoor coverage, it gives us expanded geographical preference, and it gives us a better user experience, which is already significant. Just last week, we were labeled the best performing 4G network in Colombia by Tutela, and this has been made public in Colombia.
Also increased our commercial distribution network significantly so in Colombia, because now we have more points of presence, and that does not mean network, but it also means commercial. Now, we're really focused on the opportunity, and this is the key point I'm going to make to you, Stefan, that for the first time in many, many years, because we bought this spectrum and we're putting it to use with the network investment and the commercial distribution investment behind it, we can play the true role of a challenger in this marketplace with the tools to succeed. We only have 15% market share on mobile in Colombia, 15% market share. Today, we have a very, very strong fixed base, and it's growing.
We have a brand that works. We are investing in the network and the distribution, which effectively means we can now play as a challenger with all the tools, fixed and mobile. You are right, convergence is a really important part of this deal. We also have the frequency and the spectrum to play with and all the tools with only 15% mobile market share, which effectively means in our minds, we are ready now to be a challenger in mobile. The last point I would make to you is, yes, we are preparing for the opportunity to be a challenger in the new competitive environment in Colombia, which, by the way, remains a four-player market as it has been for the last 10 or 15 years, because WOM is effectively replacing the position that Avantel had.
With fixed mobile convergence, the investment that we're putting into the network and the mindset that we can be a challenger with only 15% mobile market share, we actually feel like in Colombia, we have the tools that we never had in the past.
Okay. Thank you.
Thank you.
That was reassuring.
Thank you. Our next question.
We're focused.
Thank you. Our next question or comment comes from the line of Marcelo Santos from JP Morgan. Your line is open.
Hi. Good morning. Thanks for taking my question. The first question is about the sequential improvement in Bolivia and EBITDA, which was pretty strong. I just wonder if you could comment a bit on that. The second question is about the Lifeline client. Do you still have a large base on Lifeline? I mean excluding, or is it most concentrated in El Salvador? Do we have potential to see this coming back in the following quarters besides El Salvador? Thank you.
On Bolivia, we were happy to see, Marcelo, the business not only stabilize in Q3, but also come back strongly to growth. I think we had strong add-ons on mobile and very strong add-ons on home, no doubt, very strong quarter in Bolivia. A lot of that was a result of the strong comeback from the difficulties we had putting in place the Lifeline product in Bolivia during Q2, and we were able to put that in place at the end of Q2. Q3 show a strong comeback. We're also beginning to see, and this is important, Marcelo, we're beginning to see Bolivia stabilize much more than it has for the last 18 to 24 months. This is, I think, the key point on Bolivia going forward. We had political uncertainty in Bolivia, and then we had the pandemic in Bolivia.
The elections last week are helping provide a clear path towards certainty in Bolivia. There was a clear winner in the first round with a clear mandate from the population, and as a result of that, the social unrest and the political instability in Bolivia seems to be coming back. The head of the new government, the new president, as you know, is a former economy minister and a central banker. I think his position is helping provide stability on economic terms as well. I think that's exactly what Bolivia needed, quite honestly. We're hopeful that there's going to be renewed stability in Bolivia. Now, on the Lifeline customers, which I think is a good point. Yeah, go on.
If I can just make one tactical point. I think it comes into your Lifeline products. We introduced Lifeline very late in Bolivia. It meant we took a very high bad debt charge in Q2. A lot of the impact was lower bad debt charge. We've moved to normalize bad debt levels in Bolivia and, in fact, in most countries. I would view the outlier as the Q2 EBITDA rather than where we are today.
Yeah.
I'll save that to you.
Yeah, thank you, Tim. That's very helpful. I'll make two or three points, Marcelo, on the Lifeline customers. I think the first two are just as generic, if you will. This has turned out to be a very good tool for us, not only through the pandemic, but a tool that we think has merit going forward. We will continue to use it going forward for the exact same reasons that it was helpful during the pandemic, which I already alluded to. I'm not going to repeat them. It is a helpful tool for us to keep going forward, and you can imagine why. It starts paving a way for us to manage retention and churn and the relationship with the customer in a most cost-effective and cash flow creative way for us.
If you recall, we don't count any of these subscribers, this Lifeline or Producto Minimo subscribers in the subscriber count that we report to you. They're a pool that sits outside our subscriber counts. We also don't book any revenue from the Lifeline subscribers. We've also kept our financials relatively clean. What that effectively means, Marcelo, is that you can think of this as a dormant pool that we keep at lower levels, of course, now than during the pandemic, but that we're using to bring back subscribers. You've seen during Q3 that we brought back a ton of those, but most importantly, we've added a ton of new customers to the base because we're at higher levels than we were before. As a result of that, this is a good tool, and most importantly, something that we continue to use going forward.
