Earnings Call: Q2 2020

Aug 19, 2020

Good morning. On behalf of Telecom Argentina, I would like to thank everybody for participating on this conference call. The participants of today's conference call are Alain Donaughey, Chief Executive Officer, Navide Lassi, Chief Financial Officer, Fernando Alastida, Director of Investor Relations, and myself, the Landstar any manager of Investor Relations. The purpose of this call is to share with you the result of our 2nd quarter ended June 30, 2020, If you would like to not receive our press release or presentation, you can call our Investor Relations office to request a document or download them from the Investor Relations section of our website located at www.telecom.com. Ar. This conference call and presentation is being broadcasted and can also be replaced to our investor website at institutional.telecom.com. Are slash investors. I would like to go over some Safe Harbor information and other details of the call. We would like to clarify that during the conference call and session, we could measure certain forward looking statements about Telecom's future performance, plans, strategies and objectives. Such statements are subject to uncertainties that could cause telecoms as our sudden operations to differ materially. Sadans agencies include, but are not limited to the effect of ongoing industry and economic regulations, possible changes in the demand for telecoms costs and services, the effect of potential changes in general market and or economic conditions in legislation and the impact of the outbreak of COVID-nineteen team on the global economy and specifically on economies of the countries which we operate as well as on our operations financial performance. Our press release dated Power 14, 2020, at Copy, we will be included in our Form 6 K consent to the SEC, describe certain factors that may affect any forward that may affect any forward looking statements that could be mentioned the call. The company has reflected the effect of the inflation adjustment allowed to direct dilution 727 from 2018 of the Commission and Annualores, the CNB, we established that the expression will be applied to the annual financial statements for Intermedian And Special Series ended as of and included December 31, 2018. Accordingly, the reported figures corresponded to the first quarter included effect of the adoption of inflationary accounting in the bottom of the U. S. Transborder. In this presentation, we will also include figures in historical values, which are easier to understand. I will press release, complemented by our earnings presentation. The audience is with the disclaimer came in Slide 12 of the presentation. The agenda for today Conference Call is described in Slide 3 and includes our business and financial highlights. We will end the call with a Q and A session. Now let me pass the call to Alberto, our CFO, who will start with the presentation. Thank you, Solange. Good morning, and welcome to everyone. Slide 4 shows an outlook of the company figures for the second quarter 2020. During the first half, 2020, Telecom's revenue totaled $1,800,000,000. The revenue measured constant pesos decreased 3% year to year. EBITDA totaled $679,000,000, implying 35.5% EBITDA margin growing constant pesos 5.3 percent year over year. Our mobile subscribers in Argentina amounted to $18,800,000, remaining relatively stable when comparing with the previous quarters. Both Man and PayTV clients increased it slightly, totaling around $4,100,000 $3,500,000, respectively. Fixed voice prescribers without considering IP telephone lines amounting to $3,000,000. Thanks to our successful commercial strategy focus on the banning and upsetting of our products. We currently have 1,800,000 converted unique customers with 43% of our broadband customers having a mobile platform. We continue with Slide 5 presenting our new IT transformation projects during June without our digital call as part of our backend transformation from and for us. This has enabled us to operate under unified convergence and efficient system and processes for the back office. With implementation of SAP for Hana and Ariba, we have accomplished this objective in our model. Based on best market practices, it allowed us to work in a simpler and more collaborative and transparent way. More than 6000 employees were trained through 150 virtual webinars and more than 50 virtual internal courses. Regarding our main VSS transformation project, and we have been able to complete the 3rd important migrations of more customers adding 2,500,000 prepaid and postpaid clients during May August, respectively. Currently a total of 2,800,000 customers can enjoy this new digital experience supported by 2,500,000 commercial advisors. We have also planned 2020 with all of our mobile customers migrated to our new CRM and to have our MVP really by October. Slide 6 shows you the evolution of our service revenues. Service revenues totaled almost ARS124.7 billion, decreasing 1.4% in real terms versus the same period in 2019. In a period where inflation reached a 42.8% year over year. The share of