Welcome to the América Móvil first quarter conference call and webcast. My name is Stephanie and I will be your operator for today. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session. If at any time you require operator assistance, please press star followed by zero and an operator will be happy to assist you. I would now like to turn the conference over to your host for today, Ms. Daniela Lecuona, Investor Relations Officer. Please proceed.
Thank you. Good morning, everyone. Thank you for joining us this morning to discuss our first quarter results. We have on the line Mr. Daniel Hajj, Chief Executive Officer, Mr. Carlos Garcia Moreno, Chief Financial Officer, Mr. Óscar von Hauske , Chief Operating Officer, and also Mr. Carlos Robles, Chief Financial Officer of Telmex. Daniel?
Yes, good morning. Welcome to América Móvil first quarter of 2016 financial and operating report. Carlos is gonna make a summary of the results. Carlos?
Thank you, Daniel. Good morning, everyone. Well, the first quarter marked what was beginning of the year for capital markets in general and for emerging markets in particular, with renewed concerns about the sustainability of growth in China impacting commodity prices across the board. Oil prices were under severe pressure, reaching in mid-February their lowest level in at least 12 years. The Mexican peso depreciated sharply in the first month of the quarter, dragged down by oil prices. Currency volatility in Mexico and other countries was very high throughout the quarter, making it difficult to manage the sale of dollar-based products such as handsets. In spite of this, economic activity was rather stable throughout the region, with the major exception being Brazil. In March, fixed line RGUs reached 81 million, up 3.8% from a year before, while wireless subscribers were down 2% to 284 million.
During the quarter, we added 729,000 postpaid subs, with Brazil and Mexico accounting for just over 200,000 postpaid net adds, each one, and Colombia, 69,000. Our contract base was up 6.2% year on year. Our prepaid subscriber base declined 4.1% year on year, following disconnection of 2.4 million clients in the first quarter, including 908,000 in Brazil, 700,000 in Colombia. On the fixed line platform, fixed broadband access lines led the way, increasing 9.3% from the prior year, with both pay TV and voice accesses expanding between 1% and 2% year on year. Our revenues totaled MXN 223 billion in the first quarter, 1.4% more than the year before, with service revenues increasing 0.3% in MXN terms, and declining 1.1% at constant exchange rates.
Fixed broadband and pay TV revenues were the main drivers of revenue growth, increasing 7.9% and 5.9% year on year, as mobile data revenues decelerated, particularly in Mexico and Brazil. Mobile voice revenues were impacted by sharp reductions in interconnection rates in Peru, Colombia, Brazil, and Chile. They averaged about 30% for all. Also by stronger competition in some markets, especially Mexico. Central America continued to outperform other regions, posting 5.9% service revenue growth at constant exchange rates, followed by the South American block. EBITDA came in at MXN 52 billion, down 9.6% from the year earlier quarter in MXN terms, and 8.8% at constant exchange rate. It was equivalent to 37.7% of total revenues.
Operating profits fell 25% in MXN terms, reflecting both the EBITDA reduction and a 10% increase in depreciation amortization charges, an increase that for the most part reflected the amortization of goodwill, basically in tangible assets, related to the acquisition of our stake in Telekom Austria. Our comprehensive financing cost amounted to MXN 21 billion, 14.5% less than the year before, with net interest payments of MXN 6.9 billion. Whereas our foreign exchange losses totaled MXN 1.8 billion, other financial expenses reached MXN 12 billion. We obtained a net profit of MXN 4.8 billion in the quarter, equivalent to MXN 0.07 per share and $0.08 per ADR. Our net debt totaled MXN 578 billion in March, down from MXN 582 billion in December. It was equivalent to two times last of month's EBITDA.
In flow terms, our net debt was reduced by MXN 14 billion, with gross debt falling by MXN 23 billion. Our capital expenditures, which included MXN 3.6 billion in spectrum purchases, most of them in Mexico, amounted to MXN 20 billion, and shareholder distributions, but mostly share buybacks, to MXN 2.8 billion in the quarter. With that, I would like to give the floor back to Daniel so that we can begin the Q&A session. Thank you.
Thank you, Carlos. We're gonna start with the Q&A.
Ladies and gentlemen, if you would like to ask a question, please press star one on your phone. If your question has been answered or you would like to withdraw your question, press star two. Question will be taken in the order received. Your first question comes from a line of Daniel Federle from Credit Suisse. You may proceed.
