Earnings Call Transcript - TIGO Q1 2021

Michel Morin, Head of Strategy and Investor Relations

Hello, everyone, and welcome to Millicom's First Quarter 2021 Earnings Call. I'm Michel Morin, Head of Strategy and Investor Relations at Millicom. And this event is being recorded. All participants are in listen-only mode. Our speakers today will be our CEO, Mauricio Ramos, and our CFO, Tim Pennington. After 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. Now please turn to Slide 2 for our Safe Harbor disclosure. We will be making forward-looking statements, and these involve risks and uncertainties, which could have a material impact on our results. We will also be referring to many non-IFRS metrics throughout the presentation, and we define these metrics on Slide 3, and you can find reconciliation tables in the back of our earnings release and on our website.

Mauricio Ramos, CEO

Thanks, Michel. Good morning, and good afternoon, everyone. Thank you for joining us today on this first videoconference call. I do hope that you enjoyed the video that we just showed. This video provides a summary of Tigo's vibrant culture. We refer to it as Sangre Tigo. It is our culture, our war cry, our work ethic, and our passion, an important competitive advantage. It became increasingly important during the pandemic as it rallied all of us to be there and close to our customer base during the crisis. It helped us navigate well through the pandemic, and we will see in a minute just how extremely well we did because our purpose as a corporation is clear to all of our 21,000 employees, our strategy is well known by you, and it can be flexibly adapted to circumstances. Because our culture, this Sangre Tigo, is powerful and perfectly aligned with our purpose and our strategy. In the last few years, we have built one of the leading telecom platforms in Latin America. We are today an employer of choice, a top great place to work in the region. Our networks consistently rank best for quality. Our Tigo brand is top of mind in our markets, and we're number one or number two in all of our countries in Latin America. We are now 100% focused on this region, as we recently signed agreements to sell our two last remaining operations in Africa. These transactions will help us reallocate capital, further deleverage our balance sheet, and focus on building our future in Latin America. Now, please turn to Slide 5, as I am keen to highlight our phenomenal and promising results in the region this quarter. First, Q1 was nothing short of a fantastic quarter for us. We beat all of our internal projections, and we're now above pre-COVID levels on almost all KPIs, countries, and lines of business. Second, we had record net additions in Q1 on both Cable and Mobile, which came on top of the record quarter we just had in Q4 as a result of our customer base being up substantially year-on-year in both Mobile and Cable. So we expect this strong net momentum to drive revenue growth in Q2 and in the second half of the year. Third, our strong performance is broad-based across all business lines and every country. And fourth, this is investment-led growth. As you've heard me say many, many times, we're a network-centric company. We continued to invest for the long term throughout the pandemic, and these investments are now beginning to pay off.