Communication Services in the National CPI is approximately 2.8%. Our revenue breakdown of June 2020 shows an increase in mobile revenue share and a lower share of pay TV revenues when compared with the previous quarter. The breakdown results as follows: mobile revenue 38 percent, broadband revenues 22%, pay TV revenues 20% fixed telephones and data in 10%, equipment sales 5%. Our main drivers of growth are explained on Slide 7. We have been able to continue reducing the gap between inflation and real ARPU figures, which currently is around 1% below inflation. While being able to keep a steady of our customer base, postpaid mobile, broadband and our IP video platform, call flow, are the main pillars of our business. In the first half of twenty twenty, postpaid subscribers accounted for 41% of our total formal base. The company has registered positive subscribers' inflow during the 1st 6 months of the year, reflecting our efforts to optimize the quality and capacity of our mobile network. As mentioned before, the growth in this segment has been mainly supported by our convergent offers cable TV and internet subscribers that were not mobile clients of the company before. Showing out of 27,000 customers coming from our competition in the first half of the year. Mobile internet usage has also increased reaching an average of more than 3.9 gigabytes per user per month in the first semiannual period to 2020. In addition, there have been an important growth in broadband speeds, considering that 55% of our total subscribers speeds between 50 and organic megabytes compared to 18% by the end of last year. Our product flow has delivered solid results We have almost 1,100,000 fluorocopsies inside hubs that advancing toward the objective of network digitalization. We keep on increasing the speed and capacity of our broadband customer base leveraging on our strong HFC network responding to the higher usage of fixed networks generated by COVID-nineteen. In Slide 8, which is currently a regulatory decision taken by the Enapo and the Argentine Central Bank. In May, due to the COVID-nineteen, our industry has we jointly with an account to free studies of our products until the end of August 2020. So, currently, all companies industry were not required to increase salaries until August 2020. Both inclusive plants and reduced services are being provided to clients. In the case of the reduced services, they are only provided to clients who have not paid their service on target. It's worth mentioning that during March 2020, the Executive Power issued a 3, which determined that temporary suspension of the interaction of Hixa Moa Telecom Internet able TV services. Among others, in the case of non payment of 3 bills, I served a group of clients until the end of September to 2020. This will then extend into 6 builds until December 2020. As of June, 2020, Client will reduce its services or present less than 2% of the company's subscriber base since the products have very limited capacity as of June, we were recovering, stabilized at a rate higher than 60%. On May 20 year 2020, the Argentine Central Bank decided that and it could help with assets abroad must hurt user funds to pay their dollars, commercial and financial debt. That's not allowing the local companies to access the FX market, official FX rate unless they can prove that they do not have any liquid funds outside Argentina. Due to the above, the company decided to initiate the refinancing of its financial debt, which will be explained later in this presentation. I will now pass the call to Fernando Almasera, who will go over our financial performance. Thank you so much, Javier. On Slide 9, we showed evolution of localization. As of June 2020, the year over year increase in inflation has been 42.8% While during the second quarter of the year, it's been 5.4%. Regulated prices have increased 25.2% evo year over year and remaining flat during the second quarter of 2020 that generate in an increase in the turn inflation index. The breakdown that we're including shows that the most important weight in the index comes from food and beverage, transport activity, among other items, while the share of communication service in the CTI, amount to a very slow percentage, which is 2.8%. Going to Slide 10, For the first half of twenty twenty, consolidated revenues on nominal terms grew by 43%. Reaching almost ARS 125,000,000. When analyzing said figure adjusted by inflation, Revenues amounted to more than ARS 131 billion, showing a decrease of 3% in real terms. The company has been trying to offset the inflation impact on its revenues and costs. Service revenues showed up 45 percent nominal increase, while mobile revenues grew more than 8% in real terms when comparing the first half twenty twenty with the first half twenty nineteen. In the case of pay TV, revenues related to local soccer league programming have not been generated considering that activity has been suspended. EBITDA increased by 50 percent to 54 percent year over year in nominal terms. That's generating an EBITDA margin of 37%. EBITDA margin in real terms was 