Earnings Call: Q3 2020

Nov 11, 2020

Good morning. On behalf of Cliff Martinez, I would like to thank everybody for participating on this conference call. The participant of today's conference call are on as well. Investor relations, and myself, Salance Barab with any manager of investor relations. The purpose of this call is to share with you the result of our 3rd quarter and this 30 of 20. If you like, if you have not received our press release or presentation, you can call our Investor Relations office to request the documents or download them from the Investor Relations section of our website located at www.elecom.com dot a this conference call and presentation is being broadcasted and can also be relayed through our website institutional.telecom.com. Ar/compassortes/ I'd like to go over some site harbor information. Another base of the call. We would like to clarify that during the conference call and a Q and A session, we would mention certain forward looking statements about telecom's future performance plans, strategies, and objectives. Such statements are subject to uncertainties that could cause telecoms actual results and operation to differ materially. Such uncertainties include, but are not limited to, the effect of ongoing industry and economic regulations, possible changes in the demand for telecoms products and services, the effect of potential changes in general market and or economic conditions, in legislation and the impact of outbreak of COVID 19 on the global economy, economy and specifically on the economies of countries which we operate as well as on our operations and financial performance. Our press release dated November 9 2020, a copy of which was included in a Form 6 K consent to the SEC describes certain factors that may affect any forward looking statements that could be mentioned during the call. The company has reflected the effects of inflation adjustment adopted by Resolution 777 of 1028 of the Commissionas and Alibaba CNV, which established that the reexpressions will be applied to the annual financial statements for the intermediate and special periods ended pass off and included December 31, 2018. Accordingly, the reported figures corresponded to the 9 months 2020, including the effects of the adoption of inflationary accounting Poland with yes, 29. In this presentation, we will also include figures in historical values, which are easier to understand. Our press release is complemented by our earning presentation. The audience should read the disclaimer containing slide 12 of the presentation. The agenda for today's conference call is described on slide 3 and includes our business and financial highlights, so we will end the call afterwards with a Q And A session. So now let me pass the call to Gabriel Blasi. CFO who will start with the presentation. Thank you so much. Good morning and welcome to everyone. Slide 4 shows the summary of the company's figures as of September 2020. During the 1st 9 months, 2020, Telecom's revenue totaled $2,700,000,000. Revenues measured in constant pesos decreased 4.6% year to year. EBITDA totaled $1,000,000,000 implying a 35.8% EBITDA margin. Growing in constant pesos 2.4 percent year over year. Our mobile subscribers in Argentina amounting to 18,700,000 decreasing in approximately 150,000 subscribers when comparing with the previous quarter due to a decline of around 250,000 subs in the prepaid segment that was partially offset by an increase of close to 100,000 clients in postpaid. Broadband and pay TV clients increased to turning around 4,200,000 and 3,600,000, respectively. Fixed voice subscribers without considering IP telephone lines amounted to achieve focus on the bundling and upselling of our products, we currently have 1,800,000 converging unique customers. Which 43% of our broadband customers having a mobile bundle. Going to slide 6, we summarize our main achievements so far during this year. Telecom has been able to refinance and reduce an important portion of of its debt. Exchange its 2021 bond that refinance debt with multilateral agencies. Our capital structure has been improved our future debt maturities have been extended with only $115,000,000 approximately for 2021. OpEx has been reduced substantially and our collection have improved since 67% of our clients are paying digitally. Our collection period has been normalized when compared to the delays we had at the beginning of the pandemic. The local poker activity which we stopped billing will return in the fourth quarter thus improving our revenues. In addition, we are working on other projects such as IoT Fintech and personal cloud that will be added to our revenues. We continue being under a scenario where we cannot increase prices until year end. However, what we have done in our financial debt, CapEx, and relationship with our clients have allowed us to be resilient to this situation. Keeping a sound EBITDA margin. We continue with the Slide 6 presenting our digital transformation roadmap. Telecom is undergoing a transformation process with the target to be a 100% digital company. We are not only converting our systems in order to integrate all our operations, but we are also creating an ecosystem of platforms, leverage on connectivity, which allowed us to manage an upscale product and services with focus on the a convergent customer experience and also to the B2B business. There is also