Good morning, and welcome to Telefonica Conference Call to discuss January, March 2017 results. I'm Pablo Yaron, Head of Investor Relations. Before proceeding, let me mention that financial information contained in this document related to the first quarter 2017 has been prepared under international financial reporting standards, as adopted by the European Union. This financial information is outdated. This conference call webcast, including the Q And A session, may contain forward looking statements and information relating to the Telefonica Group.
These statements may include financial or operating forecast and estimates based on assumption 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 and all of which make us actual results plan of objectives or expectations to differ materially from the expressed. We encourage you to review our publicly available disclosure documents filled with the relevant security regulators. If you don't have a copy of the relevant press releases on the slides, please contact the Telefonica Investor Relations team in Madrid by dialing the following telephone number 3 49148028700.
Now, let me turn the call over to our Chairman and CEO, Jose Maria Alvaro
Thank you, Pablo. Good morning, and welcome to Telefonica's first quarter 2017 results conference call. With me today is Angel Villa, Chief Strategy And Finance Officer. And during the Q And A session, you will have the opportunity to address us with any questions you may have. I'd like to begin this presentation by highlighting the continued execution of our strategic goals.
1st, Business sustainability is reflected in the solid growth delivered both in reported and organic terms, namely operating cash flow. Which accelerated across the board. Also, our focus on capturing high quality accesses and encouraging response from more for more but if across markets is the basis for the expansion in customer lifetime value. Moreover, headlines in euros benefited from FX effect and earnings per share grew very robustly by 49%. Secondly, our transformation process results are visible in terms of cost reductions and synergies.
In addition, with the introduction of our We are adding a new type of relationship with tending average debt life with financing at historical low rates and reducing leverage with our growing free cash flow generation and including the sale of the announced TELSIUS stake. As shown on Slide 3, We are on track to meet 2017 guidance as our Q1 figures are in line with expectations. With regards to shareholder remuneration, the 2nd tranche of 2016 dividend per share in cash will be paid on 16th June. And for the 2017, we confirm the per share in cash with the first tranche to be paid on 14th December and the second one in June 2018. These two factors and the organic deleverage through growing free cash flow will allow us to maintain a solid investment grade rating.
To review Telefonica key financials, please turn to Slide 4. Consolidated revenues topped 13.1000000000, up 5% nominally or 1.5% organically year on year. Underlying OIBDA grew 6.5 percent to just above 1,000,000,000, while margin remained flat at 13.6%. Operating cash flow accelerated reported growth to 12.1%, eight point nine percent in organic terms. Please note the positive contribution of Forex for the first time since the first quarter of 2015.
Adding between 4 and 5 percentage points to revenues and OIBDA performance respectively. Moving to Slide 5. Growth ramp up from bottom from top to bottom, thanks to our management of non operating results. As such, January to March net income reached almost $800,000,000, up 42% on last year's figure. While reported earnings per share were up 49%.
Underlying EPS reached per share. On Slide 6, free cash flow generation reached almost 1,000,000, of 1,000,000 higher than in January March 2016. As shown in the graph, on the top right top right of the slide, operating cash flow growth explained 50% of the increase, while the working capital improvement and savings in financial payments and others more than compensated the higher cash taxes. This cash generation is reflected in the lower during the first quarter of the year. Let me mention that Q1 is traditionally impacted by seasonal impacts So for the rest of Moving to Slide 7.
In the first quarter of the year, we have noted a significant recovery in reported trends in revenues, returning to growth. In underlying OIBDA, we have accelerated the year on year valuation by 0.5 percentage points, and in operating cash flow, Ixtelor 11.2 percentage points. Please turn now to Slide number 8. To see the different moving pieces affecting OIBDA evolution. Above all, the marked change in FX contribution, which this year added EUR 191,000,000, and last year detracted 1,000,000.
So the currency impact is clearly fueling growth this quarter. Contributing 5 percentage points to Looking to the next quarter and taking into account current rates, FX will continue to be a tailwind in the 2nd quarter. However, it is important to remember the positive organic delivery in markets such as Brazil, Argentina, Germany and the UK. Moving to Slide 9. Quality of revenues is delivered against this quarter.
With growth of 1.7 percent of service revenues in organic terms, 26 basis points higher than total revenues and despite the negative effect of 110 basis points from regulation. By region, Span America continued to be the main growth driver and by services, broadband and services beyond connectivity. Global Efficiencies and merger synergies drove the group organic OIBDA growth. Margin was stable versus January March 2016, reflecting expansion in Brazil and Germany, stability in Spain, and erosion in the UK and Hispam. On Slide number 10, you can see the high cash conversion achieved led by strengthened operating leverage and lower CapEx intensity.
Absolute operating cash flow level reached almost EUR 2,500,000,000 and posted a very solid organic growth of 9%. Balancing more than 20% in Lisbon and Brazil, respectively, with high single digit in Spain and Germany and a decline in the UK. I'd like to highlight the sequential acceleration in the year on year trends in all segments. Slide 11 shows the visible results of data monetization. LT customer base increased 72% versus March 2016.
