Ladies and gentlemen, thank you for standing by, and welcome to the Telefonica's January to September 2019 Results Conference Call. As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Pablo Egiran, Global Director of Investor Relations. Please go ahead, sir.
Good morning, and welcome to Telefonica Conference Call to cast, January, September, 2019 results. I'm Pablo Guido, Head of Investor Relations. Before proceeding, let me mention the financial information contained in this Docu related to the third quarter 2019 has been prepared under international financial reporting standards as adopted by the European From the 1st January 2019, we implemented IFRS 16. In organic terms, the effects of the accounting change to IFRS 16 are excluded in 20 in 2019. This financial information is evaluated.
This conference call webcast, including the Q And A session may contain forward looking statements and information relating to Telefonica Group. These statements may include financial or operating forecast and estimates based on assumptions or statements regarding plans, objectives and expectations that make reference to different matters. All forward looking statements involve risks, uncertainties and contingencies, many of which are beyond the company's control. We encourage you to review our publicly available disclosure documents filled with relevant securities market regulators. If you don't have a copy relevant press release and the slides.
Please contact the electronic investor relations team in Madrid or London. Now let me turn the call over to our Chief Operating Officer, Mr. Angel Villa.
Thank you, Pablo. Good morning, and welcome to Telefonica's 3rd quarter results conference call. Today with me is Laura Abasolo, Chief Financial Officer. Following our presentation, we will host the Q And A session and invite you to ask any questions you may have. We are pleased to present a solid set of results.
Advancing on our strategy execution as summarized on Slide 1. First, we continue gaining relevance. Through larger and technologically more advanced networks. We are ultra broadband leaders in Spain and Latin America, already accessing 123,000,000 premises passed worldwide of which 54,000,000 with our own network. On top, are number 1 in virtualization with approximately 100,000,000 customers already in full stack and artificial intelligence.
This makes us more relevant to our customers, which are more valuable and loyal. Churn comes down average revenue per access grew 4.3 percent year on year in the quarter. 2nd, We delivered sustainable and profitable growth. Revenues are back to reported annual growth in the quarter at +.7 percent. Organic OIBDA grew close to 1% year on year, with even stronger free cash flow growth in the first name months, up 40.3% year on year.
And third, we remain focused on improving returns through being simpler and more efficient and re enhancing our financial flexibility. We continue switching off legacy. More than 400 coppers central offices closed so far in Spain. And during the last few months, we have signed sharing agreements with Tim and American Towers in Brazil and with Vodafone for mobile in the UK and cable in Germany. Balance sheet wise, this is the 10th straight quarter of net debt reduction, with average debt maturity at above 10 years.
Let me conclude saying that portfolio management remains a core focus to further improve our returns going forward. As shown on Slide 2, we are accelerating strategic actions. We're executing on efficiencies. Spain's new workforce restructuring program will result into annual direct savings from 2020 of approximately 110,000,000. 80 percent of the group's annual target of digitalization savings for 2019 have already been achieved to September.
And the copper network switch off in Spain progresses well with 100 and 7 central offices closed in the quarter and 2000 expected by 2021. 2nd, on portfolio management, monetization of the mobile telco infrastructure is a priority for the next months. And we have just started with tower sales during this quarter in Spain, Peru and Chile to Telceos. Brazil, Germany and UK are to follow in the coming quarters. 3rd, we are reaching agreements with new partners to further enrich our value proposition.
We created a fifty-fifty JV with Prosegur, a growth opportunity in the residential business security services market. We have announced as well the creation of a fifty-fifty joint venture with address media to produce and distribute Spanish fiction series for both companies and third parties. And 4th, we are introducing new alternative models to accelerate fiber expansion with less CapEx and reduced time to market. As such, we signed a partnership in Brazil with American Tower, and are franchising through the Terram brand. Key operating metrics are shown on Slide 3.
Robust momentum continued in high value accesses, with double digit increase in both fiber cable and LTE. Fiber penetration of our fixed broadband has reached 67%. It was 59% a year ago. While LTE over total mobile stands at 54%, 44% a year ago. This marks both a 4.3% increase in the average revenue per access and 20 basis points of churn sequential improvement.
All helping to make our business more sustainable. We increased customer lifetime value, which exceeded 8 years for our UK mobile contact customers and 5 years for our Spanish Fusion clients. Turning to Slide 4, we summarize this quarter's key financial metrics. I would start by mentioning that 3rd quarter reported figures include a significant provision in Spain related to the mentioned workforce restructuring as well as other non recurrent factors that Lauda will explain in detail later on. FX and negative effects from regulation also impact reported figures.
Revenues surpassed the EUR 11,900,000,000 mark in the quarter, showing both organic and reported growth. Underlying OIBDA exceeded 1,000,000,000 and organic OIBDA grew 1.1% up to September. Free cash flow generation remains solid, totaling EUR 1,400,000,000 in the quarter or EUR 4,100,000,000 up to September. Underlying earnings per share reached per share. Finally, and noticeably, net financial debt decreased 8% in the last 12 months to 1000000000.
