Earnings Call: Q3 2018

Oct 17, 2018

Morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the America Movil Third Quarter 2018 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. Now I'll turn the call over to Ms. Daniela Laquana, Head of Investor Relations. Please go ahead. Thank you. Good morning, everyone. Thank you for joining us today in our Q3 2018 conference call. We have today on the line Mr. Daniel Hajj, Chief Executive Officer Mr. Carlos Garcia Moreno, Chief Financial Officer and Mr. Oscar Bonjowsky, Chief Operating Officer. Good morning. Carlos, as always, is going to give us a summary of the Q3 2019 financial and operating report. Okay. Thank you. Good morning, everyone. Well, the continued expansion of the U. S. Economy through the summer with strong job creation even in the face of historically high levels of employment ended up pushing 10 year U. S. Treasury yields decisively above 3%, bringing about a new bout of dollar strength that affected emerging markets in general, including several of the currencies in the region where we operate, more importantly in Argentina and Brazil. This effect was partially offset by the reduced political uncertainty in some countries with the currencies appreciating the presidential elections were left behind. This is particularly in the case of Mexico and Colombia and already partly through halfway in Brazil. In this context, we gained 1,100,000 postpaid subscribers in the Q3, including 472,000 in Brazil, 100 and maybe 4,000 in Mexico and 100,000 in Colombia. Altogether, even after net disconnections of 757,000 prepaid clients, we ended up with 339,000 net gains of mobile clients as compared to a net loss of 73,000 clients in prior quarter. This is important because I think most analysts were estimating a reduction of net adds for the quarter. This goes to show the importance of our ongoing commercial effort. In fact, if we look at gross subscriber adds so as to correct for prepaid disconnections, they were up 2.9% versus the year earlier quarter. With Brazil and Austria, offsetting the faster growth, 7.9% and 9.7%, respectively. This again is the rate of growth of gross subscriber additions. On the sales and platform, broadband continued to be the fastest growing segment at 6.2% year on year after adding 284,000 new accesses in the quarter, including a 100 and 5,000 in Brazil and 93,000 in Central America. In Brazil, with numbers from Mammotho through August, we've been increasing market share over the last several quarters practically across the board in the fixed line platform. Mobile postpaid is our fastest growing segment with 7.6% followed by fixed broadband of 4.7%. The declines in pay to the accesses have leveled off. Mobile prepaid subscribers have continued to come down and we have gone ahead with barrier disconnections, most notably in Brazil. Revenues were up 2.1% year on year in Mexican peso terms and when you are shy of ARS 250,000,000, whereas EBITDA came in at ARS 71,800,000,000 and was 7.7% higher than a year before. Compared to the prior year, the Mexican peso appreciated sharply 15% versus the Brazilian real, but depreciated modestly around 5% 6% versus the dollar, the euro and the Colombian peso, all of which has an impact on the Mexican peso value of their respective operations. At constant exchange rates, service revenues were up 3.4% year on year, the best performance in 5 quarters. Our service revenue growth improved practically across the board, while EBITDA increased 8.6%, not including the release of certain provisions in Brazil related to legal proceedings associated with taxes. During the latter, EBITDA increased by 13%. Postec mobile revenues led the way with an 8.6% increase, followed by prepaid revenues over 7.7% and by fixed broadband revenues at 6.2%, as you can see in the chart. So the main business lines are growing in the neighborhood of 8%, 7% year on year. In the mobile space, service revenue showed up in Brazil and Mexico, 10.5% and 9.5%, respectively, with mobile ARPUs rising 13% in Brazil, 11% in the U. S. And 8% in Mexico as we gain more postpaid clients and in the U. S, more straight post subscribers. Our EBITDA margin, 28.8%, increased 2 percentage points from a year before. Approximately 1 point of the mine being generated to the release of provisions in Brazil. So substantially, all of our operations posted increases in their EBITDA margins in the period. Our operating profit increased 23.4 percent to ARS 35,300,000,000. Together with a comprehensive financial income net cost of ARS 3,300,000,000, mostly driven by foreign exchange gains, but also the release of provisions in Brazil. We brought about a net profit of ARS 18,600,000,000 for the period. Through September, we funded our capital expenditures of ARS 91,700,000,000, reduced by ARS 14,000,000,000 our net debt, paid out net dividends and share buybacks in the amount of ARS 10,400,000,000 and contributed ARS 15,600,000,000 to our pension funds. Our net debt stood at Ps. 384,000,000,000 at the end of September, down Ps. 45,000,000,000 from December. Relative to our last 12 months EBITDA, our net debt stood at 2.0x, the lowest leverage ratio we have attained in at least 2 years. So I think that we continue to gain traction in reducing our leverage ratios, and I think that we are very much on track to deliver to get to our target of net debt to EBITDA of 1.5x in the next few quarters. Where with this, I would like to pass the floor back to Daniel, and we will begin the Q and A session. Thank you, Carlos. We can start And our first question comes from the line of Matthew Niknam from Deutsche Bank. Your line is open. Hey, guys. Thank you for taking the question. Just 2, if I could. 