I hope that helps you a lot.
Thanks. It's very helpful. Thank you very much for the answers.
Thank you. Our next question or comment comes from the line of Peter Nielsen from ABG. Your line is open.
Thank you very much. Just two quick ones. Firstly, you have on previous calls sort of flagged the sort of post-COVID challenges which your markets will face. You are now seeing, as you said, with your good recovery in Q3.
Just could you give us any qualitative indications on how you see the coming quarters? Will the sequential improvement in service revenue trends continue? Do you perhaps a bit more optimistic of stabilization for next year? Are you still sort of equally cautious as you have been in previous quarters? Just a quick one for Tim. Tim, your interesting comments about investing anything above the $1.4 billion. I guess we should interpret that you will come in at the $1.4 billion operating free cash flow this year and not above, as you will continue to invest in CapEx. Is that correctly understood? Thank you.
We'll get to those, Tim. You can start working on the 1.4. On the first one, on the COVID one, there's actually two pieces, Peter. They're really good questions. One is, what is our outlook for COVID in our markets, and as a result of that, what is our outlook more generally? They're somewhat distinct but very interrelated. What happened during Q3 of this year is that our economies began to slowly open up, and that caused increased mobility across our countries. The lockdowns have been gradually been eased. I should say that they have been eased, but they have not totally disappeared. Mobility is not yet at 100% of what it was before the pre-COVID levels. We estimate, depending on any given country, that it's somewhere between 60% - 80% of what it was.
There's still some COVID recuperation still to happen in our markets, despite the strong prepaid results that you saw during Q3. With regards to the virus in our markets, it's still spreading. Largely stable in most of our markets. As of today, and we look at this obviously on a daily basis, we're not seeing a second wave coming back into our markets. It does not mean that it's not possible, but we're not seeing a resurgent or a coming of a second wave in the numbers, at least yet. More importantly, going forward, and this is important to our assessment on how to assess the outlook going forward, the key element for us is that the recipe of a lockdown in our markets, which was used very severely and for a lengthy period of time. We've made this point over and over.
It's a recipe that going forward, I'll say this, our view is that they won't have political support or fiscal maneuvering room being cemented in such a harsh or severe manner going forward. We don't expect, even if there's a second wave, and we don't see it at this point, but we don't know. We certainly don't know. We don't expect that the lockdowns can be put in place or will be put in place in such a harsh manner as the way before. I think the recipe in our countries will now err on the side of keeping the economies open. The recipes will have a lot more of economic predominance than anything else. Having said that, what we have learned during this pandemic is that things can change very quickly and in a very uncertain manner.
I'll tell you this because I think it's important for everybody to understand. Our Q3 was better than our Q2 in every country. We already said that, driven mostly by prepaid. Prepaid came back strongly, but postpaid and B2B are still to recover. How strongly and when they recover is a function of the macro recovery. It's a function of how bad the damage was and a function of how long the health crisis stays on, even if there are no further lockdowns in our countries. Although every month this past quarter, actually the last six months, has been a bit better than the previous month, it has been very gradual, and therefore we remain very cautious going forward. We do have a more positive outlook for 2021 than we do for 2020, we surely do.
We also have a very cautious approach to things going forward, because the key word here is the balance between the short term and the long term. If anything we've learned that during this crisis. You've seen us, we're investing for the long term. We know that broadband is a product that's in high demand. It's got a long runway, and we see it short term, but we really see it long term. We also need to manage the shorter term, and we're doing that very cautiously. The key word here is uncertainty, Peter. That uncertainty comes from, one, the mobility could come back. Two, the macro will certainly have a way on our performance, whether it's the damage that's been done to the economy or the fiscal constraint that our governments are going to have. Three is B2B.
When will it come back is a function of when the economics will recover, and we don't know that just yet. What we have learned is that being as a business, as a leadership group, really good at navigating that uncertainty is the key to this. I think what we have learned and what we have demonstrated is that our COVID plan, still ongoing, has great governance. We have shown, and we think the key to this is to have a great ability to react to the short term quickly on the way down and quickly on the way up. I think that's the key to our success while we continue to invest in the long term. That is as much color as I can give you.
With all of that, I think you'll find that our answer to the 1.4, the things I got to give you is completely consistent with that.