Let's move to Slide 5. We are right on track to fulfill our 2019 guidance, as our 9 months results are aligned with internal expectations. We expect to meet the revenue guide to exceed the revenue guidance. Q4 APA is expected to be solid across regions, and we reiterate our full year goal of growing organically around 2% OIBDA level. As for the 1st tranche of 2019 dividend, per share in cash, it will be paid on the next 19th December.
On Slide 6, we go through growth trends in revenue and OIBDA during the quarter. Consistent with our solid fundamentals. Latin America remains a growth contributor with Europe improving its momentum driven by improvements in Spain and Germany and solid growth in UK. Revenue mix continues its transformation progress with 5% of revenues already coming from broadband and services beyond connectivity, 2 percentage points higher than a year ago. Digital revenues increased at 17.4 percent versus Q3, 2018 in organic terms while B2B sales maintained momentum at +3.7 percent, all supporting our sustainable growth trends.
OIBDA improved trends in Q3 main markets, explained Germany and Brazil, while maintaining a very strong performance in the UK. Moving to Slide 7, the B2B segment, which is 20% of group revenues keeps its momentum with a low to mid single digit revenue growth in both Europe and LatAm. Our strong and flexible portfolio and customer focus set us in a privileged position to gain relevant deals and increase customer satisfaction. As a key partner for the digital transformation of corporates, B2B Digital Services delivered solid revenue growth of 29 percent year on year to 1,000,000,000 in the 1st 9 months, mainly cloud IoT and security, where we enjoy a distinctive profile. Turning to Slide 8, in the B2C segment, we aim to maximize data monetization applying innovative pricing models such as the new flexible data and handset offering in Germany, or the unlimited data offers launched in the UK aimed at blended ARPU increase.
Our device integrated offer plays a key role to Forster Handset Sales. Being remarkable handset renewal program Phoenix based on artificial intelligence and already launched in 7 countries with very positive results so far. At the same time, we have identified 5 key spaces Those five spaces where we will focus our efforts are my digital telco, my entertainment, my things my home and my financial services. Specifically, and within my entertainment, we have proven to increase video engagement while growing ARPON loyalty with continued IPTV and over the top growth reaching 10,000,000 video accesses as of September. Moving to Slide 9, we continue working on our platform's strategy.
On the first and second platforms, we have the largest Ultra broadband footprint outside China, 123,000,000 premises and 54 1,000,000 owned and a leadership position in fiber to the home coverage, which coupled with more than twothree of our processes already being digitized set us ahead of the pack for 5G. In the 3rd platform, we are capturing the digitalization opportunity and we have already created several unicorns of digital services, delivering roughly EUR 2,000,000,000 revenues per quarter with 17% year on year growth. Lastly, our 4th platform enables the application of artificial intelligence to improve the customer experience. Revenue generation and efficiencies through different projects. Slide 10, shows the progress done with our digital transformation plan.
Digital sales increased 27% versus the 1st 9 months of 2018, with more personalized offers, thanks to data driven models. Cognitive contact centers and digital centers are being increasingly used And a very ambitious processes automation program continues to be deployed or resulting into lower commercial costs and higher customer satisfaction. All in all, Telefonica has already captured 80% 1,000,000 targeted end to end digitalization savings for 2019. I now hand over to Laura to take through a detailed review of the business performance.
Thank you, Angel. As shown on Slide 11, as a successful value strategy, again, allow us to reinforce our leading market position. Within an increasingly segmented market, our strategy leading services and content proposal, which results into a higher value customer base, continue to deliver growth. We offer increasingly more services to our customers. And Total convergent accesses grew 5% year on year in third quarter.
At the same time, ARPU grew 1.7% year on year to the highest ever. Moreover, a differential asset, namely our FTTH Network, increasingly delivered returns on the retail and wholesale business. With a combined 28% uptake. We continue working to enhance and segment our value offering, including adjacent services and tapping new sources of growth. As such, we have added 2nd home, Movistar Card, start closelyte and others to hook up to our portfolio of products.
And over the next few months, we will start offering home security and insurance service to our customers. We now move to Slide 12, where we show the marked improvement in growth during this quarter. Service revenue grew for the 9th consecutive quarter, up 1% versus Q3 2018. The sequential improvement was mainly driven by convergent revenues that grow 5.4% year on year from 0.9% in the previous quarter. OIBDA posted as well a better year on year performance in Q3 plus 1.8 percent 12 points versus Q2, reflecting the growth in retail revenues, lower foot on net cost increase, and higher commercial cost reduction resulting from our digitalization program.
Worth to note, we booked in the quarter a billion provision in personnel expenses, mainly related to the voluntary employment suspension plan we already shared with you. This plan will allow us to capture a run rate of direct savings or approximately EUR 210,000,000 since 2020. As such, operating cash flow amounts to 1,000,000,000 in hand months with further efficiency already in the pipeline. Moving to Slide 13, Telefonica Deutschland delivered a robust commercial performance in both owned brand and partners with 392,000 contract net adds. Customer experience continued to improve and its O2MIA was well recognized in the latest connectors with a very good freighting.