And data usage by 58%, driving an ARPU uplift of around 11%. In LatAm, increasing prepaid smartphone penetration up to 45% and the successful implementation of recurrent data plans continued to boost data prepaid ARPU, delivering a 20% uplift in this first quarter. As a consequence, mobile data revenues grew 13.5 percent year on year, representing 58% of mobile service revenues. On the other hand, data volumes continued to post high growth rates in both fixed and mobile networks, showing a huge monetization potential. On Slide 12, you have overview on the promising growth expected from data monetization.
In the speed and capacity wave, We are successfully capturing growth, thanks to the financial network we have with fiber price premium versus TSL, and higher ARPU athletes from LP across the group as leading examples. This ARPU uplift then continues by adding service beyond connectivity, with TD being a clear driver. There are several initiatives to exploit this second wave across our markets. And finally, we are starting to work on what we see as the 3rd wave, cognitive intelligence, which will further optimize customer experience, enhance operational efficiency and open us up to the new optionality. In this context, we have new opportunity to expand our strategy reflected in the higher value and loyalty of our customers.
In digital services, on Page 13, we continue to implement a distinctive approach. On the one hand, in video, the best premium content across our geographies continues to drive revenue growth. In addition, the recent contract signing the first quarter for the international distribution of some of our original productions clues their high quality and our ambition to reach a wide audience, as well as providing a new way to monetize our investment. On the other hand, in Ijacent Services, we have once again strengthened our partnership with key players in security, reinforce our cloud offering for SMEs and began to roll out several flagship machine to machine projects. In Telefonica Global Resources, we continue to work towards offering excellent connectivity, leverage, on our enhanced network, our main differential asset.
In fact, our fiber and cable coverage of 14,000,000 premises passed is one of the largest ultra broadband networks worldwide, while our LT coverage has reached 64% on average across our footprint. In parallel, we remain committed to the evolution of our network and the digitalization of our processes and systems, leading to innovation, increased efficiencies and agility, and thus improving our customer experience. On Slide 15, we show the solid performance of Telcis, with a strong revenue growth, up 5.4% year on year and OIBDA margin reaching 48.9%. With nearly 16,000 telecommunication test hours in 5 countries and a leading network of fiber optic cables that is being extended with the deployment of 2 new cables, Telescues is an excellent position is in excellent position to capture exponential growth in data traffic foreseen for the coming years. Now, I hand over to Angel.
Thank you, Jose Maria. Let's move to Slide 16. Q1 trading in Spain shows positive results tending towards high value. As the mix of Fusion subscribers continues to improve. 21% of the customer base is already in high value packages, Fusion plus 2 or above, 5 percentage points more than in December.
It is also worth highlighting that the mobile base shows a robust positive growth of 5% and TV performance improved. Disconstructive dynamics prove a successful more for more strategy based on smart banding, combined with leading coverage and content. As such, Fusion ARPU remained stable quarter on quarter at EUR 82. And its pace of growth was 4.4% year on year due to the different timing of tariff upgrades and promotions. On Slide 17, we include a zoom on the main drivers behind services, revenue performance in Spain.
The decline in Q1 year on year amounts to 1000000. It is mainly explained by lower wholesale revenues, which declined 7.1% year on year, or EUR 35,000,000, impacted by lower football and a gradual loss of MVNO contracts. Both factors were already well flagged in the past. In addition, consumer revenues post the year on year growth this quarter because of a slower pace of improvement of Fusion revenues. The reason behind this is the different phasing of tariff upgrades applied to the bulk of the Fusion base.
February 16 versus April 2017. Therefore, note that service revenue trend should rebalance from Q2 based on a more comparable tariff calendar And again, from Q3, once the wholesale football revenue impact has passed. In addition, I would like to highlight that the low levels of wholesale fiber penetration suggest a relevant upside in the wholesale business in the medium term. Turning to Slide 18, Delifonic Espana starts the year delivering strong profitability and cash conversion. With both quarterly organic OIBDA and operating cash flow margins expanding year on year to 40% and 29%, respectively.
The consistent capture of efficiency gains, along with a material lower capital intensity, leads to an impressive 8.3% growth in operating cash flow generation. Despite a temporary tougher comparison of services revenues in Q1, as we explained before. Telefonica Deutschland on Slide number 19 maintain solid operational momentum in a dynamic environment, focusing on stimulating data usage. While price pressure in non premium showed further signs of easing. Strong growth in LTE customer base usage and data traffic continued.
With our unique positioning, positioning, of O23, allowing to multiply data usage by 1.5 times versus prior tariff portfolio. On financials, mobile service revenue trend continued its sequential improvement when excluding regulatory effects. OIBDA posted a steady growth in Q1 with further margin expansion. Balancing successful synergy capture approximately 1,000,000 of incremental savings, compensating commercial efforts. Finally, it is worth to highlight the operating cash Q11 16.
Turning to Slide 20. The UK business shows growth in value accesses while at the same time, customers continue to move towards higher tariffs, leading to greater data consumption and LTE penetration. As such, total revenues grew 2.1 percent year on year, reflecting higher average subscriptions and out of bundled spend, growing MVNO contribution and an increase in value customer base. This revenue performance, coupled with ongoing cost efficiencies, drove OIBDA up 0.6%. On the other hand, operating cash flow fell 21% due to a 31% increase in CapEx as we accelerate towards completing our LTE rollout.