1 on Mexico. If insurance stabilized or solid ARPU growth, any updates that you can share on the competitive landscape in Mexico? And then secondly, Carlos, on the point on leverage now with 2 turns, you talked about getting to 1.5 turns in the next couple of quarters. Is that sort of the timing we should look at in terms of a potential acceleration in the rate of shareholder returns once you get to that 1.5 turn target? Thanks. Starting with Mexico, I think all overall, our results in Mexico are very good. Talking a little bit about wireless, IntelGen, I think everything that we have been doing on the network, remember that we launched 4.5 gs, and we are investing a lot in our network, has been very successful. I think people is using more and more data, and that's the reason why ARPUs are going up. So we this quarter, we are more or less in the highest level of service revenue, right? The same service revenue that we had 2 years ago, 2.5 years ago. So all overall, Mexico is doing very good. We are also working very hard on the digital transformation, improving coverage, improving capacity. And the market, as you know, is very competitive. Still, our competitors are, in some things, are doing very aggressive promotions. But I think we feel comfortable. And with everything that we have been doing here in Telcel, quality, coverage, capacity, the digital transformations, our stores, our dealers, I think we feel very, very we have very good support to maintain what we have been achieving. And one on the leverage, just to be clear, I will say the next few quarters, I said the next few quarters. But we have to expectation that sometime soon. It's going to be probably as soon as the middle of next year, depends on the exchange rates. So it's very difficult to say exactly when. But we don't really have any M and A or any significant that we're looking at. So that means that once that we get to our leverage ratio, we basically don't have any other way out for our cash or than shareholder distributions, which is a very good question. So yes, once that we get to our target and in the absence of M and A, which we're not we'd be looking at, then we have to speed up our shareholder distributions. Got it. Thank you. Thank you. Our next question comes from the line of Leonardo Olmos from Santander. Your line is open. Hi, good morning, everyone. My question is on 5 gs. Last week, we saw some statements about $1,000,000,000 in Dominican Republic being the first one in Mexico to launch 5 gs. And in Brazil, in Futuricom, Claro is very advanced on 5 gs tests this week. So my question is regarding 5 gs. Regardless if the investments begin in 2019 or 2020 or 2021, how do you see it impacting the long term guideline of $8,000,000,000 CapEx? Can it be sustained? Can it be fitted into that $8,000,000,000 Or should we expect in those years some type of increase in CapEx? Well, I think what we said in Dominican Republic and everything that we have been doing and what we're going to do, it doesn't change a lot the guidance that we have in CapEx. I think we can sustain our $8,000,000,000 $8,500,000,000 in CapEx for the next years. And we're going to launch 5 gs when we feel it's the right time to do it. But we are doing a lot of things to launch 5 gs. So we are not the networks are not this way. So you wait until you decide to launch 5 gs. No, we are virtualizing our network right now, putting fiber to the node, more and more fiber all around Latin America. So all these things that we're doing right now are preparing to launch 5 gs. So that's not something that we're going to do, and then we're going to spend more money. The money and the thinking to change thinking to change the CapEx, okay? We're buying some frequencies in some countries. So we are, every day, improving our networks to do 5 gs in the future. Very good. And on the other side, on the side of opportunities, also on Futuricom, you mentioned sorry, Brazil's management mentioned about IoT in terms of things and the opportunities on some specific verticals, specifically Agribusiness. So how do you see the B2B opportunities for America Movil, either in Brazil as a whole, with 4.5 gs or 5 gs, do you see it in the mix changing more to B2B? Well, our new network of 4.53, I think at the end of the year, I probably we're going to have 4.5 gs in all of the countries where we operate. So but the ones that we already have, like Mexico, Dominican Republic, Brazil, all those places, I think people is using more and more data. So when we talk the last question about the ARPUs in Mexico, is because people is the megabytes of use, let's say, in America, mobile are growing around 80%. So people is using more and more data, and that's the reason why people is spending and ARPUs are growing. So it's very important. The network in the terms of IoT, we think that we're going to do a lot things in IoT. We have a good platform of IoT. We have a good platform for the verticals. We are doing the cloud, and we are doing all these new services. And we are being successful. So we are prepared to do all the I think America Movil today is the company that we are well prepared to be the 1st ones in our country to do all these services. I think what we need a little bit more is that the countries start to be more digital, that we have more e government or more services in health or more