Good day everyone, welcome to the Telecom Argentina TEO First Quarter 2019 Earnings Conference Call. Today's call is being recorded. Participating on today's call, we have Mr. Gabriel Blasi, Chief Financial Officer, and Mrs. Solange Barthe Dennin, Investor Relations Manager. At this time, I would like to turn the call over to Mrs. Solange Barthe Dennin. Please go ahead, ma'am.
Thank you, April. Good morning. On behalf of Telecom Argentina, I would like to thank everybody for participating on this conference call. As mentioned by our moderator, the participant of today's conference call are Gabriel Blasi, Chief Financial Officer, and myself, Solange Barthe Dennin, Manager of Investor Relations. The purpose of this call is to share with you the results of the three-month period ended March 31st of 2019. We would like to remind all those that have not received our press release or presentation that they can call our Investor Relations office to request the documents or download them from the Investor Relations section of our website located at www.telecom.com.ar. Additionally, this conference call and slide presentation is being broadcasted through the webcast feature available in such section and can also be replayed through this same channel.
Before we continue with the conference call, I would like to go over some labor information and other details of the call, as we usually do in this type of event. We would like to clarify that during the conference call and Q&A session, we might produce certain forward-looking statements about Telecom's future performance, plans, strategies, and targets. Such statements are subject to uncertainties that could cause Telecom's actual results and operation to differ materially. Such uncertainties include, but are not limited to, the effect of ongoing industry and economic regulation, possible changes in the demand for Telecom's products and services, and the effect of more general factors such as changes in general market or economic conditions in legislation or in regulation.
Our press release dated May 9th, 2019, a copy of which was included in a Form 6-K report furnished to the SEC, describes certain factors that may affect any forward-looking statement that we may produce during this session. Furthermore, we urge the audience of this conference call to read the disclaimer clause contained in Slide one and two of the presentation. The agenda for today's conference call, as in Slide three, is first to go over a general macro overview, then moving on to our strategy, which will be followed by the discussion of our business highlights. Immediately after, we will go into the evolution of our financial figures. Finally, we will end the call with a Q&A session, as is customary in our quarterly calls with the financial community.
Having gone through these procedure matters, let me pass the call to Gabriel Blasi, who will go over a brief characterization of the macroeconomic context in which we operate.
Hi. Thank you, Solange. Good morning, everybody. Please refer to Slide 5, where we include the summary of the evolution of some macro variables in Argentina regarding FX rates, inflation, and monetary policy. During January and February of 2019, FX and monetary variables continued to stabilize, keeping with the trend observed during the last month of 2018. The peso depreciated less than 4% as of the end of February, and interest rates started to move downwards at an accelerated pace due to the quick reduction in the country risk premium and stable inflation readings observed up to that stage. In this context, capital inflows increased, thus the Central Bank began to acquire foreign currency from the private sector as the FX rate moved downwards to the lower band of the non-intervention zone as defined.
This contributed for the monetary authority to exercise a reduction in interest rates, keeping the stock of monetary regulation instruments with low variation. The mentioned scenario quickly changed course during late February and March. Firstly, inflation readings for February came in higher than expected due to utility and transport tariff increases, signaling for unequal behavior of inflation of 4 March. Additional core inflation began to rise, mostly pushed by food and beverages. In turn, volatility in exchange markets began to rise rapidly after the relative stillness of the preceding months. The peso experienced depreciation of almost 11% during March, the Central Bank reacted quickly, raising aggressively monetary policy interest rates and exercising intervention in future markets. Country risk rapidly erased the reduction observed during January and February and continued to increase. March inflation readings confirmed that March inflation was accelerating.
The economic context deteriorated further in April, with increased volatility in foreign exchange markets and further increases of country risk premium to a level higher than 900 basis points. In this scenario, the Central Bank reacted, announcing a virtual end to the non-intervention zone scheme, being able to sell currency below the higher limits previously imposed and extending the maximum daily amount that will be able to sell if this limit is breached. Turning to Slide 6, we can observe the behavior of activity and consumption during the period under analysis. According to last available data, the economy contracted around 2.5% during 2018.
The rate of deterioration of economic activity was higher during the last quarters of that year, mostly due to the low performance of agriculture, commerce, industry, and construction sectors. At this stage, most of the economic consensus is expecting that the context will stabilize and then very gradually begin to register economic growth, most probably towards the second half of the year, and finally consolidating in 2020, all affected by the political calendar. When looking at unemployment figures, although it can be noted that the rate has risen during 2018, and probably we will experience some further deterioration during this quarter, when compared with other strong economic downturns in Argentina, history shows a better evolution.