Revenue growth sequentially improved by 0.3 percentage points to 1.9%, mainly driven by the good traction in retail, resulting in an accelerated mobile service revenue growth of +.6 percent year on year. Toos OIBDA reduced declined by 1 percentage points quarter on quarter. 9 months CapEx continued to phase out an increase by 5.7% year on year, further enhancing customer experience. Moving to Slide 14, O2 remained the largest mobile network operator in the K, growing its customer base by 6% with positive net adds across all customer segments, contracts, prepaid and MVNO. It is also worth highlighting a successful 5 year launch, including unlimited data offers in mid of October.
Revenue delivered a healthy growth of 4.1 percent year on year, mainly supported by both the innovative Firestone Plant's proposition and SMIC. As a result, OIBDA, Estronic grew by 5.7% year on year. In the 1st 9 months, OIBDA minus CapEx increased by 6.2% year on year, while investment continuing customer experience, network and the foundation for 5G. On Slide 15, we start reviewing our Brazilian operation. Where it had gained improved our subscribers quality mix, leveraging on our best in class networks.
We have strengthened our leadership in the mobile arena, reaching a market share of 32.3%, almost 40% in contract, thanks to our differential assets and customer experience excellence. As for the fixed business, the ongoing transformation process continue with the acceleration of the FTTH deployment having already passed 10,000,000 homes. In addition, and as already mentioned, are implementing alternative FTTH expansion models through partnerships and franchises, which will further enhance our reach with very limited impact on CapEx, will contribute in to reduce our time to market. This will allow us to gain further exposure to the large FTTH opportunity in the Brazilian market. As a result of this growth in value, we continue showing ARPU increase in our main services, plus 5% in mobile, plus 12% in fixed broadband and plus 4% in paid TV.
Moving to Slide 16, revenue growth accelerated significantly to +3 percent year on year largest growth seen in 15 quarters, thanks to our successful more for more strategy in both contract and prepaid. Fixed revenue remained affected by the legacy businesses. However, fiber and IPTV once again, posted sound growth, allowing us to confirm that we are on the right track to stabilize overall fixed revenues in the next few quarters. As regards free cash flow evolution, it increased by a remarkable 15% year on year in the 1st 9 months thanks to the OIBDA margin expansion levered on the utilization and simplification and despite the in CapEx driven by the ongoing business transformation. Next slide shows the review of our East Pan operations In Southeast Pan, we maintained solid revenue and OIBDA growth in line with previous quarters, thanks to growth in contracts and fiber accesses.
Progressive tariffs update and improvements show in Peru where we returned to positive revenue growth after 2.5 years of revenue contraction. In East Pan North, finance has continued to be affected by Mexico, where OIBDA is highly impacted by the recognition spectrum fees as OpEx, overshadowing the sound commercial performance across the region. It is worth highlighting contract net adds in Colombia that hit a record high for the last fifteen quarters, along with some ground in prepaid and contract accesses in Mexico. On Slide 18, we saw Telxius progress during the quarter. So our portfolio has increased with the acquisition during this quarter of 4 thirty two Towers in Spain, Peru, and Chile to a total of 1 1990 Towers acquired so far in 2019.
On top of acquired towers, Telxius has built 3 16 New Towers during the 1st 9 months of the year. All the above translates into a tenancy rate on one point 35 times at the end of September. We're highlighting that year to date increase on the number of tenants over other than Telefonica has grown by 28% year on year. Revenue and OIBDA continues showing, growing and mid single digit year on year in the 1st 9 months, although affected in the quarter by the seasonality of exceptional capacity sales in cable, We continue seeing ample room for further organic growth going forward. Turning to Slide 19, we detailed nonrecurring factors in Q3 reported results, which impact negatively for EBITDA by EUR 1,500,000,000 and net income by EUR 1,200,000,000.
This relate mainly to restructuring costs of EUR 1,900,000,000, mainly in Spain that will enhance future profitability and capital gains of almost EUR 400,000,000 from the 20, currencies continued to weigh negatively in Q3, but lower the year on year drag due 2 easier comps for the Brazilian currency. As such, ForEx deducted 1.5 percentage points to OIBDA variation in the quarter, 3.2 percentage points up to September. In the 1st 9 months of 2019, the million negative impact in OIBDA is reduced to 1,000,000 negative hit at the free cash flow level as ForEx also reduced CapEx, taxes, and minorities. As regards net debt, FX had barely any impact on a 12 month rolling basis. Let's now move to balancing metrics on Slide 21.
Our net debt further comes down this to a total decline in the 1st 9 months of the year of 1000000000 to 1000000000. This has been driven by a strong free cash flow generation that shows an impressive plus 40.3% year on year growth to EUR 4,100,000,000 up to September. A strong free cash flow generation is coupled with inorganic measure. And including post closing events, debt declined further to 1,000,000,000 or 2 46 times OID. Lastly, let me mention that under IFRS 16, net debt would be impacted by 7 point 1,000,000,000 worth of lease.