Moving to Slide 21, our performance in Brazil shows that we continue to steadily growing and expanding profitability. High value commercial activity is driving both solid accesses growth and sustained ARPU increase. Service revenues grew 2.1% year on year, with mobile service revenues up 5.1%. This performance and the reduction in OpEx on the successful execution of synergies drove the OIBDA and operating cash flow increase up by 7.5% 21.6%, respectively. Currency evolution is very positive this quarter and growth in reported figures is 30 percentage points higher than in organic terms.
In Espana America, moving to Slide 22, we continued to focus on quality growth. As such, mobile contact accesses growth and increased penetration of smartphones and LTE translated into double digit mobile ARPU increase. At the same time, fixed accesses with fiber and cable connections grew by 53% year on year, enabling further uptake of higher quality fixed broadband and pay TV services, with higher ARPU for both services. Turning to Slide 23, we show how these commercial trends are driving solid revenue and APA growth. Up by more than 9 This widespread growth is mainly driven by countries like Argentina, where tariff upgrades and growing volumes underpinned an outstanding performance.
Or Colombia where our solid commercial activities consistently delivering positive results. On the other hand, in countries like Mexican Peru, intense competition continues to drive negative year on year changes. However, We saw some signs of improvement with ARPU trends stabilizing or even improving in both countries. Let me now turn to the financial metrics starting on Slide 24. We continue to reduce Our net debt to EBITDA ratio down to 2.91 times as of March 2017, mainly explained by see free cash flow generation in the quarter.
Including the TELSIUS stake sale, net debt to APA ratio declined to 2.84 times. Our cash flow generation reflects improved operational performance despite seasonal impact on working capital. All in all, free cash flow has We expect further deleverage progress throughout 2017 as we continue to deliver across our operations on top of inorganic measures. On Slide 25, Telefonica continues reinforcing its balance sheet by issuing close to EUR 7,000,000,000 year to date, with an average debt life of above 16 years for new debt at an average cost of 3.3%. As a result, we have extended our average debt life above 2 years in the last three months to reach 8.3 years.
We have built a healthier liquidity position at EUR 24,600,000,000, which allows us to cover debt maturities for over the next 2 years. And we have taken advantage of historical low refinancing rates that together with exposure to short term interest rates, reduced interest payment costs 128 basis points year on year to 3.48%. I will now hand back to Jose Maria to recap.
Thank you, Rafael. To recap, today's strong set of results allow us to advance in the execution of our sustainable growth strategy. As such, our distinctive operating cash flow, growing strongly both on reported and organic basis, and fuel the year on year expansion of free cash flow. Furthermore, we'll retain a benchmark profitability and our EPS grew very solidly. Finally, we continue to reinforce our balance sheet and reiterate all our commitments.
You very much. And now we are ready to take your questions.
We would kindly ask and if possible, we recommend you not to use your cell or hands free phones. There will be a short silence while questions are being registered. We will take our first question from Akhil Dasani from JP Morgan. Please go ahead. Your line is now open.
Hi, good morning. Thank you very much for taking the questions. My first question is just to start with Spanish revenue performance. As you'd already highlighted, over the last couple of months, there was an expectation that the comps into Q1 would be tougher. Given the phasing of price increases.
And obviously, you've discussed that on the call so far this morning. You've mentioned that Q2 would improve as the price increases kick in and Q3 a bit further as the wholesale benefits improve too. But could you maybe help us quantify how we should think about that Can we think about revenue growth returning back to where you exited that in terms of service revenue growth at the end of last year? Rather any other factors within that that we need to think about that might either make it better or worse than that level of performance? And then secondly, in staying with Spain, we've seen in the press over the last couple of weeks various comments that, you as a company may look to launch a no fool's brand I just wondered if you could comment both in terms of the border competitive environment and in terms of those specific comments, whether that is something you're looking at and how you think about, I guess, more broadly your KPI momentum in Spain going forward?
Well, thanks for your question. In the revenues of Spain, Let me try to explain a little bit further the evolution on this first quarter. This first quarter is highly conditioned by the wholesale revenues and that effect should progressively fade away. If you review Page 17 of the presentation, you will notice that B2C revenues were basically stable year on year, in spite of a much tougher comparison as we have not had Fusion offer agreed this quarter, but we did have them in the first quarter of 2016. Therefore, this should be improving along the year as we have already been putting in place a first update of the offer in April.
And remember that D2C accounts for 54% of total revenues. B2B was also stable. And as we have been able to compensate declines in communication services, with a double digit increase in IT services. We expect B2B to be broadly stable along the year with some facing events in some quarters due to specific contract renewal or signing. And remember that B2B accounts for 28% of our total revenues in Spain.
Wholesale revenues were down year on year in the quarter, mainly due to the lack of football rights resale of the La Liga rights that we own in 2016 and with that and that we don't we do not own anymore. And therefore, we do not resale them in the 2017 and also the Jago contract is having some impact. Out of the total wholesale revenues, MVNOs and football represent just 80% of total wholesale revenues, while transport interconnection, fixed broadband represents 82%. As we expect the football rights effect to be progressively diluted along the year, namely from, from August onwards, And therefore, progressively, this wholesale revenue impact should be neutralized. In any case, remember that wholesale revenue accounts for 80% of total service revenue.