Lastly, higher volatility in economic variables and the continued rise in inflation have impacted overall household consumption, particularly in the case of durable goods, as it is expected that it will remain depressed due to adverse impacts of inflation on real income and due to the higher uncertainty captured by low consumer confidence readings, which in turn have fallen significantly. Notwithstanding the challenging macroeconomic context just described, Telecom Argentina has managed to maintain a solid operating profitability. Having gone through this introduction of the macro environment, I will go over the strategy of the business in sections.
For the figures, including the financial statement, the company has accounted for the effects of inflation adjusted adopted by Resolution 777/18 of the Comisión Nacional de Valores, or CNV, which establishes that the reexpression will be applied to the annual financial statements for intermediate and special periods ending as of March 31, 2018 inclusive. Accordingly, the reported figures corresponding to first quarter 2019 include the effects of the adoption of inflationary accounting in accordance with IAS 29. Over this presentation, we will discuss figures in historical value in order to reach the understanding and analysis of the earnings evolution by its users, in a similar way as analyzed by the management of the company, with the aim of reaching a better understanding of these figures in nominal terms.
With the aim to reach a better understanding of the figures presented on our press release, we encourage our financial community to consider that release in combination with this earnings presentation. Let's introduce our strategy chapter alongside with some trends that are shaping the current market context in the industry. No longer is the main emphasis on traditional bundles, for example, fixed broadband bundle with fixed voice and full-blown pay TV. In slide 8, we can find some industry trends on how operators incentivize the new bundles. Operators need a bundling strategy that is relevant and incentivize the consumer not only to purchase but also to renew. In many cases, most operators found OTT video a demand-side driver. Nowadays, bundling OTT video services not only differentiates each operator's bundle from another's, it also entices users to the bundle.
In this sense, OTT video in the bundle is a must-have because OTT video is the number one service that customers are adding to fixed broadband bundles currently. In fact, it is expected that by 2023, the broadband bundles that include OTT will reach 50% of total broadband bundles in Argentina. On the other hand, the most prominent next generation bundle is expected to be fixed broadband with mobile. Mobile in the bundle is about locking up the household. The new baseline for bundles with mobile is to give the option of adding more than one line to the bundle. This strategy seeks to reduce churn rates and lock up as much of the household as operators are able in a single offer. Meanwhile, both video alone or VYO bundles emerged in 2018 and 2019, which may include pay TV, OTT video, and even smart home.
We will see in coming slides that the company is following some of these strategies, specifically in offers that include mobile bundling. Moving to slide 9, we can illustrate how the company is planning to become a simple, agile, and customer-focused company and to lead convergence without affecting market value, leveraging on experience as a differentiating factor. In order to achieve leadership in the market share, revenue share, and in the quad play market, six strategy avenues were defined. The main guidelines behind this involve enhancing the commercial and operational model by product, region, and segment, leading convergence and growth in value-added services, or VAS, in the corporate market, the boosting of new businesses transforming into a digital company, promoting a high-performance organization, and developing the best convergent value proposal.
The commercial and business vision will be possible by means of these ideas, but it is also important to develop the technological and operating infrastructure where they will rest upon. Precisely, in slide 10, we present some guidance of the current strategy that the company is following to address these actual and future business challenges. In this regard, we are currently working over four transformation pillars in which we categorize a series of initiatives and projects that are being undertaken. Firstly, we can analyze the clients pillar that can be associated with client satisfaction that ultimately drives increases in NPS, ARPU, and market share. Over this, the company is currently working in a series of initiatives such as business support system, BSS, evolution through the FUN project, also while upgrading the digital experience of our clients and generating better and more effective offers through commercial intelligence.
Comes the network pillar that aims to achieve higher network agility and performance, and at the same time enable new business development by means of cloud strategy and data center evolution projects and its operation support system or OSS improvement. The company pillar that seeks to attain operational excellence, and in this regard, the company has focused heavily to its back-office transformation project 4UP, which seeks the integration of all the operations in the ERP platform, SAP S/4HANA, consolidating an agile and a state-of-the-art model for operations. Lastly, cultural transformation is key across to the other initiatives, as is the cornerstone of our culture pillar, which is centered on talent management, communication, and the evolution of the processes within the operational model. Moving to the business highlights, we can see where we are positioned today in terms of the businesses.