Sorry. We needed a new North Star when COVID hit. We realized we needed to protect cash flow, reduce debts, manage leverage. That's where we decided we would maintain the cash flow for the same as last year. That was an important target for us. It remains the important target for us, Peter. Like I said on my earlier answer, I think we've probably done better on costs than we had originally thought we could do for a variety of reasons. On the CapEx side, we continue to have NPV positive projects that we have paused or we have suspended. To the extent we can generate more cash flow, we will want to execute on those NPV positive projects, particularly
If we can see viability in 2021 to see returns. We remain cautious, as Mauricio said, but to the extent we can see opportunities that will deliver returns for us and we can still deliver that 1.4, we will do that.
That's helpful. Thank you both. Thank you, Mauricio. Thank you, Tim.
Thank you, Peter. Thank you.
Thank you. Our next question or comment comes from the line of Fredrik Lithell from Danske Bank. Your line is open.
Thank you. Hello, gentlemen. Happy to see you returning back with your performance. Always good. I had a few questions, if I may. Later you had a few slides on digitalization, and could you elaborate a little bit more on that? I think this is one of the interesting parts that even though it's dreadful with the pandemic, it probably spurs innovation at the same time. I'm interested to hear a little bit more behind the scenes, sort of what is happening, what you see, what is unexpected on the digitalization train for you in your countries. Another technology question is fixed wireless access. Is that something you'd consider as an alternative or one of the tools in the toolbox to pass even more homes even quicker on the fixed side, sort of? Would be interesting to hear that kind of discussion. Thank you very much.
Yeah, Fredrik. Great question. Thank you, Fredrik. On digital, I think there's two bits to my answer to that. One is, we were ready with our digital plan and very focused. I think we have shown it to you a couple of years ago when I presented the first slides on how we were going to go about our digital first platform and how we were going to focus on the commercial activities. Because we were ready and we had a centralized group that was driving support for the operations, we were able to capitalize on the needs immediately. We've already shown you the numbers. We didn't start from scratch in the pandemic. Rather, we turned the wheels faster to capitalize on it. The numbers show that.
Most importantly, I think is the fact that the pandemic did give us confidence to go out and do it. I'll give you one example that one of the distribution teams came up to me during the pandemic. I said before, we would have always been a little bit concerned to put money into any given digital channel that we already had up and running, because we felt like we would be taking away money from a non-digital channel that was proven and demonstrated to work. The reality is, during the pandemic, that non-digital channel simply did not exist. We didn't have a conundrum anymore. It wasn't a trade-off. We just put the money into digital, and we saw it worked. That's what happened. We had the opportunity, the need to go digital. As a result of that, we saw that happening.
We'll continue to drive the current focus of our digital strategy, which is very commercially driven. What you've seen us think of as digital is effectively the distribution channels and the service layer channels. That's what our current thinking about digital is, and this has been our thinking for the last two years, and we are very happy that we have put the focus on this at this point in time, because that's the first wave that really matters. Going forward, our digital, I'm not sure exactly when we're going to put it in place. It's going to have layers of data analytics and artificial intelligence to put the network to be more efficient and to put a relationship with the customers on a digital platform that can use data analytics and artificial intelligence. It is a matter of the 80/20.
When we are comfortable that we've completely maximized the commercial focus of our digital strategy today. The reason we think we work pretty wise is because we choose what to focus on, and our focus has been on digital as a commercial and service tool. Our next stage is going to be how to use digital for data analytics and the use of artificial intelligence to make us a more digital platform. That's highly related, of course, as you can imagine, with the use of our digital platform as a platform for new services. Fixed wireless access, we do use it sporadically and to test certain markets and determine whether there is penetration of fixed products there that we may eventually want to roll out fiber cable, too.
Particularly in Panama and Colombia, we have used fixed wireless access to determine whether there's enough demand for a broadband product sufficiently so that there's economics for a fiber cable rollout. All right. Thank you.
Thank you. Our next question or comment comes from the line of Johanna Ahlqvist from SEB Enskilda. Your line is open.
Yes. Hello. Thank you. Two questions, if I may. The first one relates to, you touched a bit upon sort of what you expect going forward in terms of macro consequences and so forth. I'm just wondering if you can elaborate a bit on what countries do you expect to see sort of the toughest macro difficulties in the aftermath of the pandemic? If we assume there will be no more lockdowns, where do you see the greatest risk, in a sense? If you have seen or expect any tax consequences in any of the countries that you're present. A quick one to Tim as well on bad debts, if you can give us a number on how much the bad debt was in this quarter. Thank you.
