Ladies and gentlemen, thank you for standing by. And welcome to Telefonica's January to September 2014 Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr.
Eguerran, Head of Investor Relations. Please go ahead, sir.
Good afternoon, and welcome to Telefonica's conference call to discuss January, September 2014. I'm Pao Negiran, Head of Investor Relations. And before proceeding, let me mention that this document contains financial information that has in prepare under international financial reporting standards. This financial information is unaudited. This presentation may contain a that constitute forward looking statements, which are non warranties of future performance and involve risk and uncertainties.
And that certain results may differ materially from those in the forward looking statements as a result of various factors. We invite you to read the complete disclaimer included in the first page of the presentation, which you will find in our website. We encourage you to review our publicly available disclosure documents filled with the relevant securities market regulators. If you don't have a copy of the relevant press release and slides, please contact Telefonica's Investor Relations in Madrid by dialing the following telephone number, 3 4914-8287. Now let me turn the call over to our Financial And Corporate Development Officer, Mr.
Arthur Villa, who will be leading this conference call.
Thank you, Pablo. Good afternoon, and welcome to Telefonica's third quarter 2014 results conference call. Today with me is Jose Maria Alvarez Paliete, Chief Operating Officer. So during the Q And A session, you will have the opportunity address to ask any questions you may have. Telefonica published a consistent and solid set of results.
Reflecting further progress in our transformation strategy. We are particularly pleased with a very strong commercial activity recorded during the quarter, with a significant boost in key growth levers and record net adds in smartphones and fiber customers. We kept improving our top line performance. After accelerating organic growth to 2.8% in Q3, driven by enhanced trends in most of our operations. This evolution underpinned OIBDA evolution, which returned to growth in the quarter and resulted in sequential margin expansion CapEx maintained its upward trend over the January to September period.
Speeding up network modernization, evolving towards a full IP company and driving access growth that will translate in future revenue flow generation of almost 1,000,000,000 up to September which kept strengthening the balance sheet. Net debt stood at 1,000,000,000 at the end of September. Let me note that the EPlus acquisition will be impacting net debt level and financials in the next quarter as it was closed on October 1st. In addition, we have reinforced our competitive edge in main markets through value enhancing deals The recently closed German transaction is the best example, and we are in the process towards closing the acquisition of GBT expected for the first half of twenty fifteen. Finally, we fully confirm our operating goals for 2014 and our dividend commitment.
Let me summarize key In organic terms, revenue growth improved to 2.8% in July, September period and 1.9% in January to September to 1,000,000,000. OIBDA amounted to 1000000000. Stable versus the 1st 9 months of 2013, reflecting the 0.8% growth posted in the 3rd quarter. OIBDA margin stood at 32.5 percent up to September 32.8 percent in the quarter. Both posting a limited year on year erosion.
Net income totaled 1000000000. And EPS reached per share in the January to September period. Reported year on year change reflected the negative FX impact and changes in the perimeter of consolidation. In the third quarter, FX headwinds softened particularly in Brazil. Dragging 6 percentage points to OIBDA year on year variation, while the deconsolidation of Ireland since the 1st July increased the negative contribution of perimeter to 4.5 percentage points.
Finally, net debt declined to 1,000,000,000, minus 11% year on year, not including yet the payment for V plus transaction to be recorded in the fourth quarter, nor the already executed divestments of 2.5% stake in China Unicom and the remaining 5% of all Czech Republic. Turning to slide number 4, increased investments are fostering growth in that high value customer base, capitalized on our right pricing strategy, customer insight and competitive studies. All these should contribute to improved customer retention, making the whole model more sustainable. Commercial momentum remains high during the third quarter and translated in the following data points. Smartphones net adds reached 8,500,000, doubling versus last year.
And 1.6 times versus the prior quarter. While fiber net adds further ramped up to almost 300,000 1.8 times year on year and 1.3 times quarter on quarter. PayTV continued gathering momentum and quarterly net adds surpassed 450,000, up fourfold year on year, boosting accesses growth to 41% year on year. LTE further advanced reaching 54% coverage in Europe, while in Latin America, it is available in 8 countries being a key driver for data monetization. On slide 5, we are particularly pleased with improvement posted across the board in the third quarter.
Both in absolute levels and relative change versus previous year. Organic revenue growth picked up in the 3rd quarter to 2.8 percent, 150 basis points more than in the 2nd quarter. This acceleration is based on increased growth rates in telephonicaspanamerica, mobile data, digital services and lower declines in Spain and Germany. Therefore, we keep improving our revenue mix towards data and digital company. Organic OIBDA growth ramped up also 150 basis points sequentially to 0.8%.
Supported by our continuous focus on efficiencies and strict cost control amid intensified commercial investments, network and IT costs. This performance led to a stabilization in the year to date organic trend and to a limited margin erosion of 0.5 percentage points versus the same period of last year. Please turn to slide 6 for a fast review on how we are enhancing our network and IT capabilities. Telefonica Global Resources contributed with a rapid rollout of LTE And Fiber, key tools to capture market growth. At the end of September, 12,500,000 premises were passed with fiber.
Approximately 2 times higher year on year and we had more than 16,500 LTE sites in service, 2.5 times from a year earlier. Let me also highlight that more than 80% of 3G and our 4G mobile sites are already connected with ultrabroadband technology. We continue advancing in network development as demonstrated by the launch of LTE Advanced in Spain while the network in Germany is already prepared for voice over LTE. In 2019, we are delivering results on simplification. Year to date, we decommissioned approximately 300 applications and reduced by 10% the number of physical servers, continue working on consolidating data center services and virtualization of IT.
Turning to slide number 7, let me go through the evolution of digital services. In the Consumer segment, Video continued to accelerate 1 more quarter, with a revenue growth rate of 24% year on year. The new agreement signed with Samsung in Spain is contributing service capabilities. Regarding financial services, I would like to point out the launch of Yap Money in Spain a new mobile person to person money transfer app and the nationwide spread of Movistar De Niro Mobile in Peru. In the global device management, the focus continued to be on the smartphone adoption with a clear spotlight on LTE with already 72% of total Q3 shipments being smartphones and 30% being LTE enabled devices.
Additionally, in the B2B segment, machine to machine showed a solid performance with revenues up 44% versus January, September 2013, on solid access strength. And cloud revenue accelerated its revenue growth up to 31%. Finally, in the information security area, the company continued to improve the value of its products and services with the launch of Cinfonia and with sales reaching a 42% increase year on year. Moving to slide number 8. Let me highlight Spania, where we continue to lead the market on quality differentiation.