Okay. Good morning. Thank you very much for taking my question. My first question is related to the deceleration in the top line in EBITDA in Mexico. I'd like to understand, if you could help us to quantify how much was the impact of the calendar effect and how much is increase in competition and the more competitive or attractive plans you implement in the quarter, which was the reason for the deceleration? The second question is related to CapEx. We see that the CapEx in the first quarter declined at 26% year-over-year in US dollar terms, and this is an indication of lower CapEx in this year also. Thank you very much.
Well, good morning. The first question in Mexico on the EBITDA. As everybody knows, we have been having new competitors since maybe one and a half, two years ago. They have been making their things, and I think fourth quarter of last year starts with big promotions and still we have this first quarter big promotions there. What we deciding is to follow the competition. The competition has been strong. And I think the good news there is that when we get closer to the prices and the competition and the promotions, our distribution network, our brand, Telcel, our dealers, our customer care centers, and our capacity and quality are so good that people is reacting very good. What we decide is to defend our customers as to do what we need to do in terms of pricing. Well, that's hitting us in the EBITDA.
Other good thing is that minutes of use are growing a lot. Data volumes are also growing a lot. That means that people that are staying with us are using more and more the phone. Those are the things that are happening. I think eventually, things are gonna be a little bit more rational in the future, but today, the promotions that are in the market are very aggressive. Other thing that hit us in Mexico is the Telesites. We used to have Telesites inside América Móvil. Today with the spin-off, we're paying a render. It's more or less 1.5%-2% of the EBITDA, what we're paying in Mexico, what we're paying to-
Telesites
Telesites. Percentage point. That's more or less what is hitting us now. We're growing good in postpaid and, well, the market is reacting good on the Telcel brand. The CapEx, the second question is on the CapEx. The CapEx is, well, we said that we're gonna invest a little bit less than last year, and it's what you are seeing this first quarter. Number portability also in Mexico. Number portability decreases at the end of last quarter. It's starting to increase as of February and March. Well, the competition is tough in promotions, but the market is reacting good.
Okay. Just a quick follow-up on the first question. The calendar effect with the Easter holidays in March represented a very minor effect. That's correct?
No, it's not correct. Particularly in Mexico, it's very strong. As you know, it's practically two, three business days that are taken off. Over the weekend, there's much less usage. No, the calendar effects in terms of Easter holidays are very strong in several markets, but more importantly in Mexico. If you look at Easter holidays, they were in April last year. This year, they were in March, so they were captured 100% in here. I don't want to give you an estimate of exactly what the impact, but it is a very important impact, and you can see it historically in our reports when there's been a difference in terms of when the Easter holidays takes place, there is a very significant change. Other than that, it's what Daniel said. I think that we need to look at the distribution of revenues.
On the fixed line platform, where you don't really see the seasonal effect. You see an improvement of revenues. They have been recovering, I would say, since the middle of last year. They've been trending up. If the trend continues, they should be on a positive path year-over-year, probably as soon as next quarter. On the fixed line side, we did not see this kind of a seasonal effect. On the mobile side, you do have the seasonal effect, and as I said, I think there's a big history of evidence of when this happens, how it's affecting these revenues. The other thing is what Daniel said. I mean, it is the case that we have had
A lot of promotions in place that began toward the end of last year that have been in place also all of the first full quarter, they have had an impact. Yes, in terms of driving MOUs up, for instance, MOUs, Daniel was mentioning, were up. They reached, as you have seen in the report, 319 minutes. That's, I believe, the record. I don't think that we have ever had the record before was something about 250. We are seeing very significant increases in users that have been driven by the promotions that we have put in place.
Your next question comes from the line of Richard Dineen from UBS. You may proceed.
Thank you very much. Good morning, everyone. Thanks for taking the question. Just two questions, if I may. Firstly, if you could perhaps compare and contrast your competitive strategy in Mexico and Peru Mobile, given that you're facing a similar situation with new competitors in both markets. In Peru, you've been pretty aggressive with discounts and subsidies to try and defend share, which has obviously impacted the margins quite significantly over the last several quarters. In Mexico, I'm just wondering, does it make sense for you to defend share less aggressively given that you have potentially a lot more value at stake there? Plus, losing share in Mexico arguably helps you in the eyes of the regulator. Just wondering how you think about that kind of philosophically, market share versus margin in these two markets.