Slide 22 presents how we have actively continued to refinance taking advantage of favorable market conditions, issuing long term north at historically low rates while also diversifying financing sources. Total financing activity adds up to 1,000,000,000 year date, allowing us to extend our average debt life above 10 years and maintain a robust liquidity position of close to 1,000,000,000. Such financing activity at historically low interest rates has also allowed us to lower our effective interest payment costs to 3.30 percent as of September 2019. 22 basis points lower than in September 2018. I will now hand back to Angel to recap.
Thank you, Laura. To summarize, I would like to again highlight our best in class customers' value. Our focus on digitalization and our technological advantage. As such, we have delivered reliable and solid growth in Q3. While slowing net debt for the 10th consecutive quarter, mainly due to strong free cash flow generation.
All these allows us to reaffirm the guidance for 2019. Finally, I would like to remark the progress on strategic projects announced last month. Such as Towers monetization, restructuring in Spain and new products partnerships, among others. We remain fully committed to continue working with the termination in this and other strategic initiatives in the coming months to achieve the best results. Thank you very much for listening, and now we are ready to take your questions.
You. We will kindly ask you to ask a maximum of two questions per participant. And if possible, we recommend you not you. Our first question comes from the line of Joshua Mills from Exane. Please go ahead.
Hi, there. Thank you for taking the question. The first two questions from me are both on Spain. The first is just interested to hear how you think the Masmerville orange deal can impact on your own wholesale revenues whether this is a headwind and how many lines could be affected by that? And then secondly, just whether in the aftermath of this, you would consider offering a more contingent model style agreement to use Total for access to your fiber network.
Nikki, are you looking to expand the network and would be willing to make some volume commitments? Could you look at offering cheaper than nether prices in order to facilitate that? Thanks very much.
Thank you, Joshua. On the first question on the mass mobile wholesale agreement with Orange. We are not expecting a significant impact from the recent automobile deal because the fiber to the home premises involved were already available by Beach Stream and the agreement in mobile is is for 5G. What we see is that for 5G mass mobile may be designing a strategy in which access to the 5G network is is offered by a third party, so minimizing deployment of their own network. This doesn't have an impact on us though in terms of spectrum allocation.
We think this could be a positive, regarding future spectrum auctions. Again, in fiber, what we see is that it's a change of model from OpEx to CapEx, but it could erode maybe orange based farther, but we do not expect a significant impact on us and send. But Morgan said that the savings could contribute to higher OITAs. So we do not expect extra aggressiveness from them in the market. Regarding the possibility of, of whose content, Well, we have been open to reach agreements with different players on fiber always regarding pointing the terms, which are commercially attractive for the parties.
This is not underway, but we have demonstrated our openness in in previous situations.
Thanks very much.
Thank you, Josh. Next question please.
We will now take our next question from the line of Matthew Robbie Art from Barclays. Please go ahead.
Good morning. Thank you. First, I had a question about EBITDA trends or EBITDA trends. You reiterated the guidance for the full year 2% revenue growth. You pacing slightly below, in the 9 months, where should we expect an acceleration of EBITDA in Q4?
Is it from Spain? Something you, I think you said in the past should materialize or is it coming from other geographies? And then in terms of the cost saving for Spain, you do mention that by 2020, you would have already $210,000,000 cost savings annually. Which is very close to the full run rate that I think you guided for is a 2 20. Does it mean that a very large portion of the employees have already taken the plan and that's why you're so confident about the outlook for 2020.
Thank you.
Thank you, Matti. On the first question regarding the group OIBDA guidance and specifically your question was in OIBDA. Let me address this question in full. So we are reiterating our full year guidance. This guidance is built on lots of moving parts We have different revenue lines with different attached margins from very different geographies.
So what we see is that at the top line level, we are delivering stronger than anticipated revenues based in handset sales, which are growing 17% in the 1st 9 months. And we are seeing a roughly 9 service revenue growth. More geographical units at the service revenue are performing as expected, including Spain and Brazil. Some others are doing a notch better. Some others doing a notch worse, including smaller contributors such as Mexico.
In fact, Spain has posted this quarter the highest growth rate since 2016. At the ATA level, the largest tracking growth is explained by Mexico performance that is attracting close to one percentage point to the quarter's growth on a weaker top line and impact of changes in spectrum accounting. If we were to exclude these negative Mexican contribution results, I'll pretty much in line with expectations to date. And we would be posting a 1 percentage point higher EBITDA growth rate. I would like to highlight that of our 4 largest divisions, 3 of them are accelerating trends at OIBDA, Spain, Brazil, and Germany and the UK, which is the 4th large one continues to show very strong results.
So what do we expect looking at to 4. At the operating revenues level, we will be very likely continue to be above guidance at the end of the year. Including top line growth in service revenue performance, AT and digital services will continue more than initially anticipated with different margins though. Groupe OIBDA should show continued growth in Q4 towards the full year target. Despite stronger revenue growth, slightly different mix, we are confident in meeting our guidance.
Thanks to efficiency mainstreams, including the workforce restructuring Spain. In addition, the impact of spectrum fee accounting in Mexico will start to annualize from Q4. So to conclude on this guidance question and despite tough competitive environments in some of our markets, macro political headwinds, We would be today comfortably meeting the FDA guidance when excluding Mexico, and we are confident that our efficiency gains will help us over run these factors and meet the full year group OIBDA guidance.