Commercial momentum accelerated in the quarter, despite summer seasonality. This operational strength is based on our differential infrastructure and superior value proposition and has allowed us to increase or stabilize the customer base of high value services year on year a remarkable goal that will underpin revenue going forward. As such, compared to September 13, Pay TV customers are 2.6 times higher. Fiber customers are 2.2 times more. And mobile contract just declined 1%.
Meanwhile, Movistar Fusion TV continued to lead the convergent market growth, and to increase the value of our customer continued to evolve towards higher value packages as a result of an increased uptake of high end bundles. As a result, Fusion ARPU is increasing, up 1.2% sequentially from Q2 to Q3 reaching 70 Let me stress that we remain committed to further enhancing our long term competitive advantage mainly ultra broadband coverage, reaching 8,800,000 premises passed with fiber by the end of September, doubling last year figure. In terms of financial, Let me underline that Q3 revenue posted a sequential improvement in its year on year trend to minus 6.6%. In 2.5 percentage points quarter on quarter and halving its drop in the last three quarters. This performance is mainly driven by the customer base stabilization and the lower back book impact as a large proportion of the customer base is already convergent with Fusion ARPO increasing.
Regarding profitability, telefonica Espana delivered a healthy Q3 OIBDA margin of 46%. Improving 1.2 percentage points previous quarter. The main reason for OIBDA decline remains In the current market context, we have prioritized that our plan to turn back Spain to revenue growth remains in place. And in the coming quarter, should gradually reflect the benefits of Fusion ARPU increase, sustained trading momentum and market consolidation. Turning now to Slide 10.
Telefonica UK posted strong customer growth, outperforming the market. With total customer base reaching $24,000,000 at the end of September. Quarterly net adds were consistent and strong versus prior quarter with record market leading contract churn at 1%. Strong commercial momentum was complemented by improving ARPU trends supported by pricing stabilization, and data monetization, leveraged on the increasing data usage of LTE customers, 2 times versus non LTE and high single digit R uplift. As a result, revenue mobile service revenues performance continued to improve in the 3rd quarter.
And grew 2.3% and 1.1% year on year, respectively, excluding the impact of O2 refresh. As a result, Q3 OIBDA expanded 2.7% year on year, affected by a positive nonrecurrent impact of 1,000,000 mostly due to the final settlement related to the disposal of the consumer fixed business assets in 2013. To review Telefonica Deutschland, please turn to slide 11. In a dynamic market, we posted very solid momentum in the third quarter. With contract, gross adds growing by 30% year on year, leading to contract net additions 3 times higher versus previous year.
LTE is gaining traction with close to 90 percent of shipments being 4G enabled and usage 3 times higher versus non LTE smartphones, demonstrating that there is a strong demand for data in the market. Revenue largely stabilized year on year in Q3, with a limited decline of 0.5%, after posting a consistent turnaround throughout the year. This improvement is the result of better mobile service revenue trends, driven by data and strong handset sales following the launch of new high end devices. Increased commercial efforts to support better trading momentum, initial restructuring costs associated with integration of IPLAS, and nonrecurring transaction costs, pressure profitability. Lastly, I would like to remark the closing of the Press transaction on October 1st.
As such, the fourth quarter results will incorporate the consolidated new company figures. In Brazil, Turning to slide number 12, we continue strengthening our position in the most valuable segments. Capturing for 6 consecutive quarter more than 1,000,000 contracted debts and accelerating the adoption of data services. As such, Wharterly smartphone net adds reached a record high with almost 6,000,000 new data plans, outperforming the rest of the market and boosting data ARPU that already represents 37% of total ARPU. At the same time, In the fixed business, we continued accelerating our transformation into fiber company, reaching 3,400,000 premises passed, and 322,000 accesses as of September.
At the same time, we are strengthening our position as a video player Financial performance is shown on Slide 13. Outstanding commercial activity posted in the quarters explained the consistent revenue growth trends, with positive contribution of both mobile and fixed businesses. The latest is growing for the first time in seven quarters when regulation is excluded. Let me highlight that this steady revenue growth in mobile implies that share in the last 12 months. And on top of that, ongoing efficiency efforts are leading to a year on year cost reduction of 0.2% in the third quarter, despite higher commercial costs.
And results in an acceleration of OIBDA growth for the 2nd consecutive quarter to more than 5% in Q3 with a margin expansion of 1.2 percentage points year on year. In slide number 14, let me highlight the strong growth posted in Q3 by Telefonica Espana America. Commercial momentum with levels of mobile results above $11,000,000, an increasing weight of smartphones is driving a system double digit revenue growth. This performance is leveraged on the growing contribution of data revenues. Already accounting for almost 1 third of mobile service revenue, fostered by non SMS data up 48% year on year in Q3.
On top of all of these, let me highlight the increased profitability across the board in and particularly in non inflationary economies like Mexico, Colombia, and Peru. As such, when Venezuela excluded OIBDA ramped up year on year to 17.8% and OIBDA margin expanded by 2.2 percentage points Turning to Slide 15, let me go through the progress achieved in Mexico. The combined benefits of our quality assets and the new pro competition regulation are driving a significant improvement on operational and financial metrics. Firstly, gross adds year to date are consistently higher versus previous years. Growing by 45% when compared with the 9 months period of 2013, and 63% with the same period in 2012.
Secondly, revenue is steadily accelerating. Our mobile service revenues grew by 12.6% year on year, the highest growth in more than 4 years. And finally, Q3 OIBDA rose by 50.6% year on year. Showing the effects of the new regulatory framework and the economies of scale we are achieving as a result of the strengthened commercial positioning. In the rest of Telefonica is Pan America on slide number 16, Still growth is the main reference across the board.
Specifically, let me highlight the sound OIBDA year on year acceleration in Peru, growing by 17.4% and Colombia by 25.3% on very solid revenue growth. Margin in Colombia expanded by 5.6 percentage points year on year. In Chile, regulatory changes continued to drive revenue and OIBDA performance, but profitability as in the case of Argentina also improved year on year. In Central America and Venezuela, OIBDA year on year growth acceleration is explained by the highest net adds of last four quarters and the effects of the inflation on costs. Let me now move to the financial side on slide 17.
Net debt as of September 30 stood at 1,000,000,000 with a leverage ratio of 2.39 times. This figure would stand at 1000000000 or 2.5 times including post closing events, mainly the payment for the A plus acquisition, the sale of 2.5% of China Unicom and the already completed sale of our remaining 5% stake in O2 Czech Republic. Leverage is negatively affected by the FX impact on OIBDA, which has started to ease in the quarter. We are mindful on the need of executing further measures such as the scrip dividend and other inorganic actions. We expect to continue progressing towards a EUR 43,000,000 net debt target.