Please refer to slide 12, where we highlight some of our key achievements. During the first quarter of 2019, Telecom's revenues totaled ARS 44.3 billion, decreasing 9% year-over-year in real terms. Please bear in mind that the total revenues contain approximately ARS 1.9 billion and ARS 18 billion for the first quarter of 2019 and first quarter 2018 respectively, related to the reexpression in terms of the current measuring unit as of March 31, 2019. Operating income before D&A totaled ARS 14.5 billion, implying a 32.7% margin over revenues achieved in a challenging economic context. In addition, fixed voice ARPU and broadband ARPU were up to more than ARS 314 and ARS 819 per month, respectively. Meanwhile, Pay TV ARPU reached ARS 871, and mobile ARPU reached ARS 235.
It is worth to highlight that all of these were reexpressed in terms of measuring unit as of March 31, 2019. Moreover, in relation with our subscribers, mobile subs in Argentina amounting to 18.4 million, of which 12.5 million were 4G clients. Pay TV subs amounted 3.4 million. Fixed broadband subs totaled 4.1 million, and fixed voice lines totaled 3.5 million. As for the total customer base, we continue to observe that it remains stable in relative terms and showing a change in the portfolio composition through actions that generate higher value, such as product and services upgrade bundling, allowing to increase the share of value customers and conversion clients in order to maximize ARPU in the future once the discounts and promotion start to expire, and economic context helps to improve the household consumption.
Increasing revenues is also driven mainly through a combination of price increases and the growing use of telecommunication services, which more and more affect the daily life of our customers, thus allocating a relative stable portion of their income for these services. Finally, regarding corporate matters, it is important to mention that the ordinary and extraordinary general shareholders meeting, held on April 24, approved a cash dividend distribution of ARS 6.3 billion that was made available to shareholders on May 7. This dividend payment represented an amount of ARS 2.93 per share or $0.33 per ADR. This implies a dividend yield of approximately 2.3% at the record date price. Turning to slide 13, we can observe a breakdown of service revenues, where mobile services businesses still hold the main participation over Telecom revenues, although verifying descending trend in share, followed by broadband and Pay TV.
We can highlight that the current revenue mix has a participation for mobile revenues of more than 33%, followed by broadband revenues that, apart from representing near 22%, continue to register growth in share, as well as Pay TV revenues, which accounted for almost 22% participation. In turn, fixed telephony and data represented more than 15%, growing in this quarter, while devices achieved more than 6% of the total revenues. As we already mentioned, mobile and broadband are the segments that mostly contribute to the total revenues composition, generating revenues of ARS 14.8 billion and ARS 10.1 billion, respectively. In addition, the Pay TV revenues totaled almost ARS 9.6 billion, followed by fixed and data revenues with aggregate amount of almost ARS 6.9 billion. To a lesser extent, we can highlight the contribution of handhelds and others with ARS 2.8 billion and ARS 0.1 billion, respectively.
It should be observed that in general terms, that although the company's revenues are growing at a faster rate when looking at its historical values, during this quarter, the acceleration in inflationary context during the last quarter of 2018 and the first quarter of this year, as discussed in our macro chapter, has posed a challenge. This is basically reflected in the figures we expressed for inflation. We will go into some details of this in the following slide. In slide 14, we will go through the evolution of the company's mobile business in Argentina. As intensity data usage continues to increase, we can observe that there has been also sustained growth in postpaid subscribers, which represent our high-value mobile segment.
In fact, this segment has been growing steadily during the quarter due to the good results in the convergent offer to cable TV and internet subscribers that are mobile clients of the company, thus leading the mobile Flow share in the market. During the first quarter of 2019, postpaid subscribers accounted for an impressive 40% of the total customer base, up from 36% compared with the same period of 2018. Additionally, the intensity of mobile internet usage continues to increase, which as of the first quarter 2019, has reached an average of more than 3.3 GB per user per month, which is 48% higher than first quarter 2018. When we focus on the evolution of our 4G rollout, we can highlight that there has been an important increase of 4G subscribers, which totaled 12.5 million as of March 2019.
This rapid growth in subscribers that use 4G networks has been the driver of increase in data traffic since 2015. Currently, the coverage of our 4G network reaches around 1,540 locations, an increase of over 400 locations year-over-year. Moreover, Personal's 4G network is the fastest network in the country, according to the results of international reference who measure the network standard through the experience of the clients worldwide. Please turn to slide 15, where we include the review of our internet and pay TV services segments, which aim to differentiate and upscale to an enhanced customer experience. Related to our broadband segment, we can point out that the numbers of subscribers grew almost 40,000 year-over-year, achieving 4.1 million users. The aforementioned increase in subscribers was supported by the offer of higher connection speed.