Tim Pennington, CFO

Thank you, Mauricio. Well, what a difference a year makes. This time last year, we started the quarter strong, but we exited with great uncertainty. This year, we came into the quarter strong, and we have exited it even stronger. On Slide 13, you see our usual bridge from IFRS reported numbers to the LatAm segment numbers we are discussing on this call. On Slide 14, you can see the breakdown of the 2.2% year-on-year organic growth for LatAm. Very importantly, Mobile reported a positive year-on-year growth largely due to extremely strong prepaid performance. The volume was very strong, as Mauricio explained. ARPU fell a little, but that was largely to reflect the mix shift between prepaid and postpaid, and in fact, pricing has remained robust across most markets. Now Mauricio has talked about the fantastic Home KPIs. This fueled the Home revenue acceleration to just under 8%. In B2B, while we are still negative, we've made substantial progress in the quarter, and we are expecting to see the growth rates turn positive in the coming quarters. On Slide 15, you can see more detail on a country-by-country basis. Now please note that we have adjusted our earnings presentation to report local currency growth rates rather than organic growth rates. The main difference being changes in accounting or perimeter, neither of which was a factor in Q1 2021. In fact, you can find more details on our website. So from the slide of local currency growth rates, we saw once again Guatemala and El Salvador posting very strong revenue growth. Guatemala benefited from extremely good Home and B2B numbers, offsetting a slight deceleration in the Mobile business. Meanwhile, in El Salvador, the recent network and spectrum investments have fueled very robust mobile growth. In Colombia, growth improved in every business unit, particularly in our Home business, which grew more than 7.5%, and that's our fastest growth rate in more than five years. We also saw good sequential improvement in Honduras, almost breakeven, as we did in Paraguay. Now we are slightly behind in those markets that were more affected by COVID, Panama and Bolivia, but the gap is narrowing very rapidly. Turning to EBITDA on Slide 16. You can see that we reported LatAm EBITDA of $638 million. This is up $38 million from a year ago and $4 million compared to Q4 2020, which is traditionally our strongest quarter. The EBITDA margin was also up strongly at 41.7%, and this is the highest margin we have posted at least during my time at Millicom. The underlying organic growth at just under 6% was mainly thanks to revenue growth and our continued focus on costs. In fact, some of our costs are running ahead of budget, but these are all related to higher commercial activity and to the record level of net additions. On Slide 17, you can see the EBITDA by country, and I think it's fair to say that we have had a very good performance across the board. Double-digit growth in Guatemala and El Salvador, Colombia up 3.6% with no impact on the new entrants in the quarter, and Honduras and Bolivia coming back strongly. Finally, Panama and Paraguay both improving sequentially. On Slide 18, you can see how this has filtered down to our operating cash flow, which we define as EBITDA less capital expenditure. Keep in mind that there is some seasonality here, given that our CapEx is usually back-ended, but I wanted to show you that we had double-digit OCF growth in the quarter, and this growth is coming largely from the growth in EBITDA and not from lower CapEx. Now please turn to Slide 19, where you can see how our debt position changed during the quarter. Underlying net debt was relatively stable at just over $5.3 billion. This is typical for the first quarter when we usually see a fairly big working capital outswing with the following inswing in the second half. The strength of the EBITDA growth resulted in proportionate leverage, excluding leases dropping to three times despite the slight increase in net debt, and with leases broadly the same as last quarter, our overall leverage has reduced to 3.13 times. As you know, we prioritize reducing our leverage. We've made that a priority during the pandemic, and you can see the progress on this front on the next slide on Slide 20. Last year, we focused hard on reducing our net debt, given the uncertainty around EBITDA, and we reduced net debt by around $0.5 billion, which supported the leverage reduction in the last two quarters. As we progress into 2021, we expect EBITDA to continue to improve. That reflects a stronger recovery than we might have expected, and this will support more flexibility in our capital allocation. As Mauricio said, there's even more confidence in the macro outlook, and our businesses are performing well across the board, and our EBITDA is growing. So we intend to prioritize profitable investment, as Mauricio said. We will continue to focus on deleveraging, and we will also resume our share buyback program later this year. So with that, let me hand back to Mauricio to wrap up.

Mauricio Ramos, CEO

Thank you, Tim. Before we take our questions, let me recap the quarter. First, this was a very strong Q1 with record net additions and excellent operational performance across all our markets and businesses. Second, our growth is accelerating, with organic service revenue growth returning, which is driving both our strong EBITDA and operating cash flow growth in the quarter. March was particularly strong, as I've already said, and this momentum has continued into April. We're feeling a lot more confident about our outlook today for the rest of the year than we did just a quarter ago. Third, our leverage continues to decline, and we expect to make a lot more progress on this front by the end of the year, particularly as we now have EBITDA growth in the system. Fourth and finally, our priority will remain to invest in the business and in our networks to drive faster organic growth. We're emboldened in this approach by the results of the last couple of quarters. Because of that, we want to keep the immediate flexibility to invest more this year in the business as we see the clear opportunity to capture more growth. As a result of all this, we are confirming our goal to deliver at least $1.4 billion in operating cash flow. You all know that we could deliver much more, but we feel it is best to retain the flexibility that has worked so well for us. And with that, we're now ready for your questions.