36.5%. The company performed well in terms of cost controls. Operating costs before D And A decreased almost 7% in real terms versus the first half of twenty nineteen. And almost all cost lines experienced a decrease in real terms, with exception of interconnection and transmission costs which increased mainly due to the rise in FX rates and bad debt expenses that were higher as a consequence of the current economic situation. In Slide 11, we show the company's EBITDA and the impact of the different components of revenues and costs. Was a positive evolution of handset costs with decreased 34% in real year terms, maybe by a lower number of sales. Operating costs were up 7% lower in real terms. Operating efficiencies, we're obtaining both in programming and content costs. Were there were no costs related to, to the local soccer league because if you had been suspended administration costs also registered a good performance decreasing 9% in real terms. Compensation expenses remained stable mainly as bad debt expenses, including the rain, increased above inflation impacted by the deterioration of the general economic context. Final result was at 2.90 bps increase in EBITDA in real terms when compared with the first half of twenty nineteen. Besides 12, we show the evolution of our collections and non performing debt. Collection with digital tenants have increased to 65% of total collections from the 50% observed at the beginning of the year. Additionally, the gap of real collections versus our forecast has decreased substantially. At the beginning of the COVID-nineteen lockdown, the level was almost 30% negative. Currently, our collections are a normal level, and have been possibly influenced by external collections in our B2B business. During our second quarter 2020 nonperforming in retail business increased mainly due to the size of the COVID-nineteen lockdown from 2.4% to 0.7%. Since June, set trend is moving to more normal levels and it's been benefited by the recovery rate we can see the company's operating income totaled almost ARS 14,500,000,000. The EBIT increase in cost as measured units is explained by a lower increase in D And A and disposals an impairment of the excesses visavis increased in EBITDA, 4% in real terms year over year. Operating margins reached 8.11 percent of consolidated revenues While in historical figures, the same margin has increased to 24% from 20% in the first half of 2019. Net income in the first half of twenty twenty decreased more than ARS7.6 billion mainly reflecting FX losses due to the depreciation of the peso and higher interest expense expenses in the net financial results. In Slide 14, there's a summary of the company's investments during the as half of the year. Telecom has invested almost ARS 34,400,000,000 including rights of use of assets, being this amount 34% lower when compared to the same last year's period. Set decrease in CapEx is mainly explained by strategy to protect the company's cash position. Technical CapEx were mainly composed of installation, installations and customer experiments equipment or CPE. The balance was allocated to network and technology and for our international operations in both in Paraguay and Uruguay. During the second quarter of 2020, more than 39 new model sites were deployed. Moreover, we continue to increase the capacity of our 8 FCS network mainly through segmentation of areas focusing particularly in the amber region in order to respond to our customers' high broadband usage due to the pandemic. And 2,3001 gigawatts 8 Fc blocks were enabled. Additionally, we completed the 1st phase of our cloud foundation initiative by uploading a set of business obligations for the Amazon public cloud. In Slide 15, We describe our capital generation when comparing the first half of twenty twenty with the first half of twenty nineteen. During the first half twenty twenty, the operating free cash flow amounted to approximately $361,000,000. The increase in EBITDA and the reduction in CapEx mainly explained the additional $79,000,000 in free cash flow when compared to the first half of twenty eighteen. Turning to Slide 16. We show our key figures last 12 months as of June 2020 in constant measuring unit. Copartis revenues amounted to more than a ARS 265,000,000,000 was EBITDA amounted to almost ARS 90,000,000,000. EBITDA margin was 32% or 384 percent. Our gross debt amounted to ARS 183 billion as of June 30, 2020. The company has been able to generate an important amount of cash and equivalents having a net debt of ARS 131,000,000,000, reducing our net debt in real peso terms when compared with the 31 December, 2019. Our net debt to EBITDA ratio was at 1.46 times. Slide 17 shows the breakdown of our financial debt. Total outstanding debt as of June 30, 2020 amounted to almost $2,600,000,000. As mentioned, the Argentine Central Bank has not allowed companies to access FX market at the official FX rate for commercial and financial debt payments informed currency currency unless they can prove that they do not have any liquid funds outside of Argentina. This was the main reason why the company