As a consequence, subscribers with speeds equal or above 20 MB have increased to 44% of the total client base versus 27% over a year ago. ARPU expressed in terms of the measuring unit as of March 2019 for broadband services decreased to more than ARS 819 per month. Price adjustment of 39% applied on average broadband plans compared with those as of the first quarter of 2018, contributed to offset the ARPU decrease in real terms. In turn, churn increased slightly to 2% in the first quarter of 2019. For fixed and pay TV services during the first quarter of 2019, cable TV subscribers decreased slightly, while Flow TV achieved 602,000, practically doubling from figures observed over a year ago.
Finally, cable TV ARPU expressed in terms of the measuring unit as of March 2019, reached more than ARS 871 per month in the first quarter of 2019, while churn increased slightly to 1.5% in the first quarter 2019. On slide 16, we present our consolidated CapEx, showing a continuous investment effort to improve our network and quality services. During the first quarter of 2019, Telecom has invested more than ARS 9 billion, being this amount 3% lower in real terms at the same period of last year. Nonetheless, the consolidated amount of capital expenditures increased to 20% of total revenues from the 19% registered in the same period last year. Furthermore, we can verify that an important amount of the technical CapEx was allocated to network and technology, being the access network the most important component, representing almost 50% of network and technology CapEx.
The remaining of technical CapEx was mainly comprised of installation and customer premise equipment or CPE, and of investment done over our international operations in Paraguay and Uruguay. It is worth to highlight that during the first quarter of 2019, Telecom continued with its efforts to improve both the fixed and mobile network. In order to achieve this goal, the company deployed more than 140 sites during the first quarter of 2019, and additionally, more than 816 sites were modernized and modified to incorporate new frequency bands. Moreover, Telecom began to build up 600 new blocks of FTTH and 1,000 blocks of 281 GHz HFC network.
Due to the recent evolution of macroeconomic variables, the company has decided to develop its investment plan in longer periods than announced, with the objective of having greater financial flexibility and being able to withstand the actual economic volatility, passing from the 27% of CapEx over revenues original plan, to 26% in our annual budget, and finally, after the aforementioned revision, further reduce it to around 22%-21%, depending ultimately on the pace of devaluation and inflation. It may return to the situation foreseen in the annual budget, depending on market conditions. As remarked in previous call conference sessions, one of the advantages of the company CapEx plan is that the investments are performed in a very modular way. They are not huge projects involving large blocks of investment.
It is very easy to manage the company CapEx in response to changes in macroeconomic context without harming its operational capacity, competitiveness, or its capacity to generate funds, meaning that the cash flow needs won't have to be stressed. Having gone through these financial highlights, now I will pass the call to Solange, who will go over our financial performance.
Thank you, Gabriel. We will go over the impact that these business trends just described by Gabriel generated over our operating income. Let's move to slide 18, where we can analyze the consolidated revenues and EBITDA. For the first quarter of 2019, consolidated revenues and current terms grew by 38%, reaching almost ARS 42.5 billion. When comparing in constant measuring unit terms, revenues amounted to more than ARS 44.3 billion, showing a decrease of 9% in real terms. The company has been increasing its effort on offsetting the high inflation effects discussed in our macro chapter over the top line. In this sense, increase in the average cable TV, internet, and mobile plans has been 39% when compared to those of the first quarter of 2018.
The company is currently focusing on promoting higher usage of both fixed and mobile services, focused mainly on higher mobile client capture in the AMBA region, leveraging its convergent offer possibilities. In turn, service revenues grew even more, reaching a 40% increase, thanks mainly to a better performance of internet and in-fixed telephony and data service revenues. Moreover, although EBITDA experienced a lower growth, growing by 21% year-on-year in current terms, EBITDA margin remained stable from previous fiscal year figures. EBITDA in real terms experienced a decrease of 21%, mostly affected by the performance of the top line's real terms. In fact, operating costs before depreciation and amortization decreased around 2% than the first quarter 2018. EBITDA margin decreased to 32.7% for the first quarter of 2019 as the EBITDA of the first quarter of 2018 was impacted by temporary effects and one-off related to the merger transaction.
Please refer to slide 19, where we show the performance of EBITDA and the behavior of the different components of revenues and costs. The company has taken actions to gain operational efficiency and manage its cost structure, these actions have positively impacted our suitability, as we can observe how the company was able to generate a reduction in real terms of the cost structure. It is important to remark that this has been achieved while going through an integration phase of the two merged companies, which involves the deployment of new systems and processes. We can observe a positive evolution of transit costs that contributed positively to EBITDA margin growth, mainly affected by a lower sellout, while cost management has delivered good results in interconnection costs through better negotiation international interconnection.