Michel Morin, Head of Strategy and Investor Relations

Thank you, Mauricio, and thank you, Tim. We will now begin the Q&A session. So with that, our first question will come from Stefan Gauffin at DNB. Stefan?

Stefan Gauffin, Analyst

Yes. Hello. So a strong set of numbers, both on subscriber intake, service revenue, and EBITDA, and you talked a little bit about your outlook, but perhaps not as outspoken as you have been earlier. In Q4, you commented that you were unlikely to meet the medium-term targets regarding service revenue growth, mid-single digit and high single-digit growth for EBITDA in 2021. Given the solid start and much easier comps, solid subscriber intake, do you still think it is unlikely that you can meet these targets? Or are you just being cautious? I'll stop there with the first question, and then I have a country question as well.

Mauricio Ramos, CEO

So let me start with a little bit about our view on what has changed. And then I'm sure, Tim, you can add. What we have seen during the last 15 months, pandemic plus this quarter, is prepaid coming back very, very quickly as soon as there's mobility allowed. As we look forward, even with limited curfews or nightly curfews here, we find that consumers on prepaid adapt very, very quickly. We're seeing that they top up more, which is good for the prepaid business, and our connectivity has remained particularly important for them. Home, as you've seen, because penetrations are so low and people want broadband, and we've been providing that service, is growing rapidly. And B2B, as I said, is coming back. So we feel a lot different from the way we felt certainly a year ago, and certainly, the way we felt one or two quarters ago, because we've seen that the teams and the strategies that we put in place to manage the pandemic have reacted so strongly. So we're ahead of pre-COVID levels with growth now stronger than it was before. And we see a strong and healthy runway for us to continue to grow. As we become more and more emboldened, as we said a quarter ago, we're likely to invest more this year to capture more of that growth going forward, because everywhere we've built Mobile or everywhere we've built Cable networks, we see the results immediately. And whereas last quarter, I was talking about keeping flexibility because there was a lot of uncertainty about the macro situation and where we would be with regards to COVID, and because we wanted to keep some flexibility, now, Stefan, we're keeping up flexibility largely because we want to invest to capture growth, and much less because we're uncertain about our ability to manage through the remaining part of the pandemic. So our outlook is, as you've noticed, certainly improved and pretty positive. Tim, do you want to add anything to this?

Tim Pennington, CFO

I just want to emphasize that my benchmark for Q1 was to achieve higher growth than Q1 2020, which was before COVID, and we accomplished that. So, yes, Stefan, the outlook appears strong. For Q2 and Q3, since last year was particularly challenging for us, the comparisons won't be very significant. Internally, we’re not overly celebrating surpassing the Q2 2020 comparison. We’re focused on sequential growth and comparing to 2019. While we expect a strong year in 2021 based on those headline figures, our focus for the outlook is on sustainable long-term growth rates. We shouldn’t feel too celebratory about meeting a 2021 target. We are dedicated to building a business aimed at achieving those medium-term sustainable growth rates in the future.

Mauricio Ramos, CEO

I think, Stefan, what I said was, I believe in the prepared remarks, which I believe is true, is that, in developed markets, you saw sort of a COVID bubble for broadband. We view it very differently in our markets because penetrations are low and speeds are low and demand is so high. For us, I think the runway is much longer. And I think that's very, very important for us. There is a long runway for broadband adoption in Latin America. So what these couple of quarters have shown is, if you're on the street, if you build a network, demand will come sustainably to us into the future.

Stefan Gauffin, Analyst

Yes. And then just a question on Colombia. There's a new competitor. You stated that you have seen limited impact in Q1. But what have you seen in terms of operations, changes in price plans, marketing activity, etc.? Any flavor would be helpful. Thank you.