Secondly, just if you could give us a quick update on fixed line local loop unbundling in Mexico, which seems to be the only major regulatory measure missing from that market. Just wondering, what stage is that discussion at? Is it just a discussion about pricing at the moment, or are there other things that might need to be resolved, which might take some time? I guess, yeah, anything on the kind of roadmap over the next few quarters would be fantastic. Thank you very much.
Well, there's a lot of questions. Let me start with the first. I think it's totally different what is happening on Peru than what is happening on Mexico. It's not the same market. It's different competitors. It's different what is happening in Peru. What is hitting us a lot is the interconnection rates. The interconnection rates, they reduce a lot, and it's around 60% of the reduction is in interconnection rates. It's been high. In Peru, still subsidies are high. I think they should be more reasonable in the future, but today subsidies are high. In Mexico, we have not been so aggressive in subsidies. In Mexico, we are more aggressive on rates, in promotions, and these promotions have some time. I don't know exactly when they're going to be more reasonable, the promotions. In terms of subsidies, we have been more careful.
We are losing a little bit of market share in Mexico on the prepaid. We are in a very good position in postpaid. In postpaid, we're maintaining or gaining a little bit market share. It's totally different. It's different competition. Here we have AT&T and Telefónica. In Peru, we have Entel, that it's a new entrance in the market, and we have also Telefónica. We cannot compare different strategies, different markets. It's different. The other question about the unbundling on Telmex.
Yes, Daniel. Basically, on December of last year, IFT issued the final conditions for the unbundling, including the tariffs. At this moment we are speaking with the different interested operators to be able to implement the unbundling in Mexico. Well, it is difficult to envision or to see what the effect of the unbundling would be. Just as we have been doing, what we are doing it, we are further increasing the speed and the quality of our products, and therefore we think that we are in a good position to face this new competition environment.
Okay.
Yes. Just to finalize on Mexico, and if it makes sense to. We are losing some customers in prepaid, but the promotion was too aggressive. We have to do something in the market, and it's what we decide. I think long term it's good. As I said, eventually things are going to be more rational in terms of promotion. We are going to be aggressive in postpaid. We have a very good network. We have a good quality on the network, good coverage, good distribution, customer care center. It's a lot, a good branding. As we get closer in the promotions, people is reacting on favor on Telcel. That's a very good news for us.
In the other side, well, people is using a lot more data, a lot more minutes, I think it's also very good for the Mexican market.
Your next question comes on the line of Michel Morin from Morgan Stanley. You may proceed.
Yeah, good morning. Thank you. I just wanted to see if you can elaborate a little bit more on the statement you made in your prepared remarks and also in the earnings release around the impact of the FX volatility in terms of your ability to manage the business. Was that reflected in some of the cost pressures that we saw? I mean, was there a material or visible impact on margins in some markets? Then the second thing is around your leverage. It's ticked back up to about two times Net debt to EBITDA. I'm wondering if you can update us a little bit on how you're thinking about your leverage levels, and also whether or not you're seeing any pressure from rating agencies to bring that down a little bit faster. Thank you.
Well, as Carlos said at the beginning of the call, there was a lot of volatility during the first quarter of this year, also the fourth quarter of last year, first quarter of this year. In terms of the operation, yes, it hit us a lot because, well, you have to pay handsets. Handsets are in USD. You have to pay software. You have to pay some operating expenses are in dollar terms. It's very difficult when you have a due date to pay some things and at what the rate is in, let's say, the Brazil or the peso, the real, the peso or the Colombian peso. Well, change you a lot. It's difficult to budget all those things.
That's why it hits you a little bit because, let's say, the USD against the peso gets in the quarter from MXN 70.20 to MXN 80.90, then goes down to MXN 80 and then to MXN 70.60. Well, in those dates, you have to do something. It's difficult, then you have to manage that, and it's going to hit you always in your results. That's what it's happening, and it's depending on the country, hit you depending on the exchange rate and the volatility. There's a lot of things that are denominated in USD and you have to pay in USD. Carlos can talk a little bit about the-
Okay. Well, the-
Next one
The increase in the ratio, Michelle, is basically the result of the decline in ARPU for the last 12 months because of the reduction that we had in this quarter. In my prepared remarks at the beginning, I mentioned that in terms of flow, we had actually reduced gross debt by MXN 23.7 billion, and net debt by approximately MXN 1.4 billion. There's a lot of noise with the FX volatility, as we have pointed out. That probably will not allow you to see all of this. The reduction in net debt in terms of pesos was approximately MXN 4 billion, but in flow terms was approximately MXN 14 billion.
I expect that throughout the year, as we continue to reduce our debt, which is what we have said that we would be doing this year, that we will maintain the leverage ratio within the ratio that we want to keep it.
Thank you. That's very helpful.
Thank you.
Has there been any conversations with the rating agencies? Is there any pressure from their perspective?
We have stable ratings today by S&P and by Fitch. We have a negative outlook by Moody's. That came roughly at the same time that Mexico was put on credit watch as well. There could be something there. Again, I don't think there's anything immediate. We have today the best credit ratings in the telecom sector. I probably say that in the world, I do not know about Japan, but outside of Japan, I think that we have the best credit ratings of any telecom company in the sector, and we intend to hold on to them.
Your next question comes from the line of Amir Rozwadowski from Barclays. You may proceed.
Thank you very much, and good morning.
Good morning.
Good morning.
I was wondering if we could talk about the reverse side of some of the increased competition in Mexico. If we think about some of the pricing declines that have occurred from a regional perspective and some of the increased competition, do you believe this puts you in a better position to benefit from easing asymmetric regulations going forward? Then, a second question, with your CapEx down, which is a theme that you had mentioned in your analyst update late last year, I suspect that the expectations is improving cash flow conversion. And with that, how should we think about the priorities for cash at this level? Is it to focus on some of the debt? Is it potential increased return to shareholders? How should we think about your strategy going forward? Thank you very much.
I will start from this.
Well, on the second one, which is a little bit related to what Michelle, we had asked. Well, our intention is to reduce net debt by MXN 3 billion, MXN 3 billion-MXN 4 billion this year. That's the intention, that means that some of the savings that we will have on the CapEx side will be utilized mostly for debt reduction, okay? That would be the priority for this year as opposed to paying an extraordinary dividend as we did last year.
The first question, we're in the process where IFT is reviewing all the asymmetric, what happened the last two years. We don't know what they are going to decide. I think in my personal that there's effective competition in the market. They should see that we are not putting prices in the market. When you have competition, you don't decide the prices in the market. It's what is happening, it's what you could see the last eight months. There is much more aggressiveness in the market. We don't decide that. We don't decide what the market is going to do, that means that there's effective competition in the market. Still, we don't know what IFT is going to decide, but I hope there are going to be more relaxed regulations in the future for América Móvil.
That does not mean that we're going to be out of being a preponderant player, means that there should be more relaxed regulation for Telcel and Telmex.
Thank you very much. One follow-up, if I may. Switching gears a bit, how do you think about your opportunities for a TV license at this juncture?
Well, in Telmex, we asked to renew the concession and we don't know what they are going to decide. Still, they are reviewing that, let's see what does the IFTEL is going to decide there.
Your next question comes from a line of Andre Baggio from JPMorgan. You may proceed.
Hi, good morning. Two years ago, AMX tried to get out of the preponderance by trying to divest some assets. We now see an opportunity that we have a very aggressive competitor that is probably AT&T. We have seen that América Móvil is trying to fight back, like trying to follow the price discounts or more aggressive campaigns that we see from competition. Why not simply giving up market share that would expedite América Móvil getting out of the preponderance status?
Well, it's a very complicated question. Because you need to defend your customers, you need to be also competitive in the market. Well, we don't know even if América Móvil doesn't have any offer of selling customers at this time. At this stage, what we want to do is we want to defend our market. I think as we're saying, it's very good for all the customers. They are consuming more data, they are consuming more minutes, I think that's a very good visualization for the customers for the future. We are, as I'm saying, we're losing market share in the prepaid business. Well, I think we're going to lose market share in the next years. Of course, AT&T and Telefónica are aggressive, they are going to get more customers.
On the other side, the market in Mexico is also going to grow. Still, the penetration in Mexico is low, I think we're going to have more growth in the market in Mexico. That's the strategy for Mexican market.
Do you see any signs of change in this competitive position? Should we just expect the market to get more and more competitive over time?
Well, I think we are at a very competitive pricing right now, I think much lower than in a lot of countries, than in U.S. We are at a much lower price than what my competitor is having in their market. I don't know. I'm not the one who is deciding at which stage we are going to go. We're deciding to compete, that's what we are doing. If you are asking me if the market today, the market today is really competitive at a very low pricing today, much lower than what you see in the United States.
One thing, Andre, that is interesting to look at is how the structure of subscribers of América Móvil in Mexico is changing. We have been losing share in prepaid. We are continuing to gain, I think, in postpaid. The quality of the subscribers is improving overall. I think that the quality of the network is a key element. We have seen that as we move our prices closer to the competition without even having to match them, this immediately attracts more people back to our network. An indicator of this is that in February and March, we had the highest numbers ever of port-ins on the number portability. That is basically what we have seen already in other markets, including in Europe, that the main driver of your competitiveness vis-à-vis other operators is the quality of service. We have the best quality of service.
We have the best data speeds of any network. We have the best coverage, and that's not going to change anytime in the future. We expect we will be able to hold on to this competitive advantage, and that should continue to allow us to gain inroads in the segment of the market that we're more interested in. In this regard, if you look at our plans for CapEx this year, it's basically, in the case of Mexico, meant to allow us much greater capacity to allow us, again, to process much greater volumes of data so that we can continue to service the high-volume clients the way that we want. Okay. I think that's how you should look at that. We have an installed infrastructure in Mexico that is a key element of competitiveness going forward, and we intend to maintain it and strengthen it.
Your next question comes from the line of Carlos de Legarreta , GBM. You may proceed.
Thank you for taking the question. I noticed in Brazil there's a substantial contraction in operating profitability. I was wondering if you can comment on that, because that seems to be mostly explained by depreciation charges. That's the first question. Thank you.
Let's talk a little bit about Brazil. I think in Brazil, well, we know what's happening in the economy. Bad debt has increasing a little. We have been a little bit more careful on what we're doing there. Overall, we are gaining market share in most of our markets. In pay TV, we're doing well. In broadband, we're doing well. Also in fixed, I think in the corporate customers, we're doing well. We are investing, and we're preparing. When Brazil recovers, we are well prepared to take more market there. That's what is happening in Brazil. It's a special condition. The economies are not doing so well, and what we want to do is to be a little cautious on what is happening. We are seeing that bad debt is increasing.
A little bit of our DTH customers segment C and D are disconnecting. What we want is to be more cautious on all our offers that we are giving now. That is what is happening right now in Brazil. Overall, our company has a very good strategy. We have peaks, we have mobile. We are doing also cloud. We are doing applications. We are doing more on the cloud business in the corporate side. We are well-prepared in Brazil.
Thank you, Daniel. I'm very aware of the integrated offering that you guys have in Brazil, I didn't think that explains the actual decrease in the operating profit. EBITDA is increasing by 1.2%, whereas operating profit is declining by more than 60% year-over-year. I don't know if there's a specific reason for that you can comment on.
I don't know. Daniela can tell you. I don't have it, why the depreciation specifically is growing in Brazil. I don't know, Oscar, if you have the number exactly, but if not, Daniela can give you exactly what's the reason, why the depreciation is growing
Right
in Brazil a little faster now.
Your next question comes from the line of Walter Piecyk.
Excuse me, one question. Just to go back to that, to the prior question, because we have now the answer. We changed the policy for depreciating the set-top boxes in Brazil. It used to be for five years, we moved it forward to three years because that's more consistent with the life of that type of hardware. Obviously, it's more reflective of the real value of the hardware that we are buying.
Yeah.
We depreciate it more rapidly. That's the reason. Thank you, Carlos.
Your next question comes from the line of Walter Piecyk from BTIG. You may proceed.
Great. Thank you. This is a question for Carlos. Carlos, the leverage, obviously, because of the movement in EBITDA is up. I see that your share repurchase is obviously a lot lower than it was back in early 2015. Just curious, given the trajectory of EBITDA, does it make sense to perhaps suspend the share repurchase program at this time?
I think that we can continue. It obviously will depend on the prices. As you know, we have not always had a linear share buyback, very often the share buyback plan is sensitive to the kind of prices that we see in the market. I would say that, yes, we do have some amount earmarked for share buyback this year. In principle, we will continue with that. At what pace will depend on what prices we see in the market.
Understood. Also, Verizon was talking very positively about TracFone as a good prepaid channel for them. I know you use a number of different operators. You have the ability to shift your traffic between operators. Have you been shifting a significant amount of traffic to Verizon and away from the other U.S. operators?
I think Verizon at this stage has a good share of our traffic. Yes, if Verizon is giving us a more competitive offer
Of course, we can move more traffic to Verizon, but it's going to depend on the offers that we receive, and that's what we have been doing for the last two or three years. Verizon has been very aggressive, and that's why they have been growing with us in the last five years. They have a big share of our market, and I hope we have, in the future, very good offers from them, and we can increase the market. That's the business and that's what we're seeing there. Depending on the offer, it's going to depend on with whom we can go. It's not only Verizon, it's also T-Mobile, it's also AT&T. We have business with them. That's more or less what you have been seeing in the last three, four years.
Ladies and gentlemen, as a reminder, please press star one on your phone to ask a question. Your next question comes from the line of Gregorio Tomassi from Itaú BBA. Please proceed.
Yes, good morning. Thanks for taking the call. I have actually two questions. The first one is on the local loop unbundling in Mexico. I want to go back a little bit there. I understand there are any rules that allow you not to unbundle for a certain period of time, the fiber that you have deployed in some accesses, the fiber accesses that you have deployed. Is that in place? What's the time window? Basically, I think it was two years, but is that in place, and what percentage of your access network actually would fall into the category that would not be forced to be unbundled? That's the first question. The second question is about, again, the depreciation charges. Can you give us a refresh as a guidance in terms of percentage of revenues, where should depreciation and amortization on a consolidated basis converge?
Yes, Gregorio. Speaking about the unbundling, yes, the measures that IFT established two years ago regarding the unbundling, they specified that there was a period of two years for new development in fiber. Basically, this is one of the conditions that is defined in the measures that were established on December of last year. Regarding the number, I don't have the numbers right now, but basically, there's a portion of those that would be exempt from the unbundling at this moment for two years. No? I don't know.
On the depreciation amortization charges, well, I would expect them to be similar to what we have in this quarter. They had been always around 13% of total revenues. I'd say that what is being reflected in this quarter that's a bit higher than what before was on account of what was just discussed in Brazil, that we are accelerating the depreciation of the set-top boxes. On the other hand, what we are now doing, which we did not have in the first quarter of last year, was the amortization of goodwill in tangible assets associated with our consolidation of Telekom Austria. That leads to this amortization that has increased the line item of depreciation amortization charges. Okay, the comparison year-over-year was high because in the first quarter of last year, the amortization of goodwill was not taking place.
This should normalize for purposes of year-over-year comparisons. That should normalize next quarter. In terms of percentage of revenues, I think that we will expect to continue to be close to around 14% of revenues.
Thank you very much, Carlos.
Thank you.
Thanks.
Your next question comes from the line of Ric Prentiss from Raymond James. Please proceed.
Thank you. Good morning. Thanks for taking my question. Couple if I could. One on Telesites. You mentioned it was about 1.5%-2% of your EBITDA in first quarter. I think it was also about 1.5% in fourth quarter. This really is a year-over-year difference, I guess, not a quarter-over-quarter difference for Telesites impact. Is that correct?
That's correct, the 1.5% and 2% it's on the Telcel results, I was saying not on the Mexican results. I have to check exactly what is the percentage of all the Mexican results, because I was giving you only on the wireless side. Daniela can give you exactly the number on the Mexico.
2% of it. No, 3%.
Okay.
It's also year-over-year, not quarter-over-quarter, as you are saying.
Exactly. Good. Thank you.
Yes.
Pigging back on Walt's question earlier, obviously Verizon made a nice mention of you, but the results in the U.S. were very tough in the first quarter. Can you talk a little bit about the competitive environment in the U.S.? Usually, first quarter is a good quarter with the income tax season. How do you view the competitive dynamics in the U.S., please?
Yeah. What we're seeing in TracFone is a lot of competition in the prepaid side, and I think also the U.S. market is really competitive. What's happening, we're an MVNO, so as the market is changing faster their rates, then we have to negotiate new offers with our carriers. That's why it has been more costly for us because there's a time where you need to give a new promotion, and then you have to negotiate with all the carriers a new rate. That's more or less what it has been happening for the last six months, eight months. We're really happy, as you said, Verizon is mentioned in us as our prepaid business. We have a big slice of our market with them, and we're really happy with that mention.
At this time, there are no further questions in queue. I would now like to turn the call back to Daniel Hajj for final remarks. Please proceed.
Just to thank you everybody for being in the call, and thank you. Good morning.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.