Yeah. I'll start with number two, then move on to number one and hand it over to Tim, because he can weigh in on the macro as much as I can. On the tax consequences, we've debated this, Johanna, internally quite a bit. As you know, in every country around the world, the reaction to the pandemic has taken a big toll on fiscal accounts. On the one hand, you would think, well, then governments are going to be more tax constrained, and as a result of that, they may look for some of the bigger companies to be more burdened. On the other hand, every country, particularly in our economies, has realized how important digital connectivity is to their citizens.
As a result of that, they have a counterbalancing argument, or we have a counterbalancing argument, that basically says, be careful with taxing this sector, particularly now in a pandemic and going forward, if you really want this to be the driver of your digital economy going forward. It's uncertain where exactly that's going to land and how effective we're going to be in saying, "If you care for the sector, be careful with what you do with it." On the macro side, I think the key word, Johanna, is uncertainty, and that's why I described it as cautious. Central America has been very resilient, in terms of its FX, and in terms of the remittances. The remittances went down in April and started to come back in May.
Year to date, just about every country in Central America has seen renewed growth in remittances, which has certainly held up those economies. The reason I hesitate a little bit here is because one of the things to be learned about our economies is how much the informal sector really weighs and how resilient these economies are at the informal level. That's why it's so important for us to have such a good pulse on what's happening on the ground. We do worry, and this is the reason we're cautious. We are very emboldened, if you will, by the Q3 results and by how resilient our subscribers have turned out to be and the great demand that we see. Going forward, we do worry, and we need to be cautious.
With that, I'll hand it over to Tim to expand on that, if he can.
Yeah.
Take on the last question.
I'll just make a quick comment on tax, actually. We had a very low tax charge in Q3. I realize this wasn't your question, but just to explain it. To some extent, I think that is lower withholding tax, but I expect to see a kind of normalization in Q4. The overall tax charge for the year is going to end up somewhere between $200 million and $250 million on an underlying basis. Realize that wasn't your question, Johanna, but I just wanted to get that in so everyone understands. On the bad debt, I don't want to give exact numbers, but roughly speaking, in Q2, our bad debt charge was twice the normal level. In Q3, it was a third of the normal level. What was happening there was some write back of charges we took in Q2 and a normalization of the level.
Frankly, I'm expecting Q3 to be more or less back at our normal level of charge.
In terms of countries, Johanna, I think the one mention I've already made is two to four weeks ago, the level of uncertainty around Bolivia concerned us all. I think today we have less uncertainty than we did politically two to four weeks ago. I think that's the one thing I would call out in terms of any specific country.
Thank you very much.
Thank you. Our next question or comment comes from the line of Soomit Datta from New Street Research. Your line is open.
Questions, please. One, just on Tigo Money. I think you've got a slide in the slide deck this time. I can't recall whether you have before recently or not, seems like there's a little bit of focus on that. Could you give some thoughts on where you see that business going over the next year or two? I say that in reference to some initiatives we've seen in the region, particularly in Brazil, with the wireless companies beginning to push into this direction and beginning to move also, not just looking at payments, but also moving into credit. I wondered just whether you had any perspectives on a kind of one to two year view there. Secondly, please, just one on the balance sheet for Tim. Apologies that I dropped off the call. I'm not sure if I missed this.
Just on Guatemala, if I understand it, the local debt is being paid off there and there's a lower dividend payment coming out of Guatemala this quarter. So far this year, I should say. There seems to be a kind of attempt to de-lever that particular operation, but it's already got relatively low leverage. Have I understood all of that correctly, and maybe you could give a bit of perspective on what's happening at that asset? Thank you.
Yeah. Tim has a master's degree on Guatemala financing, so he'll take that for sure. He's just laughing at me here. Tigo Money. You're right. I wouldn't say it's a little bit of focus. I would say it's a lot of focus that we're putting into Tigo Money. We have, for the last two to three years, put a lot of focus on it. We've just been doing it in a kind of quiet and forceful, yet focused way. Just to give you an idea of what that business is today, it's small for Millicom. It could do on a yearly basis, and of course, it's difficult to analyze given COVID, but it could do somewhere around $40 million-$50 million on a yearly basis today.
It's small for us, but it certainly is large in terms of revenue compared to many of these Latin fintechs that you're referring to. It's small within us, but big in comparison. Importantly, it's profitable for us because of all the synergies of participating within the larger group and the mobile subscriber base that we already have. It's growing very rapidly before COVID, and COVID has only accelerated adoption and usage. Today it is almost exclusively a payment model, with some very small exceptions in Paraguay where we do lending, but it's just lending for our own subscribers for their mobile usage. We're lending credit for the mobile usage. It's a way for us to start learning a little bit more about that model going forward.