As a result of all of that, we foresee a progressive recovery along the year. We do not guide on a specific geographies And certainly, we do not guide on a quarter by quarter basis. But we do foresee progressive progressive recovery, progressive improvement along the year. And on your second question, we cannot confirm a second brand launching still. We analyze all alternatives, of course, And we have 2nd brands in some of these, for example, gift gaffe in the UK or others in Latin America.
However, we foresee that we are very strong on the bundle strategy on the mid and high end And we think that we should gain some traction on the low end. And therefore, we are certainly rethinking our strategy on the low end, Fusion customer base.
Thank you, Adil. Next question please.
Thank you. And our next question is coming from David Wright from Bank America. Please go ahead. Your line is now open.
Maybe, I guess, just to sort of push a little on achilles yesterday, by the end of the year, we be expecting sort of revenue growth back to those 2016 levels in Spain? So for the around the full year, so just trying to get a little more comfort there. And then just secondly, in the UK, that CapEx spend is high again, as you mentioned, you are getting towards the end of your LTE rollout. Should we be to see CapEx levels come down again in the UK? Or is there a, is there a kind of an effort to continue to improve that improve that network quality, potentially ahead of any kind of IPO or even a a minority stake sale?
Again, allow me to reiterate that we don't guide on regions. But having said that, we foresee Let me make a few reflections around the Spanish market. The market consolidation of the market and the more for more strategy is basically driving into upselling of the different customer base of the different players. In Q1, in this first Q1, and the second quarter of this year, we are upgrading again all of our services. And therefore, what we can extract at all that is that this is a very rational environment We think we have differential assets.
We have the largest fiber network in Europe and the strongest project coverage in Spain. And we think we have the best TV proposition as we are focused on value. And therefore, we also think that the fiber wholesale agreement would drive even more rationality into the market. So overall, we see we think that all the trends that were valid at the end of 2016 are still here in spite of the fact that we have been having this impact of wholesale revenues in Spain. And remember, again, that B2C and B2B accounts for basically more than 80% of roughly 80% of the revenues in Spain.
And we saw we see solid trends on that part of the business. So we are pretty comfortable with the market environment. We are working in order to improve the current trends. And we think that all the reasons that we're behind the market in 2016 are still valid today. And in terms of CapEx in the UK, we foresee a quite similar CapEx to sale ratio in the UK in 2017 compared with 2016.
We are we are improving our network significantly, and that's why We have decided to accelerate some CapEx deployment in the UK this quarter. We have reshaped our beacon agreement with Vodafone order to make it more flexible on ours, both of us to have more agility. So you should expect a similar level of CapEx over saturation in the UK this year compared with the previous year.
Thank you. And our next question is coming from Matthew Rabilhert from Barclays. Please go ahead. Your line is now open.
Yes, good morning. Thank you for taking the question. First question on Spain, sorry if I come back to that. I'm just looking at the KPIs now. I understand there's some upselling there, but clearly there's been a bit of a deterioration in some of the broadband and line loss trends.
And I was wondering if we should relate that some sort of consumer fatigue about the price increases. So the question would be, are you comfortable you can continue to do more for more initiatives without having a negative impact on KPIs going forward? A second question has to do with Brazil. Very strong numbers in Brazil published yesterday. We're not seeing a big recovery in top line, but obviously very strong synergies.
And I was wondering if you're expecting the macro to play a role for the rest the year and to enable a further acceleration or the numbers you're seeing in Brazil already benefiting from the easier market macro? I guess the question really is, can the revenue accelerate in Brazil? Thank you.
In terms of, thanks for your questions. In terms of Spain, of trading this quarter, First, allow me to mention something that, it is important for us. Our outstanding mobile contract this quarter. We have had record gross adds this quarter. And we have improved sequentially the quarter on quarter TV performance on a better IPTV.
We have had some solid growth on Ultra broadband. It is true that we have been having the impact of tariff upgrades and promo calendar. But overall, if you ask me, which is the most significant indicator around it, potential fatigue that you were mentioning in our customers in Spain allow me to say that in spite of these price upgrades, churn levels remain significantly low. Churn level in mobile is 1.6% in contract, on fixed telephony is 1.4% on fixed broadband is 1.6% on fiber is 1.3%. On Ultra broadband fiber is 1.2% and on Fusiyan is 1.4%.
And allow me to say that those level of churn, which are would say relatively positive compared to the benchmark of the industry and the sector, namely Europe. We have been having all those indicators at the same time that we have been having an expansion of Fusion ARPU of roughly 4%. Which is significant, in spite of the fact that we have not been having any tariff upgrade in this first quarter. And that means that the Fusion composition base, which is the most significant contributor to B2C revenues, has also been improving. We have been able to upsell our customers.
And now you have that the high end customers of Fusion accounts for 21%, which is 5 percentage more. Points more than in the previous year. And the basic has declined this 5% with the low end remaining stable, basically. And that means that we have been able to upsell our customers. In this quarter, ARPU growth, this upselling has been diluted by the promo effect.