decides to initiate a liability management strategy that we will cover in the following slide. Slide 18, summarize the latest financial transactions that the company has done. On August 3, 2020, Telecom concluded an exchange offer of an outstanding 6.5% notes, due in 2021. The holders, bundled, tendered, CNS 62,200,000 of notes due 2021. The acceptance rate was 77.74 percent, high enough to demonstrate our solid credit and structure of the exchange offer. An additional amount of 130 $5,400,000 of notes due 2025, which we consider to be new money. Was free to repay our loan with Deutsche Bank, London Branch and CPP, IB Credit Investments Inc. In summary, the company issued $38,900,000 of new amortizing notes due 2025 with an 8.5 semiannual 2 point. Due to the above, the company has considerably optimized its capital structure. Our next step will be to extend amortizations of our nuclear as well loans and we have already started with this process. In Slide 19, we show our pro form a maturity profile as of June 2020, after the extent we just mentioned. Our maturities in the U. S. Dollars are in the range of $100,000,000 to $500,000,000 between 2021, 2022, and are reduced until the maturity of 2026 notes. Having concluded with the presentation, I'm going to a Q And A session. Then we pass the presentation to Roberto Manueli, our CEO. Hi, everyone. Just to to finish the presentation and opening to questions. We just would like to highlight that the Covid pandemic has been like a catalyst for the company in its digital transformation path. Not only because we were able to sustain and hold the operation and the business, but also grow significantly in terms of engagement. If we take a look at flow, our IP video platform, we reached 9.5 hours of average user per customer. And that's an amazing number considering the volume of transactions that are being, passing through our platform. We hit 126,000,000 views we grew 30% in terms of users on the OTT platform. We grew 66% in terms of hours in VOD on our app, on our OTT platform too. And more than 31% growth of hours in DOD in our box or set up box video platform also. We have also been able to keep our transformation project on schedule. As Gabriela was mentioning, we were able to keep running our SAP project and we have Today, we have all the the ledger in 1 ERP, it's SAP, it's for Hannah. We were able to migrate more than 2,800,000 customers, mobile customers into the new Salesforce platform. And that's a great achievement and we keep on rolling migration wave throughout the year. We have given the company also a better outlook for 2021 20202021 debt maturity reducing significantly the debt maturity next year. We have managed cash flow in a very severative way to deal with a difficult business context, to ensure the company's sustainability, no matter the Argentine context as well. And finally, we have been able to keep our customer connected in these critical times which is something that we are proud of. So now we can open to questions. Bye. Hello, everyone. We will just continue with the Q And A session. Before going to the Q And A session, please, we would like to remind you that we can address your question during Q And A session. Argentina to the Q And A menu, identifying yourself, I'm stating that you have a question or alternative use the hand button to let us know that we want to formulate your questions. So the first question we have is from Andres Coelho. Hi, in this regard to debt denominated in dollars, are you using the official effects to convert it into Argentine pesos? Can you remind how many dollars you can actually buy at the official effect or what is the average effect at which you can buy dollars? Okay. Thank you for the question. Well, all the accounting for the company of all the dollar assets are accounted using the official foreign exchange rate unless those specific assets might have a market price. This is, for instance, if the company buy any security, you use the market price of the security or the rest of the dollar are accounted at the for the official foreign exchange rate. Regarding the amount of dollars that the company might get, from the, from the local FX market, from the Mulk, as we call it here, Theoretically is unlimited in terms of as far as you comply with the regulations pertaining what type of pay are you willing to make, you go to the market and the market provides mostly with the authorization of Banco's and Thrive. The restrictions are paid in what type of conditions the payment must meet to be able to be channeled this market. For instance, all the financial payments require that the debt should be registered prior with back office in trial. All the commercial payment have to meet certain technical relationship between the wood, for instance, just to be to explain this in brief, and we can go over these more detailed, in a separate call, if you wish, due to all the goods have have been you cannot anticipate a significant amount of import. But as far as you comply with the obligations, there is no problem in accessing the foreign exchange market. Okay. Now we