a difficult transformation that promotes autonomy collaborative work and the application of DevOps and agile methodologies. A good example of this was the recent implementation of Meneosio personnel which was formed by a multi disciplinary internal team. We are working on a simple architecture for our systems and platforms in order to achieve additional efficiency. During the last three years, we have cut in half our legacy system from the telecom and calibration merger. Moreover, in order to get a better understanding of our clients' consumption habits, we are adapting our system to incorporate analytics and big data capabilities. This will allow us customize our commercial offers and enhance the customer experience. Finally, we are envisioning a great future for the IoT business. Our target is to be the number one exchange to exchange value provider of our our IoT products and services in all segments. Currently, we have developed a strong portfolio of our IoT solutions, and we have a strong partnership with Nokia Supporting by its worldwide IoT network grid solution. In the next slide, we go over the progress of our main IT transformation projects. Let's turn to slide 7, where we present our fan and switch initiatives. Regarding our main BSS transformation projects, fan, we have a continued immigration process and 1,300,000 lines have been added. We achieved 5 migrations during the pandemic which were also the largest in the industry. Currently, a total of 6,700,000 customers can enjoy new digital experience, which offers a unified invoice and service process. We expect to complete by the end of next year this process. Switch our new digital channel front end that includes e commerce and self-service solutions that give our B2C customers a convergent experience. It has an intuitive interface that summarized the client's products and information in accordance with its profile. Through switch, our clients use more our digital channels. In slide 8, we continue with a brief summary of our cloud foundation and Up programs. The objective of the cloud foundation project is to integrate the different public cloud platforms with telecom processes in order to achieve additional efficiency, process automation, and business flexibility. The final objective is to enhance the company's physical data centers the work to successfully implement it as for Hana central finance with central payments and credit management altogether. On July 1st, have concluded the digital core implementation and post goal leave support has been done. Slide 9 shows our products evolution in Argentina. On the mobile segment, postpaid subscribers had increased 2.6% while prepaid subs have decreased 4.5% increasing our postpaid share. FiberTel, our customer base increased 0.7% year over year, mainly growing in the HFC and FTTH segments. Pay TV ARPU pay accesses have grown 1.6 year over year, mostly leverage on our float platform. FIX voice ARPU, the reduction of accesses has continued, mainly in traditional fixed copper lines, why FiberTel IP accesses have increased by almost 210,000. Slide 10 shows the evolution of our service revenues. Service revenues totaled more than ARS 187,000,000,000, decreasing 3.6% in real terms versus 9 months 2019. In a period where inflation reaches at 36.6% year over year. Our revenue break as of September 2020 shows an increase in mobile revenue share and a lower share of broadband and pay TV revenues when compared with the previous quarter. The breakdown results are as follows. Mobile revenues, 38%, broadband revenues to 1%. Pay TV revenues, 20%, fixed telephony and data, 15%, equipment sales, 5%. Our main drivers of growth in mobile and broadband are explained on slide 11. We have been able to keep almost constant our customer base and also register growth in the usage of our products postpaid mobile and broadband 2 of our main pillars of our performance. As of September of 2020, postpaid subscribers amounted to 41% of our total customer base. The chart in the upper left shows the evolution of the competition landscape, wireless per month during the last year. Personalists in blue collar, positive numbers show incoming clients and negative numbers show client lost against the competition. As mentioned, the growth in this segment has been mainly supported by our convergent offers to cable TV and Internet subscribers that were not mobile clients of the company before. Mobile internet usage has also increased more than 4.1 gigabytes per user per month in the 9 months of 2020. We have continued increasing the speed and capacity of our broadband customer base, the verging on our strong AFC network, and responding to the higher usage of our fixed networks. Considering our different broadband technologies, we can observe that clients have been migrating to the more efficient ones. CapEx are mainly year to continue upgrading our network, which have shown to be extremely resilient to the increase in traffic during the lockdown due to COVID. In addition, there has been an important growth in broadband speeds, considering that 58% of total subs have a speed 50 and 300 megabytes as of the end of the 3rd of third quarter of 2020 compared to 33% in the same period last year. In slide 12, we show the evolution of our float product and how we have been able to increase its penetration. Flow is our IPPDO platform with a better experience as it has