But once the promo effect will be diluting progressively, you will see that being fostering ARPU growth. So overall, we think that this rational strategy that we are following in the Spanish market is so far we have been able to execute it at the same time and controlling the churn effects and having significantly low levels of churn. And in terms of Brazil, macroeconomic in Brazil and scenario in Brazil is certainly recovering on the back of a much more Russian economic measures. The market consensus estimate for GDP expansion in this year is 0.4%. But we are already seeing some report of some macroeconomic analysts showing a 3% to 4% GDP growth in 2018.
And these opportunities started to be perceived in our revenue trends and namely on commercial activity. And certainly, on the bad debt levels, on the provision of bad debt in the different companies. So overall, yes, we see macro recovery already being a fact in Brazil. Yes, we do think that that should be translated into a much better, customer environment and commercial environment. And as we do have, the best network in Brazil, and as we do have the best brand the best distribution network in Brazil, we are we feel that we should be able to capture this extra boost coming from the macroeconomic environment.
And finally, allow me to say to tell you that as the economy improves, we could see a better evaluation on the prepaid segment in Brazil, which is still underperforming year on year and also on the B2B business. For us. So we see some further room for improvement in Brazil. And finally, just to conclude, This macroeconomic recovery we think is here is solid. It's here to stay, but we have been the only telecommunication company that has been able to grow even in the times of where the GDP was declining 3%.
So we feel that we are prepared to take advantage of this better macroeconomic environment.
Thank you very much.
Thank you, Matthew. Next question please.
Thank you. Our next question is coming from Mandeep Singh from Redburn. Please go ahead. Your line is now open.
Thank you for taking the question. I'm apologies, but I want to come back to Spain I appreciate you don't give specific country or regional annual guidance, but we've had multiple moments in the past where returning Spain to revenue growth and sustainable 40% margins was a sort of watershed moment and it's been expressed by management on calls as sort of ambition as a sustainable trend. I mean, your message on that appears to be a bit softer. I mean, how should we think about Spain? Is this a business where revenues will grow sustainably and where 40% margins are sustainable?
If you could just sort of just give us a little bit more in terms of what's the ambition around the Spanish business and the sustainability thereof? Thank you.
Well, thanks for your question. I'm more than happy to to be back to Spain. In terms of revenues, we expect recovery along the year. With service revenue progressing toward stabilization. Handsets sales will not follow linear trends.
I mean, and in general terms, they are decreasing. Consumer trends will continue increasing. We have already executed, tariff update of Fusion in April, and the preliminary figures that we have out of April and this 1st week of May allow us to say that revenue trends are back, into the right direction. In terms of, in terms of, SMEs, rising competition is also erode in some part of the trend. But as we launch Pucion, business last year, we have been able to stabilize that part of the business.
And in the corporate segments, we are growing double digit in 'nineteen more than compensating the comps. As I have mentioned already, wholesale revenues should are suffering in the first quarter. And we'll be starting to ease away in the 3rd fourth quarter. Overall, again, competitive environment is rational, the more for more strategy sustainable. We have the best network.
We think we have the best brand. And therefore, all the trends that we were highlighting in the previous quarters should be here to stay.
Can I just follow-up briefly on margins, if you don't mind, please?
Oh, yes, certainly. Sorry. In terms of margin, we have been able to absorb, I think it was a 10% increase in content cost year on year. With a stable margins, thanks to the voluntary retirement plan that we put in place last year, efficiency and distribution channels. And also, we should start to notice some effect in the next quarters, but namely in the next years, our central office decommissioning.
So in terms of margins, what we can tell you is that we have been able to absorb the extra content cost with efficiencies in other chapters, namely in labor force. But we are also working and we have been also working on the distribution line and we are also working on the network side because for the time we are running 2 networks, the analogical, the copper 1 and the fiber and we will be progressively decommissioning central switches. So we feel that margin slows in Spain should be sustainable.
And our next question is coming from Keval Kirogia from Deutsche Bank. Please go ahead. Your line is now open.
Thank you. I've got one question on Spain and one on LatAm, please. So just on Spain, when we look at the non Fusion revenues, they're still falling around 15%. And the KPIs are quite weak within the understand. Obviously, some of this is driven by the migration to Fusion, but the Fusion ads themselves are perhaps a little bit lower than just over 1 year ago.
So how should we think about the direction of non fusion revenues? Do you have any drivers to improve this trend or is this 15% decline quite realistic for what we should see for the rest of the year? And then secondly, when we look at LatAm, you know, for some post development but as you highlighted, Peru and chile to remain a little bit mixed. When do you expect Peru to improve his entire being very aggressive, are there any signs of improvement at all beyond the quarter in terms of competitive backdrop in Chile and Peru?
Well, thanks for the for your questions. You're right. No, Fusion revenues declined 15% this quarter. While Fusion revenues increased by 9.3%. And remember that basically, Fusion revenues are twice larger the non foreseeable revenues.