Slide 18 highlights our diversified 14,000,000,000 funding exercise in the year, with a more active role on the equity markets in the third quarter as we have raised 1,000,000,000 through the issuance of a mandatory exchangeable bond into telecom Italy shares and a mandatory convertible bond to Telefonica Shares, and we have executed the capital increase at Telefonica Deutschland for the Plastics acquisition. Reinforcing our capital structure, while raising 1,000,000,000 from equity investors. This funding has allowed us to keep a very ample liquidity cushion. Above 1,000,000,000, even after paying 40 plus. This has been complemented in October with issuance of an 800,000,000 bond with 15 year maturity and only 2.93% coupon, the lower is longer than 10 years.
As we have kept an average amount of cash in euros higher than in the previous year in anticipation of the A plus payment. And the relative weight of debt in Latin American currencies has increased following the amortization of debt in euros and Secorunas. Though this effect will persist in the future, it will be partially, it will partially offset by savings from floating The successful execution of our transformation strategy is creating growth momentum into 2015. We delivered solid customer base growth, focused on high value, enhancing the customer's lifetime value and building a more sustainable model. Revenue growth accelerated in the third quarter.
Improving the top line profile and enhancing profitability. OIBDA returned to growth in the third quarter. And margin expanded versus Q2, thanks to Telefonica Espana, Mexico, Peru, and Colombia. Our balance sheet remains strong, producing net debt year to date, even after day plus payment. We reinforced our CapEx effort, speeding up network modernization towards an all IP company, and driving access growth that will translate in additional revenue opportunities, driven by further differentiation.
Finally, we're actively participating in the consolidation of 2 of our main markets: Germany and Brazil Thank you very
you.
Participant and if possible, we recommend you not to use your cell or hands free phone. There will be a short We will now take our first question from Georgios Yara Diakono from Citi. Please go ahead. Your line is open.
Yes, good afternoon and thank you for taking the questions. I have 2, both financial related. The first one is around your capacity to to hybrid. I heard I remember in one of previous conference calls, you mentioned around $7,500,000,000 as being more or less your capacity for hybrids. There was a report yesterday by one of the major rating agencies suggesting that could be as high as around 1,000,000,000.
So I just wanted to get a clarification whether you do have more capacity than the billion we have in mind and whether you're planning to use it at some point. And my second question is around E plus I mean, it's commendable that you have stricter EBITDA recognition, done some of your peers, but I just wanted to understand once you've seen that there was actually a lower EBITDA and cash flow generation perhaps was expected last year out of this asset, why you chose not to renegotiate the price and whether means you see more revenue upside or other types of synergies that maybe haven't been identified. And if you could at all comment on GBT and whether there could be some kind of adjustment we need to make on the numbers for visibility also. Thank you.
Regarding hybrids, we have outstanding hybrids issued, of 4,200,000,000. Regarding the capacity to issue additional refibrates, the treatment is slightly different between Moody's and SMP. We are taking the most prudent one, which corresponds to some people when we say that we have a limit of 1,000,000,000, despite Moody's Moody's report issued yesterday that indeed was getting closer to 13. We have been using hybrids in order to support strategic decisions, such as M And A, acceleration on CapEx, and to protect from negative events such as the evaluations like in Venezuela. And we would expect to continue using this type of instrument from time to time, and we may approach the market again in the near to meet future.
To the plus accounting, procedure. Well, our colleagues in Germany have both in the roadshow and the prospectus and in the several Q and A sessions, which is the nature of of of adjustment that we have done to convert, what used to be plus or potentially KPN's accounting policies to telephonic policies. The different treatment, has a clear impact at OIBDA level, but, that's not affect, at the operating cash flow level, which in the end is, what one would be looking at when thinking about valuation. And therefore, we decided, that given that the synergies case was there and that the cash flow generation was there with a bigger customer base and therefore potential for revenue going forward. We decided not to renegotiate the price.
Regarding GBT, we are not aware of any such, type of adjustments that would be necessary, to meet in the future. And, as you were saying, as, as we have seen, in various deals, our accounting principles seem to be prudent and potentially more conservative than some of our competitors. Which we feel proud of.
Thank you.
Thank you, Julius. Next question please.
We will now take the next question from David Wright, Merrill Lynch. Please go ahead. Your line is open.
Hello guys. Yes, a couple of questions from me. First of all, just on the Spanish through. That's obviously a very strong number and to be able to stabilize is very encouraging. I think you said over, there was a comment about gross additions over So could you give us any idea on how the ARPU should evolve into Q4?
Would you be looking at something a little more stable. I noticed your run rate of additions are stepped down now to sort of 170,000 or so. So clearly, there is a an ARPU sort of premium. You're now trying to collect. So should we be looking at ARPU stabilization, in the next couple of quarters?
My second question is just a little more on the UK We had Vodafone announcing yesterday its ambitions to launch a fixed product. I'm sure in, as a preemptive move against BT, you obviously still stand as a mobile only operator, having divested your fixed assets. So are you feeling, exposed given Vodafone and EE and now both out there with a fixed product, could that even, prompt you to consider, an exit or even trying to consolidate the market for more scale?
Well, thanks for your questions. Regarding Spain, in Fuzion, we have seen a slight ARPU increase during the quarter, namely coming from 2 major factors. First, if you also have the new order upselling customers keep growing Now we accounted for 78% of total gross adds and 68% of gross adds are on taxable Europe, which means that with the current, with the existing commercial trends, we are seeing a move towards, not the basic product and therefore, some movement for accretion. A slight accretion for the first time is the 2nd quarter that we are seeing are moving to that direction. It is also important to know that churn has also stabilized in the neighborhood of 1% of the Fusion cast And therefore, the lifetime of service value of our customer is on Fusion is more than 2 times on the ones of fixed broadband and more than and a half times of a pure mobile contract.
So just Fusion, the trends of commercial, then the line commercial trends of Fusion, even with with slightly lower net adds that in the previous quarter, I go into the direction of a slight ARPU uplift. Considering that Fusion is roughly now more than 50% of residential revenues and residential revenues are 50% of total telephonic net revenues. This is a very sound anchoring factor for revenue stabilization in Spain. We are also accelerating, as you know, fiber deployment and LTE coverage. And therefore, with the new data packages that we are putting the revised pure mobile offer.