currently reached 94,000,000 views during the third quarter of 2020, 5,000,000 connected devices and a high level of usage as our customers use Flow for an average of almost 9.7 hours during the first the third quarter. Sorry. We have almost 1,200,000 flow boxes inside homes and 1,300,000 flow ups, thus advancing towards the objective of network digitalization. Additionally, we continue to evaluate our flow path platform. Starting in November 2020, we are integrating the Disney and streaming service, flow and personal customers will be able to access Disney plus for the 1st 3 months free of charge. Let's move to slide 13 where we can find the summary of our international operations in Paraguay. We consider our presence Paraguay, so nuclear, a solid driver to grow given our strong market share. Paraguay's improving economic situation, nuclear's ability to finance itself in the local market and the implicit hedging dollar that we have since there are no restrictions to convert to our NES local currency in $2. Nuclear, our subsidiary in Paraguay, on which we hold 67.5% stake, registered around 142,000,000 62,000,000 in revenues and EBITDA during the 1st 9 months of 2020, respectively. Browse services accounted for more 43% of the revenues followed by voice with almost 21% data with almost 10%, Internet 8% and TV services with almost 7%. As of September 30, 2020, mobile customers totaled 2,200,000 clients of Vichatella personal and mobile financial serve that our subsidiary provides, reaching 275,000. Fixed internet services subscribers among into 119,000. In the pay TV segment, flow customer totaled 20,000 and personnel HD 62,000. The fixed network deployment in the main cities of Paraguay has been increasing rapidly during 2020, reaching 447,000 homes passed. Additionally, Nucris Internet subscribers totalled 118,000,000, increasing 3.5 times versus the same period of last year. I will now pass the call to Fernando Almasouda who will go over our financial performance. Thank you so much, Gary. Turning to slide 14, we show the evolution of local inflation. As of September 2020, the year over year increase in inflation has been 36.6%. During the third quarter of the year, inflation has been 7.7%. Accelerating slightly when compared to the last quarter, but still well below the third quarter of 2019. The breakdown that we are including shows that the most important percentage in the index comes from food and beverage, transport, and closing. Among other items where the share of communication services in the CPI amounts to approximately 2.8%. In slide 15, we can see that for the 9 months of 2020, consolidated revenues on nominal terms grew by 38%, reaching almost 189,900,000,000 pesos When analyze this figure adjusted by inflation, revenues amounted to more than 2 200,000,000, showing a decrease of 4.6% in real terms. Service revenues showed a 39% nominal increase in our context where prices have been frozen, Since May 2020, being mainly driven by mobile revenues, which grew more than 6% in real terms when comparing 9 months 2020 with the 9 months, 2019. EBITDA increased by 46% year over year. In nominal terms, thus generating an EBITDA margin of 36.2%. EBITDA margin in real terms was 35.8%. The company performed well in terms of cost controls. Operating costs before D And A increase almost 8% in real terms versus the net versus the 9 months of, 2019. The company performed a very efficient cost reduction policy. The only exception being interconnection and transmission costs which increased mainly to the rise in FX rates. Slide 16 shows the company's EBITDA evolution and the impact of the reduction operating expenses. It was a positive contribution to the EBITDA margin due to the reduction in handset handset costs. Which decreased 29% in year terms, mainly by a lower sellout. Operating efficiency efficiencies were also obtained both in programming and content costs, maintenance and material material expenses, commissions, and advertising. On the other hand, interconnection costs increased in real terms, mainly due to their dollar component, while bad debt expenses also increased above inflation. The final result was a 250 basis points increase in EBITDA in real terms when compared to the 9 months of 2019. In slide 617, we can show the evolution of our collections and on the form and debt. We can see that the collections during, through these digital channels have increased to a 60 7% of total collections from this 50 percent observed at the beginning of this year. Additionally, the gap of real collections versus our forecast is decrease substantially. The beginning of the COVID-nineteen lockdown, the level was almost 30% negative. Currently our collections are at a normal level and have been positively influenced by extraordinary collections in our B2B business. Despite that the general level of non performing debt in our retail business, debt has increased during this year due to the effect of the COVID 19 lockdown, as of the end of September of 2020 has moved to more more normal, more normal levels, decreasing 2.3% being 2.7% in June 2020. In slide 18, we can see that the company's operating income, total almost 19,400,000,000. EBIT has decreased 1% in real terms as the decrease in D And A and disposal of fixed assets slightly higher than increase in EBITDA. Operating margin in real terms was 9% of consolidated revenues stable from the