Commission and advertisement decline is due to lower charges in agent commissions and due to a slight decrease in advertisements related to the synergies achieved after the merger that allow to reduce costs, even greater presence in media. This effect has been offset by increase in labor costs, mainly due to salary increases and greater severance payments due to the reduction of more than 1,800 employees or 7% in total employees year-over-year, and bad debt expenses that reflect mostly the deterioration in the macro situation reviewed in our initial analysis. The final outcome was a 510 basis point reduction in EBITDA in real terms when compared with the first quarter of 2018, which, as we mentioned, registered temporary savings and one-off in advertising, labor cost, and fixed for service maintenance material and supplies.
Turn to slide 20, where we can verify the company's current operating income total of ARS 4.5 billion. The EBITDA decrease in constant measuring unit that was higher than that of EBITDA can be explained by the increase in depreciation amortization, and disposal and impairment of PP&E, intangibles, and right of use, which increased almost 18% in real terms over a year. In addition, to higher depreciation and amortization due to the repayment of non-monetary assets, the application of IFRS 16 since 2018 has entailed an impact of more than ARS 600 million. Mainly because of the aforementioned increase in depreciation amortization in real terms, operating margin has decreased to 10% of consolidated revenues. Moreover, Telecom registered a net income attributable to the controlling companies of almost ARS 1.3 billion.
The variation of the net income when compared with the previous fiscal year can be mainly explained by both the previously mentioned decrease in operating income and by lower financial results explained by higher effect losses associated with the net financial debt position denominated in USD, a lower high inflation adjustment gain reflecting the positive effects coming from the exposure to inflation, and higher interest expenses due to the overall increase in the net debt position converted to ARS. Having gone through the summary of financial figures, let me pass the call to Gabriel Blasi, who will explain some key figures for the year and the composition of Telecom debt.
Turn to slide 21. We present some pro forma key figures for the fiscal year of 2019 and 2018 in constant measuring unit. Company revenues achieved more than ARS 3,183 billion for the last 12 months as of March 2019. Meanwhile, EBITDA amounted for more than ARS 69 billion for the same period. EBITDA margin for the last 12 month period as of March 2019 was 32.2%. Regarding our gross debt, as of the end of March 2019, it amounted to more than ARS 91.3 billion, but as the company holds an important cash equivalent and investment position, net debt reaches approximately ARS 71.6 billion. In fact, net debt to EBITDA ratio remains solid in levels of 1.5 times, despite the devaluation of the currency during the first quarter and the acceleration of inflation. In slide 23, we summarize the main milestones regarding the company's financial debt management.
Regarding new debt obtained during the first quarter of 2019, in March 2019, the company entered into a loan agreement with the International Finance Corporation, or IFC, for a total amount of up to $450 million, of which a disbursement for a total of $290 million was received. Also worth noting, our subsidiary in Paraguay, Núcleo, completed successfully an issuance of two series of notes for a total amount of approximately $25 million with a year tenor. This issuance was the biggest deal completed by a non-financial institution from the private sector in Paraguay. It was done in guaraní. Moreover, on May 7, we announced that the company had obtained a credit facility for an amount up to $96 million, guaranteed by the official export credit agency of Finland or Finnvera, thus obtaining an international loan at a very low rate. That is LIBOR plus 104 basis points.
When taking into consideration Argentina country risk and with the final maturity in 2026. Finally, reflecting the active debt management that Telecom has been performing during the last quarters, we can observe that the maturity schedule going forward is continuously improving as tenors have been considerably extended, mainly concentrated principal repayment for year 2019, in spite of market conditions. Please move on to slide 24, where we can analyze the breakdown of the financial debt. As we mentioned in our previous press release, in February 2019, the company canceled the final amount outstanding of the original syndicate loan facility for $1 billion for its own fund. In addition, during March 2019, the company partially prepaid $100 million of the outstanding amount under the term loan due 2022. Moreover, the IFC and IIC loans also started the amortization schedule, and thus the outstanding debt position was reduced further to $62.5 million.
Finally, the total debt outstanding of the company as of March 2019, considering the new debt operation and cancellation just described, this would amounted almost $2.1 billion, showing almost no variation when compared to 2018 year-end. As mentioned in previous calls, we deem important to emphasize the manageable debt profile the company has, as well as diversified source of funds currently available, such as vendor financing local bank lines, while always analyzing the possibility of accessing to local and international capital markets if market conditions deem reasonable and, as we mentioned, allow debt to EBITDA ratio. In this sense, the company holds a permanent optimization policy for the term, rate, and instruction of its financial liabilities. With this, I will open the session to questions, having concluded with the presentation. We are more than pleased to answer any questions you may have. Thank you very much.