We have been having this quarter price average on the non foreseeable revenues and therefore this effect should start to be reflected in the coming quarter. And we have been also improving our trends on the contract side on the mobile side. So yes, we are working on stabilizing or improving the trend on the non foreseeable revenues. And it is also true that we are keep migrating customers from non Fusion into Fusion. Also allow me to mention that in the non Fusion revenues, you have the DTS 1 play revenues.
And therefore, the migration of customers from pure satellite plate into Fusion and also the migration to customer other platforms should be easing away in the next quarters. So we expect that to improve in the next in the next month. And in terms of Chile and Peru, Those are different scenarios. Allow me to start by Chile. In Chile, we have been focusing on high value segments.
And we have been having growth in contract and in fiber to the home despite very intense competition. We have a relatively strong position and we are improving on the high end the value customer side. And we are suffering on the low end with the entrant with the entrance of some new players. In terms of fixed, we have been having a solid performance of pay TV. We have been growing 2% and on the fiber to the home, we have been increasing by 22%.
We have already in Chile more than 1,200,000 home pass with fiber, which accounts for 30% of fixed broadband access and fixed broadband ARPU has been growing. So even though revenues have decelerated and half fell slightly due to this decrease in prepay, and regulation, ex regulation, revenues in Chile would have increased. So and then OEDA is down 10% because we have been high in some more commercial cost, and some and some higher network expenses. So overall, in Chile, we see trends solid in the high end of the market. We keep expanding our fiber and LTE network.
And therefore, we think that, we need to hold on to our commercial position but the overall underlying trends of the company are getting better. If you look at the situation, it's different. Peruda situation is we have a strong competition on both the high end and the low end of the market. It's a very highly competitive environment, namely mobile and specifically mobile, while we have a positive traction on the fixed line. And we do not foresee that commercial intensity on the mobile side to be released in this year.
Neither in prepaid nor in postpaid. So in Peru, it will take us longer to turn around the business. On the mobile side, and allow me just to point out the evolution on the fixed line, which is growing. And we are also expanding significantly over ultra broadband capabilities in in Peru. So different scenarios in Chile, we think we can hold on and somehow improve our trends in Peru is going to take us longer.
Thank you. And our next question is coming from Giovanni Montalte from UBS. Please go ahead. Your line is now open.
Hello, good morning. If I can, on the cost base in Spain, looking at service revenues, so let's say, excluding the mobile handset portion, And let's say subtracting EBITDA before one off, it looks like your cost base in Spain, let's say the one link to the recurring business is down around 1%. I understand and I do respect that you don't wanna indications on a regional basis, but is it reasonable to assume that the improvement that you have been indicating in terms of top line for the coming quarters, will, will, let's say, be followed also by the OpEx base. Shall we let's say, expect the evolution of the OpEx base to continue to be, let's stay on the downside as it was in Q1 and eventually to improve this decline as well. And on the wholesale revenues, if I may, you again have been guiding for an improvement going forward.
When do you think it could be reasonable to start thinking about the deal set revenues as a potential soft stop growth? Not just stabilization. I mean, once you get rid of the content portion of the revenues, once we get rid of the impact from the loss of the MVNOs, contract. The agreement you have reached with Vodafone and the improvement in the pricemix that should derive from the fiberal cell connections could make this revenue line as also brought actually. Is this something you would share some comments with us?
Thank you.
Well, thanks for your questions. On the cost basis of Spain, and the way going forward. Allow me just to focus for the time being in 3 chapters. Although we are working on some others. In terms of the voluntary retirement plan, As you know, we booked the provision in 2015, the extension of the plan in 20 sorry, 2015, the extension of plan in 2016.
We have been booked an extra provision this quarter because we have been having more people subscribing to the plan that we were anticipating at the end of the year. That means that the acceptance so far is roughly more than 4200 and of which 2 28 left in this first quarter. Which means basically is that, the run rate of those savings should be around 480,000,000 since 2019. And therefore, we have still some effect to flow through the organic P and L of Telefonica Espana. We think this the level of this should be in the neighborhood of more than 350,000,000 in 2017, another 100,000,000 in 2019 and an extra million coming from the higher acceptance.
So it's still a way to go to have a more impact on efficiency on the labor force in Spain. And then on the distribution channels, we have been closing stores for the last years, we have been closing basically close to four hundred stores, namely three eighty three. If I remember correctly, 41% 41 shops were closed in this first quarter. And our online sales are also growing. So in terms of distribution channel, we should have also some positive effects flowing through the P and L in the next quarters.
And then finally, on central office closure. We are the 1st company in the world to shut down 38 central of central switches. And we target to close more than 2000 in the next years. You know, that according to regulation, we need to give a 1 year a 1 year pre notice in places where we don't have ambunding of the local access. And we have already announced more than 200 central offices closure.
And therefore, we should expect more efficiency growth. And in terms of the on the places where we have unbunded of the local access, we need to have a pre advice of 5 year and we have been already preannouncing more than 30 central switches. So you will see that as also acting very heavily on the network side of the cost in Spain going forward. And then we are also trying to land down towards the cognitive intelligence impacts on the cost basis out of Ara, we will try to give you more color out of that in the next quarter. And then on your wholesale revenues question, we should have effects negative effects coming from this TV thing that should be fading away in the 3rd fourth quarter.