figure observer a year ago. Considering historical figures, the same margin has increased to 22%, from 19% in 9 month, 2019. Net loss registered in 9 month 9 months 2020 was ARS 1,000,000,000, decreasing in more than, ARS 16,000,000,000 from the same period of last year. Mainly reflecting lower FX losses due to the depreciation of the peso and the lower impact of the income tax. In slide 19, there is a summary of the company's CapEx during the 1st 9 months of the year. Telecom has invested almost has invested almost 35,000,000,000 pesos. This amount is 37% lower when compared to the same last year's period. I mean, almost finalized most of our system changes catching up infrastructure infrastructure during the 1st 2 years after the merger, our CapEx program will continue evolving according to Argentina's economic growth. Network performance and customer requirements of new services. Technical CapEx were mainly composed of installations, and customer premise equipment or CPE. The balance was allocated to network and technology and our 2 international operations in Paraguay and Uruguay. During the third quarter of 2020, more than 50 new mobile sites were deployed and more than 300 existing sites were modernized. Moreover, we continue to increase the capacity or of our HFC access network. Mainly through segmentation of various focusing particularly in the AMA region. 1 1.4008 TTH Blocks, who are enabled reaching more than 180,000 new home bus with FTTH during the 1st 9 months of 2020. Personnel's network has achieved the highest excellent consistent quality and fastest median lamp download and upload speed in Argentina. And the 2nd fastest mobile network in terms of download speeds in all South America. Slide 20 describes our cash flow generation when comparing the 1st 9 months of 2020 with the same period of 2019. As of September 2020, the operating free cash flow amounted to approximately $509,000,000. The increase in EBITDA and the reduction in CapEx may explain the additional $71,000,000 in free cash flow when compared to the 9 months of 2019. Slide 21 shows our key figures for the last 4 months as of September 2020. In constant measuring unit. Company revenues amount to almost ARS280,000,000,000 while EBITDA amounted to 96,000,000,000. EBITDA margin was 34.3%. A gross debt amounted to a 171,000,000,000 pesos as of September, 2020. Decreasing 7.7 percent from December 2019. The company has been able to generate an important amount of cash and short term investments amounting to ARS39 billion from which more than ARS16 billion have been invested in local bonds and notes. Net debt amounted to almost a 132,000,000,000. Our net debt to EBITDA ratio was 1.37 times Slide 22, summarize the latest financial transactions that the company has overtaken. On August 6 2020, Telecom concluded an exchange offer of its outstanding 6.4% notes due into 2021. Folders validate tenured $362,200,000 of notes due 2021. The acceptance rate was 77.74%, high enough to demonstrate our solid freight profile and structure of the exchange offer. An additional amount of 135,400,000 of notes due 2025, new money was raised to repay our loan with Deutsche Bank, loan on branch, and CPP, IAB Credit Investments Inc. In summary, the company issued 380,900,000 dollars of new amortizing notes due 2025 with a new coupon of 8.5 percent payable on a semi annual basis. Moreover, on September 22, the company announced that it has successfully refinanced its close with IFC and IDB invest for an amount of a $129,300,000. The case of the ISC loans, 85 percent of principal that has to be paid in 2021 was extended between 24 48 months. As for the IDB Invest loans, 85 percent of principle that was to be paid in the fourth quarter of 2020 and in 2021 was extended between 24 66 months. Overall, the company partially repaid $40,000,000 of the outstanding amount on the loans. Due to the above, the company has considerably optimized its capital structure. Slide 23 shows the breakdown of our financial debt. Total outstanding debt as of September 2020 amounted to more than $2,200,000,000. Or debt profile and capital structure has improved significantly after after the exchange of our 2021 notes. And the and the refinancing of the ASC and IDB loans. Our maturities in U. S. Dollars are we in the range of $400,000,000 to $500,000,000 between 2021 2022. Anna is, and have been strongly reduced and so the maturity of our 2026 notes. Slide 24, summaries the latest regulatory decisions regarding the telecommunications industry. In May, due to COVID-nineteen, our industry has agreed jointly with Enercon to freeze the tariffs of our products until the end of August 2020. On the other hand, all companies in the industry were not required to increase salaries until August 2020. In August, if we 6.90-2020 extended the price freeze until the end of 2020. The decree also declared ICT services as an essential public service, and it has been approved by the National Commerce at the And today, the regulation up to date, the regulation is is still pending. Both inclusive and reduced services plans are being provided to clients. In the case of the reduced services, they are only provided to clients who have not paid their service during a period of 90 days. It's worth mentioning that during March 2020, the executive power issued a decree, which determined the temporary suspension after the interruption