Earnings Call: Q4 2018

Feb 20, 2019

Buenos dias. Good morning, ladies and gentlemen. We're now going to begin the presentation. We'd like to welcome those of you who are here in the room, and also those of you who are following us via the webcast. We're joined today by the Chairman of the Board of Directors, Jordi Sevilla, the Chief Executive Officer, Juan Lasala, and the CFO for the group, Teresa Quirós. First of all, the Chairman of the Board of Directors will speak, after which, the CFO will be presenting the results. After that, the CEO will talk about the achievements on the strategy plan from 2014 to 2019, the acquisition of Hispasat, and the strategy plan we have for 2018-2022. At the end of the presentation, we'll open the floor to questions. Now I give the floor to the Chairman of the Board of Directors, Mr. Sevilla. Thank you very much. Thank you for being here, if you are here, and also if you're following us. It definitely shows the diversity that we have in the diverse audience and the diverse way of presenting things. I've got a whole lot of slides that I'd prepared for a rather formal presentation, but then I decided not to go ahead with it. You've got the slides if you want to, you can look at them or not look at them, as you prefer. What I want to do, though, is to tell you what's behind all of that. The reason why we have the strategy plan. What's our intention? Why did we draw it up like we did? What's motivated it? What's our purpose? As they like to say. The whys and wherefores of the plan. At least in this initial intervention, I wanted that to be the main focus of your attention. The things that you'd be thinking about, reflecting on, so that afterwards, and only afterwards, we can look into the numbers, and you get EUR 6 billion in capital. It's okay, but why are we investing all that? I think we should start with a basic idea. Thinking about the method. You could talk about the narrative, although that's a funny word, too, isn't it? This is the narrative behind our proposed strategy plan. The idea there is that we live in a complicated world, a very complicated world. The moment you find out what the answer to a question is, the question changes. Sometimes you think you know the questions, but then it turns out, actually, they're not the right ones anymore. The presentation that we have handed out to you has a statement from Angela Merkel, and we can't suspect her of anything apart from being a marvelous chancellor in Germany. At the last security conference this weekend, she said, literally, I believe, and you can check this out. She said that the world as we knew it is now collapsing into many tiny parts, and with it, unpredictability has increased. So we don't know how those parts are going to be put back together because we're facing so much unpredictability. I'm not quite sure how you say that in German, but we know what unpredictability is, don't we? What's an electricity company like Redeia Corporación doing in this kind of world? What value can we propose to our stakeholders? Now, that's when we start to talk about our purpose, the purpose behind the strategy plan. We want to grow. We are not frightened of this new world. We are convinced indeed that we can make a big contribution to this world. We know a lot. We have a lot of know-how. We want to grow. We want to grow, at least in the period covered by our strategy plan, by those EUR 6 billion, that we will be explaining in great detail throughout the rest of today's presentation. Why do we want to grow? Because we think it is better to be big rather than little in this world. Because we want to contribute value, and we want to find stability through growth. That means smart growth, doing things in an intelligent, diversified fashion. In our strategy plan, we are aiming to get diversification between our regulated business and our non-regulated business so that the market can offset the regulatory risk and the regulation can offset market risk. We are going to try and do that with the best of our powers. We also want to diversify in terms of the vectors driving the world nowadays, which we can sum up as three. Electricity, telecommunications, and talent. Without these three vectors, we would not be here. Nobody would be listening to us over the streaming. No one would be sending WhatsApps or Twitter if we did not have the Internet of Things and the other elements that are really building up our society and our economy as it now is. These are the three elements which are vital, and Redeia is there. Here in Spain, we are a decisive factor, a decisive player in the electricity industry. An industry which Once again, it is the thing of you know the answers. Finally, when you find them out, then the questions change, the transition changes, the way we transport it, transmit it, and consume it has changed. The two key parts of the TSO, the operation, the transmission, has changed. We need an operator that is willing to invest in going smart so that we can instantly match supply and demand for a good in which we are going to be investing for storage. We are still far from having a source of storage that is powerful enough to make it possible for us to do everything we want and to ensure stability too. Our networks will have to not only transmit more megawatts, but they will be quite different megawatts that they will be transporting. We will have to do that with more intelligent smart grids that are able to do that, with a few more kilometers of grid too, but not too many. We will be in a world in which the interconnections, in the broadest sense of the word, thinking about the interconnection with the Balearic Islands and also the third cable approved in the Morocco summit the king went to the other day, and also the interconnection with France. All of these things will enable us to diversify the way that we import and export electricity. That is what we are. We're a TSO, and for that, more than half of the 6 billion CapEx are going to be there to guarantee that we can boost renewables, that we can focus on the strategic role that Red Eléctrica has to play in the Spanish electricity industry. But we're more than just a TSO. We want to be more than a TSO. We already are an important player in telecommunications infrastructures with Reintel and with Hispasat. We've made a great leap forward in our technology with satellites coming into our telecommunications business, not just fiber optics, but also dark fiber, and we've got a whole lot more countries within our footprint because of that, which means that we're also now a key player in the telecommunications infrastructure industry. That is part and parcel of that diversification that I was talking about before with the regulated, the non-regulated sectors, but also electricity and telecommunications. We're talking about a sector that's definitely in movement too. We have to see where the technology revolution related to the satellites ends and what we're going to do, what the satellites will be like, what the geolocation is going to be like. And quite honestly, no one's got the answers to those kinds of questions yet. But we have to be in the right place to make sure that we can contribute to coming up with the answers. And we think that Hispasat was an ideal place to be, along with Reintel. And having a key stake in this means that we are becoming a telecommunications infrastructure operator. We're a big player in Spain, but we also want to be a player beyond our borders. We're a company that has a lot of knowhow, and most of the things we do, we do well. And these are the two elements behind the internationalization of Spanish companies for the last 20 years. Knowing that they knew how to do things and being willing to go out and do things elsewhere, saying, "Hey, we can help you with this because we know how to do this, and we know how to do it possibly better than you." You know that our footprint includes a significant business in Peru and in Chile, and in our strategy plan, we've said, okay, we want to have a significant business in other countries too. We want to expand. If other Spanish companies could do it, why not us too? If we have this knowhow, if we do things well in Spain, why shouldn't we do things well elsewhere? We've thrown out a signal, our commitment to put investment into seeking out opportunities in international Red Eléctrica, which is an important part of our diversification plan for Redeia Corporación. We want to concentrate all the talent we've got, our ability to innovate, our technology knowhow that we've already got in Red Eléctrica. We want to bring all of that together and turn Redeia Corporación into a center of excellence, a benchmark for all the people, universities, and businesses, and entrepreneurial startups that are working on innovation in electricity and telecommunications. When someone has a relevant idea that can help to change the electricity or the telecommunications industry, we want them to think, "Let's call up Redeia Corporación." That is why in our strategy plan, we say that we want to invest in a technology company that will start to drive forward innovation, bringing in innovators in these two industries. This is really our purpose. That is the underlying idea. We did not get overwhelmed by the uncertainty of this new world. We did not get tied up in the regulations that we have to respect. We did not want to rest on our laurels. No. We said, "Let's come up with a challenging plan. Let's challenge this uncertainty. Let's run with this risk. Let's take it up and move into this world which is fragmenting and put together this jigsaw, even if we are not altogether sure where each of the different pieces should fit quite yet." That is why it is such a brave strategy plan. It is a plan for growth, for