Sorry, if you can follow-up just on Spain, excuse me. Should we see already in Q4 in Spain, some of the benefits of the employee reduction or are you
Yes, that was your second question, which I was about to address. We no, no, don't worry. The 210,000,000 annual savings will be the run rate from next year. We will see part of those savings already flowing into Q4 because the employees that have left with these programs have already left the company at the end of last month. So those savings are ready to start flowing in the month of November December of this year.
Thank you, Madhu. Next question please.
Our next question comes from the line of David Wright from Bank of America. Please go ahead.
Yes, a couple of questions, please guys. First of all, I think I saw, your Spanish business your TV customers decline. And I think that's the first time for a couple of years. And even back in 2017, I think it was a digital plus drag, if anything. So just wondering if we could expect that dynamic to evolve a little and is this a shift from the kind of mid tier customers down to the lower connectivity segment?
And then I have to admit, I'm still a little bit confused about the group OIBDA guidance. By definition, you've done 1.1% through the first nine more you've done 0.8% in Q3 to make 2%, you're going to have to do over 4.5% even to make 1.5%, I guess, your guidance is around 2%. You'd have to do sort of closer to 3%. It's not really obvious how that works. I know you've given some answers, but the 1% Mexico unwind on its own, doesn't really get us there.
So what are the big drivers, the more material drivers divisional towards that, please?
Thank you, David. On the TV, commercial performance in Spain and internal commercial performance in In the quarter, we had a quarter with contained commercial trading, which was impacted by some tariff upgrades at the beginning of the quarter for premium customers and the end of promos. Promotions. And it's always a quarter with back to school commercial activities. We have seen a fixed broadband positive net adds for 2nd quarter in a row with good performance in premium fiber On pay TV, to your question, one has to be reminded that pay TV penetration in our conversion base is already high at 93%.
And regardless of the overall number, the mix is very important. We are adding higher value pay TV customers with better mix and better ARPU growth. So we have a base of TV, very well penetrated. We are seeing improvement in the mix of that one. And this is reflected on, as you can see, in Slide 11, the converged customer base actually shows a move up with high end customers being 30% of our convergent base, 2 percentage points more than in Q2.
And convergent ARPU is 1.7% up With respect to group OIBDA guidance, what we see, what we're expecting is, it's a strong 4th quarter. You in the trends, the improving trends that we have in our 4 big units in the group. Both 3 of them, Spain, Germany, Brazil improving and accelerating their OTA growth. We have specific factors, for instance, helping us in one of the operations in Spain the comparison of content cost, the 4th quarter is going to experience the lowest growth rate in in content costs, we're going to start seeing benefits from the recently closed personnel restructuring plan. Germany already.
Yesterday confirmed their ETA guidance, Brazil shows strong growth And they were confident in their call yesterday that is to continue. The UK is performing strongly. And then we will have easier comps in some of our ispam units, such is the case of Mexico with Spectrum Accounting. And we are on track for progressive turnaround in some of our units in the region, such as Peru.
Okay. And just maybe just a quick expansion on Spain. I think you gave some interesting stats in Q2 around 28% of swaps high end. I think it was 30 odd percent mid range €80 and about 40% lower end customers. You give us an indication on how that mix is continuing to shift, please?
Well, the mix is, the mix is if I would say polarizing on the upper end, we have grown the high value customer from 28% to 30% sorry, let me get the specific figures. What we call lower end which is an ARPU that equals to the average ARPU of our closest competitor is now a 41% and the mid end of the intermediate is at around 29%.
Thank you, David. Next question please.
Our next question comes from the line of Narack Sini from Morgan Stanley. Please go ahead.
Thank you very much for taking my questions. I have 2 please. Firstly, on Spanish competition, we are hearing mixed messages from your competitors, about the competitive landscape in Spain. So it would be helpful to have your views on this and also have any color about whether you are seeing any change of behavior from competitors? And secondly on Brazil, momentum to be building for market consolidation there.
Could you elaborate a little bit on your views on the topic? And in fact, particular, the level of involvement that you will be willing to pay and putting on implications on, on leverage.
Thank you very much for your questions. On first one, competitive environment in Spain, We believe that the market remains competitive, but has a rational structure. And we see no structural change despite intense activity in the low end and despite some of our peers' comments. What we do see is more polarization or if you want more market segmentation. On the high end, It's a rational segment with Orange Finance being the only ones having access to football and targeting the highest value customers.
In the mid to low segment, promotional intensity increased, as a result of Vodafone needing to reposition after abandoning football, in an effort to turn around their operation. And in the low end, it's very competitive. There is intense competition with MVNOs, low end brands from commercial players and the fight between mass mobile and Vodafone. Of course, we are not immune to competition. But we are far more protected than others.
Thanks to our positioning and differential assets within a market structure that is is very well defined and segmented. In Q3, we have seen promotional activity as always in the third quarter but it was milder than 1 year ago. This is the promo that we saw were less intense and for shorter periods. As a proof, portability volumes continue going down. So for us, being high and focused makes us more protected.