It's also helping to establish or to improve the trends of pure mobile ARPU. Therefore, from both sides, we are seeing better trends the other line revenues of Spain and that explains the year on year improvement or the decrease in the rate of decrease, so to So, for the fourth quarter and according to the figures that we have for October, it looks like it is going to the right direction. We have also a very sound, move in terms of the TV, commercial effort even though we would like it to accelerate even farther, it is going well. Therefore, all the elements need to be in place for a further ARPU athlete on Fusion or on the pure independent offers, which is namely data monetization fluid, the video offered, and more data bundles and more data packages are going to the right direction, both in wireline and in wireless. And on the UK, well, convergence in the UK will depend on the, on several factors.
One of them being the the strategy that BT will take on its mobile launch, the aggressiveness on the BT will take on the mobile launch and the kind of commercial offers that they would put on top of the table. We do not see today the UK has a strong convergent market and we anchor that statement into the fact that consumer behavior for the time being, I'm showing limited interest on the on the converged proposition. Distribution of wireline and wireless has different market structure And there is already some quadruple pay offers on the market like the one coming from Virgin and it has been showing limited traction. But as you said, said during your question, I mean, both our phones and everything we have moved into one direction. It looks like they are being prepared in order this is just anticipation of the potential launch of BT and we will monitor very closely the evolution.
Thank you, David. Next question, please.
We will now take our next question from Luigi Minerva, HSBC. Please go ahead. Your line is open.
Yes. Good afternoon. First question is on Germany. The pricing momentum in the market seems positive. Team has refreshed their products in September, cable has raised their access prices.
Wanted to get your view on these pricing dynamics and whether you believe Drillisch has the ability to derail or disrupt these pricing dynamics on the back of the wholesale agreement with the Telefonica Deutschland? Question is on Brazil. If you can elaborate it to the extent possible when you say that you are actively pursuing consolidation opportunities? Thank you.
Well, in Germany, you're right. We are seeing a much, a better, commercial, momentum with more rational commercial approaches by the different players. We are also seeing some stabilization on the increase of the ARPU athlete coming from LTE offers and also data volumes, data traffic is also going to the right direction. So for us trading keeps positive in terms of momentum. The net adds were very sound.
Was we have had this quarter 3 times more than that. I think the same quarter of the previous year. It is true that we are also investing heavily in the market and this is impact ADA. We are also seeing positive performance in handset revenue after the launch of the iPhone 6 So overall, yes, we see a sounder commercial momentum in Germany overall for the whole of the sector and namely for us. In terms of the potential movements coming from release after our midstream access agreement with them after the remedies agreed with the commission Remember that in our agreement with release, and agreed with the commission is a variable pricing, which means that prices applied to the release for the wholesale Bstream access contract is going to be depending on technology and therefore the potential impact that this is going to have on the on potential tariffs down to the market is significantly more limited that if that agreement was to be at prices.
So what we wanted to prove with the German transaction that was that 4 to 3 consolidation was doable in Europe without compromising data monetization for the future, we think is going to the right direction. From our point, from our standpoint, we think that we all need to show a more rational behavior in terms of data devices. And that's what we intend to do through our brand new Telefonica Deutschland after their combination with T Plus. So I think that you should not expect from us these rapid movements on that landscape.
Regarding, regarding Brazil and M and A, I agree with you, this is Angel. Our focus is, is, getting the approvals for the GVD transaction. We are in the process of, having a very constructive dialogue with Kave on the technicalities of this transaction and its interaction with the telco demerger transaction. And we believe that this will be solved satisfactorily and we would expect to close EBT in the first half of twenty fifteen. In the meanwhile, we continue, as I said in the presentation, strengthening our position in Brazil in the value segments, leading in the mobile market, growing in fiber and video.
And we are accelerating growth both in revenue and OIBDA. So we are in a very good position and we expect to consolidate EBT and see the synergies flowing from that transaction. That makes it this, and we have stated many times in the past that we are very strong believers in the benefit of mobile consolidation and when and if that happens, we will be supportive of such a consolidation.
And if I may follow-up, if there was something on the mobile side, would you play an active role or a positive one?
We have been actively participating in processes in our core markets. So it would be our duty to explore actively potential opportunity.
We will now take our next question from Fabian Larrez, JB Capital Markets in Madrid. Please go ahead. Your line is open.
Hi, good afternoon guys. Two questions please. With regards to the recent announcement in Mexico by AT and T that it was acquiring, use to sell, I was wondering if you could give us your thoughts on what the possible impact is on evolution in Mexican market and the 3rd quarter results saw some positive evolution, really positive evolution out of Mexico. And with this somehow undermine that by the increased competition, both from AT and T as a buyer used to sell and the possible divestment by America Movil of its of some of his assets to a newcomer? That's my first question.
And second, with regards to the statement made by Angel with regards to the possible inorganic operations, to reach the $43,000,000,000, below $43,000,000,000 net debt target. Could you shed more light possible as to what we should consider aside from the scrip. And then would you would you consider divesting the remainder in China Unicom, for example, despite your strategic alliance? Would that be undermine the way shape or form? Thanks.
Well, taking your first question about Mexico, First, let me focus a little in the first part of my answer on the operational trends. We are seeing a significant commercial traction which is boosted by the effort that we have done on our own network in terms of deploying a better network and deploying also LTE And that's why we have had a significant increase in gross adds, which have increased 45% in the 1st 9 months of this year. We have significantly improved our portability figures with 94,000 in the 3rd quarter And that has helped to boost the revenue growth. We are growing more than 12% and accelerating compared to the second quarter. Let me remind you that this is the highest growth that we have achieved in 2009.
And this was almost independent of the regulatory changes, I mean, which has should start to affect commercially speaking from now on. This growth has been basically around the prepaid segment with the put traction on postpaid, which is our pending issue. And that has helped us to significantly improve our OETA evolution OIBDA have increased 50% year on year. I have, I'm stating all of this because I wanted to make clear that regulatory effects have not yet been flowing into our commercial traction. ECTFO that we were doing before the commercial regulatory changes and therefore before any structural changes in the market.
We believe that a consolidation of 4 to 3 players is always good for the market independently of who's going to be the 3rd player or the 2nd player in this case being AT and T. We thought that the asset used a sale at that price was not providing value for us because we would rather invest in our own platform because we were showing significant traction. And therefore, we were scared of refocusing our team by doing an integration, which not providing clear value, compared to other examples that we have done in in our footprint. So we are not, we are not focused by what we are going on because commercially we are having more traction. The regulatory changes for the first time provides a much more level playing field And therefore, I think that you should expect that, our trends in Mexico to keep going into this direction.