Then we'll have the migration of the Pepephone and JOYgo into the new owner's network, which would be in 2017 2018. But allow me to say that MVNOs and TV represent just 80%, 18, 180% of of wholesale revenues, while other wholesale revenues, namely the ones coming from the network, represent the bulk of wholesale revenues. And out of that, we have the unbunding of the local access of the traditional corporate lines that progressively would be somehow migrated into fiber into fiber accesses. And the rental access of fiber is significantly higher than the rental access of the copper line. And then we are also ready and having conversation with different players to extend wholesale agreements into our fiber network.
So let me know, to be very specific, because we don't guide on the different countries and certainly not on the different segments, But we are we think that there is room to significantly improve the wholesale trends because of the strong network that we own in Spain.
Thank you, Raj.
Thank you, Giovanni. Next question please.
Thank you. And our next question is coming from Joshua Mills from Goldman Sachs. Please go ahead. Your line is now open.
Thank you. And two questions from me. First on Hispam. So first is Q1 last year. Obviously, the CapEx to sales ratio has come down.
And I've seen in part of that is due to help from the FX effect. So my question is what level of CapEx sales do you see as sustainable longer term, assuming a kind of stable FX rate in that Hispam region ex Brazil? And secondly, coming back to Spain, we're talking about more and more strategies from the main operators. But you are seeing some extension of promotional periods, you're looking here at Orange JazzTel and Massmobile is still it's being quite competitive. So do you see have you seen any change in competitive intensity over the last quarter?
Or is it really the slowdown in net adds really due to a slightly larger price increase versus this time last year?
I would start by the second one for your questions. I will start for the second 1 and then move on the on to the East Bank if you allow me. On the If we do see signs of fatigue, again, on the more for more strategy, the answer is so far no. Certainly not on the mid to high end. We see some intensity on the low end because of the mass mobile namely the mass mobile moves.
But again, because of the structure of the mass mobile capital structure, the room for significantly deteriorating the current environment in Spanish our opinion, limited. So it is true that we have some more intensity, a slight more intensity in this last month. But it is also true that it is certainly below the levels that could be anticipated. So on the low end of the market, a little more little bit of more tension. We are rethinking our strategy there but certainly on the high end mid end, we think that the more formal strategy is pretty solid.
So overall, I think that in our opinion, you should not expect the Spanish market to deteriorate in the next quarter, the competitive environment. And in terms of CapEx over sales in Espan, it is roughly around 1 percentage point lower than in 2016. And which is in line with the group guidance on the CapEx over sales, which is roughly roughly a 1 percentage point down compared with the previous year. We are already covering more than 50%. 50, I think it's 56% of the total Latin American territory, with LP.
We have already doing significant improvements in our fiber to the home, ultra broadband networks in the countries in which we have wireline operations. So we feel comfortable with the levels of CapEx that we have in his bank. We do not see a significantly significant increase. And in the mid to long term CapEx intensity in the whole of the group should be heading down.
Thank you, Jos. Next question, please.
Thank you. And we'll take our next question from Julio Arciniegas from RBC. Please go ahead. Your line is now open.
Coming back to Spain, it's true that the high end proportion of customers has increased this quarter from to 2021, right? But I can also see that the proportion of the low end customers has also increased. Do you see some risk that the upside from higher end customers could be reduced by? Increasing low end customers. Now that you are actually thinking in pushing maybe order the low end of the market, That's my first question.
And my second question is regarding Latin America. From the 5,000,000 home pass in ISPA, do you include in this figure with this technology? And if you do approximately roughly, what is that figure? And additionally, some of your competitors, they have been saying that, for example, the deployment of cable and fiber let's say in Colombia, which is a big market, is roughly $100. Why doesn't Telefonica considering that the cost is actually similar to Spain decide to basically move from a copper network to a cable fiber network in Colombia?
Thank you.
Thanks for your question. Taking the first one on, on Spain, out of the Puxi on Total customer base, the high end has increased 5 percentage points. The median has decreased 5 percentage point we are running. And then the low end has increased 1 percentage point because we are also doing some pro and therefore, we are also incorporating some new customers, which is the way going forward because once we have incorporated new customers, we try to sell them and to encourage them again through promos to move upwards on the trend. So we are not detecting a significantly downward trend on the customer base of Fusion, rather the I would say the opposite, we are upselling our customers and through the different promos.
We are also being able to increase their average ARPU. So and you should expect us to keep doing the same. And it's something to be a little bit more active on the low end. And in terms of ispam, we are pretty pragmatic with the technological evolution in some places where it is more effective and where the average ARPU for civil, average ARPU of the different customer ledgers in some regions could not justify deploying fiber. We are seeing we are increasing our capabilities with fiber to the cabinet.
And therefore, we are mixing technologies in Latin America. The reasons from moving from one deployment to other it's directly depending on the foreseeable ARPU that we foresee out of the customers and the data needs that are foreseeable in the different region So you should expect us to keep going into that direction. And remember that we have the largest fiber, I mean Ultra broadband network in Latin America overall. So, and then on Colombia, just to focus on Colombia, we have, we are advancing significantly. We are advancing significantly, enabling fiber deployment.