diversifications, and it is a plan which shows that we are committed to sustainability. No serious company nowadays, I think, and I would imagine most of you would agree with me, can even think of coming up with a strategy plan that does not include technology and sustainability. Technology is vital, and sustainability is a transversal part of the plan. It mainstreams through everything we do in this company. From our commitments up until 2030, which are in part reflected in the strategy plan to get 100% green financing, then specific commitments to bringing more women and more diversity into our management teams and our board, and wanting to be 100% circular company by 2030. I think that that really shows that we are a company that, when we come to the end of the strategy plan, should be bigger, more highly capitalized, with stronger businesses, a bit more capital in them. Also, with greater security, because we have a more diversified risk base, not just over the different areas of economic activity, but also, as I said before, between the regulated part of our business and the non-regulated part of our business. And we will be socially more useful for all of our stakeholders. All of them. Including shareholders, and also including people whose financial commitment to us enables us to roll out this strategy plan. So that is our strength, and that is our commitment. That is what lies behind the numbers that you will be hearing about now, the accounts for last year, giving a snapshot of where we are, but also the numbers in the strategy plan. That is where we want to move towards after 2022. But I wanted to keep this bit for me, to play the role of the person who can explain the purpose, the reason why we have done all of this. What is it that underlies everything we do? You know about the world, you know about the markets. History will judge, and will say whether we have been right or wrong, but I am sure of one thing. I don't know if we'll be able to meet the strategy plan, but I think we will. However, the purpose of the strategy plan is absolutely spot on right, and that we are on the right track with this plan. In fact, I'd go so far as to say it's the only possible strategy plan for a company like Redeia Corporación in a world like the world in which we have to live nowadays, which might be one of the things that you don't have to think too much, whether it's a better or worse world, or if you wanted to live in it. You're just there, and you have to deal with it. Anyway. You've got the presentation there, and if you want to look at it, that's great. If you can't be bothered, then just take home the messages that I put across just now. Perhaps then, without further ado, we can give the floor to Teresa Quirós, so she can talk a little bit about where we are and give us some more details about the financial statements and the numbers for 2018. Thank you very much, Mr. Chairman. Thank you for being here, everyone. It's a pleasure to see you again. In my specific case, I'm going to have to use some notes because I'm going to be talking about the results for 2018, and although I do pretty well know them by heart, I don't want to skip over anything that might be important. Let's start by talking about the 2018 figures, the most significant figures and events of the year. 2018 was a year in which our company's net profit reached EUR 705 million for the whole group. That's a growth of 5.2% against the same period in the previous year, and in line with the growth target we had in our 2014 to 2019 strategy plan. The board of directors yesterday proposed a payout of a final dividend, which along with the interim dividend paid out at the beginning of January, means that against 2018, we'll be paying out EUR 0.9831 per share. That's 7% more than paid out last year and very much in line with our commitment in the 2014 to 2019 strategy plan. The investment levels were high as well in 2018, EUR 547 million, with a CapEx of EUR 378 million in the transmission business in Spain. We've already heard from the chairman how important the international business is for us. In June, the Azángaro Juliaca Puno electricity line came into service in South Peru, and also the company Centinela Transmisión in Chile was acquired for a total of EUR 101 million with a commitment to acquire a power line for $205 million, which is the Carhuaquero Moyobamba line. It's very difficult to pronounce, but it's definitely going to be a good line to have. You know that on the 12th of February, the company reached an agreement to acquire the satellite infrastructure operator, Hispasat. I'm sure you want to hear the details, so the CEO will be giving you more color on this deal. Then regulation, that's important too. There we've got TRF and the Royal Decree passing on the CNMC competencies has also been established, that's something that the CEO will also be talking about so that we know exactly what the financial remuneration rate will be. Anyway, let's look at the numbers. That's what I'm best at. Although there are some things that aren't completely financial. We got a new record in wind generation last year with 43.2% of the mainland's electricity generation needs being generated by wind power, 40% of all the electricity generation came from renewables, compared against 34% the previous year. We've already said when we presented the results in June, but I think I might as well repeat that in the first six months of 2018, Red Eléctrica, along with other operators and TSOs from various European countries, have worked on the implementation of the continuous intraday market, which works across all of Europe. Then corporate governance. What's happened there? There were changes made to the board with the appointment of Jordi Sevilla Saura as non-executive chairman, in September, María Teresa Costa and Antonio Gómez Expósito were appointed as external directors, representing the State Industrial Ownership Corporation, known as SEPI. With these appointments, we've now got 7 of our 12 directors being external directors, 42% of the board members are female. 2018 has been a year of important progress in the area of sustainability as well. In November, the board, at the proposal of its chairman, established a sustainability committee in response to the strategic nature of sustainability for the group. We've also signed up to the commitment to sustainable mobility in 2018, as I said, Red Eléctrica, once again, has been distinguished by the prestigious Dow Jones Sustainability Index. So let's go back to the figures. Turnover for 2018, EUR 1.94 billion with a growth of 0.4% year-on-year. That shows an increase in the remuneration for the system operation activities of EUR 66 million. The external telecommunications business, that was EUR 89 million. Also international business brought in more than ever before, EUR 23 million coming from the commissioning of the Azángaro-Juliaca-Puno line. Also, you know that this year, we've been accounting for the company TEN in Chile as part of our gross operating profit or EBITDA. Our EBITDA was EUR 1.54 billion, which was 1.3% up year-on-year, and this result has mainly been due to curtailing the cost of supplies and inputs and other operating costs, which reflects the consolidation of our efficiency measures. The net financial income, I should also mention, it was minus EUR 134 million. That is less of a loss than last year when it was EUR 143 million, and an improvement, which was mainly due to the lower average interest rate, which was 2.4% rather than 2.8% that we had in 2017. The profit for the year was EUR 705 million, which was up 5.2% year-on-year, and the effective tax rate was 24.8%. That's in line with the rate recorded by most other companies as well. Then our net financial debt, that performed positively, reaching EUR 4.68 billion. The year ended with high solvency ratios. Our FFO to total debt ratio improved, reaching 26%, and this performance meant that our net debt to EBITDA coverage ratio was three times. Now I want to focus more on the financial structure of Redeia Corporación. You can see here, for the whole group. You can see that our long-term debt maturity schedule is well spread out over several years. The average duration of the debt is currently 5.3 years, and the amounts repayable over the next four years are covered by the liquidity we already have in the company. That is EUR 2.5 billion. Moreover, if we look at the debt and analyze its structure, we see that it is well diversified, with 90% at a fixed rate through to maturity, and most of it is denominated in euros, with only a tiny part of it denominated in U.S. dollars. Then our credit rating. After the acquisition of Hispasat, Standard & Poor's have maintained its long-term ratings. Fitch has us under watch until they see exactly what the impact of the Hispasat deal could be. There is another couple of things I wanted to mention before finishing. First of all, Redeia Corporación has reduced the cost of our syndicated loan, and that is because of the improvement we have in our ESG metrics, which brought down the cost of the syndicated loan. We are the very first company to come up with a multi-currency syndicated loan using blockchain technology, EUR 150 million, and that is backed by three banks, who I would like to thank for moving into this kind of innovation with us. Now I will give the floor to the CEO. Thank you very much, Teresa. Yes. I think it is going to be up to me to actually carry on. You have given me a tricky task to actually follow on for those presentations. Good morning to you all once again. It is a great pleasure for me to be able to talk to you today about the achievements over the course of the last couple of years. The last couple of years have been highly intense, marked fundamentally by new regulatory framework and, of course, the company presented its strategy plan for 2014 to 2019 during that period. Today, then, I can say with satisfaction that although 2019 I hope you are hearing me correctly here in the room. Yes. As I was saying, although 2019 has not yet come to a close, we are already achieving our targets up to 2018 and very close to being able to confirm to you that we will very probably reach all of the targets we have committed to the market for the period 2014 to 2019. We have made investments totaling EUR 3.45 billion on the transmission grid, telecoms, energy storage, as well as investments internationally. We have also committed investments for EUR 1.46 billion under the agreement with Boug Power, which was mentioned to you just a little earlier, that line in northern Peru for another international investment, as well as the implementation and the execution of the Hispasat transaction announced recently. I will give you further details on that transaction a moment. On the subject of efficiency, significant results have been achieved at operating level after a review of operation maintenance policies and supplies and construction criteria. The greater burden of unit operating and maintenance costs that were approved at the end of 2015 has meant the company has had to intensify its review of the previously mentioned policies, while at the same time, we've kept up our standards of quality, both in construction and operation. These achievements have been keeping at the same time a debt-to-EBITDA solvency ratio of around 3.4 times on average in the period. As you've heard from Teresa just a moment ago, this has helped us to continue to record a credit rating reflecting high solvency levels. Furthermore, the growth path of earnings per share during 2014 to 2018, that period, has averaged around 6%, and we've met our commitment to the market, making a dividend per share payout that has risen by 7% in that same period. As you've already heard, we don't expect anything to happen during the rest of the year to prevent us from achieving all of those targets that we set out for the strategy plan up to the end of 2019, although we haven't yet, of course, closed the year. Let me now explain in detail the recently announced transaction involving satellite infrastructure operator, Hispasat. The satellite infrastructure business is a natural development of Redeia Corporación Group's telecommunications business, as it involves the commercial exploitation of a telecoms infrastructure, very similar to that of fiber optics. This transaction is an excellent fit for the strategy defined by the group for its telecommunications business for several reasons. Let me explain. One, it's a wholesale business like Reintel. Hispasat does not provide services to domestic users, only to companies that have households and companies as their customers. Secondly, it's a business with stable and recurring revenues, with significant barriers to both entry and exit. The satellite infrastructure business is based on the signing of long-term contracts with customers that generate a recurring revenue flow. Hispasat's current contract portfolio amounts to over four years of revenue in line with the portfolio of contracts acquired in the Odise transaction. The satellite infrastructure business has major barriers to entry for new competitors. Why? Because orbits and commercially attractive frequencies have, of course, naturally enough, already been assigned. As well, it does have exit barriers for customers because of the high cost of migration and the risks of service interruption in a market of such immediacy as is the audiovisual sector. It's also an investment-intensive business with high margins. Hispasat bases its business model on the construction of infrastructure, satellites in this case, and on the commercial exploitation of its transponders until the end of their useful life. EBITDA margins for the business are high, pretty much in line with the ones we have in our other traditional business areas. Lastly, satellite technology is very efficient in cost terms because multipoint transmission facilitates the coverage of continents, and it's independent of terrestrial infrastructure and complements fiber optics. Hispasat offers satellite communication services for video, data retransmission, and mobility services. Video satellite transmission accounts for around 50% of the business. Telecoms operators can also use satellite links to replace the backhaul or the last mile of their landline network in the absence of terrestrial infrastructure. Lastly, in addition, satellite technology makes it possible to transmit data to mobile devices for both transportation operations for customers and passengers. Hispasat operates seven satellites providing coverage for Europe and the American continent, mainly with a total of 301 transponders and 46 gigabits per second in service. It is the leading Spanish communication satellite operator, both on the Iberian Peninsula and Latin America, in the distribution of content in Spanish and Portuguese. It is already the fourth largest satellite operator there. It has become firmly positioned in high growth markets and also has a stable base of strategic customers. It is currently ranked the world's ninth largest satellite operator. Through its powerful fleet of satellites, Hispasat broadcasts more than 1,200 television channels and radio stations, providing coverage to more than 20 countries. It is a key driver for the Spanish aerospace industry, too, thanks to its highly trained personnel. Its key results for 2018 are as follows: net profit, close to EUR 42 million, EBITDA, almost EUR 161 million. Look at the balance sheet. The total assets were just over EUR 1.23 billion, and its obviously ratios are sound with a net financial debt to EBITDA ratio of around 1.8 times. Hispasat is also a company that is in an excellent position to be able to meet the increased demand in its core markets. The company is well-placed to handle future growth and also to incorporate opportunities that are offered by satellite technology for both the audiovisual and mobility services. Satellites are going to be the key platform for video, and we consider that they will continue to be a sound business in the medium term. Furthermore, while Europe is already a mature market with moderate prospects for capacity demand, Latin America, on the other hand, is a very dynamic market, recording 3% annual growth in demand. In addition, transition to a more mobile business will be essential to be able to capture future growth. HTS technology will play a fundamental role in this regard. Hispasat already has four of those elements there. Also, it is a much more accessible technology, and it makes it possible to serve more retail-type markets with more elastic demand. With current demand for permanent connection everywhere, there are a series of connectivity and onboard entertainment services with great capacity for growth. The maritime and aviation markets are estimated to reach some $9 billion in 2025. Technology improvements for satellite manufacturing and launching make it possible to optimize investments, shorten cycles. The sector has certainly experienced a transition from a focus on hardware, satellite manufacture, to software, satellite intelligence. With more efficient designs, shortening the production cycles and also optimizing launches, there is a growing focus now on cost to gain in flexibility and efficiency. In short, the purchase of Hispasat allows us to maximize the complementarity between Hispasat and Reintel with an increase and diversification of the current customer portfolio, mainly through audiovisual services and international telecoms companies. To conclude, I would like to focus on the more financial aspects of the transaction, albeit succinctly. The acquisition multiple, 8.3x enterprise value to EBITDA, is a very attractive multiple that is below the average of nine times for our peers. The transaction will be financed 100% out of available resources and debt without any need to resort to any rights issuance. We will also, as we've explained to you already, be able to continue to record our sound credit rating. Therefore, we believe that the transaction we're presenting to you today is a good one. It will boost our telecommunications activity and provide a boost to the whole of the Red Eléctrica Group. Let me now comment on the key elements for the development of the 2018 to 2022 strategy plan, as you already heard briefly from our chairman. To achieve our long-term targets and our commitment to sustainable development, we will have to take a series of steps that I can summarize in the following strategic plans. There are four of them. The first one, perhaps the most important one, to promote energy transition. Secondly, to become the operator of reference in the national telecommunications infrastructure. Thirdly, to unlock the value of our core skills through international investment. At the same time, this is the fourth one, while preserving operating efficiency and financial discipline. Maximizing the integration of renewable energies within the Spanish electricity system is quite obviously one of the company's key tasks. This will require investment on the transmission grid of an average of EUR 575 million per year. That's almost 40% higher than the investment recorded in the previous strategy plan, 2014-2017. In addition, Red Eléctrica will also allocate a significant portion of that investment, achieving an increased interconnection capacity, both internationally and within the very subsistence of the Spanish electricity system. You also heard that from the chairman. This increased interconnect capacity will enable us to confront the greater variability of renewable generation. We minimize waste in a context of increased green generation capacity and reduce the need for any backup generation, facilitating the development of the internal energy market in Europe, which is and will be a key tool for the operation of the electricity system. Another key element in the stabilization optimization of the grids in a system of higher renewables penetration will be storage, and that is why part of the investment to be made by Red Eléctrica will be allocated to the hydraulic pumping stations in the Canary Islands. These storage projects will serve as operating tools to ensure supply, to improve the security of the system, and also to optimize the integration of renewables on the islands. We are committed to ensuring the security and the quality of the electricity supply by maximizing integration renewables. To do so, we will probably invest more than EUR 3.2 billion, that can be broken down mainly into EUR 2.9 billion for the talent of the transmission grid, EUR 200 million for storage in the Canary Islands, and EUR 50 million for systems operation, another EUR 50 million in miscellaneous areas, probably the technology that was explained by the chairman just before. Regulation now. Regulation must be a facilitating element, taking us towards that energy transition, offering high visibility and aiming for stability in the next regulatory period, as Teresa Quirós said just earlier, begins on the 1st of January 2020. It'll run for six years until 2025, as you're aware. The financial remuneration rate proposed by that draft bill submitted to the Council of Ministers in Spain is a nominal 5.58% before tax. Now, this proposed rate is in line with the proposal made by the CNMC in its report of 30th of October last year. In the implementation of that rate, what we do have to take into account is that the Royal Decree 1047/2013 states that the final remuneration in the financial remuneration cannot record any annual change of more than 50 basis points. Therefore, changes to the rate will be progressive, phased in, and limited to between the current 6.5% and the rate of 5.58%. Now, of course, instead of 6.5%, this year it will be 6% in 2020. Of course, by the time we get to 2021, 2022, it will be down to 5.58%. That is what we have estimated. In addition, let me remind you that the current regulatory framework offers incentive based on efficiency and availability of the transmission grid. Still on regulatory matters, I should also mention that one critical aspect for energy transition will be the development of networks while maintaining an adequacy for the consumer. Measures to minimize the cost of the system could include allowing the extension of the useful life of the installations providing essential services. In this regard, we are talking about the whole electricity sector. Here, in the case of our pre-98 assets, as we have always called them, the residual life of these assets should be a reflection of the actual physical state of the installations, and that means that they should incorporate into the regulatory value of the assets the material economic efforts made to ensure the provision of the service and the quality of supply. I will now go on to talk about the most relevant aspects of the telecommunications business. The development of the satellite business and the business for leasing dark fiber will be carried out through an increase in the customer portfolio, accessing new market segments such as alternative and regional operators, gaining market share amongst government agencies, providing services to technology companies, while new customers will be accessed following the integration of Hispasat. We will also extend the provision of our telecommunications services to new sectors and new geographies. We will start to seek out strategic partners who will be able to support our search for new products and/or markets whilst retaining a majority controlling position wherever possible. That is true both for fiber optics and for satellites. Red Eléctrica also plans to broaden its offering of infrastructures and services with an analysis of the opportunities that could arise in the sector. We will make an analysis of the synergies between the assets already available in Spain with the deployment of new telecommunications technologies. With all of that, telecommunications investment will be around EUR 1.7 billion over the 2018 to 2022 period, obviously, including the acquisition of Hispasat. This kind of investment will provide a strong support to our aim of becoming a leader in the telecommunications infrastructure sector. Another significant line of strategy will be the showcasing of our core activities through our international business. For Red Eléctrica, the development of our international business is a natural path for the growth of our core business, the building and exploitation of transmission networks. Red Eléctrica has been operating in South America for 20 years, managing 2,635 kilometers of network with excellent availability indicators. In recent years, we've invested more than EUR 900 million in international assets, mainly, as you know, in Peru and Chile, countries in which the company intends to remain. We're aware that our investment in international business will have to face up to significant challenges, but our position in Chile and Peru already provides us with a competitive advantage and an excellent basis for any possible future tenders. The company also remains constantly on the lookout for investment opportunities that could arise in stable markets offering the right kind of return on investment. We are looking into projects where we can obtain an adequate return, preferably while holding a majority interest and participating actively in management. We consider that, because you probably want the figures, an adequate return on investment would be that which exceeds the cost of capital by at least 100 basis points. Red Eléctrica's intention is to remain for the long term in countries with low risk and stable regulatory frameworks. Thus, over the coming years, the company will consolidate its position in the countries in which it's already operating, Chile and Peru, whilst analyzing investment possibilities in countries elsewhere, such as the U.S. and Brazil, both through greenfield and brownfield projects. With the strategy plan, about EUR 1 billion will be allocated to investment in regulated transmission internationally in the 2018 to 2022 period, understanding that of this billion, EUR 400 million are already committed for Cajamarca and Centinela and some projects that we've got underway, and the other EUR 600 million will be invested when we find the right projects that are going to add value. We're not going to commit EUR 600 million to projects that aren't adding value for our shareholders, because amongst other things, we don't need to. Finally, I'd like to mention that operating efficiency and financial discipline are vital for the promotion of the company's sustainable development. Efficiency is based on value creation through the identification of synergies, the optimizing of processes, and adequate resource management. Operating and financial efficiency and continuous improvement are key success factors in rolling out our strategy. Just as they were in the 2014 to 2019 plan. Achieving greater efficiency will help generate value through improvements in operating margins. Digitalization has become a core driver for process optimization and is an indispensable foundation for improving the efficiency of the company's regular business. Thus, consolidating digital technology in the group's business areas will expand our company's transformative vision of digitalization to our operating processes, thereby maximizing benefits. Additionally, to underpin the company's strategy, we intend to maintain strict financial discipline during the period with a target average net debt to EBITDA ratio for the period of around 4 times, keeping our funds from operations or FFO to debt levels at above 17%. Sound financial management, optimizing the cost of borrowing, and incorporating ESG criteria into the way we finance our activities will be key to success in rolling out our strategic plan. Finally, I wanted to show you our commitments in the Red Eléctrica Group for 2018 to 2022. I'd like to point out that our commitment to energy transition is a commitment sustained over time, aiming to create value for all of our stakeholders. Thus, the company's actions will be underpinned by five elements. Total investment in 2018 to 2022 period, including acquisitions that we've already mentioned, will reach approximately EUR 6 billion. Around 50% of this figure will be allocated to investment for the transmission grid and storage in Spain, promoting the energy transition. The average EBITDA margin will be more than 76%, maintaining a net debt to EBITDA ratio of around 4 times. Net profit will show a compound annual growth rate of over 1% in the 2018 to 2022 period. We'll maintain a shareholder remuneration of EUR 1.05 per share in 2019, with the dividends paid out in that year, and at least EUR 1 per share in the 2020 to 2022 period. That concludes today's presentation. Many thanks for your attention. If you have any questions, we'd be delighted to answer them. So Irene, you're going to start in the room, are you? Yes. Let's take the question from the people present in the room. First of all, please do tell us who you are when you ask your questions. Then when we've heard those questions, we'll answer any questions that we've received via the webcast. Unless, of course, the answers come out with the questions from the room earlier. Hello. Yes. Good morning. Gonzalo Sanchez from Casa BNP. I have three questions. One is about the pre-98 assets. Do you have any visibility on them? What's the Ministry of Planning doing? Can you give an update on the calendar? What are your expectations with regard to that extension to their life that you're looking to get? Secondly, the change in political environment in Spain. I'd like to know whether you have any expectations. Would any possible change in government change your own strategy? Whatever happens politically at the government level, is it a stable plan taking us up to 2022? Lastly, the EUR 600 million in CapEx internationally. You say you're on the lookout for opportunities. You're not sure where to invest them yet. Can you give us some idea of what countries, what assets? I know you've just told us general targets, but give us some detail. Thank you. Okay. It turns out that I have to talk about the political environment. Don't quite know why, but here comes your answer. I don't know what's going to happen. I only know that the elections have been called, but I do know what has happened, and I know that what has happened is that no change of government has ever affected Redeia Corporación's plans over the last years. Redeia Corporación is a sound company. I see it as a, yes, a state company which has strong nationwide coverage. What we do here in Spain has a lot to do with the territory where we're operating, with the projects that we're involved in, work with many different levels of the government, not just the central government. We also have an entrepreneurial approach to diversified growth, sustainable growth on the basis of a consensus with our management team and with the entire board of directors. Indeed, everything that has to do with it gets approved unanimously, and I've been able to be in contact with all the relevant political players in the country, and I don't want to in any way compromise them, but I must say I've never detected any special concern or any issue enmity to anything that we're doing in Redeia Corporación. You might not think that I'm an impartial player here, obviously I'm not, but there's a guarantee there that the company can continue with its roadmap. It's fully committed to that, whatever might happen with the forthcoming elections. Shall I answer the other two questions? Okay. Visibility. Pre-98 assets. Thank you for the question, Gonzalo. It's my favorite question, actually. Quite honestly, it's a long, drawn-out battle. Yes, I did say I could answer it, and he said, "No, no, that's my favorite question. Let me." Yes, I really love this question. As you know, this has been an ongoing battle. We've been involved in it for several years now. Quite honestly, unfortunately, we've still got limited visibility. We're still working on it. Mainly working through justice, going to the High Court of Justice of Madrid. What the company has to do now to ensure that this comes to a successful ending is to be found to have a sound argument. If the judge finds otherwise, it would be most unfortunate. That doesn't mean to say that we're giving up on other fronts. The chairman, from the very first day he came in, has been helping us a lot with this. We've analyzed a lot of different possibilities. The possibility of an extension under the Royal Decree 2017/1047. There are other additional possibilities. Having a 50-year useful life for all of the assets throughout the network. That would be a possible thing to do. Enagás took that up as well. Then there are other alternatives we've been offering. We could individualize all the different assets so that we could have incentives to extend the useful life of those grids with the asset there. Once it gets amortized, then it will move into the other group of assets, because once something's been amortized, we should start with a new cycle of investment in assets. So that's something that in the turnover from the Royal Decree 1047 to the current one, it somehow fell through the cracks. We're still talking to the ministry, though. We've talked to the CNMC, and we'll talk to anyone who we need to talk to, because it's something where we're very sure about what should be done. We will definitely fight to the death for it. Then the EUR 600 million in CapEx. I think this has been covered in principle. We don't want to give up on the possibility of assessing other things, although clearly, first of all, we'll look at transmission projects in countries where we're already operating or where we know that the country risk is low with stable regulatory frameworks. For us, the countries of reference will be Peru and Chile, but we're looking at tenders for operations like the one I was mentioning in the line that's just been put up to tender in Peru, but also the Centinela line that we took up last year. In both of these countries, we've already got a size that makes it possible for us to take advantage of economies of scale to grow further, and quite comfortably. It's also true, however, that possibilities for growth in these countries are limited. We have to look further afield. We've mentioned two countries, but there could be others. Brazil has capacity for growth, enormous upside, although it's true that its risk profile perhaps is a little bit higher. Then the United States is a country where we're seeing more and more opportunities opening up the transmission market. Obviously there, the kind of return you get for your risk is excellent. That's in principle where we're looking. But I repeat what I said before about that EUR 600 million. If we don't find the right investments, we'll invest EUR 600 million less, and we'll just keep that back for future possibilities. We are not going to invest just to hit some CapEx target if we don't get a return for all our stakeholders, not just our shareholders, but also the employees in the company and the business as a whole. There's something I should clarify here. When I talked about our purpose, I was talking about this. We explicitly now are talking about going out to look for opportunities. It's not just saying, "Oh, well, if anything comes along, maybe we'll think of it." No, we're going to actively go out there to look for sensible opportunities. Obviously, we could make a mistake, but we don't think we should do. But our strategy plan is setting aside investment for internationalization. It doesn't matter if it's 600. If we find three fantastic opportunities that would require more than EUR 600 million, we'll study them, and if we have to approve additional investment, we can. But the thing is that now we're declaring that this is a strategic line of action for Red Eléctrica. We want to internationalize more. Okay. Next question. Daniel Ortega from BBVA. I had three questions. The first one has to do with pre-98 assets, but it has more to do with REpex. There are two things there. First of all, the period went to 2020, and via CapEx, you could increase the useful life by five years for those assets, couldn't you? So where are you in this process? Then there was the second part. After 2020, you're able to recognize the CapEx as an investment made by the company, and that was going to be included as part of the RAB. How's that process rolling out? Specifically, your CapEx plan. If it's approved, then the CapEx will be additional to what you've already presented today, or is it already included in the figure you gave? The other question, in the telecommunications business, with the investments that you're planning for the future, with Hispasat, there are EUR 450 million investment left for the next four years in telecommunications. I'd like to understand whether this is purely Hispasat investment or are there other potential acquisitions that you're thinking of? What are you planning there? The final question is your payout policy. Have you established a floor, EUR 1 per share? Is that forever? Or will it change with your net profit? Is this the floor that we should expect for the dividends in future years? Or could you perhaps go above it if you have more than 1% growth in net profit, in which case there will be a higher payout? If you agree. Yes, there you are. I can see you there in the room. I can answer the last two, and of course, the CEO can answer as well. If we didn't have a CEO, we always have to come up with one because somebody has to be able to answer these questions. Telecoms, first of all. Essentially, that investment process, the EUR 450 million, has a lot to do with a little more in fiber, but more to do with the satellites. They're already committed in that strategy plan with Hispasat. In Hispasat, we are living almost out there like Saint Teresa. We are there living in spirit there with Hispasat. We're still waiting for the official sign and seal of approval, which should be by April, the approval for the transactions. Then we'll be able to actually move forward with our positioning in the company from that time onwards. I'm pretty sure that the Council of Ministers here in Spain will say, "You have to start to actually implement the strategy plan." In fact, the minister also asked for the plan from Orbitas to be able to let the takeover bid go through. So they will come to us surely and say, "Yes, you have to take on and take ownership of that plan." We've quite obviously said yes to the minister, and that plan includes investment. I think they have to actually replace another satellite, and then something to do with the constellation of satellites. So that investment is already there. But there's also some investment for fiber and to go further, to go abroad, we want it to be more international. Why not go to Peru and Chile? We have already got our transmission business there. We will look at that option, too. Dividend policy. I will answer that one and then hand over to the CEO. I would love to do what you have suggested. I would love to see much higher figures than we are expecting and forecasting, and that we could pay out as many extraordinary dividends as we could. We have not been mean, I do not think, with this commitment. I do not think anybody could call us being not very generous with our dividend policy commitment there. But we have been prudent, you see. You just heard. I think it is EUR 0.98. So that is 98 cents of a euro. That will be the payout for this year or really for charged to 2018. That is not anything that there is a big cut there. But if things were better, then there is no problem with pushing that up slightly. And in principle, please understand my words in the way that you all choose. But I would say that this is a reasonable and prudent commitment that we are making dividend policy. If we can better it, then without a shadow of a doubt, we will better it. Perhaps I could just add on these points something, too. The satellites, first of all. Just as with international investment, the same thing is happening with satellites. There is a certain commitment to following through the Hispasat strategy plan, their investment plan, with replacement of one satellite, and then there is that other possible satellite. What type of satellites are they? Where are they? Well, this is something that we would have to decide at a later date when we are actually in there in the company, working together with the team in Hispasat. Are they geostationary satellites or are they low orbit satellites? You know that there is all these keywords, so the LEOs, et cetera. Lots of possibilities for satellite constellations. So this is something we would have to look at as we move forward, but always subject to the usual criteria of creation of value and a return for the group. We are never going to invest in anything that is not profitable. Then the dividend payout. Of course, I endorse everything the chairman has just told you. But I would say that 2020 and 2021 will be tricky years. As you know, the rate will come down, and I am sure you have all calculated the impact of the rate. Sometimes you actually come up with better calculations than us in your own analysis reports, and you know how much it will be. It will be whatever figure you have come up with. It will be EUR 50 million, perhaps, a year. EUR 50 million per year hitting your EBITDA figure are not easy to actually recover. So 2021 and 2020 will be tricky years, complicated years for us. And you have also heard that the CNMC's circular, the communication that has been issued, talks about capitalization of companies and how we also have to deliver on certain capital ratios. We have to be prudent at this point and see how that process actually pans out. Next Monday is the last date, the deadline to send in arguments, and we will do that. It's not that we don't agree with the rates or that we think the CNMC shouldn't actually be worried about the financial costs of companies. However, if we do want a certain level similar to our rating, perhaps then rates should be targeted in the same way. We're going to put in our arguments to the CNMC. We agree with the procedure and even with the rates, the ratios. However, during this period, we may have to deliver on some of those ratios, and we may not be able to do that necessarily in one year or other. That's why we want to be prudent, as the Chairman said. EUR 0.98 is the payout this year. You may remember that it was EUR 0.75 when we started off the last strategy plan. So we've had a lot of upside in this company over the last few years. The next few years will be slightly different. It's much harder to actually grow from 650 upwards and not 450 upwards, and I think that's why we have to be prudent, as the Chairman said. The CapEx, I'll take that in a moment. CapEx, first thing, though, comes to an end in this regulatory period. Whatever you do in 2019, 2018, there is no impact on CapEx. It was only up to the end of 2018. So this new plan has no CapEx, and we won't be adding it in. However, of course, a new CapEx plan could come out, but it doesn't exist at the moment. So this plan today, the strategy plan, does not include CapEx. Perhaps, Teresa, you could follow up. Yes, the investment in CapEx over this period, yes, it's been a short period. We believe that the extension that we will obtain will be out one to two years. Of course, we're actually covering ourselves because not everybody agrees on that. The Ministry and the CNMC have different views, as Juan said. Future CapEx. This is also to do with the pre-'98 assets extension. One option would be CapEx would be envisaged as such, and that would solve the problem of the pre-'98 assets and the post-'98 assets. It's a question of time because if we don't solve the pre-'98, it will become a problem for the post-'98. Fernando, you wanted to ask a question, I think. You were making a sign there from the audience. Yes? Hello. Fernando Lafuente. My questions are about your targets. So your net profit target and your dividend target. I know that you are a prudent company. You tend to be prudent. Perhaps you're being over-prudent on both sides for both of those targets. To follow up from Daniel's question, in net profit, are you including Hispasat in your target there? Hispasat, the contribution, the accretive effect of Hispasat to the net profit. What about that 1%? Is it at least 1%, you're saying? I would like you to expand on that. It might make sense for that growth rate to be more to do with 2% or 3% if you look at the financial cost performance as well. The dividend issue, I think, doesn't quite work out in my mind. Yes, fair enough, the next couple of years will be tricky years, and you say you'll have to bring dividend payout down, but we're not asking for you to put it up 7%. The downturn in the return on your remuneration will just be a couple of years. It's just a short period you're looking at, and I think things will go back up after that. Is there anything else there behind this? It's an open regulatory framework. That 5.58% remuneration rate to financial remuneration has not yet been fully approved. Perhaps your options aren't the best one now. These were the points that I was surprised about in your plan. Thank you. Well, very quickly. I am not clear that if we'd said 2, you wouldn't have said, "Oh, you've gone overboard. That's too much." Anyway, that's part of the dynamics of what we do. We're in the market we're in. No. Behind the at least EUR 1 per share, we have prudence, not fear in any way. There I want to make that absolutely clear. What we're doing is being prudent. It's not that we're saying, "Oh, good heavens. Will we be able to cope? Let's hide something so no one notices." No. Amongst other things, it's what the CEO said before. It's impossible. Years back, I learned in politics that a secret is something that takes 24 hours to be made public knowledge. It's impossible for us to hide something that you can't think of or recognize might happen. There's nothing to make us fearful about the plans. The plans that we are talking about are based on rational information that you have access to, just as we have. Although, of course, it's possible the Martians might invade, in which case maybe the strategy plan could be hit by that. But quite honestly, we're not fearful. There are no hidden fears. Quite the opposite. We're being very prudent, and as the CEO said, we actually feel rather satisfied with this plan. So allow me, since this is the first time I've talked to you, to say that this is pretty cool. How many other companies could come up with a plan like this? I'd like to make a quick confession. This is a conversation we've had in private, and we talked about it. Talking about paying out less than 0.5. Coming down, yes. But when we started to talk about the 2018 to 2022 plan, the first question that came up was, okay, we've committed in our 2014 to 2018 plan. It was 19 already in the final year, and we're at 0.98. Now, will that affect what we will pay out in 2020? Now, it would have been quite comfortable to say, "Okay, then. This runs to 2019. I'll stop at EUR 0.98, and I can grow up to EUR 1. But quite honestly, when we held this debate, thinking about what the analysts and the investors would think as well, because we always bear in mind what your recommendations are and the feedback we get from our investors. Then we realized that in most of your recommendations and analyses, 90% of you were taking for granted that the dividend of 1.05 was for 2020. So it wasn't going to end up at EUR 0.98 but at EUR 1.05. If you look at the plan we had for 2014 to 2018, you could see that it was going to be EUR 0.98. But then when we saw, and I think that there were only three who didn't interpret it as being that, everybody else reckoned that it was EUR 1.05, and we said, "Okay. Well, let's not confuse the market, even if it could be interpreted as bringing down the payout." Because everybody already had decided that that is what it would be. So it's true that if we're hiding anything, it's prudence, definitely not fear. Thousands of things could happen, but we can't imagine anything specifically coming in. Okay, small things do occur, and the company has to handle these things as part of what we do, but there are also going to be opportunities. We are on the lookout, and we are saying that the remuneration level will stay at 6.5% throughout the period if there's no new law. If that's at 6.5% throughout the period, then we won't go out to borrow anything. If we don't find any international investments, then we'll get much higher returns. But do we want that? Well, right now, we think that it's reasonable to approve this plan, and the rate will run as is expected in the market, and the lower return would seem to be reasonable given the cost of funding for the company, the cost of capital we have. Asking for a higher return, you could, but 5.58% isn't what we used to have, if you remember. It used to be +200, and it was only 3.5%, even with all of that. It was conceptualized differently, though. I don't think we should forget about the future. The regulator may decide that we're talking about the cost of capital, and even if it's low, it should be taken into account. So in this environment, our income statement will suffer, and the payout could go up. If it goes up, you'll say, "Well, what's behind that?" Well, the regulator wouldn't like us paying out everything that comes in. But the main rationale isn't that. Anyway, it's a matter of prudence more and saying, "Okay, if any of these upsides materializes, then yes, it could change." Any more questions here in the room? If you wish, then we can move on to the questions that have come in over our website. A lot of them have already been answered, but there are a few additional ones sent from UBS, Exane BNP Paribas, Royal Bank of Canada, Mediobanca, Bank of America Merrill Lynch, Dow Jones, Morgan Stanley, and JP Morgan. There's one that has been asked before. Well, Gonzalo Sánchez started with it. He broke the ice. But it's worded slightly differently. Elections. Do we think that the elections could affect the approval of the Hispasat deal and the approval of the infrastructure plan, or even the approval of the financial remuneration rate? Well, quite obviously, these are pretty smart questions because these are doubts that we all have, and I can just tell you what I believe. My conviction is no. No, they will not affect us. I think, first of all, we will be able to get the final approval from the Spanish Council of Ministers, the cabinet, on the transaction, the equity increase for that before April 28. Let me say what I said before. I do not feel now that any possible change in the Prime Minister, or not just the Prime Minister, but the government ruling party after the elections, this is what I feel anyway, would perhaps change the view of a government with regard to any finalization of the process for acquisition. The same I would say about the financial remuneration rate. As you know, there has been a decision taken by the government, but it is the EU, the European Union, that has actually been the driver and the implementation is through the CNMC. So there is almost an assignment of competences over this, the CNMC, and the figure is finally 5.58%. It was not quite that, but it has been slightly corrected. So I do not think there is anything that will change this situation, even if the government changes. Planning is ministerial, so it is slightly low down on the official hierarchical scale. It is a ministerial order. It is neutral. It involves the different levels of government here in Spain, and they are ruled by all different political parties, and what we are talking about now is implementation of the plan, and if it is not next week, or as the ministry seems to tell us, it will be soon. My mind is pretty much at rest about this. About any impact of the general election, whatever that general election outcome will be, with regard to the plans we are presenting today. There are a number of questions about risk. About whether this business plan actually increases the company's risk because of its great exposures to non-regulated business and with regard to the company's position as TSO. There are also questions about the risk that Hispasat might bring to the company's business profile and in whether we think the CNMC might not eventually approve the transaction. There is a third risk that has also come up in the questions, we are putting forward this EUR 6 billion plan without yet having a final clarity on the regulatory parameters and what that might mean for us. Well, I'm not a risk expert. There are a lot of people who are streaming this presentation who do it much better than I do. It's what they're professionals in. They may get it right, they may not get it right. That does tend to happen. But we haven't got a strategy plan which isn't based on logic and an assessment of the risks. One of the many things that has changed nowadays is the idea of security. Did we ever have certainty, actually? People like to think that we had certainty, but anyway, now we live in a world of risks, and many people say that that's good and positive. Consequently, you just have to ask the managers of businesses and institutions to manage risk intelligently, not to avoid it, because you can never get rid of risk. This strategy plan shows that we are intelligently managing the risks facing Redeia Corporación over the next few years. Very intelligent, I would say. Then there's that debate, regulated and non-regulated business. Well, it all depends, doesn't it? There are some people who think that moving away from a regulated business, we're increasing risk, but others think the regulatory risk is much higher than market risk, and so diversification into the market provides more stability. We agree with that second line of argument, although you could defend the first line. What you can't do, though, is to breathe in and blow out at the same time. Either you have a risk framework which includes regulatory risk, and that means that you will obtain some kind of offset vehicle by moving into the other markets. Well, it's there or it isn't there. It's up to the company to decide. We're not taking refuge behind regulation. We think that that would undermine the capacity of the company. We're able to provide much more value to our stakeholders if we diversify, and that's why we decided it. We weighed up the different factors, obviously, looking at the different risks. Does that mean that we're no longer following the TSO model? Not at all. The main investment is in the TSO business. More than half the EUR 6 billion is in the transmission system operation. We are a TSO. Having said that, I should say we're actually more than a TSO. As such, we should avoid the temptation that within the company we recognize does exist. It's like saying, "Who do you love more, Daddy or Mommy? Do you prefer TSO or non-TSO business?" Well, both things. Redeia Corporación is a transmission system operator, but it's a lot more than that, too. I think that this is not just saying that this is what we would like. We're saying we've got EUR 6 billion, and more than half of that is going into TSO. So if you're investing so much in being a TSO, then that shows who we are, Hispasat. Well, more of the same, really. Will we have less risk without Hispasat? I don't know. I don't think it would be the case, in fact. I think that the opportunities for the benefits we get from Hispasat outweigh the risks because we're moving into an activity where Hispasat can be successful, and otherwise we wouldn't be there. Of course, we can make mistakes, but we're not going to make mistakes on purpose, are we? We believe that the opportunities offered by moving into that business, going from optical fiber to the satellite business, going from Spain to other countries in Latin America, the opportunities that we have being in Hispasat, with this board of directors, with this management team, so that we can manage things together, working with the Hispasat people. We think that together, we'll be able to apply our very best talent to doing things the best way we can. The benefits that we'll get from the Hispasat deal, we think far outweigh the risks that we may be incurring. The CNMC doesn't have to approve the deal. They have to make a statement about the concentration of the market. That comes from the antitrust part, and we will be communicating that the regulated company isn't buying Hispasat. It's not the regulated part of the company. We've already explained that it's not the regulated company that's buying Hispasat, and there, the CNMC will say, "Okay. I hope everything goes well, guys." They won't have much more they could say. However, and this is something that the CEO's already said, and it's something that I want to be sure you understood. In our diversification, in the investment we want to make, in the diversification of our business between the regulated and non-regulated business, we want to establish very clear-cut firewalls. We want to strengthen the independence between the different businesses, the regulated business and the unregulated one, and we'll do that with two things we've been talking about for some time. Some formally with the CNMC communication, guaranteeing compliance with certain ratios regarding our capital levels and other ratios, which are natural to a regulated company. Saying that we will never jeopardize our solvency with this. We were going to do that anyway. Maybe we wouldn't have done it quite as fast as we will now after this communication. But it was an explicit aim that we had declared, which we'd discussed in the Redeia Corporación board. We also want to strengthen that culture throughout the other companies within the group. We want to be highly capitalized and solvent. This links in with something else that I said twice, and the CEO has also talked about this. We always want to have a majority holding where we can. But we don't necessarily want to go it alone. We're open, in the non-regulated part of our business, to thinking about possibilities of finding partners and to find a different way of getting a return on our businesses. Then there was another question about the approval of the regulatory parameters. Okay. It's true, obviously, they haven't approved the standards yet, nor has the deal been approved of, for maintenance of the construction business. But the current standards were approved relatively quite a short time ago, so we don't expect things to change much. The other thing would be to ask, well, why did we go ahead with the plan as if it was without planning? We're coming to the end of the current strategy plan that runs up to 2019, and you can't expect these regulations to come out in time for us to wait. There are some things that will be covered by the period covered by our strategy plan because there are draft bills in the parliament that will take time to get through parliament, and there's an annex in the planning that makes it possible to start other drafts to be put to parliament, including the modification of the current plan. We have these two packages of draft laws and other standards that could come in, and that was where we got the estimate we had, that EUR 3 billion. Is that high? You're investing EUR 400 million over the last few years. How come you're moving up EUR 600? Next year, it might not be immediate. In 2019, it might not be. It might not be in 2020 either. But maybe 2021 and above all, 2021, 2022, we'll see an impact with high investment in interconnection with France. That's a one-off project, and it requires high CapEx in one single project, which means that we can be pretty sure that that figure is correct. The other thing is to say, "Okay, let's wait until the parameters are published." But quite honestly, we thought that the parameters probably won't change significantly. We thought that it was best to provide visibility to the market now up until 2022. That's what we like to do, to give our investors maximum visibility regarding what we want to do. We want you to feel comfortable with what we say we'll do, too. There's a question about CapEx. You're talking about that EUR 6 billion figure. How will that contribute to the generation of earnings in 2020, 2021? The question here is about the growth of 1%, and why did you say that? Is it because part of the investment is going to RAB, or is there a work in progress with the new RAB? We're getting that question from various people, and we're also asked about the visibility of the transmission grid investments going beyond 2022. Yes, to almost everything there. Yes, there is a major part that will go to RAB. Yes, there are a series of RAB. There are a lot of projects, too, now, like the France project, that don't have final revenue. Why? Because they're a work in progress, and there's a lot of them, and they're relevant. Why just the 1%? If it was 6.5% during the whole period, then I think we'd be two percentage points above that. That's also relevant. I mean that part of the growth in the group, both in the new businesses and in our traditional businesses are being swallowed up by this increase, or this change in the remuneration rate, the financial remuneration, the decrease in it. Then the question about visibility beyond 2022, we do have a reasonable amount of visibility. For instance, this week, I think the Chairman mentioned this already, the investment with Morocco came up this week. There is an MoU that has been signed between government of Spain and Morocco. That investment is not in the Ministry of Planning. It is not in Annex two. In fact, this is something that is in addition to all of that. Is it a lot of money? Well, it is a major investment. It is not a minor investment, not as big as some others, but it is major. The Secretary of State at the Ministry has already said that they are in favor of a new line to the Balearic Islands, so that is also important. It was in Annex two, but it was not quantified at all. There was no figure against it. By the way, it looks like they are thinking about it being taken to the other side of the island, Mallorca to Alcúdia, because that power plant will be closed there. If that is the case, if it is going to go to the other side of the island, it is a very high-value transmission line. So what are we going to see post-2022? Well, there will be the interconnect with France. It was that investment. We will see this sort of cable, this sort of line between the Spanish mainland and the Balearic Islands. There is also the third line for Ibiza, and there will also be some lines, some cables between the different Canary Islands. But we will also have to provide access. What about the 5,000 megawatts increase? Well, maybe it will not be five, it may be three, it may be it will be seven. But we still have to provide access for all of the renewable energy generation. It will not necessarily be all in the transmission grid, but it will be out there, scattered and in remote places, and we have to get access for them. Perhaps they will be close to Red Eléctrica substations or not. But whatever the case, to be able to get access to that huge amount of renewable energy, it is not just about kilometers here, as the Chairman said. This is about smart grids. This is about intelligence, where there will be more smart mechanisms with some extra kilometers. So what will we see post-2022? I would think what we will see, we will be seeing more of what we have seen during this period. What about until the end of the decade? Will it last until then? Perhaps not, but certainly 2023, 2024, 2025, there will be three, four, five, six years of relevant investment or during my chairmanship. Well, there are quite a number of regulatory questions that have come in, but I think we have probably answered most of them, especially the ones about pre-98 assets. They are also asking whether we expect a review, a revision of the standard O&M and construction costs. I think that question has already been answered, has not it? The CEO, yes. If you remember, we're talking about 2014 to 2019, but we're talking about this coming from the end of 2015. There might be a review, but it's not going to be an in-depth review. Hispasat, there's a question about whether we can give some color on CapEx and revenues and profits. What's the average life of the Hispasat contracts is another question. A satellite has 14, 15 years useful life. The Hispasat contracts tend to cover the life of their satellites, which often aren't that long. Right now, if I remember right, the customer portfolio is about 4 times the revenues of the company, about EUR 800 million, approximately, just to give you an idea. It seems to me, as I said it before, this is a very similar amount as we have in the optical fiber contracts. The good thing about these contracts, well, what's good for the supplier of your customers, is that the barriers to entry and to exit are very high. If someone's thinking of changing satellites, it means they have to change thousands or millions of antennae, and they have to change their whole mast infrastructure. It's the same with fiber optics. If someone's going to change to another network, it means that they have to change hundreds or thousands of servers from a substation that we have in Red Eléctrica to another, I don't know, say, Unión Fenosa. Changing hundreds of servers has a very high cost, so migration is too expensive, which is why people tend to stay loyal. When you launch new satellites, normally, you bring in customers that you already had on the old ones. Then, with the new ones, you bring in new customers as well. So actually, the ratios tend to be quite high. Then the projections for the future. Well, as always, it's tricky to foresee the future. It will depend a lot on the growth or replacement satellites and what kind of satellites we're talking about. There, I'd say we have to have some time. We've done our due diligence, of course, and there are people in the management who have a lot of detailed knowledge of the company. We have to sit down with Hispasat, so we can say, "This is our plan." At the moment, we're assuming that their plan is correct and it's based on their knowledge of their company. We now want to have our plan. At the end of this set of years, we'll be receiving more EBITDA, more revenues, and more profits than we currently are. A question about debt. What cost of debt are we expecting for 2022? International investment. Of that billion figure, how much has already been committed? Are you talking about projects that are already underway? The average cost of debt that we're expecting for up to 2022 is around 2.5%. I have to say that this is a conservative projection, because we have expected interest rates to go up, both in the short term and long term. If this doesn't happen, of course, and that's what same as in the past, then we will see a reduction in that expected figure. International investment, that EUR 1 billion. We did say EUR 400 million already committed, and the remaining amount left, we're analyzing that figure for investment in Brazil and other countries. There have been a lot of questions about dividends, but I think we've already answered in full those questions. If we've missed anything out, then of course the investor relations team stands ready to answer those questions later. That's all of the questions that have come in via the webcast. Thank you very much to everyone. Thank you to the people here in the room, and thank you to the streamers. It sounds terrible, but perhaps I can use that term. You're also present. You're not absent. You are here with us. Thank you to you all. I'm convinced that we've convinced you about our own convictions that the outcome of the strategy plan will be a much stronger Redeia Corporación, a much more stable, a much more secure company, a much more diversified group with sustainable growth and a true commitment to good governance. It will be a company that will be worthwhile betting on, making commitment to, because it's highly committed to its own stakeholders and to the essential service it provides in Spain and to the new businesses that we will be developing. It's a company, too, if analysts and investors basically love us as much as we love them. I'm sure things will go swimmingly for us. Thank you.