From this competitive dynamics, proof of this is our performance, 9 state quarters of service revenue growth, with acceleration, clear acceleration in this quarter. Conversion revenues growing mid single digit for the last fifteen quarters. Including this quarter at 5.3%. As I said before, in this quarter, we have achieved the best year on year revenue growth since 20 16. And this with a 40.1 percent organic OIBDA margin.
So yes, we think it's a competitive market, but rational and the market in which we are outperforming. On the question on potential M and A in Brazil, There is speculation on, especially regarding OI and the mobile part of OI. First, here we think Brazil is a very attractive market from the macro point of view where they have recently approved the pension reform and This is the future for balanced finances, public finances. It's attractive from sector structure. And recently, there has been approval PLC 79, which is a very good news for the industry.
And third, Brazil is a very effective market because of our position of leadership. We have always. So we think it's a market where we want to be we are strong and we want to be stronger. We have always defended in market consolidation in the sector as a catalyst to improve returns, but also to accelerate sector transformation towards the digital society and Brazil course, it's not an exception. So we, although OI has not formally said that they are selling mobile assets, we will closely monitor the situation.
We think there could be a significant value creation from synergies. But we're also seeing that if in market consolidation were possible, none of the 3 players in Brazil would be capable of doing it alone. It would also require oil's intention to and capacity to do so. The company's under judicial intervention. So lots of of moving parts.
So if, although this may sound like there's a boom, lots of stars need to be aligned, but it looks like this time they may actually align at some point.
Okay. And how do you think about integration for leverage, please?
Sorry, can you repeat that question?
And how do you think about, I mean, if you were to be involved in Brazil, how do you think about implications on leverage?
I think it's too soon to say and being transaction in which more than one party is involved, it shouldn't be really, really sizable. In any case, we will look at that within our overall target of maintaining a solid investment grade credit rating and also aligned with the performance you have seen regarding the leverage so far in which we have accelerating the pace and we have again posted a very sound net financial debt reduction in the 1st 9 months of 20 of almost 1,000,000,000.
Our next question comes from the line of Mandeep Singh from Redburn. Please go ahead.
Primarily related to free cash flow and net debt. You talk about a factoring benefits in free cash flow in the text of your report. Could you just sort of help quantify that for us. And relating to sort of organic deleveraging versus inorganic, if you exclude hybrids asset sales, and potentially any benefits from factoring that you will tell us about. It doesn't look like there's been any organic deleveraging in the 1st 9 months.
So if you could just like bring us up to date with what's going on with deleveraging organically and inorganically and so we just understand the moving parts?
Yes, thank you for your question. Regarding free cash flow, we are indeed believe we have reached a very sound free cash flow in the 1st 9 months of the year. It's been a EUR 4,300,000,000, and that has a on year on year performance. And the drivers behind that free cash flow are various. First, the solid revenue and OIBDA organic growth, obviously, the very positive tax contribution, also the lower financial payments and working capital generation.
Regarding working capital generation, there's been a big improvement, but it's mostly due the deferred spectrum payment in Germany. Excluding that, it's also being helped by the positive effect of the Brazilian court decision in 2018 But in fact, the working capital measures, they are being lower than the ones we did in 2018. No, so we've been very less active in that front. And regarding supply financing, for instance, that we published the figure, it's been below what we had in 2018. No, it's been slightly above EUR 300,000,000.
And for the full 2019, it should be below what we did in 2018. If I give you a little bit flavor of working capital, working capital, has been affected obviously by seasonality, which is there's some measures that are unwind through the remainder of the year. We also do sale of receivables, commercial and financial agreements to postpone payments. And I have specifically mention the supply financing figure being below last year. We also do monetizing handsets financing and other measures.
And we do that. This is pretty much in line with what we do every year. But as I said, in the 1st 9 months of the year, has been less measures and working capital has proven better because of the deferred payment of spectrum and the judicial review of Brazil. Regarding the net debt figure and evolution, we again believe it's the free cash flow being the main driver. There's been other impacts.
Of course, as always, I mean, the net debt figure and the solid investment grade credit rating target is being achieved through a combination of free cash flow and also in organic measures as it's been the case. Also in this year, and we are already accounting for the sale of the data center, the sales of Guatemala, Nicaragua, Panama, Panama, Panama, Panama, and more is to come because we are still not accounting for Panama and Costa Rica, whose regulatory approval as we expect by the of the year. Hybrid have indeed helped for these 9 months as we have the liability management positive impact and also the EUR 500,000,000 issuance we did in September. But this is a temporary improvement. We definitely do not count on that for our net financial debt deleveraging path.
You are already seeing it.
Thank you, Mandeep. Next question please.
Our next question comes from the line of Jacob Limestone from Credit Suisse. Please go ahead.
Hi, good morning. Thanks for taking the questions. I've got 2 questions, please. Firstly, on Spain, can you maybe comment a little bit on the outlook for convergent ARPU, obviously accelerated this quarter as you highlighted with price hikes and sort of past promotions rolling off. But we also had Orange, who were highlighting the sort of negative effects from spin down on ARPU, from your comments on market being sort of increasingly polarized.