Mauricio Ramos, CEO

Yeah, sure. So first, a little bit about the new entrant and then a little bit more about Colombia. For clarity, the new entrant launched right after Easter in early April. It's actually some six months later than they had announced they would launch, so obviously, there were some hiccups there. The launch itself, in terms of the product offer, was exactly as we had expected given all the work that we had done to see what they have done elsewhere. Effectively, they did something similar to what they did in Chile in terms of the product offer. There was no difference, nothing unexpected there, which is basically three times more data for the same price. The market matched immediately. Literally, we were so operationally prepared that we matched within a matter of hours. And of course, as we expected, it's pressure on ARPU, and that's completely within the expectations. Let's put that into context for us rather than what they did. We're not an incumbent in Mobile in Colombia. We only have 15% market share. So we're a challenger, and that's what the team has been preparing to do regardless of the new entrant because we have that brand-new network with very low payloads on it. Our network is not legacy constrained at all. So we can play the high allowance game that the market is playing now, specifically high allowance on the data game, because we have this brand-new MT network. We're well-positioned, extremely well-positioned to play the volume game now because we increased commercial distribution, as you know, and we have this brand-new empty network with full-spectrum capacity, and we will develop it faster than anyone else. So what this is going to be is pretty much a volume game, and we need to focus on that for the period throughout which this sustains. Now it's still early, but the launch has had little impact so far on our net adds and on our gross adds. We are growing through April in Colombia strongly, both on postpaid and prepaid. We're expecting that Q2 prepaid gains will be in line with 100,000 to 200,000 that we're expecting, and our postpaid in Colombia through April after launches remain extremely strong as well. Now it's early days, but that's what we're seeing. And we're focused on gaining subscriber base because we are not an incumbent in Colombia. In the meantime, our Home business in Colombia has remained very, very strong. It's actually our biggest Home business, and it's growing very, very well. You've seen the numbers. That's largely because we built all that network and corporate attrition on our system in Colombia is now very, very limited. Our B2B business in Colombia is also picking up. Now strategically, big picture, in Colombia, number one, we have an empty mobile network that we're putting to use in this future volume gain that we see evolving. Two, we have a state-of-the-art Home network in Colombia that we've basically reengineered to get rid of the copper, and now it's providing a lot of growth. And three, throughout the last year, we increased not only the network but also commercial capacity and distribution. And number four, in Colombia, we will now have, and this is why you're seeing us pick up volume, access to Bogota. Bogota is about 30% to 35% of Colombia. A year ago, we had little Mobile access because we were using high-frequency spectrum in Bogota. Now we have low-frequency spectrum and an empty network and access to Mobile in Bogota. That is huge, Stefan. I was sure you've also noted that fiber in Bogota has been opened. The fiber owner in Bogota has opened a network to new entrants. So we have now access to Bogota both on Mobile and on fixed. And largely, point number five on Colombia, big picture, is we have a team that's executing extremely well. We got our act together in Colombia. Now there's a new entrant. It's a volume game, but we're not an incumbent, and we have all the goods to play really, really well in that market. That's the entire Colombia story, Stefan.

Stefan Gauffin, Analyst

Thank you. That's very clear.

Michel Morin, Head of Strategy and Investor Relations

Thank you, Stefan. Our next question will come from Marcelo Santos at JPMorgan. Marcelo?

Marcelo Santos, Analyst

Hi. Good morning to all. Thanks for taking the questions. I would like to ask for competitive updates specifically on Paraguay and Bolivia. Paraguay, more on the fixed segment. And in Bolivia, how is the behavior of state-owned Intel?