We have connected more than 33,000 homes this quarter, and we have passed 360,000 homes in Colombia. So pretty active. I'm sorry, but we do not disclose the average cost per connection.
Are these homes in Colombia, BDCL or fiber?
Again, it's a mix of both, a mix of both.
Thank you. Thank you very much.
Next question please.
Thank you. And we'll take our next question from Justin from Credit Suisse. Please go ahead. Justin Funnel from Credit Suisse. Your line is now open.
Please go ahead proceed with your question.
Yeah, thank you. Can you hear me now? Just two questions, just follow-up questions. On in Mexico, there's a plan to roll out a national wireless network by the governments. And there seems to be a similar plan in Argentina, although it's less developed.
I just wondered what your thinking was about these? I mean, could you actually shift towards perhaps being an MVNO in these markets and perhaps invest less capital that make make better returns. And then secondly, in Spain, again, the regulators made a few comments If you could, you know, made it clear that if you've got a few concerns about the level to which prices have risen in the Spain, is that going to affect your stress on how you put through price increases going forward.
Well, thanks for your question. On the first one, allow me to make a more general reflection on the environment in Latin America. I would say that all the players in Latin America, including ourselves, certainly as much more open to network sharing. And therefore, you would see you will see. And in fact, we have already been doing some network sharing, I would say both network sharing agreements, namely with Millicom, in, in Colombia, And we're analyzing network sharing agreements.
I would say a significant network sharing agreements with different players, with all the players in Latin America. So I think that all of us being much more rational in terms of CapEx deployment is something that you should score into your models. Again, it's similar to the thing that we have done in Spain with the fiber network with Vodafone. So we will analyze every single possibility of taking advantage of further deployments. But we will need to run the different numbers.
I'm not sure. I mean, about the red carpet, in Mexico, I would not comment. Because it's on early stage. But we see opportunities of doing different things with different players in Mexico, not just with Fred Compartira. As I was mentioning before, all the players are now open, much more open minded to that.
So the answer is, should we be should you consider us running in some regions of Latin America on Others Network? That's perfectly possible. And in terms of Spain, well, the regulator, in terms of the more for more strategy, that does not imply unitary price increases. In fact, if you divide the prices of Spain per gig or 4 megabit per second, including the TV content, price per unit keeps declining in Spain. So I don't think that this should be a concern going forward, especially at a time that this plane has become the leading country in Europe in terms of ultra broadband deployment.
There is more fiber in Spain than in the sum of the UK, Germany, France and Italy together. And this is something that should be protected because we can go even further. There is roughly a 65% household penetration of coverage penetration of fiber in Spain. This is far beyond any other country in Europe. So we are we think that these significantly value to our customers.
In fact, churn levels are low and have not been significantly impacted by these price upgrades. So we do not feel that there is any need to be concerned around that in Spain going forward. But of course, we will monitor Another factor that should be taken into consideration is the prices that are going to be proposed. By the regulator in Spain for the Neva, for the Local Neva, which is also going to be conditioning our further deployments of fiber. In Spain.
Thank you. And our last question comes from Luis Prota from Morgan Stanley. Please go ahead. Your line is now open.
Yes, thank you. Two questions, please. First is a follow-up on the wholesale revenues on the agreement with, both the phone I would like you to elaborate if you don't mind on the rationale and the benefits for Telefonica giving access to Bullafone to the non regulated and regulated areas. And also, I would like to get your thoughts on that potential for Orange to join this agreement. They have just announced accelerating the fiber deployment, but whether you think that they eventually will join this wholesale deal?
And the second question is on whether you have any update on how to recapitalize Telefonica Colombia? Thank you.
Well, thanks, Luis. I'm very happy that Angel has got a question, I mean, in this conference call. On the wholesale agreement with Vodafone, the rationale behind that. Well, you know that there are geographical segmentation in Spain. And therefore, in, in non regulated areas, the price of the nevaxis is liberalized, so to say.
And in regulated areas, it's going to be liberalized. We think that having reaching an agreement with Vodafone allow us to set the standard for those benchmarks. And I think that it makes a little sense not to take advantage of the fact that we can have extra revenues coming from this very intensive capital deployment effort in Spain at a time that in some of the regions, that would not be a competitive advantage. And in other regions, in the regulated regions, we'll have to give them assets anyhow. So we think it's better to negotiate that directly on commercial terms with them.
That and therefore setting the level of the precedent and therefore, giving some sign of rationalization also on CapEx deployment in the Spanish market. So it's you should include that on the capital. Optimization of the different players, but also have a read on a strategic terms Are we ready to take orders on board? The answer is yes. This is not an exclusive agreement.
It couldn't lead. And therefore, yes, and we are having conversation with other players.
Of Telefonica Columbia, we are making progress with the Colombian government. They need to go through a very specific progress process That includes some government action. Advisors have to be hired, which they have been And we are making progress in those talks, which would lead to a potential recapitalization of the company and and repayment of this type of liability.
Okay. Thank you.
Much for your participation. We certainly do hope that we have provided some useful insights for you. Should you still have further questions, we kindly ask you to contact our investor relationship department. Good morning and thank you.
Conference call is over. You may now disconnect your lines.