If you would like to ask a question over the phone, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Guilherme Aguirre from Bradesco. Please go ahead.
Hi, good morning. Guilherme Aguirre. Thanks for taking my question. The first one I have is more related to the top line. We have seen a challenging outlook for real growth considering how consumers are pressured. We were just wondering, what can we expect in terms of real growth trends going forward? If we can expect any kind of real revenue growth for 2019 or at least for later in the year? After that, I'll have another question.
Hi. Thanks for your question. In fact, it will really depend. We have made different scenarios, but it will really depend on the shape the final inflation curve will show from now to the end of the year. If all the provisions that are presently, I would say the general consensus of the economy really present that inflation trend becomes more normalized and can begin to go down. It will be quicker, the time frame that we need to cope with inflation and to fully price that inflation in our revenue. I think that at present, the inflation adjustment is done almost on a monthly basis, and the price increases have loops. We are not increasing prices at the same pace, but increasing prices, I will say probably three times a year.
That means that in the meantime, you have these periods where you are not going vis-à-vis inflation through the valuation of inflation in our own portfolio. Although when you adjust the revenues, you are showing that trend, and that is showing the partial, I would say, loss in real terms. Meaning that as the situation normalize and the effect that comes when you have drop in inflation of increase in income in real terms from the population will help us in terms of getting again to full recovery inflation in our revenues. If inflation continues to be high and continues to go up, that timeframe will take longer, and if that's the situation at the end of the year, probably it will be harder for us to completely cope with that.
Having said that, when you look at the general picture in terms of how the company has been pricing inflation, we have been vis-à-vis, I would say, pretty good, considering the fact that I mentioned that in one case, we are adjusting on a monthly basis, and in the other case, we are only adjusting probably on a quarterly basis for the time being.
Okay, thanks. That's very helpful. My second question is on the EBITDA front. We were just wondering how big was the impact of the adoption of IFRS 16 on the EBITDA and how margins would look on a more comparable basis. Considering the real decline in revenue, and also that the cost pressure seems to be quite high in perspective, what margin levels can we expect for 2019, and where are the main opportunities to gain efficiencies?
Yes. Going to the third part of the equation, I think that, just to be clear, I will revert to each part of the explanation. The comparison is to some extent that was possible because the first quarter of last year was extremely good one. We had a huge impact of the first part of the merge, and part of that were synergies, and part of that were one-timers and temporary effects. All that motivated us when we are comparing with probably the best EBITDA that we had during last year. Having said that, going to the second part of the question regarding IFRS 16.
The total effect up to now has been ARS 600 million, in a very, I would say, general broad picture, because it is difficult to say we are not quite sure how the rest of the year the interest rate will go. I think that we are really moving up with very strong nominal rates, very high ones. Really it's difficult to make an assessment on that. Just to give you some color, that might represent up to 1% of EBITDA, maybe also slightly higher than that. That will give you just a good color in terms of the effect. Finally, you have another question. Your question had you've also asked for what would be our expectations in terms of EBITDA margin.
It is clear that the company is stabilizing upon this 130% devaluation and inflation over 50% that we have been suffered. We are stabilizing and still going on. This is still moving forward. We are stabilizing at a different level in terms of our operational figures. When you look at how the company is behaving, probably I would say you should wait for the same type of trend that we went through during last year. Of course, at a lower stage. Meaning that if you consider that the EBITDA figures that we mentioned about in the range, has one-timers and probably normalize the EBITDA for last year upon all these effects was in the range of 35% or something like that. As with the very first, I would say, with the beginning of the synergies being put in place.
Today, probably we are more on the area of 32% something as a final EBITDA margin for the year. Probably, it is difficult, as I mentioned, to give you a final figure as nominal variables are having such a big distortion in terms of the amount of monthly variation that is difficult to give you, I would say, a more precise outlook, but I will start from there if you want to have a view on the rest of the year.
Okay, thanks. That's very helpful.
As a reminder to star one, if you would like to ask a question. We have a follow-up question from Guilherme Aguirre with Bradesco. Please go ahead.
Hi, thanks for taking my follow-up. On the topic of very strong depreciation in the peso. I appreciate your comment on the review of the CapEx plans. I would really appreciate if you could just give us some more granularity on how the CapEx target is for the coming years, and considering that there has been a downwards review. What were the parts of your plan that you preserved more, versus what did you have to cut a little here and there to absorb the currency volatility?