have the following question from Pedro O'Sorez was on the incremental CapEx, the company had canceled in May. Does the company plan to restore the extra CapEx? How that's unfolding? Yes. Well, definitely, the conditions that made us took that decisions that were related to the general situation. Really, it was very difficult to precise in March this year what would be what was going to be for the company, the outcome of the pandemia plus all the uncertainty that was derived from the Argentinian negotiation of the debt. With a much clearer situation regarding both issues, Argentina has already reached an agreement on the sovereign debt and on the other hand, we have a clear picture of how the evolution of the company is behaving with the the quarantine process, we decided to retake the original amount CapEx and also we are considering some additional amounts regarding some aspects that are related to the new normality. Let's call it that way and it might require a different type of attention. At the end, we think that our CapEx will be over $550,000,000 for sure and very likely over $600,000,000. All these, of course, calculated, as I mentioned, to the foreign exchange rate, which is the one that we effectively account and the effect will be pay. Now, we have a Argentina activity from Iowa partners. So, Argentina you can go I would like to ask about the status of the price update in your different segments. So the price freeze expires by the end of the month in Argentina So how are negotiations evolving with Thank you for the question. We have already communicated to our customers, a price increase. That in average, it's around 10.5%. That's going to be from September 1st on. And that's, we have already communicate that to our customers with 1 month in advance, because the local law requires us to do that. We have the negotiation within a that was between the March August 30. That was the the timeframe where we have agreed upon, freezing, let's say, that way, the prices, but we are able to increase them from September 1st. So now we have the following question from Daniel Alsua on Banchile. What's here do you have a specific leverage target for the short, medium term? Any additional initiatives you may be working on in order to tackle the uncoming maturities. Okay. Thank you for the question. Yes, definitely, the company, the and you remember has a long term target in terms of relationship, debt to EBITDA, around, around two times. We are a fundamentals claim. We are below that. For the time being. We do not think that is going to be a very significant change in that equation. Regarding the next steps to keep up with the maturities. We have already refinanced more than $600,000,000 on the maturities especially next year. And as you saw from the presentation, we have already started negotiations with the most of our banking creditors, meaning that we, I will say, at this stage, we have reached an inform a commercial agreement with our bank and we still are having additional conversations with multilateral agencies to bring on the same package and restructure the rest of the maturities Having said that, that will mean that for the next 2 years, the company would have reduced the total amount of maturities in half And that is considering the remains of the 2021 note that we exchange recently. So really the situation in terms of cash flow for the company or requirement of financial dollars for the company has changed significantly. And also that implies a significant advantage for local DCRA too. The following question we will receive is from Santiago Petri from Santel Income, who said hello. Thanks for the presentation. Could you repeat the explanation for the difference in the operating margin between historical 24% and inflation 11% adjusted figures in chart 13. What does it mean is that the difference between the two is the effect or the inflation adjustment, the historical values, meaning with no consideration on inflation, as a group of 71%. When you calculate the same out operating income related to the inflation figures as you have costs that are related to a different base and your income is not necessarily adjusted, completely by inflation, but by your price adjustment, that there is, in this case, the reality year is they had the company during this process went into a very successful, I would say, cost control. All the situations of becoming digital, as Roberto has mentioned, has an having a very significant part of our population working from home means that for instance, we have a 5 corporate buildings 3 of them completely closed and also additional cost savings we are relevant have been, have been taking place as Fernando explained regarding the football. Also, you have a reduction in the sale of devices, which concurrently imply a less cost too. So there are several lines of cost that were very successfully managed. And as a result of that, they operate the EBITDA margin grew significantly and operate in income. Also have a classic carry with a good behavior on this. Also remember that 10% of our revenues which are related to the corporate business are adjusted by lower income. The follow-up question we have is from John Ho, what it says, how much of the cost cuts are one time in nature and the sales of programming costs, how sustainable is the margin expansion you experienced in 2nd quarter. Well, you know, a part of this is difficult to answer because more related, for instance, to the evolution of foreign exchange, freight and some other and the ability of many suppliers to pass through inflation to In terms that I will say that in terms of the improvement of margin that we already have, we think that at those at the accounting levels, but on the MIS information, we grew about 6 points of EBITDA margin, which we think that at least 3, 4, 3 of them would reduced when the quarantine process reopens. But I think this is personal opinion, and it is yet difficult to say that probably a 1 or 2 points are going to be there and our intention is to do so. We are really doing a very, a very intensive cost control and learning for the cost reduction that we achieve in this process to keep most of them after this situation changes. The following question we have is Francesa Maria from Morgan Stanley. Would like to hear your thoughts on competition on the fixed business. Since that some of your competitors deliver a stronger growth rate in pay TV and broadband. Thank you for the question, On pay TV, our market share remains the same. So we don't see any even though there are competitors working on the video side, we we are performing very, very well. And that's not a problem so far. On the Broadband side, we have a very strong competition today that is hitting on, we have already mentioned that in previous talks. We have an HFC network that's a high rate coax and fiber network. Where we have, HFC Broadband customers. And we have the old Hopper network where we have TSL customers. We are losing and probably we have shown the figures. We are losing customers on the 8x DSL network. Because of a stronger competition with a better product. And we are retaining our market share on our HSD network. So as long as we are able TTH Networks. That's part of our CapEx plan for the future. We will be able to increase our market share on those areas. But as long as we don't keep on with the FTTH deployment, that's not possible. So anyone that interacts in an area with a copper network only, it's difficult to to compete. So that's probably the way most of our customers are on HFC and on HFC, we are growing. And for example, in last month, we are growing more on HFC than what we are losing on the copper areas. Thank you, Roberto. The following question is from Nate Ivano, what it says, is the U. S. Dollar amount the company can get on any day from the Central Bank Limited, even if it is needed for interest payment or debt amortization? No, no, it isn't. What we are doing, but I will say as a facility issue, not as a requirement. We will not expect to the last day, and we try to to make our acquisitions in 2, 3 times to create the minor noise that we can on the Arquil. Thank you, Javier. The following question is from Rodrigo Ishanueva. It is possible to what he says is it is possible to break down how much of the OpEx savings that you have had are related to frozen tax salaries and software commercial activity and how much of the OpEx savings could be perceived as sustainable. Just to add, on the salary line, our salaries in were increased, more than between 40.5% 42.5%. On the period, July, June, July, 2019, June, July 2020. And 70% of our staff is, belongs to a union and we have agreed with the unions the salary increase and we completed the negotiations. And that was the between 40 and 42% depending on the union. So we have not had any salary freezing, during these this last year. And we are our approach is to move our salaries at the same rate as we increase our prices. That's the approach and that's the negotiation we are running today with the unions together with an account. Thank you. A follow-up question from Telsey Collins. This says, can you please discuss operations in Paraguay? Mobile customers are down 5% in the quarter. Is the situation involving both in terms of the pandemic and competitive dynamic? It is true, Paraguay is, strike, by the, but the pandemic also We are we have been hit by the pandemic. Most of our customers are prepaid and prepaid customers as well as in Argentina are not recharging as they often do. So that's one of the temporary reasons why customers are down. But on the other side, we were able to deploy 16,000 square blocks of FTTH in Paraguay, especially in Asuncion. And we have hit 100,000 more than 100,000 new customers on broadband on FTTH Services. And that's a great job we're doing. We're we're achieving probably around between 25% 30% of market share, coming from 0. So we are doing a very good job, and we are going to keep doing that. Salogana. She said, hi, I would like to ask if you could provide a breakdown by currency of cash and equivalents and how much is held in our sales banking account. Hi, thank you for the question. Well, as we explained regarding the new