services in other things, but we are prepared for everything. Other things, but we are prepared for everything. Brazil is doing very well in that scenario. So I think we are in the right way to do that. Our next question comes from the line of Diego Arguello from Goldman Sachs. Your line is open. Hi, good morning, Daniel, Carlos and Daniela. Thank you for taking my question. Two questions, if I may. The first one is a follow-up related to your business in Mexico. You mentioned that prepaid revenue grew almost 11% year on year, while postpaid extended by 7% on a yearly basis. So my question is, how can can you share these numbers and how these numbers would compare to the past 2 quarters? I mean, I just want to understand whether or not postpaid and prepaid are accelerating or decelerating on a sequential basis. Thank you. I think we are accelerating a little bit. We have 2 quarters also with good growth in Q1. 2nd quarter are also quarters that we have good growth in revenues in Mexico, and this one is also a good one. So people is using people is we are the preferred network for the customers in Mexico, and we are selling a lot of data, and people is happy with that. We also have the World Cup, and people use a lot data because of the World Cup. But I think people is happy with the network that we have. We have very, very good speed, a lot of capacity and very good coverage. So by far, we are the best network in Mexico. Perfect. So just to make sure that I understood 11% growth in prepaid, we should expect the trends to continue going forward, right? Yes. We think we can expect the same trend for the 4th quarter, and we are growing at a very good pace right now. Okay. Perfect. And my second question is related to Brazil. Can you provide further details on the one time items accounted in the quarter? I just want to understand whether margins could eventually benefit from lower provisions in the upcoming quarters? And also, if you don't mind to provide more colors on the pay TV revenue dynamic in Brazil, when do you expect, for instance, to see broadband revenue growth to fully offset the structural headwinds from both long distance and pay TV? Thank you. I'm going to talk a little bit about the market in Brazil and the results in Brazil. Oscar can add something. But what I see is if you compare our results quarter year over year, we are growing. I think it's we have our EBITDA is growing. Our revenues are growing. So we right now, we I feel that we have the best platform in Brazil. We are modernizing our network. We're working a lot on giving more for LTE capacity in more rural areas. So I think we're working a lot in the convergent network that we said that we're working. We're very advanced on that. And all overall, if you see year over year, we're gaining market share in postpaid, we're gaining market share in broadband, we're gaining market share in pay TV. Even that the pay TV is losing, and we have disconnections in DTH, Our cable TV is also growing. So I think in the commercial side, we're doing very well. Even in the corporate business, I think we're doing also very strong. So in the commercial side in Brazil, I feel very comfortable on that. And in terms of the digital transformation that we're looking, we're investing in our stores, we're investing in platforms, we're working in paper led. So we're trying to improve a lot all these digital. We're selling more and more digital. So we feel that we are working because I cannot see, of course, this quarter, we don't have the same growth that we have been having the last quarters in terms of EBITDA. But year over year, we're growing in EBITDA, and we're doing very good. So Oscar can talk a little bit more about the networks and a little bit more about the market shares, Oscar, in Brazil and how you see the market. Sure. What we do, if you look at the total fixed market revenues are decreasing, I mean, the total market is increasing 3.4%. We are decreasing less than the market. But if you look at the breakdown of the revenues, in fixed broadband, we are growing 12% revenues. Of course, in cable TV, we are steady. I mean, the revenues are not growing. And we have the impact of satellite TV. And mainly, it's coming for the disconnections. And the fact of the disconnection is on collection. The people could not pay, so we need to disconnect some of the DTA customer because this product was really focused on the deep end market of the population. And as you can see, the economy is not very good in the past. So when we look at the economy, the trend of the economy looks better on the last quarter. So we will still expect that we'll give increase of revenues coming from a better economy in the country. And on the corporate market, as the economy is live, there is a lot of price erosion. I mean, if you look at the units or products, we are steady on units, but it has been a lot of price reductions in the marketplace. So that's and as Daniel mentioned, in mobile, we are getting as well market share. So the trend that we believe that is the right path to go in revenues, and we are working in cost efficiencies. I mean, as Daniel mentioned, the digital transformation, we want to digitalize all the customer interactions. We are really focused to reduce core expenses like energy, all different sources of expenses. And we are investing in the network. We believe that Photonics is going to bring us a lot of bandwidth in the network. And we're still doing the integration of all the networks to have a simple and unique PHY