And, again, let me state that, 4 to III would always be welcome. And namely with this new regulatory framework, which should boost all the pledges to be much more rational and much more, leveled in terms of commercial activity. So we're all much more positive outlook on the Mexican market than we had before. Mainly due to our own efforts by turning around our own operation and we have significant, expectation about the regulatory changes to further boost our performance.
Implement, if I may Jose Maria sensor. I would say also that the price agreed for the Usafel transaction clearly shows that our Mexican asset is undervalued in our sum of the parts valuation. Moving to your second question on captions, First, I would like to say that we envisage to continue working towards reducing debt first by free cash flow generation. That you've seen, to September has remained strong close to 1,000,000,000. 2nd, through financial measures, I hear the script dividend.
We're expecting significant acceptance on the share side. It's a voluntary script. And potentially, as I said before, issuing some hybrid in the near to mid term, And third, through portfolio management. Our portfolio management has been very active and we have consistently been seeking to increase the value of our operations and and improving our financial position, to demonstrate our commitment towards, progressing in debt reduction we have in the last weeks or even days. We have sold our remaining stake in Chesky and we have accelerated the payment of some of the pending amounts regarding services that we continue to provide to that company and we have sold the 2.5 percent in China Unicom.
We reiterate our commitment to the alliance, and we see opportunities to do more things in Innovation And Digital Services with China Unicom So, we would not envisage selling in the market additional shares at least in the short term. But we have several options, several additional options to reduce debt. And we are open and we have proved that in the last quarters that we are open to analyzing strategic alternatives in several markets to generate value and improve our financial flexibility.
Thank you, Fabienne. Next question please.
We will now take our next question from Louis Prote, Morgan Stanley. Please go ahead. Your line is open. Hello, caller. We are not able to hear you at this time.
Please sure your line is not on mute.
Hello. Can you hear me now? Hello?
Yes. We can, please.
Oh, hello. Yes. No, I said there are two questions. First on the Spain, on the competitive landscape, wonder whether you have noticed already any change for the better in the market since the acquisition of Uno and Justeel, were announced particularly in the mobile space, helping the market performance and your evolution in this space in the third quarter. And then on Venezuela, I don't know whether you have any update on currency, whether there's no any particular recent change from CCAD 1 to CCAD 2.
And if you could probably remind us how the rating agencies are treating your exposure to Venezuela. I'm trying to figure out is whether if tomorrow you decide or you are forced to move to CCAP 2, or the currency is floating in the market. Whether that's a big negative for rating agencies? Or they are already treating this in a different way or taking that into account? Thank you.
Hi, Luis Jose Maria here. Taking your question on Spain, the competitive landscape. Too soon to see any major action coming from the recent consolidation of Vola, of mono into Volafone or potentially just but overall in the market, we see pressure in prices slowing down during the 2014 due to a very high convergent penetration by the main operators. And that's, if we were to project that, through the consolidation processes that are already in place suggest that the price stabilization should at least be expected in the midterm on top of that, as 4 g is being deployed as we speak, and all the players are trying to accelerate the use of 4 g data by increasing the data allowances, you will see another step in our opinion, another stabilization of, contract mobile with, an increase, data usage proposition. On top of that subsidies have fallen deeply in the last 2 years.
After our first signal more than 2 years ago, all other players have gone into that direction. And therefore subsidies would appear to be kind of an structural feature, commercial feature 3 years ago have now become much more tactical and therefore also the commercial effort overall in terms of subsidy has become much more selective, including places like Diego. So overall, if you ask me to give you an overall picture of Spanish market, we see a much more rational behavior of the market. It has been painful because we have been provoking this convergent process. But now it looks that we are reaching a point with the different players, namely the consolidated or convergent players of the market ourselves, both Afon and Orange.
Would have similar ARPUs to defend on the existing customer base, both on the wireline and on the wireline side. So forecast a more rational Spanish market and this is starting to flow through the stabilization that you saw in the ARPU of Fusion So we think this is the way to go. This is the way we ask the leaders. I'm gonna try to to to drive the market. And I think that the convergence, the consolidation processes are going to be one more step into that direction.
Regarding Venezuela, we continue to record the figures in full accordance with our auditor at CCAT 1 rates. At this moment, we have, at CCAT, which, was at the rate of 12 bolivars to the dollar, at the close of the quarter, we have the equivalent of 1,000,000,000 of cash in Venezuela, she cut 2 continues to be very liquid and the volume of Dollar Street that is not preferential. We see, the equilibrium rate, of the Bolivar taking into account internal and external opinions would be closer to SICAT-one than CCAR 2, but, we do not disregard that we give it a growing scarcity, the inflation pressures, and the double digit deficit. We do not disregard the government allowing for a higher trading bond in the coming months. So rather than a movement from Sika-one to Sika-two would be probably a movement in the rate of the CCAT-one at which we would continue reporting.
Rating agencies are already making several adjustments on this. In their liquidity ratios. They exclude the Venezuela and cash from liquidity as we do in our presentation, of of our liquidity position that I presented before. They also adjust partially, in the ratios. When they calculate the solvency ratio, they partially adjust for, for, for the cash in Venezuela and they also increase the levels of the ratios, that they put for us as a reference for a specific rating.
So, we continue obviously to explore, every alternative for option that we can think of to invest and deploy that cash and protected from inflation as close as possible to seek at 1 and and we will continue to do so. It's quite relevant to see that in the results that we have presented, we are posting growth acceleration and improvement in margins ex Venezuela and, also to take into account this market concern, we decided at the beginning of the year to set our guidance ratios excluding Venezuela so that impact would not be, sort of flattering our numbers. We are not hiding from this exposure to Venezuela. We are managing it. We are trying to invest that cash in the way that would allow us to preserve the value and, and this is it now.
I may, Luis, complementing Angel on Venezuela, we have also decided from an operational standpoint to accelerate CapEx to transform part of this cash flow generation into an accelerated CapEx deployment, namely on 3g capacity. Because we thought that as we are accelerating our revenue growth in Venezuela, we are also improving our traction in terms of OIBDA the return that we are getting by transferring that cash that cannot be repatriated and therefore is not accountable for a debt reduction per the group level to transfer that into a CapEx deployment and accelerated CapEx deployment in Venezuela, but it's also helping us to foster the operational performance the unit. So overall, going better in Venezuela and investing more than we were anticipating at the beginning of the year precisely because we cannot repatriate the cash. Generate more return by investing that into the business and having it at the bank.
Thank you, Chris. Next question please.
We will now take our next question from James Ratzer, New Street Research. Please go ahead. Your line is open.
Yes, good afternoon. Thank you very much indeed. Question I had was just regarding your post event net debt, which you quoted at 1,000,000,000. I was wondering if you could let us know how you're going to be accounting for the spectrum purchases in Brazil and also Argentina, which didn't seem to be included in that figure. And from the comments you've made earlier on this call, is it right to conclude that you will need to do some form of hybrid issuance before year end in order to reach the 1,000,000,000 net debt target.
And then the second question I had was regarding O2 UK. This is the first quarter, so it's full quarter where we've now been lapping the 2 refresh launch from April last year. It seems like underlying EBITDA in that business was down around 5% year on year. I was wondering if you could just let us know whether accounting effects are still being a drag on that performance. What do you think is a good steer for the underlying EBITDA performance within O2 UK?
Thank you.
Hi, James. We expect to your first question when we have been posting this post closing, pro form a adjustments has always been regarding M and A transaction We are not trying to do what would be, you know, the pro form a, taking into account business evolution, spectrum, and everything else, we have just included. And this, we have been consistent across the last few quarters presentation, just including M and A transactions. So because we thought that the 1,000,000,000 figure, as of the end of September, would have been, not giving the full picture of of, of the debt situation given that Iplaz was bought, you know, the 1st October. So here, you only have the impact of M And A Transactions.
With respect to spectrum in Brazil, Argentina, it will be part of the free cash flow calculation in the fourth quarter. As you see on slide 17 in the bottom part, we have all the waterfall that from operating cash flow to free cash flow. And there is one of the blocks, which is spectrum accrued, which, up to September, have been quite low figure this year compared to the previous year. But in the fourth quarter, as you rightly pointed out, Brazil and Argentina spectrum is going to be a very significant, component of the, of the free cash flow calculation. No?
With respect to the hybrid, it's not that we need to do it, depending on the market conditions, we will decide if and when is the appropriate time to to to, make such a potential issuance. But, I agree with you that in order to get, to the 1,000,000,000 target, we will need in addition to free cash flow, given that in the fourth quarter, we have spectrum and we have the cash component of of the dividend as it finally may be. We will need to comply with some inorganic option. Be it portfolio management or be it financial measures like a hybrid. We don't need to necessarily, we may in a to issue the hybrid, we may do it in a combination of other, of other measures.
With regards to your question on the U. K. Or the U. K. OIBDA margin and potential impacts of non recurring things and refresh.
Let me state that we, for the fourth quarter, for example, we expect similar EBITDA margin performance versus previous quarter, excluding the positive nonrecurrence events that we have had mostly related to the disposal of the fixed business assets a while ago. And this is 1,000,000 net impact in the 3rd in the third quarter of this year and also remind that we have a 10,000,000 impact in the fourth quarter of the previous year. And this is the only the major one off that we have in terms of weak fresh and in one deal effects of refresh on the accounting impacts, we think that the positive impact from the stabilization of top line terms of revenue will be offset by the unwinding of refresh accounting. And therefore, we foresee similar levels of OIBDA margin for the next quarter compared to the 3rd quarter. 1 unit of this effect of the 1,000,000 of the one off.
Thank you, James. Next question, please.
We will now take our next question Your line is open.
Hello. Good afternoon. Thank you for taking my 2 questions. The first one is related with Spain. I know that it is going to be a progressive and long term process, but I would like to know what are your views on the potential savings and also potential real estate value to show up with the progressive corporate network switch off in Spain.
Process that has already started in the third quarter. And the second question is related with Germany and again on convergence. Given your current spread between obviously plus annual fixed market share in Germany. Should we expect any kind of showroom made any initiative to reinforce your market share in fixed, either organically or inorganically.
Thanks for your questions. Taking your question on the on the potential OpEx coming from central offices closure. Well, it's totally true that the fiber network requires less central offices. And therefore, we should expect as we deploy fiber to have savings coming from the elimination of those stations. And therefore, also less cost in energy, call centers potential service failure attention.
But so far, we have just closed 2 small central offices We've had no unbundling local loop players, one in Barcelona and another one in the surroundings of Madrid For 2015, we expect to close 132 additional central office But, it is also true that, it is too soon to disclose potential savings because those have only been on the long run. And that's because the fact that according to the regulations in Spain, we need to have just small percentage of unbundling look and look players in his central office before being allowed to close the station So yes, we foresee that in the next 3 years, 3 to 5 years, we'll have significant savings coming from that effort. You should not expect that majorly back in 2015, it would require a significant effort because of the current existing regulation in Spain. But it is totally true that from the in the midterm, we need to do an effort to generate savings coming from that. Those are going to be generated, again, in the mid term, namely from, from 3 to 5 years.
And in terms of our situation in Germany. Well, first of all, let me say that we do not see today a major threat of convergence in the German market because namely of the situation of the leader on that market, Gucci Telecom, which has signal that they have they are ready to offer some discounts on the potential Guadalupe or Guadalupe offers, but it is also true that the level of ARPUs are very high. And discounts are limited. So in our opinion, it's going to be very focused on our own behavior on the mobile data monetization strategy and they are showing that they are ready to go that route if we were to become very aggressive on the other side. We have already stated that we want to become a rational player that we want be a rational player being the leader in terms of our customers in the German market.
It is also true that if the market was to become more convergent, we are technologically hedged, thanks to the agreement that we have that we'd reach with the Deutsche Telekom when we sold to them our wireline business and the that agreement includes technological evolution. And therefore, if the market was to move from BDSL to fiber, we will also have access to the Deutsche Telekom potential deployment of fiber. So we feel that we are in a in a good position in Germany for the current market structure, but also the market was to move more aggressively, we have, we have a hedge from the indirect access that we have signed through our contract with Deutsche Telekom.
Thanks. Thank you, Fernando. Next question please.
We will now take our next question from Justin Funnel Credit Suisse. Please go ahead. Your line is open.
Thank you. Yes. Just coming back to Brazil and then a question on Spain. Obviously there's been a huge press coverage of the what sort of merger scenario we might get in, in Brazil, and it appears there's a a TI board meeting next week. Of the two scenarios, which seem to be either Tim Brazil merging with Oi or the, the famous breakup bid for Tim Brazil.
I was just wondering where your preferences lie these days, would seem to be with the, the Tim or merger, you could get, market repair without having to spend a penny. And with that now, it should be preferable to the, the breakup scenario, you know, breaking up in Brazil. Secondly, in Spain, we've seen a a sort of phasing over the last 2 or 3 years when fusion was first launched, you were going to see a turnaround in EBITDA before revenues turned around. It was very much a a cost cut cutting story. And then during last year, and it's first half of this year, there was a a sort of ramp again in, marketing costs, you know, to, turn around the top line.
I'm just wondering where you are in that phasing now that, obviously, we're seeing a reduction of competition is there now scope for the the margins just to really start moving up again, potentially even outperforming the revenue trend in Spain. Thank you.
Hi, Justin. Regarding Brazil, we are in, we think we are in a in a in a comfortable position. Being the market leaders in mobile and with the GBT transaction that we have made. In, in, in, you know, when we finally closed GBT, taking into account within this decision to take the telecom italia shares and the mandatory exchangeable that we issued, we will stop being shareholders in telecom italia and therefore, you know, there would be no time, pressures on our side to participate in any process, which is a good position to be while we continue to have very strong momentum in the market and acceleration in our magnitudes, in our growth, in our revenues, in our margin. So There could be several scenarios in have been speculated of potential consolidation in Brazil It's it's very difficult to to see through all the noise because there are lots of moving parts And it's difficult to assess the timing and the format of transaction.
But in the 2 scenarios that you described, in both, we could, be active. We could be passive beneficiaries of consolidation I think we stand to be beneficiaries of any of the two scenarios that that you described. We think that in such a big market with such huge investments that or relevant investments that will be needed going forward. And we are very much progressed in our 4G compared to our competitors, but some of them still need to be there. Synergies of consolidation could be very important and could create lots of value.
The transaction was properly structured. But, as of now, we are very focused on GBT, on closing GBT, on executing and delivering on the synergies we've committed to market on the GBT transaction. And monitoring, obviously, all the market developments that we can on what could be the evolution in Brazil As I said before, we would be supportive of a market consolidation. And, in certain scenarios, we would be active, but if there are other scenarios where we are less active and we also benefit, so be it.
Taking your question on the OIBDA margin in Spain and framework in that on the on the Fusion lounge 2 years ago. Let me remind you that it started before before launching Fusion, we did a significant price discount in all fronts. Prepaid, postpaid, ADSL immediately after we took out subsidies, it was the first quarter of 20 of 2012. And then we launched Fusion with another discount. And that's why for a while, we were combining the effort of restructuring our commercial effort even accelerating our revenue decline in order to bid on a significant churn reduction because we were exporting valuable customers to the portability market.
And we were bleeding to portability with significant commercial efforts to try to retain or to try to capture new customers with lower Once we did that, we have a first impact on OIBDA. And the first impact on OIBDA was thanks to the savings that we were generating. And at the same time, while we were launching pushing will still decline in revenues. Midlastyear or the beginning, even of this year, we realized that OIBDA margin was significantly picking up But at the same time, we were still bleeding on part of our customer base, namely on the pure mobile contract customer And that's why we decided to invest part of the significant savings because remember that before the launch of Fusion and before this transformation effort, margins in Spain were in the very high 30s on in the very low 40s. Margins went up to almost 50%.
And now they are standing somewhere between 44% 46%. But thanks to the reinvestment of this 4 percentage point coming from 49 to 44% to 46% that we stand right now. We have been able to stop the bleeding on the contract side as well. And that's why we have been able to stabilize the customer base and to slightly grow in access for the first time in a lot of time in a series in a long series of quarters. And that is the effort is being based around the fact that we are betting for revenue growth in Spain.
Soon as possible. And for that, we need to stabilize 2 things. First, the customer base and that we have why we have been investing part of the margin second and also importantly, the ARPU. And that's why stabilizing the mobile, the pure mobile and also the Fusion ARPU was so important. So for the next quarter, for the fourth quarter, we see levels of ARPU similar to the one that we have been showing, seeing so far this year.
And for 2015, it's going to be depending on the effort that we are going to be doing in content. And therefore, at the end, on the and the conference call results of the fourth quarter of 2014, we will give you more guidance on what would be the UAT margins in Spain. So this is a little bit the journey that we have been going through. We think that now we are staying at a point where OITM margin is pretty stable and compatible with the stable and a slightly growing customer base with some commercial effort with more valuable customers coming from fiber, coming from contract and coming from Fusion. So we think the journey has been worth the effort.
We will now take our next question. From Jerry Dallas from Jefferies. Please go ahead. Your line is open.
Yes. Good Thank you for taking my questions. First one is on the UK. Again, to the backdrop of sort of BT's mobile launch and the commercial cooperation that seems to be taking place between Sky and Vodafone, it feels as though your own attitude in the UK towards convergence is rather one of an observer rather than proactively going out and preempting what your competitors might be about to do. I just wondered why you've chosen to adopt that attitude if that is the right reading.
And whether if the UK market work to consolidate perhaps behind a convergent trend over the next couple of years. The UK is a market in which you might be prepared to deploy significant amounts of capital. In order to participate in that consolidation theme? And then secondly, in Spain, sort of following up from Justin's question perhaps, but asking in a slightly different way. I think the trend in your operating costs has gone from sort of net 20% year on year declines in the 1st part of 2013, now to around a 3% increase.
Accepting your point about the theme of higher content costs. Is there anything else you can do within the cost base in order to sort of limit the inflationary impact of those rising content costs? Thank you.
As Jose Maria stated before, UK is a very important market for us. It's at the forefront of innovation of digital services, of optimization, it's not a strong conversion market, as we perceive it today. And Jose Maria also elaborated very much on that. And of course, we are monitoring the market trends. As you would expect, that we should.
Accordingly, we will be open to assess potential strategic alternatives, depending on how the market evolves. That would, as has been the case in all of our portfolio management, allow us to generate value and improve our financial flexibility.
I'm taking your question on what else could we do in Spain to try to mitigate the potential impact of the content strategy or other impact. Let me step backwards a little bit before I state that the impact is 3% increase in OpEx this year is mainly coming from several factors first TV contents, also the impact on the, on the termination rates and also handset sales that happy company tactical then the pension fund that, as you know, that we have 1 year agreed with the union not to contribute to the pension fund and that we have retaken the contribution this year. So part of that content and pension fund is there to stay content depending on the intensity that we are going to be applying and it's going to be depending on the kind of agreements that we are going to be able to close on that front. And that's why I would like to update you on that side at the 4th quarter conference call. The effort that we are doing to try to absorb part of that internally from major basically 2 major funds.
1st is in sourcing as we have been able to eliminate significant amount of complexity by cutting down references of prices by switching off applications by also virtualizing servers and by doing a much more efficient network deployment we are now able to absorb to insource part of the activity and therefore to reduce the weight of outsourcing costs in our structure. And the second point in which we are focusing is significantly optimizing our distribution channels. We think that we need to reshape or direct, namely our direct distribution, but also the indirect distribution chain that we have in Spain. We think that we need to have a more efficient and different kind of profile of distribution, namely on the stores. And we are aiming to have a less capital because we have now the most capital network distribution that we're in Spain, we think we can do the same or even more with less stores, but it's displayed in a different manner.
And that's why We think that there are significant savings namely on the commercial fund can come from the different approach to the distribution channel. So the answer is yes, we think we have still room to go in cost structure in Spain that we aim to absorb a significant portion of the different cost impact that we have been having during this year. So we'll give you update updated, but the answer is yes, we see further room for savings and efficiency in Spain.
We will now take our next question from Mandeep Singh from Redburn. Please go ahead. Your line is open.
Hi. Thank you very much for taking the question. I have a couple of questions, please. One quite specific one. Both OI and America Mov would have said that BTG Pactual is involved talk of discussions with third parties has been mentioned.
Can you just confirm or not whether you have been involved in any conversations with BTG? That's the first question. The second question is really just around cash flow. I note that you've improved your working capital 1,000,000 year over year through use of factoring and other initiatives yet despite that operating free cash flow, it's still declining in the high teens percentage. Can you how much more room do you have on working capital initiatives and what's the sort of underlying free cash flow trends we can expect once you run out of room on working capital improvement?
Thank you.
Hi, Mandeep. On the first question, our Brazilian subsidiary has been asked formally, from the stock market regulator, whether we were involved into any negotiations, whether we had mandated any advisor, and they have formally responded that we're not aware of any agreement and we have not mandated any adviser for for Brazil. Regarding free cash flow, What you should be thinking, looking forward for for the full year now that you have all the figures for the third quarter, you should be as follows. Regarding OIBDA and CapEx, We are reiterating our guidance, and you can make our assumptions on where we're going to be to be there OIBDA is already growing and this growth organically and this growth has been accelerating in the 3rd quarter. The drag that we have had is regarding FX and regarding the reduction of perimeter, both, negative impacts starting to ease in the case of FX and that probably should be a trend given where the euro versus other currencies is trading right now.
Obviously, this is Xfinity for Argentina. And the change of perimeter that has been adverse to us because of the exit of Chesky and Ireland from our perimeter. Going forward, it's going to start adding because C plus starts from the fourth quarter, CBT from some point, around mid next year. So two impacts that you're seeing negatively affecting our OIBDA trend and therefore the operating cash flow. Going forward, organically, we are growing perimeter will help and also FX is going to be less of a drag.
That's, one point is, will be seen across the following quarters. Working capital, still as of the end of September was cash consumption. It was $773,000,000 better than last year less cash consumption. For the full, part of the year, we're expecting a positive contribution to cash flow from working capital higher than the one we had last year. Just to remind you, last year, it was around 1,000,000 positive cash contribution from working capital.
We are looking forward to something which is going to be higher than that, visibly higher than what we had last year. Regarding the other component of free cash flow projection on the cash tax rate. 8% for the full year. I spoke about in response to a previous question spectrum. Brazil, Argentina are going to be there.
And interest payments, you should be thinking that we're going to be in our 5% to 6% range in the upper part of that range. Even to minorities is going to represent lesser leakage than what it was last year. We don't have we all have, for instance, the Czech Republic minorities that we need to, to give dividend to. All in all, free cash flow will cover dividend payment.
Okay. Can I just quickly follow-up on the first question if that's okay?
Okay.
So just specifically, I appreciate you've filed that you've not engaged any advisor but have you been approached by BTG? Because they said they have approached third parties.
I don't think we are responding to this type of questions. Thank you.
We will now take the final question from Paul Marsh Berenberg.
Thank you very much. Maybe if I can be a little bit cheeky and ask three questions instead of 2. Firstly, can you repeat statistics that you gave on the Fusion revenues as a proportion of total domestic revenues? Secondly, on the the dividend, would you intend also to offer a script for the full year dividend? And then finally, maybe Could you give some comments on what's actually happening with mobile data revenues in Spain, which seem to be declining, even excluding SMS Can you talk about the various moving parts that are going on there?
And when might we expect to see that overall trend turning positive?
On the percentage that I share on the on Fusion, I said that more than 50% of residential revenues are already FusionI, so to say, which means that considering that that part that Fusion is showing for the 1st, for the 2nd quarter on a row, the slight ARPU increase means that at least 50% of the residential revenues are going into the right direction considering as well that we have been able to stabilize the customer base. I was trying to point out into the direction that stabilizing residential revenues is essentially if we want to stabilize Spanish revenues are residential is more than 50% or is in the neighborhood of 50% of total revenues of Spain. I would take the mobile data revenue and then handed for Angel for this script. On the mobile data in Spain, I don't think it's that relevant because the way we account for the Fusion the more convergence you become, the more revenues you allocate to Fusion or to the bundle that you include into the Fusion offer the less relevant becomes the mobile data excluding out of the package of Fusio. And so I think that if I may guide you on what is the relevant figures to follow in in in this case of the Spanish revenues, I would I would I strongly suggest to focus on the Fusion ARPU total amount of customers' mobile contract because this is where it's going to be pointed towards revenue stabilization in Spain.
Data traffic in Spain is literally booming, which means that we are not seeing in Spain a different pattern of behavior in other markets in my opinion, it's just the way to allocate those revenues from the different elements and therefore I strongly suggest to focus on the on revenues and KPIs.
Regarding dividend, the dividend for 2014 is fully confirmed. It's per share. This is composed of two parts. The interim, which is $0.35. It's a voluntary script.
Dividend. So shareholders can choose between cash or shares. This will be paid in the coming weeks. On October 10th, we made a public announcement regarding, such script dividend. And on November 14, we will announce the details of, of, you know, ex dividend date and the period, for the selection between shares and cash So the first tranche is interim, 35 percent voluntary script.
The second tranche is a final dividend to be paid in cash. The second quarter of 2015, not scrip, but to be fully paid in cash. Well, thank you very much, for your participation. And we certainly do hope that we have provided some useful insight for you. Should you still have further questions, we kindly ask you to contact our Investor Relations department.
Thank you and good afternoon.
Call is over. You may now disconnect your line. Thank you.