regulation, the company, the company has a in dollars, about $40,000,000, which are held now in Argentina. We brought that money within the country to comply with Banco's and travel relation. And no other currency is held abroad as part of the refinance in process that we are currently developing. We have established a structure that has no relationship with the company that has paid the cash consideration for the exchange of the bond. And we'll also use the funds required for completing the refinancing of our bank team, meaning that no additional funds are going to be required from that part. On top of that, we have about 300,000,000 equivalent dollars in pesos in Argentina, which are split between $200 in pesos specifically and 1 had a equivalent of $100,000,000 held in dollarized security. But all of that is, held within the boundaries of the country. So what the company did was under this new regulation of Banco Central was used all the, all the funds available to strengthen balance sheet, changing the maturity profile with its creditor. And now we have plenty of cash operate the company within the boundaries of Argentina. Thank you. Now we have a request from Alejandraana to Alejandra. You can go ahead with your questions. Roberto Fernandez, Fernando and Salange. Congratulations on the debt deal. The communication was a little bit tricky. Maybe you answered this, but could you talk a little bit about the tariff increases by segment? And how are customers behaving if you're having some pushbacks to increase tariffs or if customers are looking for upgrades, And then if you have a CapEx guidance for the rest of the year. Hi Alejandra. On average is 10.5%, the on mobile will be 10%. And we have, some, a very thing gap between 10% 12% or 13% any other service, but on average it's 10.5. So there's no change by segment. Is we have gone through a very flat, flat increase for all, prices and products, except the reduced product that by definition of Enercon is cannot be increased until October. Okay. So, hi. So that's the following question that we is, there was one question listed from Rodrigo that it says Rodeo is in my last call, Marlene, which would OpEx down by around 5% year over year in real terms for an EBITDA margin as around 30 10.9% or more than 730 basis points higher year on year. So with OpEx down by around 5% year on year, we are transferring EBITDA margin at 37.9% or more than 330 basis points higher year over year. But and then it is possible to break down, I think that we're very answering this. It is possible to break down so much of the other savings that you have are related to pros and tariffs and some of our commercial activity. As I mentioned, Rodrigo, just to give you some color in general terms, we think that the there is about half of the of the improvement is related to the pandemic effect to the quarantine. And will be much difficult to keep. The other half is something that we think that we are doing our homework. We will try to to keep on staying. Then the following is from Jose also with regard salary increases. Do you expect to raise compensation and benefit from September? If so, how much? Like how much? You're very reposo with price increases. Then the following question, it came from Alwyn Palalje. I said, do you expect any other price increases for the rest of the year apart from Santander in Greece? We also need to negotiate with the NII? We will be monitoring inflation rates and our own inflation of our costs and OpEx We will need to understand what's going on. If we see the inflation as is right now, with this 10%, we are keeping track of inflation. We are not going over inflation, but we are keeping track very close track of inflation, year to date. Nobody knows when the quarantine will be finished, how will the business context, start developing September on. So we need to understand where we are going and see and we will do the corrections that we need as long as we as we know them. Question from our team that was already mentioned in the presentation is how many subscribers did you currently have and include on these services. I will mention that we'll let Andrew personally. In the case of Celsey Collins, yes, what is the CapEx guidance for the rest of the year? A challenging total thinking, of course, it is, in some extent, might be altered on the margin because of the foreign exchange rate evolution, but assume something in the range of $600,000,000 product Yes. And it will depend on the ability to most of our CapEx imported goods. So it will take time to bring goods into Argentina. So Once we have decided to move forward with the CapEx, it's not only money. It's only time. And we can be around 600, but we could a little short if we cannot bring things on, that will be a carryover for the next quarter of 2021. Yes, sorry, that's for the total year. The $600,000,000 is for the total year. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So, we have no further questions. So, we'll be glad to thank you for participating in our quarterly conference call. 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.