Mauricio Ramos, CEO

Sure. Let's start with Paraguay. COVID has been managed quite well in Paraguay. We are now seeing a little pressure for the government to accelerate vaccinations. Overall, Paraguay has remained very resilient, and you know this. If you go back to what we've done in Paraguay, to answer your question more specifically, we've put in new teams two or three years ago, we acquired spectrum, we put in a new network, and we've significantly increased our quality of service. At the same time, we continue to build Home, and we've been closing that price gap that existed in Paraguay to defend our market share with a better value proposition. GDP is expected to grow in Paraguay by 4%. We’ve now basically stabilized Paraguay in terms of volume, and you see that in the numbers. We believe we've reduced our price gap, and with all the goods that we have, the network, the teams, and the content rights, we think we can begin to see that business grow into the future, particularly answering your question because we've seen competition be more rational. It isn't that it isn’t there, but it is more rational, Marcelo, largely because they've seen us really strong in defending our position and our market share, giving little room to others to play anything other than a more stable, more rational game. You’ve seen the quarter numbers; I think they have to speak to this point, as net adds are positive, both on Mobile with some 60,000, and now the base is up 6% year-on-year. Home is also growing quite nicely; the base is up 4% with almost 20,000 net adds. So Paraguay is more stable. Bolivia, as I said in the prepared calls, had a double whammy: political and economic uncertainty and then competition. Just to summarize quickly, there’s new management at Intel, and that new management has appeared to be much more rational in their pricing. I think that's with the view that the government needs the company to produce, which results in them being more rational. You saw that in the quarter actually in terms of net adds. Mobile is at 50,000 net adds, and Home has performed phenomenally with 50,000 net adds, the strongest quarter since 2018. March, as I said in the calls, was particularly strong. We see Bolivia certainly more rational on pricing and recovering.

Tim Pennington, CFO

Not to what you said, Mauricio. I think just maybe more generally, pricing has been pretty stable across all of our businesses in the quarter, particularly prepaid which has actually seen some price rises in some markets. So now, fingers crossed, there’s some kind of stability out there.

Michel Morin, Head of Strategy and Investor Relations

Thanks, Marcelo. Next, we have a question that came in via email. I'm just going to read it for you, Mauricio and Tim. It's from Johanna Ahlqvist with SEB. She's asking, maybe this is for you, Tim, how big is the impact from lower bad debt in the quarter? And whether or not we expect this trend to continue going forward? The second question was on competition in Colombia, but actually, I think we just answered that one, so we can probably ignore that for now.

Tim Pennington, CFO

On bad debt, I mean, we did have a lot of our debt charge less than we had a year ago, probably about $10 million lower. But I think it's sustainable. What we're seeing is that our collections are really very, very good, and they've been improving. We have seen churn reducing, so people aren't leaving as much. We have introduced things like installation fees and front-end payments, so our customers are more committed. While our bad debt charge is lower than it was a year ago, I think this is an underlying sustainable reduction of our bad debt charge, at least during this next period.

Mauricio Ramos, CEO

What happened during the pandemic is that we got better on our collection path and our processes. We implemented those upfront installations, the industry followed, and we just got increasingly better because it was critical. All of these improvements have kept going forward, and they seem to be creating a better industry.

Sergey Dluzhevskiy, Analyst

Good morning, guys. Thank you for taking the questions. My first question is on Mobile Financial Services. I think you provided an update a few quarters ago. I was just wondering, has anything changed now that you're out of Africa? I guess I was wondering about the Mobile Financial Services business in Latin America; where do you expect it to go? What is the size now? And where do you expect to be in five years?

Mauricio Ramos, CEO

That's a great question, Sergey. Of course, just on building the business, the MFS or FinTech business, as we build it from a very strong base, by the way. As you know, we've got 5 million users, and we’re going to give ourselves a little bit of time to get that properly built. We eventually will start reporting on it more on a quarterly basis. We just don't think it's important for us to focus on the quarterly gains, where we're looking at building the business long-term. That's true for actually the two platforms, Sergey, that we're trying to build as we grow Cable, Mobile, and B2B. There are a couple of platforms we're building. One is infrastructure, of course. As you know, we have a ton of towers and now a dozen data centers. We installed one in Bolivia just yesterday, actually. We have about 100,000 kilometers of fiber. So we have an infrastructure platform that we’re strategically figuring out how to best optimize and put out. Then we have this FinTech platform. We brought in new management, so we've got an entire new management for our FinTech platform. We're also developing local capabilities. The key point here is that those 5 million users are growing, their ARPU is stable and growing. We're doing over $2.5 billion of transactions. But as I said a couple of quarters ago, we're still in a low-margin, high-volume peer-to-peer game. We want to build that platform, be the payment platform of choice in all of our markets, and then on top of that, we're going to build the FinTech business. We'll give you more color in the following quarters.