effects and mobile telephony, Internet and cable TV services, in the case of nonpayment until the end of September 2020. This was then extended until December 2020. Having concluded with the presentation, and before going to a Q and A session, let me pass the, the call to Salance for a final remark. Thank you. Thank you, Samantha. With the present of our CEO, Donavile, we are more than pleased to answer answer any questions you may have. However, before we start, we'd like to remind you how you can address your questions during the Q and A session. Which we need all that you need. Please send a letter to IVR Telecom Argentina through the Q And A menu, identifying yourself, and stating and ask a question, or alternatively use the hand button to let us know that you have forward looking questions. We'll let you know when it is your time to speak and we'll we'll we'll we'll use so you don't proceed with your questions. Thank you. So the first questions we will receive are from Avayo, Mishanueva, that make the following questions. Would you please share with us an update of potential conversations with the government to be able to raise price of telco services in 2021. The second question is Assuming the government does not allow you to increase in prices to accept the negative impact of your infrastructure from inflation refresher. Which alternatives are you considering? And then finally, there is a third question that it says, Could you please share with us your target targets for 2021? Where will you be focusing your investments? Okay. Good morning, everyone. This is Roberto. I will try to be very conservative on the, on the information that, we, as an industry, are having negotiations with the government, with a, in a home, which is the the regulator of the industry, trying to consider the how to implement the the degree, in terms of giving the the industry the incentives to keep on growing and to keep on investing. And that means that we, as, as an as an industry, together with the government, are working on trying to define the the targeted, customers where we should try to focus in terms of a special product, like an entry level product for certain services and trying to free, of the public service. Degree to, to the risk, like, high, high or premium services such as broadband or or mobile. So we we're optimistic that we will be able to increase prices We do not know, how far from from the real inflation rate, we will be able to to do the catch up. But we're still working on that. But we're very optimistic that we will be able to increase prices, during 2021. That is something that, we all agree upon we don't know yet the how we will schedule those increases. And we need to keep on discussing the, the rates of increase. Regarding the second, the second question that was if we assume that we do not have any price increase, And we do not assume that. And on the other hand, we still have a lot of room to grow, in terms of, reducing this promotional discounts. The industry has been very, very aggressive in terms of, competition and trying to gain market share. In that, marketing activity, most of the other customer base are, have a promotion or a discount, in, in, in the price. So I believe that if if by any chance, formal prices will not be able to being increased, if that, that could be a possibility, which I personally don't believe it, we have room enough room to work in a in a less competitive environment, I would say. And therefore, we will be able to increase, prices through, taking away discounts of being less, less aggressive in terms of promotions. The third one? CapEx target is around 76, 77 percent of our revenues, and we will try to, to keep it that way. We've been investing about 20% for the last. 16. 17. Sorry. 17. Can you hear me? No. No. 17. 17. 17% of our revenues. We, we have been investing more than 20% over the last 2 years. This year, we And and that was due to a a catch up, of, CapEx that not done previously by the former telecom company incumbent. And also, we did a lot of CapEx to integrate and and make one network out of, the 2 companies and trying to integrate also the the IT platforms, that CapEx will be reduced to this target of 17%, we will have to make it 18 or 19, but that will also so, be aligned to the possibilities that the company had in terms of financing and price increases. Okay. Just follow my question, has requested Marcelo Sander from Tech. Good morning. Hi. Can you hear me? Great. Thanks for taking the question. My question was on the mobile performance. Which if you look sequentially, I think it was quite good despite the price freeze. So if you perhaps could comment on this and talk some of the initiatives that led to this performance. So when I compare the sequential growth in mobile versus the fixed line, it actually was was was good. And the second question is about Paraguay. Would you share your longer term goals, especially when it comes to to the fixed broadband product there? Thank you. Oh, on the on the mobile, we have being very, successful in trying to convert, prepaid into postpaid, and and that is probably the the the main reason why our performance has been good. If you take a look into the COVID in the lockdown period, prepaid, customers, have, stop, charging their, their service because they are, they are at home. They are not commuting. They are not, going to work, by