Well, first of all, it's not an issue of foreign exchange rate. It's a combination, because when we look at the general situation, we have an increase in the level of activity of the economy, a decrease in the purchase power of the population. You have a huge increase in interest rates. All the economy tends to become overnight and a huge increase in country risk. With all that together, we haven't stopped our CapEx. In fact, if we look at our CapEx to revenue ratio, we still are highly over our competitors in that sense. What we have decided is that it will take longer, meaning that we have not interrupted, or we have not stopped it yet. What you can expect is that we add one year from 12-18 additional months to the plan that we have proposed. What have we sacrificed?
Well, mostly, although we have not yet shown that in our portfolio, what we have sacrificed is the ability of the company of going to new markets in the short run. If the company has improved very significantly the Personal network coverage, our NPS growth is a very direct result of that strategy by increasing our coverage and our capacity wherever we already are. For instance, we are not deploying new sites in the southern part of Argentina. That is something that it will take longer than expected, because at this moment, we prefer to strengthen what we already have to provide best service to our customers as the strategy has been changed in terms of providing the way to get the best NPS and start from there as a way of pricing more.
As I have explained, when you look at the behavior of the total portfolio, yes, maybe you can consider, or it might be considered that we are not optimizing cash generation in the short run by increasing the most as we can. We are having a very good behavior in terms of the shape and the quality of the portfolio that we are developing. As a result of the strategy of bundling mobile with the Personal customers of fixed Internet, especially, and cable. We are having a very extremely successful result in terms of bringing up new customers for the best part to our postpaid mobile customer base. Of course, in the short run, this does not mean an increase in ARPU or an increase in additional cash generation.
It is creating the base for us to allow us to do so as soon as the economy as a whole revamps. Finally, when you look at the average of the CapEx ratio of the company is available today, the range of between 2020-2022 is almost 15%-20% higher than our competitors, meaning that that CapEx reduction is not harming the competitive environment at all.
Okay, thanks. That's very helpful. If I may add just one question from my end. You mentioned the migration of prepaid to postpaid consumers. We were just wanting to have better visibility on how do you believe that price freezes impacted your mobile revenue performance during the second quarter on the prepaid front? If you have been seeing any kind of more aggressive behavior from your competitors in the commercial side with discounts or any other type of incentives.
Regarding the evolution of the prepaid to postpaid in that we are doing, it is very successful. It has been in the range of 90,000 customers per month during 2018, and continue showing a very positive trend during this year. Of course. Again, as I mentioned, when we do that, it takes up to one year to have the ability to increase prices in a steady way. What you are building up is the base. You are getting this customer used to be billed on a monthly base, used to have a consistent payment with a fixed frequency. All that takes time, and until that is well established, we don't begin to increase pricing. That will take, for each, I would say, each new group, it takes up to 12 months approximately to deliver a new capacity.
Regarding, I would say, I won't expect significant changes in the next quarter upon this trend. Having said that, we are facing or we are seeing some better behavior in some indicators like the prepaid and also in delinquency rate. The market is showing, I would say, a flatter line in terms that it seems that the trend is not getting worse. Instead of that, it's like the market has bottomed, although it might be early to say.
Okay, thanks. That's very clear.
We'll move on to our next question from Babatunde Ojo with Harding Loevner. Please go ahead.
Thank you very much for the presentation. Just a couple of questions from me. First is that, do you mind giving your thoughts on your level of pricing power that you have across the products? Given the price control that has been announced by the government recently, does that in any way impact some of your products? If so, which ones are impacted by that, and how does that feature into your ability to increase pricing to compensate for the rising cost pressures that you've experienced? The second question is on labor cost. Do you mind giving some sort of split between what is perhaps a one-off, maybe severance payment and then maybe voluntary restructuring that you may have in that line item, and what is sort of recurring in that cost base?
Because it seems to be the largest driver on your EBITDA margin year-over-year. Maybe in addition to that, you talk a little bit about wage inflation that you've agreed with your staff for the year and what to expect on that line item. The last question from me is on the synergy that you announced through the merger with Telecom Argentina. Have those synergy margins come through at all? If so, can you quantify what levels you experienced, or has this been distorted by the whole macroeconomic environment? Just curious to get an update on that. Thanks.
Going to the first one. Strictly, there is not a price control at present at all. What has happened, at least in our case, maybe the situation has been different for certain products or certain basket at supermarket level. In case of our services, what we have done is we have agreed by a very specific group of customers, low-income people, is to give a special condition for a certain period. I would not tell it's a price control at all. It doesn't imply any specific regulation. It's just a way to take care of our own customers. Going to your second question regarding the different labor cost composition, I would say, the big part or the big bunch is the payroll. You have one-timers, I would say probably it's 15%-20%, no more than that.