It sounds like you are sort of expecting that you're not seeing a big impact from spin down on ARPU But I'd just be interested if you could maybe share a little bit how you see the outlook for the Spanish convergent ARPUs. And then just secondly, in Brazil, you announced these fiber franchise and partnership agreements. Be interested if you saw a similar model being applicable elsewhere, particularly in Spain, would you look at similar sort of deals or setups, or indeed other forms of monetization in Spanish fixed line?
Thank you, Jacob, for the questions. On the airport Fusion, As you saw, 1,000,000, it's up both year on year 1.7% and up quarter on quarter are 2.5%. This is the result of a positive impact from 30 upgrades that we have had in more for more moves, during the year, It also has a positive impact from upselling. And it's has the dilutive effect from promo and has a dilutive effect from what we call multi brand, which is the lower ARPU from our O2 conversion brand. But the impact from tariff upgrades, but also upselling is more than countering the dilutive impact of Promos and Multivranta.
In Brazil, with a fiber building agreements that we have reached. 1st, it's very different situation from Spain. Spain, we have already 22,700,000 homes passed with fiber. The penetration is very high already. Well in Brazil, which is a huge country, penetration is still much lower.
So what we have done, we are prioritizing the cities in Brazil across to 3 categories, category of cities that we're going to do the fiber deployment from our own CapEx. Then 2nd tier, which is cities where we're going to do partnerships, like the first one we have announced with American Tower Corporation, but others to follow. And third, the 3rd tier of cities that we're going to address the franchises. This is allowing us to do a faster deployment in the market with limited or limiting the impact on our CapEx because the partners are going to be investing in passing the passing the homes and then we will take care of connecting the customers in the partnerships. This can also this partnerships can take the format of this type of commercial agreement like we've reached with American Power Corporation, who'd also take the format of JVs or equity partnerships into fiber costs.
So we're exploring all options in Brazil. And in counties where still fiber penetration is low, but not in Spain.
Can I just follow-up just on the Fusion point, I mean is your expectation that when you take all those pluses and minuses, that you can continue to grow Fusion ARPU? Is that sort of your assumption?
Well, we are going to continue applying the same time of strategies that we have been using up to now, including more for more, of course, this will be, depending on market conditions. Are getting into a quarter where we will have Black Friday Christmas campaign. But we have seen also ARPU increases in 4th quarters in previous years. So we're going to continue playing the same strategy. I cannot forecast the ARPona quarterly basis.
Thank you very much. That's very helpful.
Our next question comes from the line of Michael Bishop from Goldman Sachs. Please go ahead.
Yes, thank you. Good morning. Just two questions from myself. Firstly, could you give us a bit more color on the UK mobile trends going forward? Because it seems like you've got very positive net add momentum, but clearly, there's also some headwinds going forward.
And we've seen 5G being generally launched at no premium by operators. And then secondly, I was just keen to get your latest thoughts on the tower strategy. And you mentioned that you transferred some towers in particular in Spain until Telxius. But I was wondering if I could get your updated thoughts on your broader thinking of the towers you identified and how quickly we might see those chunks VAD or even sold externally? Thanks.
Thank you, Michael. On UK, UK reported 1 more set of strong quarterly results with top line growth for 0.1% at revenue line, bottom line, 5.7%. Sorry, bottom line is being EBITDA. An overall customer base growth. Mobile Excesses are 5.6% up year on year to more than 30 4,000,000.
And this allows us to maintain the market leading position and the largest network carrier also the UK most favorite mobile network with the highest sector leading loyalty. The contract base of this 34,000,000, the contract base is 17,400,000, growing 8.7% and prepaid base $8,600,000 MVNO partner base $8,100,000,000 growing 8%. So we are growing customers more in the contract base and then through the MVNOs. So we have very good traction in the UK, which is reflecting into sound revenue growth and ARPU improvements. This, though, as you said, can be affected by a number of factors.
On the one hand, And there is a regulatory focus on revenue spending measures such as home, like at home, also lower out of bundle revenues And then some decisions that have been taken to, going into 5G in applying a premium pricing versus 4G. So those are moving parts, but still, we expect to continue outperforming and the UK market in our UK business. So with respect to the tower to the tower strategy. We announced in early September a push to accelerate the monetization of our tower portfolio. We had already set up TELSIUS a few years ago.
Company that has 15,000 towers where we have where we own 50.1% and we as partners, TTR, and one of the largest family offices in Spain. The total number of owned towers by telephonic is around 69,000 of which 18,000 are in TELSIUS 51 1000 owned by telephonic as hobbies. The 4 largest market, Germany, UK, Spain, Brazil account for around 2 thirds. Of that number of towers. What we are planning to do is to monetize the remaining portfolio of tower that can be transferred.
And as seen in our portfolio, one needs to conduct the diligence of which towers have more or less ability for colocation, technical capabilities and so on. So one has to filter the portfolio. Of towers, but we are going to be monetizing those progressively. We have already in this quarter transferred to tells you the remaining towers we had in Spain, Chile and Peru. This is the fact of because some people have asked why is this monetization?
This is the factor monetization because our partners are taking 50% of the equity of this monetization be through a less dividends payout by Telxius. And therefore less leakage for us on that and those dividends. Or depending on the size of the deal by direct equity contributions, So we have time for the remaining towers in Spain, Chile Peru, the next batches that or lots of towers that you should see would be in Brazil, in the UK, where we are already in advanced stocks with our partner, Vodafone and in Germany. So you should expect us in the coming quarters to give you a consistent update on the monetization of those towers. We are going to be open to different alternatives of monetization.
We think there is value in doing this transaction through Telxius because we get the double benefit of monetizing the towers. And at the same time, keeping the controlling stake in a larger and more valuable infrastructure company. But we remain open to different monetization avenues.
Thank you, Michael. We have time for one last question please.
Our last question comes from the line of Jerry Dulles from Jefferies. Please go ahead.
Yes, good morning. Thank you for taking my questions. First question has to do with Consumer Convergent segment in Spain. Please, you highlighted how the proportion of Fuzione customers at the high end, has been increasing. And on a year on year basis, it is indeed up 1 percentage point to 30%.
But when we look at the medium and the low tier segments, we see much more material shifts year on year. Looks like the medium segment is now 9 percentage points less as a proportion as to where it was in Q3 2018. And the low end segment is now 41% is up eight percentage points year on year. So it looks like there's been quite a lot of shift from medium down to low. And perhaps that puts more and more pressure on you to keep raising prices on Fuzion customers at the high end.
Is that the right way of sort of thinking about the pressures that you face in keeping the convergent business growing or is there another way of looking at this? And in particular, is it possible to see a situation in which going forwards the Fusion business or the convergence segment can grow revenues without such reliance on price increases, please. And my second question has to do with the B2B segment in Spain. I think we understood that B2B revenues were rather flat at Q2 stage because of some issues around sort of invoice phasing. The 3rd quarter progression in B2B revenues is also flat.
So it'd be interesting, pleased to have your thoughts on the outlook for B2B revenue growth in Spain.
Thank you for your questions. On the first one on the consumer conversion segment in Spain. You have to look at, Fusion through different metrics and KPIs. 1 is the base or the number of customers, then the mix of that base, the ARPU on the churn. We have, sustained momentum on our base.
It's up quarter on quarter on year on year. Customer base inflection is growing 2.4 percent to 22,900,000 accesses and 4,700,000 customers. The mix that you were pointing out is polarizing. Here, I would like to qualify how we have the find this mix because what this mix is defined by types of products and since this type of products move their prices up, what we call low could have been at the bottom end price wise of what could have been meet 1 year ago. So So when this 1,000,000 to 1,000,000 products, mid end is 1000000 to 1000000 Europe products and high end range from 110 to 190.
So our share of in our customers of customers that have products above 1000000 that would be adding up the medium and the top segment is 59%, which is resulting in an increase in ARPU. So because there is not only increasing the number of customers, but also increase in the ARPU of each one of these segments. And this is sometimes overlooked. And this we are achieving with churn, which is the 4th element of how we look at Fusion of 1.6%, which is controlled. It was 1.7% in the 1st quarter, 1.5% in the second, 1.6% in the third.
So we believe that we have a solid and resilient mix in which is making us less dependent on the fights are at the low end. Are our services expensive given the substantially higher ARPU that we have with respect to our customers and I think your question is regarding is this too expensive? Can will you see downgrade or will you find it harder to do more for more. So the first question would be, are these services too expensive 190.6 convergent ARPU includes 5 services per customer with an average of less than 4 services for the vendors of our competitors. We have a higher number of mobile lines per customer.
And pay TV penetration is also higher. So on a per service basis, our prices on a per service basis, our prices are similar slightly higher than those of our peers. So we think that we have a very competitive offer and very importantly, which is well priced. Is there still room to grow through more for more moves where we have been leading the market in the last years through offer upgrades? All our competitors have followed and they continue to do so not only the 5 telco operators have put prices.
Up this year, both from book and back book, but also over the top players have been putting their prices prices up. No? So depending on market conditions, we think that there is room for selective more, for more. On B2B, which is your second question, we announced 27% of our service revenues in Spain. We are growing for the 6th consecutive quarter and the growth is 0.4% year on year.
With a sequential improvement of 0.3 percentage points versus the previous quarter. Here, what we see is pressure on the traditional communications part of this. This has 2 parts traditional communications and IT services. We see pressure on onto additional communications impacted by contract renewals, basically. And at the same time, we see IT continuing to grow at double digit, have a very strong position in B2B, where we are a market leader.
Have competitive advantages due to scale brand convergence network and digital services. So we think that momentum is good and we will continue to see growth in B2B segment.
At this time, no further questions will be taken.
For your participation. We hope we've provided you with some useful insights. Should you still have further questions, we kindly ask you to contact our Investor Relations department. Good morning and thank you.
Telepone test January to September 2019 Results Conference Call is over. You may now disconnect your lines. Thank