public, transport because public transportation is locked down too. So basically, this, the strong thing is on the, on the postpaid, where we have been working very heavily trying to migrate pre into post and keeping the, the, the revenues pretty stable, I would say. Going back to Paraguay, Paraguay today, we have, almost 33% market share, in the broadband, services. That has been successful story, because we we were coming from 0. And 1 year and a half, we were able to to grow to 120, 1000 new customers. And As far as, we are, moving forward, we believe that we can, keep on, growing very fast during 2021, especially considering the gap of service between our service FTTH service and our FTTH network, middle network, compared to the competitors. Who is asking. One question on prices and cash flow. What was the impact of the decrease? 267.67 on the sub quarter of his It is possible to have a better sense of that that. And looking ahead, what are the company's perspective for 20 we probably we can share the the the answer with Gabil. I would start and then Gabil can complete it. The degree, the the, how do you say the the decree is asking us not to, No. No. Not too. No. No. To keep customers that are not paying. That that's the the main problem that we have. And we have 700 between 6700,000 customers in that situation. If we if we compare that number to the number that we have in 2019, in, in bad debt. That is probably, around 30% increase. So basically the difference between last year and this here is that we are not, eliminating the customer from our customer base, and the customer is still using the service, but the amount is probably 30% increase in, in that debt, compared to last year. If we look at the the final numbers, we we have come from 2.4% of debt to 3.82 from 2.7to3.8, Valdez. That's the probably the number that we should look at, and that's the the main impact of the decrease. Moving to the following questions we'll receive for Andrew DeLuca is asking The 2021 Don maturity is beyond the CB measure, but could you please provide us with an update on how you are thinking about the remaining 20 21 maturity if the CV measures are extended. And the second question from Anuis, can we also provide an update of the competitive environment in Paraguay. That is why. Okay. Well, the the re regarding the maturity, the first thing is our interpreter is that as the original maturity of that debt was $500,000,000 and the personal standing is 100,000,000. It is including that that debt has been already refinanced. So, the company has already complied with that rule, although we are behind that reach, as as the rule, is extending that to March and the maturity of the bond is after that. Regarding how we how we can cope with that maturity, is interesting to see that the only total maturity that the company has next year is in dollars, is is that plus about something less than $50,000,000 of, transactions related to vendors, which, in one case of them, have preferred, foreign exchange channel because it related to a multilateral agency. So we think that, 1st of all, the risk on that is very low. Beside that, the company still has, about in dollars in Argentina, $50,000,000, and also has a pretty strong cash position and always the ability to go to the market and refinance as we have been doing during all this year in, in, probably, the hardest environment that we can imagine. In parallel, now we are also developing additional great lines. That we expect to announce pretty soon that will also give us additional room, not depending only from international markets or from the local capital markets, or we can issue, very easily, the amount related to the maturity of next year. Okay. I I will go back to the previous answer, to this question, actually. The target for 2021 in terms of bad debt, we are considering something closer to 3 instead of 3.9. Because we believe that this whole situation of of pandemia, will will go probably until April, March or April of next year, and then, slowly, going back to previous levels. So we we are targeting a 3% 3%, bad debt for next year. Now going back to Paraguay, Paraguay, we have a very competitive, market basically 33 major competitors. We were the only one that we're able to increase our pool increase revenues and increase EBITDA. When the the competitors are not going to mention them, but they, they are, using, basically, a EBITDA. They are very, very aggressive trying to sustain their market share and therefore, being very aggressive in in subsidizing, devices and, and that type of things. And we are very, very conservative on that. We're not that aggressive, and we are making sure that we have a long term, business, and and we are trying to keep on growing, month after month. So we have the following question from from from but that says, what should we expect in term of dividends for next year? Well, regarding regarding, we, as as you know, it is public information, and assembly is has been set and will take place next Friday. So, I think that we will need to wait to that event to, to see what's the decision of the, of the shareholders assembly about this. Question from Andrew DeLuca, what it says, cost cutting initiatives were quite strong during the quarter. How much more room do you see to cut costs? Thank you for the question. Not much. I think we we we have tried to squeeze, all that we can. Of course, when when you when you could use cost, that much, you are losing something. We we, the the the the the OpEx is not that we are reducing OpEx that is not necessary. It's OpEx that is necessary, marketing, our brands are not speaking, and we need our brands to, to, to, to start, talking again and, and trying to to, reach all our customers with our value proposition So there are there are a lot of things that under this, I would say, crisis, having cut down, many of them, need to, to be, invested in, in a, in a time, in a time frame. But we have started to achieve, synergies coming from the merge for example, in terms of we have by the end of this year, we will have all our mobile customers in one, platform, one CRM platform that has, a lot of benefits in terms of cost, in terms of, holding time, in terms of, first, first of all, the solution. So there there are a lot of, good things that are coming out from the the projects that we are, deploying. So I believe that these type of things, we will keep on doing them as long as we keep on deploying the new the new system from your applications. Probably by by meal 2021, we believe we can finish the migration of all the converging customers into the Salesforce, platform. And therefore, that will allow us to keep on, keep on working on the synergies. That should be, important. In intent, throughout the last 2 years, we have, reduce headcount by 10%. And and we have a lot of third parties that we need to, to keep on, reducing as long as we, we start deploying the new systems. Just just to, to illustrate what, Roberta as mentioned, we can remember that prior to to the big surge of the COVID in Argentina, the company margin, EBITDA margin, as of March was nearly 39%. That give you an idea or in a, in a, in a different environment without that problem being completely exposed, a, a, an idea of the potential of the of the, of the situation within a situation improvement in the, in the economy in general and the, and, normalization of the activities. Thanks to all the investment done. From Seza Marina from Morgan Stanley, but it says, can you please quantify the current magnitude of promotion and discounts? And in what would would ARPU could be if 100% of the existing promotions are eliminated. Thank you, sir, for the question. That is impossible because the to eliminate the discounts a 100%. That means that, there's no competitors, there's no, competition in the in the market. And and that is something that will not happen. Today, we, we used to have between 2020 something, percent discount. On, on conversion services. And, and today that, that number is closer to 30. So I believe that we can, we can, reduce that gap, but you know that, going into a convergent bundle needs a discount, is part of the value prop. And probably we can, reduce the the whole promotion from 30 closer to 30 to closer to 20s. The follow-up question is from Alex Trevy. What he has, can you discuss your plan for the ability management in 2021? Okay, Alex. Well, in fact, as I mentioned, for 2021, will say that, there is there is not too much to, to do from the region of $1,000,000,000 of maturity. We only have $1.50. From that, 100 is the bond. We have $50,000,000 in cash, in our cash position today. And the, we, we have the ability to go to the, to the capital market, both locally and outside, if that's the case. In for the for for the the other 50, is related to vendor financing, which are lines that we have constantly renewing, in, and also related to some ECA agencies. So we don't foresee a problem behind that. Also, we have the ability of tapping the local capital market where we can get, I will say, in the range of $100,000,000 per quarter with the present liquidity situation, at least And and also we have all the the most of the banking lines, about what we are using today, about a third of the available banking lines beside the position that we already have in cash in local governments. So we don't foresee a significant risk from the financial side for 2021. Of course, it will depend on the market. It's always a constant a point of analysis. And if the market provides opportunity, we will, if our if if if the if if if the economy gets better in Argentina. The vaccine allows a better, a better outlook in general. We can consider, continue working on the future, maturities. As of today, the total debt book of the company with the reduction of, of those $100,000,000 that Fernando mentioned is yielding a 7% yield, and we want to keep, that type of cost control. This follow-up question is from a Yes. Hi. I want to get a sense of the affordability level of your customers. What person that your customers, do you believe it's dollarized and can withstand significant price increases? It's a it's a difficult, question. All our customers are in pesos. They are not dollarized, because we we we have, a pesos economy if if this doesn't denominated economies, so it's not the dollar response. For the most part of our of our customers, they are and they have being able to pay throughout the lockdown, without any any problem. And basically, the the strongest thing about our services that we are really essential today. And probably that, that need of connectivity will remain after the lockdown, after the pandemia. So I think that the, the, the service is resilient, is resilient to, to I wouldn't say price increase. I