Sergey Dluzhevskiy, Analyst

All right. Thank you. And my second question is M&A. I think over the past few quarters, you guys have been pretty clear that the near-term focus is on reducing debt, delivering on synergies, and making the right investments for the future. But, I guess my question is, given all that, are there still assets that you would be interested in, given this pandemic-affected environment? Has the pandemic or any other event over the past 15 months changed how you think about M&A and the relative attractiveness of certain markets or certain assets?

Mauricio Ramos, CEO

So, we don't have a current M&A focus, Sergey, because I think, as I've said many, many times, that our greatest opportunity is in-house. We're putting our money, as you see, to grow the business organically. As I've said, we want to keep the flexibility this year to put more money into better coverage, wider coverage, both on Cable and particularly on Mobile. So that's where we're going to focus our resources. Also, as you've heard me say a number of times, we have internal M&A, which I think is very accretive to us. We want to keep our eyes focused on that.

Michel Morin, Head of Strategy and Investor Relations

Great. Thank you, Mauricio. We did get a follow-up by email from Johanna Ahlqvist at SEB. She is asking about Tanzania expected proceeds and the timing. I think she was also curious as to when we might deconsolidate the results from Tanzania. So perhaps that’s more for you, Tim.

Tim Pennington, CFO

Yeah. So we have now signed the sale purchase agreement. There is a period now that takes place, which is to go through regulatory approvals. It's very typical in all telco deals. These things don't have defined timelines, but we'd expect on a normal basis for it to take six months to go through those processes. We will not be deconsolidating until we have gone through the process and we have regulatory approval. That's just an IFRS consideration. We will continue to hold it in our numbers until then. I think, frankly, we've got enough disclosure for you to understand the impact on the group anyway and make your own adjustments. In terms of the proceeds, we will be using those to effectively pay down debt, reducing leverage. As with all our previous Africa deals, we haven't announced a price. We won't do that until we get to the end of the process. So hopefully, Johanna, that covers it.

Mauricio Ramos, CEO

You’re going to have to trust us a little bit that this is a competitive process with multiple bidders. You can see that we’re happy with the outcome strategically as we are also financially, because it helps us delever and it helps us focus on our strategic future, which is Latin America.

Michel Morin, Head of Strategy and Investor Relations

Perfect. Thank you. We have Stefan Gauffin from DNB back with us for a follow-up question. Stefan?

Stefan Gauffin, Analyst

Yes. I refrained from asking this question earlier, so now I have the chance. So it's on Panama. It was actually that market that surprised me the most given the really, really strong recovery. You state that the consumer business is back to growth and compensates for weaker B2B. I can see the subscriber numbers, both Cable and Mobile, are strong. Can you give some more flavor on the overall development for you in Panama?