Typically to what we do, we want to really learn how to walk very strongly on the payment before we go broader into financial services, which of course is a medium to long-term ambition if this works out the way it's beginning to pan out on the payment front. There you have Tigo Money summarized in one minute.
Just on the Guatemala balance sheet, simply what happened there was we have an $800 million U.S. bond, 144A bond. It was our most expensive financing. It was at 6.875%, and we just issued at 4.5%. You can see that we're leaving a lot of money on the table. We had considered refinancing that in the bond market, actually, Guatemala has been so cash generative, and we found that there was some local currency financing available at reasonably attractive prices. Given that is our strategy to match currency where we can, we decided that we would simply refinance that using a combination of cash resources in Guatemala, local currency financing, and then there was a small element of shareholder loan as well just to do that. As a consequence of that, obviously, they've been preserving cash over the last couple of quarters.
The cash dividend that you see in the cash flow is lower. From our perspective, as we're looking to reduce leverage across the group, whether we do it in Guatemala or we do it somewhere else, it's relatively neutral to us. That's really what's been happening there. Soomit.
Thank you. We have time for one more question. Our final question or comment comes from the line of Mathieu Robilliard from Barclays. Your line is open.
Good morning. Thanks to you. I have a quick question, please. Obviously, you stepped out of the deal earlier this year.
Sorry, Mathieu, I cannot hear you.
Can you hear me now?
Yes, much better.
Sorry. I had a quick question on M&A. You stepped out of the deal at the beginning of the year. I guess the price that had been negotiated didn't reflect the new reality. I just want to have your view on to whether at this stage you still believe M&A is not the right focus because there's lots of uncertainty, you're managing net debt, or conceptually, if there are interesting deals out there, and that is something that you would consider. The second one, kind of linked but not necessarily, is we saw in El Salvador that two of your peers stepped out of the deal because the regulator was imposing very tough remedies.
I was just wondering if this kind of approach that we've seen in El Salvador, is it something that we should now expect a bit more in the countries where you operate, as in actually not being very receptive to consolidation and going, unfortunately, more the European way than the U.S. way? Is that an unfair generalization? Then very lastly, if I can, any comments on competitive environment in Paraguay? Thank you.
Sure. Some of these are fairly quick to respond or important but quick. On the M&A, the simple, straightforward, very rapid question is, M&A is not a focus of ours today. We are focused on weathering the crisis successfully, as we seem to be doing. We don't think the crisis is over by any stretch of the imagination. We think we need to continue to be focused on that, focused on delivering the operating cash flow growth, the synergies, and the integration, and on reducing that debt. That's squarely our focus today. On whether El Salvador presents things for the region towards a harsher view on consolidation, I don't think so at all, Matthieu. I think it's an isolated, specific country decision.
The reason I think that is, we did quite a bit of M&A, and others did throughout the region in Central America over the last couple of years. All of those went quite well, quite successfully. In some markets, we created better industry structures, like we did in Panama, and like we did in Guatemala. As a result of that, I don't think there's a trend here. If anything, I'm actually a believer of the opposite going forward long term, which is the more governments realize that they do need strong digital highways, and they do need investment because this is an important part of their economies, the more they're going to realize they need strong industry structures. Two to three-player industry structure is not four to five industry structure players. I think that way is just too obvious for responsible governments not to recognize.
The El Salvador matter, I think it's an isolated matter. That's my view. Unfortunately, I wrote down number three, but I didn't exactly write it down, so I don't know what number three was. Maybe you can bail me out here.
Competition in Paraguay?
Oh, all right. Competition in Paraguay. Generally speaking, we've seen competition in Paraguay in 2020 to be a little bit more rational than it was in 2019. You can imagine that I hesitate a little bit to say this because I don't want to jinx it. The reason I think that's the case, I think it has a lot less to do with COVID other than some Argentina contagion into some of their competitors. I think it largely has to do with the fact that we defended our market share. Although that was painful for a period of years, for a period of months or a couple of years into the marketplace, it certainly should have sent a very strong message that we're going to defend the marketplace going forward, and we expect this market to behave rationally.
I attribute our lessened very aggressive competition in Paraguay to that more than anything else.
Great. Thank you very much. Very helpful.
Thank you. I'd like to turn the conference back over to management for any closing remarks.
Well, I just want to thank you all for participating on the call today. We're coming back. We're on a good track. As you know, we need to balance that, and we need to balance the short term with our long-term investment and our cautiousness levels going forward. We do thank you for participating today and paying attention to everything we do, and we look forward to being on the call with you next quarter.