would say price inflation adjustment, because we are not working, and and we have as as long as you have seen throughout the quarters, we have been always able to keep prices with inflation. We have not been going beyond inflation. Currently, if we can change the mix products and go into products of one gig or or other, premium products, we can increase the price because the value prop is increased. But but if we take a look at the whole, business, we believe we, we will be able and our customers will be able to keep on the inflation adjustment. That, that has always been the the, the real thing and what we have been able to demonstrate, throughout so many years. Thank you. Who said, how do you reduce services compared to those of your competitors? What kind of measures are you your competitors taking in rebounding my response to the tariff risks. How do you compare? Hi. Sorry. I don't get taken. How do you how do you reduce services? Compared to those of your competitors and what kind of measures are your competitors taking in response to the tariff freeze? No. Basically, that's ruled by the decree. So all the competitors are, reducing the the product. To the to the product that is requested by by the government. So we have we are sharing the same, reduced product as the entry level or the or the, we should say that the non, non pay, product. So there's no difference in that. I don't see any other difference. Thank you. The following question will be from So, Aleksandra from Itau, if you are here at us, please go ahead. Can you hear me? Yes. Perfect. Okay. Just, Roberto, I I wanted to there was a little bit of breakup in the line. Could you confirm the percentage of of your client base with promotions on the average discount? And then I was hoping to get a little bit more color on the competitive landscape. You said that some of your competitors were not being quite rational. So I'm wondering even in in a world where you could increase tariffs next year, what would be the pushback from from your clients and the need to 10 promotions going forward. The last question that I have is on on the personal and severance cost and how should we think about it in the next a few months. Okay. You mentioned many things in the Canada. The first one was the or the promotions. No. We The percentage. Okay. We talk about 30% average, discount for our, customer base. And it has always been 20%, around 20%. So that that's the gap that this whole thing has produced in the last, quarters. The the second one was the competitive landscape, the on the mobile side, the competitive is, as you saw in the, in the presentation, month by month, the port in and port out activity has been important. We I would say are the less aggressive of the market and trying to keep balance, especially in this moment, in time to not to push, portability. Therefore, portability means discounts. So we we are trying to pull down our our own activity. But the real truth is that, the other competitors are not cooling down the activity right now. I I believe that they will start pulling the activity very soon, because we, we are in a, in a very difficult, economic situation. And on the severance, when I saw that one of the major, cost reductions was in the, in the labor cost And that is due to to a reduction in severances, during the year. Last year, we have, agree with, with many employees to to accept or to negotiate leaving the company. And this year, that that situation because of because the economy of Argentina is, very bad. It's very difficult to to, to find someone that wants to leave the company by its own sake. And that is one of the reasons why the severances have been very low. I know, are you okay? Yeah. And and and going forward, what what what are you expecting for for 2021? The the same as this year, as long as the the the whole economy of the country, that's not improved. It's very difficult to to find people that wants to leave the company, being paid severance and trying to start a new business outside. People will try to, to keep it this way. And, and without making So I believe that the the number will be very similar to this year. Okay. Thank you. Thank you, Alejandra. So we have a final question from Nicolas Cianone that is saying considering the price freeze and perhaps following ups as a question, does the regulation considers lowering discounts as changing, changing prices, or it is just points as a delayed price? Oh, the the the the decree is, based on on prices, general prices. The real thing is that with the, the new customers, will the the major effect on the discount is that all the new customers will not have the promotions. Promotions are not part of the pre promotions are still an always be part of the company's commercial decision. So you can, you can sell a product at a 100% price or you can sell, a product on a 3 month, discount price at, I'm gonna say, 70% of the price or 50% of the price. So that that's a commercial decision, and that's not part of the please. A final comment for under the local and said thanks to everybody and congrats for themselves. Thank you. Thank you very much. Thank you. So having no more questions, we thank you very much for participating in our to the conference code, please do not hesitate in contacting our Investor Relations department for any further inquiries you may have. Good morning to all and have a nice day.