Mauricio Ramos, CEO

Yeah, absolutely. When the dust settles on the pandemic and the impact it had on Panama, which, as you know, GDP came down 18% last year. That’s significant. When the dust settles, it will be clear that this was a phenomenal strategic move for us. Dollar-denominated number one market position was executed strategically through M&A in less than 18 months. You may have seen perhaps, Stefan, that yesterday, we changed the brand to Tigo after a very successful integration process. We’ve now created a single platform in Panama that did not exist two and a half years ago, and it's branded Tigo. The outcome, once the dust settles, is going to show very, very strong for us. I think we're outperforming in every segment in Panama. As you know, customer intake is followed by financial results. Both our Home and Mobile businesses in Panama saw significant intake. Mobile is up 130,000 net adds just this quarter, and the base is up 18% from what it was a year ago, pre-COVID levels. Mobile is up 18% from what it was before, because the cross-selling, which was the strategic move we wanted to implement, is working. Remember, we bought an asset that has significant Home market share. The state-of-the-art network and the Mobile asset had a much lower subscriber base, so we're cross-selling. Every time we go to a home, and we've done this throughout the pandemic, we sell SIM cards into that home. It's cross-selling at its best. The Home business itself is also performing very strongly. We added 13,000 net adds, and the base is actually 8% year-on-year, and ARPU is slowly declining. So what does this tell me? That once the impact of COVID is behind, this business is going to blossom, and it's going to show all the potential that we thought it had when we acquired the assets before COVID hit. Lastly, Panama was hugely hit by the pandemic, but it's also recovering super fast. The government has reacted strongly and has one of the better vaccination programs that we're seeing in the region. The numbers for COVID were high in Panama, the impact was significant, but the vaccination has been secured, and a vaccination program is in place. As a result, we expect B2B to rebound in Panama. I don't know exactly when it will be, but with the recovering economy, it will come back. You can see that we believe we've put all the pieces of the puzzle in Panama to be ready for a strong comeback.

Stefan Gauffin, Analyst

Okay. Sounds great. Thank you.

Michel Morin, Head of Strategy and Investor Relations

Thank you, Stefan. So we'll go from one Stefan to another, Stefan Billing from Kepler Cheuvreux. You're on.

Stefan Billing, Analyst

Thank you very much, and hi, everyone. I have a couple of questions. One is that it seems to me that your Central LatAm markets have benefited quite significantly from rapidly growing remittances. I think there is some data out there as well. Just curious if you agree on that. Also, how sustainable do you think this trend of remittance growth is? When will you meet, let's say, tougher comps on that side? That’s one question. The other one is, once again, if you can share some details on M&A synergies, and also how much integration costs you have incurred and how much is left? Thank you.

Mauricio Ramos, CEO

I'll give you, Tim, a few seconds to prepare for number two. On the first one, Stefan, yes, remittances have been very strong throughout COVID. We expect remittances to continue to be strong. They seem to grow every year in high single digits. The interesting thing is, and this is why we think it will continue to grow, is that this trend goes back 15 years. They remain strong. There were question marks around whether they would weaken throughout the pandemic. The pandemic demonstrated that they didn't. Going forward, we expect them to continue to be strong. It just seems that they are a structural part of those economies, which is very positive.

Tim Pennington, CFO

On the synergy question, Stefan, well, run rate now is around about $35 million. That is basically a target level of OpEx, CapEx synergies that we set out as adjusted for Costa Rica. We've got them by the end of the second year. We had planned to get the full run rate by the end of the third year, so into the fourth year. We're ahead of that. We have said around about $40 million, 4-0, on the costs of the integration. We think we'll spend about $60 million, so another $20 million to go. If you remember, the original estimate was $100 million albeit that did have costs to recur. So actually, that bit has gone really, really well, and we've now effectively dismantled the integration team that we had because the business is running very well on a BAU basis. But there's a lot of nitty-gritty stuff to do. We've just migrated to an SAP CRM system. A lot of stuff like that needs attention. But I do think that is very evident that we’ve been getting high levels of synergies than we originally expected, and we've got them faster.

Stefan Billing, Analyst

Okay. Thank you very much.

Michel Morin, Head of Strategy and Investor Relations

Thank you, Stefan. That is all the time that we had. Mauricio, I'm going to turn it back to you for some closing remarks. I also just want to mention that anyone who missed the video that we showed at the beginning, you can get to see it again at the end. So, Mauricio?

Mauricio Ramos, CEO

Well, just two big thank yous. One to the entire Tigo team, thank you for a job very well done, and thank you to you all for participating in today's call and keeping an eye on how we do. Thank you very much, and we look forward to speaking to you one-on-one in the next quarter. Thank you.