network in Brazil. So we see a good future in Brazil. And other adding something more. I think that at the end of this year or beginning of next year, we're going to modernize all our wireless network. All of our cell sites that we have over there are going to be modernized and ready to have 5 gs in fiber. So fiber to the node, the new technology. So all of that, we are doing. And I think at the beginning of next year, we're going to have more than 90% of our sell sites modernized. So there's a lot of things that we are doing, and we're preparing where this company is not going to be for 1 quarter. It's going to be for the next 20 years. So that's right. And in terms of the taxes, Carlos can explain a little bit of that. In terms of this release of provisions, those were the provisions that have been created in Claro, separate from Andatela Net as regards the famous PRISCOFINS, where they should have been the part of the base for the determination of ITMS taxes. The Claro won the legal proceedings on a definitive basis, and we are basically having a release of reserves that from a net basis is equivalent to our BRL 500,000,000 in this quarter. This is basically what we are what we are showing here and that is that explains a significant part of the increase in the margin in Brazil to 25%. So that's basically the basis for this release of the provisions of the accounting provisions. Okay, perfect. This was very helpful. Thank you. Thank you. Our next question comes from the line of Alejandro Galvezda from BBVA. Your line is open. Hi, good morning, Manuel and Carras and Manuela. Thank you very much for taking my questions. First, we've seen a remarkable sustained strengthening in the margins of your Mexican operations. So I was wondering how much of your traffic has already been migrated to VoLTE and home? And what are your expectations for 2019 or the next few years and the type of efficiencies that you've gained from this migration? I think voice on LTE, I don't remember exactly the number of customers, but we have been migrating that since the beginning of this year. We have our network ready and we have a good quality. We don't want to launch before because what we want is to have the best quality there. And I don't remember exactly. Daniela can give you the number later, but I don't have it. But we have been working with Voalte. Depends a lot on the number of handsets that has that technology. So that does not depend only on what we want, also on what handsets have that technology. Remember that different than the U. S, we're selling also handsets, dollars 100 or $80 handset that doesn't have that technology. So it depends a lot on the number of handsets that that technology. Daniel, but is this one of the drivers behind the improvement in margins? And do you think this will continue to help you in the years to come? No, no. I don't think that's I cannot say that in Mexico, there's only one thing that we are doing that is increasing the margins. I think you need to see Mexico all overall. We are, as I said, working very hard and investing a lot in our networks. We were the first one in 4.5 gs. We have the best throughput, the best quality, the best coverage in data in 4 gs. Also, we have the best by far, we have the best in our customer care centers. We have the best services. We have been digitalized all of that. We have a very good network of distributors to good retailers. So all overall, we feel very comfortable in Mexico. And I cannot say that it's only one thing. We are competitive in the market also. The market has been also aggressive. You know that in Mexico, we have one of the lowest prices in the world, not in Latin America, but in the world. As I said last time, I don't have the measure today, but we are much lower than what U. S. Is selling over there. So it's a very competitive market. And well, we are competing there and with very good quality is what I said. People is choosing our network. Some people is leaving and then it's returning with us because all of the things that we are saying. So that's they are testing other networks, and then they are returning with us. And that's what you we could see all this year. Okay, Daniel. And because of this thing that you're implementing, do you still see room for foreign margin improvements, not only in Mexico but also across the region? Are you confident that you will be able to keep improving your margins? I don't know in the short term if we can improve margins. We have been improving the margins in the last 2 years. And of course, I think in the long term, we're going to increase margins. But I cannot say tomorrow, no, well, next quarter is a very important quarter in terms of sales. It's Christmas sales. And when you sell more, then you have more expenses. But I think we are looking to increase our margins in 2020, 2021. So we're not looking only short term. We're looking long term. Okay. Thank you, Daniel. And my second question, it seems that competition from OTT players is intensifying, with Netflix showing a good performance, especially at the U. S. And for example, Roku getting an appreciation to sell again in Mexico. So I would appreciate if you could give us more color on the performance of your Claro Video platform, what your strategy is and how do you plan to compete in the OT team? Remember that we have our Claro Video, and we're selling our Claro Video, this over the top platform we're selling all over Latin America. But also in some countries, we are selling. I think Netflix is also as you're saying, Netflix is a complement for us. So in Brazil, we're going to start selling also Netflix, and a lot of our customers have Netflix. We have Oscar can explain a little bit, but in Claro Video, we have other services that we can sell, HBO and Fox. Yes, yes, yes. We include what we call add ons in Claro Video. So we have HBO. We have Fox Plus. We have Crackle and we have Nickelodeon. The noggin is for kids. So we are selling, adding to a Claro Video this that we call add ons that are different providers of streaming over the top. So we are bundle all these products within our Claro Video platform. I think it's important all over the top, and I think we're bundling our services with over the top. Yes. To give to the customer all the alternatives together in that sector, unfortunately. Okay. So could you please explain us what are the Sandra, I'm sorry. We just have to move to the next question. Please, everyone, try to limit your questions to 2 per person. Okay. I'll get back in the queue. Thank you. Thank you. Our next question comes from the line of Rodrigo Villanueva from Merrill Lynch. Your line is open. Thank you. Good morning, Daniel Carlos, Daniela. My first question is related to Mexico. I was wondering if you could share with us your thoughts on the court ruling in Mexico that ordered Telcel to compensate other carriers for anti competitive practices. Is there any potential amounts that you could share with us? And the second question is related to the U. S. I think you have you still have around 3,000,000 subscribers that are still using SafeLink. And I was wondering if you could tell us if you expect to disconnect all these subscribers at some point in the future. In the first question, Rodrigo, it's a damage claim from 1 of our competitors that the tariffs from and all proceeding related to interconnection disputes. It is based on a resolution from the competition commission that has been revoked by a court for the benefit of Telcel. So we believe there are no basis for damages, and the ruling does not provide a specific amount, so we don't know about the amount. And we have appealed the ruling, and we will initiate additional procedures given certain irregularities that we have detected on such procedures. So that's at this time, it's the only thing that the only comment that we have on that. And on the second question is on TracFone. What was your question on TracFone? Sure. Thank you, Daniel. So basically, it seems to me that you have been disconnecting your SafeLink subscribers, but you still have around 3,000,000. The question is if you expect to keep disconnecting these subscribers before probably migrating them to other brands. In SafeLink, we have 2 different subscribers. They are subscribers that are consuming a little bit more than the other one. So maybe part of these subscribers are disconnecting. The ones that are the lowest ARPU are the ones that are disconnecting. We are still selling SailLink. So we are not canceling the sales of SailLink. But we have been more cautious on where we sell, how we sell and the subsidies that we're putting there. We're trying to be profitable since the beginning. So we're focusing in the space, in SafeLink that are the highest ARPU. So that's where we're focusing. And when we have been seeing that we have a lot of disconnections of these customers, but in the other side, we have been very it's very successful with our other brands. So if we talk a little bit about TracFone, I think this year, TracFone has been very good because all overall, we are not achieving exactly the same EBITDA as last year, but we're growing a lot. So we have a good pace of growing. If you take out the straight talk, I think we are going to end I hope we're going to end our year having a little bit of gains in some drivers. So we are thinking that for next year, we can sell more. So in Tracol and we're still with that, we're having very good EBITDA margin. So And Rodrigo, just to add to that. As I mentioned at the beginning, ARPUs in the U. S. Were up 12% to 11%. And that's basically a reflection of what Anel is saying. We have been gaining a lot of new scrap of clients that are very high ARPU clients. They are on average, dollars 40, dollars 45 per per client. And we have disconnected and did disconnect some of the safe linked clients. So net net, we've been getting an improvement in ARPU that I think is quite impactful. And sorry, that's not only straight up. We have also good add on SIMPLE Mobile and Walmart Family. So we have some brands of high ARPUs that we have been growing very good, Rodrigo. And also one thing that has to go also with what I mentioned on the ARPU. If you look at the growth of service revenues, it was 1.5% year on year, which is better than what we had had for at least 5 or 6 quarters. It was already positive last quarter, but today, it continues to accelerate, and we're expecting a good quarter in the 4th one. And likewise, in the case of EBITDA, all over the last 5 quarters, I think, or 6, EBITDA was experiencing negative growth. Now it is growing 3.2%, okay? So it is again recovering. So positive growth on revenues, positive growth on EBITDA, and we expect this to continue going forward. Understood. Thank you very much. Thank you, Rachael. Our next question comes from the line of Achirul Langa from Itub BBA. Your line is open. Hi. Thank you very much for taking my question. I just have one brief question. Could you please give us some color on the strategy you plan to follow in the wireless market in Brazil? And I ask this because it looks like competition is heating up with more aggressive offers. And I just wanted to understand how you think about positioning the brand, positioning the network. Where do you try to differentiate yourself versus Vivo and TIM? Maybe you could just provide some color on that, it would be very helpful for us. Well, the first thing that I can tell you is that this year and last year, we have been improving a lot our coverage. So we are growing a lot our coverage. Our point you coverage, our data coverage is we have been growing a lot our coverage. And we also are giving a lot more speed and the quality. If you check the quality with the regulators, you are going to see that the quality of our network is the best one. So we have been improving a lot qualit level. So we are not going to compete only with price. We are competing with price, and we are going to be as aggressive as the market demand. But in the other side, we are keeping a very good very, very, very good quality of the network. In the other side, what we are also doing is we are not only selling wireless also. We're selling combos. We are selling wireless plus broadband or we're sending to our subscribers of pay TV, our postpaid service. So we are doing this combos, and we have been very successful. So if you are saying we are only going to compete with price, no, we're going to be competitive, and we're going to be competitive as the market demands to be competitive. But in the other side, we are going to demands to be competitive. But in the other side, we're going to try to give something else to our customers in terms of quality, coverage, speed and combos and all of those things. And just on that point, are you comfortable with the market share that you currently have in Brazil? Or do you think this could increase a little bit? We have been increasing our market share in the Brazil, and I think we can increase a little bit more. So market share is important also. ARPUs are important. And so I cannot say if we want, no? So if there's we have been increasing in mobile our market share around 1.5 points in service revenues. So I don't we really, really don't care about the market share in subscribers. We care about revenue. So market share in revenue is the important part for us. Okay. Thank you very much, Daniel. Thank you for taking my questions. Yes. Thank you. Our next question comes from the line of Daniel Federle from Credit Suisse. Your line is open. Thank you. Good morning, everyone. My first question is regarding EBITDA margin in Brazil. We see that the recurring EBITDA margin expansion was not that strong as we saw in the past few quarters. So my first question is, is there any cost pressure that is affecting margins in the Q3 in Brazil? Any specific points? That's the first question. And if I may, to use my second question to brief clarification on the first one. It was said that the company is not looking at any significant M and A. The question is, could you consider that Clari is not interested in Nextel in Brazil? And the second clarification is the guidance for $8,000,000,000 to $8,500,000,000 in CapEx. That includes the Spectrum acquisition or it doesn't include the Spectrum acquisition? The first one is 8 €1,000,000,000 to €8,500,000,000 in CapEx. It's include in our budget, includes a spectrum. And let's see what are going to be the prices for the spectrum, but for us, it's including the spectrum. So we can increase a little bit depending on the prices, but we think that today, it's that's our view and our vision is not that the government shouldn't sell the spectrum at the high prices, but they should expect big investments in the country. So that will be the best thing to do in the spectrum side. In the EBITDA in Brazil, as I told you, of course, we have less growth than what we have been doing in the 1st and the second quarter, but we have a good growth against last year. So I'm not worried about 1st and second quarter. So I'm not looking the EBITDA and the margins. I think that will recuperate. I'm sure that our growth will recuperate in the future. But what we're looking is we have more we're doing important commercial efforts in Brazil. We have a little bit more of bad debt also in Brazil. So I'm not really looking if in the short term. I'm looking in the long term. And what we're doing in Brazil in the long term is we're consolidating our platforms. We're consolidating our networks. We're investing a lot to modernize the networks. We are improving our commercial distribution and our digital transformation. And that requires a little bit of, at the short term, more money and a little bit more of expenses. But I think I'm feeling very comfortable in Brazil. And if Brazil starts to grow as a country again, then you're going to see that we are going to be well prepared to take part of this growth in the future. So that's more or less. And Carlos wants to add something. Just to put it in context, Ramit. I think it's if you see mobile service revenues, they were nearly at the same pace as last quarter. I think they are the fastest of any operator in Brazil today. They are the one of the the 2nd best in the last 10 quarters, I think, nearly identical to last quarter. On the fixed line side, you see heavy revenue has been declining for quite some time, but this is the best show in the last three quarters. So you seem to see you begin to see a deceleration, a stabilization of the decline of fixed mobile revenues. So yes, they are still down, but they are down 3.2%. They were down 4.5% 2 quarters ago. So that's, I think, something that is also important. On the cost side, I don't think that there's anything that we can report now. Maybe there's something we can discuss it with you and Daniela later, but at present, we don't really have any big advantage. Other than what I mentioned at the beginning, which is that gross adds have been doing very, very well, that year on year, the gross adds in Brazil are up nearly 9%, I believe it was 8% to 9%, And this is an effort that is also this is sequentially, by the way, sequentially. So there's an increase sequentially and there's an increase visibility prior year. So the commercial effort is ongoing and it's ongoing on a very strong basis. Thank you very clear. Could you comment on the next tail point? If when the company Remember that, We're always open to all the opportunities. And when Carlos said that we don't have a major, no? Carlos, if you want to add Yes. No, I think what I said is correct. I mean, we're not looking at anything of any significance in M and A. And I don't think that there's anything else to say. I'm open to all the alternatives in Latin America or in Europe, in the sense of as telecom, Austria and all of that. Perfect. Thank you very much. Our next question comes from the line of Andre Baggio from JPMorgan. Your line is open. Hi. Good morning, everyone. So I just want to follow-up on the competition. Like in essence, you have been doing a great job in Mexico, so that referred to some trends that in a couple of years ago. So is it a function of orders not being aggressive? Price is a function of you reducing again the recharge of the prepaid cards and so on. So can you give a little bit more color on what's going on in Mexico that's back to this strong performance? I don't understand the question. If there's any difference in competition? No, I think I don't think there has been a lot of even new promotions. I think in the markets in Mexico, we have been having new promotions, even that we have more stabilized market in terms because the prices are too low. We're still having some new promotions and new things. So the market is still very, very competitive. And I think I've been telling that in the phone. I think some of the things that customers prefer from us or from Tencent is because of the coverage, quality, capacity, customer care centers, the digital transformation that we're doing that people is happy when they go to a dental center and you attend him a very fast, very good job. Online, that we have been doing a lot on online. But mostly, mostly is our network that is superior than all the other networks in there. And Andre, just to add to that. I think we have continued to invest in the network, as you know, and it's both fixed and in mobile. And as you know, we are obliged to give capacity even to our network competitors. So it is the case that all our competitors today have access to the network. They are roaming on our network, and this traffic is also helping us. So we are investing a lot. We are making sure that the network is available most everywhere and that it has sufficient capacity. And I think that we are also having good revenue as a consequence of that. Perfect. And the second question I have is that we have a new administration in Mexico. So do you think that you could have a better chance of applying to a PTV license now that with the new government? Or do you think that the new government is going to make any change that is meaningful for your business? No. As you know, Telmex has formally requested regulators for many years the elimination of the restriction providing its concession. And I think it's time for the regulators to take steps for promoting competition in a really heavily concentrated TV market. So that's the way we feel. That's the way we think, and I hope that the regulators will take that step and decide to give us the TV. So that's our view. Sorry. So in essence, I understood that you had to formally apply for something. So it's just on the hands of the government. It's not on the hands of America Movin, the next step. I think it's on the hands of the government right now. Perfect. On the regulate, yes. Yes, the regulate, I know. Okay. Thanks a lot. Thanks. Our next question comes from the line of Maria Eschedo from UBS. Your line is open. Hi. Thank you for taking the question. The first question would be on your FTTH strategy in Brazil and overall geographical expansion plans, if you can comment a little bit on that. And with more visibility on the macro and political side, would you consider intensifying your fiber rollout and even considering a potential M and A of regional fiber players? And then the second question, if I can circle back on the competitive environment in Brazil, you recently added more data and 0 rating ads. Do you believe that the market is moving towards an unlimited data plans environment? Yes. Well, about fiber to the home, as you know, within AMS, we have cable companies mainly. When you look at Brazil, Colombia, we are really a cable company. So we are using 3.5, and we've reached very, very good high speeds for fixed broadband. And in all the new cities that we are doing, we are using fiber to the home. We are using GPON technology. In Mexico, we already have home passes with GPON as well in Puerto Rico, Dominican, Argentina and in Europe. So the focus is to cover really the ABC plus market with fiber and the rest with cable or copper. So we have a program from the next 2 or 3 years to really achieve that we will cover the ABC plus market with a very high technology fiber to the home and to upgrade all the network to DOCSIS 3.1. All the countries in the backbone, the network is already available to deliver 3.1. So we are ready to really have a good speed. In Brazil, as you know, in the segment of ultra broadband, we have a very good market share. We have 50 something market share. So I think the network is ready to do that. And to be honest, what we do is to make the economic balance to really move to fiber to the ground and to use as much as we can operating the copper network. So it is the strategy that we are following within AMX. Yes. And you talked that we increased our data in Brazil, and if we're going to go unlimited data, well, we don't know if we're going to reach unlimited data in our plans. But right now, I think the plans are very strong plans and giving a lot of data. So very competitive plans to what we have. Our next question comes from the line of Cesar Medina from Morgan Stanley. The first one was, what are the trends that you're seeing in your own market share of broadband in Mexico? And then second, what should we expect for the margins in the U. S? I mean, 7.1%, I mean, it's a bit low relative to the improvement that we saw in the Q2. So I appreciate your comments on both questions. If we talk about U. S, I think you have to check. If you compare against last year, this year, we are growing more than what we have been growing last year. So you need to check EBITDA plus the growth that we have in our subscribers. So I think we are reducing our EBITDA a little bit, but we are growing our subscribers. I think taking out SafeLink, we hope that we can be positive in net adds this year. So that's the reason of why our EBITDA is a little bit. In this quarter, our EBITDA is even a little bit higher than what we talked last year's quarter in TracFone. So all overall, I think this year, totally this year, TracFone is going to grow much more than what we have been growing last year. And I think you have to consider that the tax and EBITDA is very seasonal. So if you look at, for instance, in the Q2, EBITDA was down 22% year on year. But in this quarter, EBITDA is up 3% 3.2% year on year. So there's a very big change from minus 22% to plus 3% from 1 quarter to the other, okay? And this is basically because of seasonality. We have to go back for that. And in Mexico, in broadband, well, Mexico, it's as well, as you mentioned, mobile is a very competitive environment. So we are we already give reshape what we're offering in the marketplace to deliver more bandwidth, more speed than our competitors. And we are adding on all the Claro Video over the top offering in order to compensate a way that we don't have pay TV. So I think it's a way that we see the competition. So the network is very prepared. So we have good proportion of the network with the fiber to the home. And as well, we operate all the network to PVFL to deliver more speeds. And we are getting closer to fiber in order to really have good speed all across the network. So that's the environment that we see. And then we are setting up these new products in order to be competitive in the marketplace. So relative to the question that was asked before, would you assume that if you get a Pay TV license eventually, you're going to get more market share on the broadband side? Bonding is helpful on the commercial. Well, we have all the elements to be competitive in that shape. And due to time constraints, our final question today will come from the line of Mauricio Fernandez from Merrill Lynch. Your line is open. Thank you. Good morning, Daniel, Carlos, Daniela. Just a follow-up and apologize for repetitive subject of Brazil margins. But to Carlos' point, revenues were actually up sequentially in the quarter during this year. And still, the pace of EBITDA margin, actually EBITDA margin itself was down in the Q3. So it must be cost related. And it doesn't look like even though with a little tougher competitive dynamics, it doesn't look like competitive dynamics were not based on Carlos' comments. So is there anything that is there any cost item? Is there anything that has already been achieved that is no longer available that would stop or make the EBITDA margin expansion less than before than what we were seeing in the last couple of quarters? No. No, I don't think there's nothing specific on that sense. And as I told you, Mauricio, I think we cannot see quarter over quarter. I think the what we're doing in Brazil is going to be successful, and you're going to see better growth in the future quarters. So I don't we're growing 10% our mobile revenues. We're growing a lot our broadband. In TV, we're losing less than the market, all over all the market. So we, in revenues, we're doing okay. And specific some costs that we have, no. I don't know if we have something specific in this quarter, but I think if you see all over year over year, we're doing I haven't identified specifically anything, Mauricio, but to say that, but Rodrigo will let you know. No. And the growth in the end fiber. Also, some important things is the growth on subscribers. We're growing more, Mauricio, in search. So we're spending a little bit more on the commercial side. So that's the only thing that we can see at this moment. Thank you everybody for being in the call. Thank you, Carlos, Oscar and Daniela. Thank you all. Thank you. Bye bye. This concludes today's conference call. You may now disconnect.