In this case, you have more in the range of 10% of the total. Sorry for that. I said 15%. In the first quarter, you have the effect of the bonus payment, which implied additional one-timer. The reason is that because of the inflation processes and because of the aggregation of additional percentages, it went slightly over budget. In terms of the general picture for the year or this is a process that is taking place, meaning that we are in the middle of that discussion, for me, it would be really unfair to give you today some color about that because we are in the middle of a discussion. Although we have achieved last year the success in terms of putting a single agreement between the seven different unions that we have at present in the company.
The way all that is reflected in each particular case might differ or might bring some misunderstanding what is fixed. At the end, we move very similar with all the employees of the company in terms of adjustment. What I can tell you advice in general is that this is not speaking from Telecom a specific case, but to give you some color on what has been the evolution of salaries increase in Argentina against inflation in this type of environment. Typically, these processes means that in the short run, you have a gap between 5%-10% against inflation index in the medium run. This is not specifically the case of Telecom.
What I'm referring is that if you take the general wage indexes and you compare that with the inflation in the long run, that's the type of situation that you get to give you some color for any projection. Regarding synergies, that was the last part of your question. Well, of course, we materialize a lot of them. This is a very difficult question. The reason is that because of the huge transformation in terms of the nominal value of all the variables, it's very difficult to specify unless we have other unit to give you a comparison. For instance, in terms of interconnection cost at network level, we have achieved very specific synergies, because we have blocked certain type of connections. We had a different bargain process with our suppliers.
From there, we have several examples beside the synergy that we have discussed in terms of our human resources costs. What I can tell you is that we are going there, we are achieving them. The implementation of our systems, of the new systems have a lot to do with this, just to give you some considerations. Remember that FUN will allow us to provide a single billing. Now we provide 4 different type of billings. We have different call centers take to those customers, achieve to each business line. All that is yet to come once we complete the go-live of all the system. In the case of the back-office, same situation happens with for 4UP, the implementation of S/4HANA.
All what happens in the surrounding of SAP in terms of new systems, we are implementing Concur for all the travels and operations related to the people which is in the street for the company on different cities. It covers a huge part of our population. Also, we are implementing or in the process of defining implementation of Ariba for the procurement. Really there are many steps that are taking place. Of course, when you ask me to give me a synergy today, it's very difficult to give you a number as of today and in the middle of where we have movements of salary cost of more than 20% a year. Believe me that the company is really working towards that direction, and it will deliver.
Probably it will take at least this full year to have a clear view in terms of the type of synergies that we can get from there. By the end of this year, we should have a much better picture, a map of the implementation of each one of the systems, what it will imply in terms of resources that are freezing or that we can devote to a different proposition or a different activity within the company. Sorry, not to give you a deeper color on this. This is a work in progress. Believe me that cost is one of our biggest concerns. We are very focused towards achieving additional efficiencies.
That's very helpful. Thank you. Just a quick follow-up from me is on the Quad Play. Just wanted to get an update on the implementation or launch of that. Maybe if you could provide me any numbers in terms of number of your customers who are on Quad Play already, or what's the level, status of progress on that front?
Well, in terms of testing the market, we are already there with very minor groups. In terms of having the Quad Play full capacity in the way we go to the customer and in the way that we have a relationship with them because of our CRM, you will begin to see some proximity to that by the end of this year. Probably in the last quarter.
Although we have different stages of go-live of the different part of the system, up to the end of the year, you will not see a complete picture that you will from the other side, as a customer, you might say, "Oh, I'm Quad Play." When we are referring to Quad Play, I'm meaning that having a, I would say, digital platform in your mobile that would allow us to manage all the services that the company will provide to you and to have a single billing. That will take at least the rest of this year to be completed. Although we are going to deploy different stages of the system during this year.
Got it. Thanks. Just the last follow-up on the labor cost. Do you have a number for the amount of severance payment that you had this year and this quarter, sorry, and is that something that is still ongoing?
Sorry. Up to now? Yes, you have that in the financial statement on the 22 note, operational costs. You have a specific item, labor cost and severance payments. There you have the details. I think that what you see now, up to now, is a good proxy of what you can see for the rest of the year.
Yeah. Okay. Great. Thank you very much.
Are there further questions over the phone?
Okay, thank you very much 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. Have a nice day, we expect to meet again soon.
Ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect.