Earnings Call: Q2 2015

Jul 17, 2015

Good day, ladies and gentlemen, and welcome to the America Movil Second Quarter Earnings Conference Call and Webcast. My name is Alex, and I will be your operator for today. At this time, all participants are in a listen only mode. We will conduct a question and answer session toward the end of this conference. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Daniela Lecona, Investor Relations Officer. Please proceed. Good morning, everyone. Thank you for joining us today to discuss our Q2 results conference call. We have on the line Mr. Daniel Hajj, our CEO Mr. Carlos Garcia Moreno, Chief Financial Officer Mr. Oscar Bonjowsky, Chief Operating Officer and also Mr. Carlos Robles Naha, Chief Financial Officer of Telmex. I'm going to pass on the call to Daniel. Good morning. Welcome to America Movil's Q2 of 2015 Financial and Operating Results. Carlos is going to make us a summary of the second quarter results. Thank you, Daniel. Good morning, everyone. Well, of course, at the start of the Q2, the U. S. Economy seemed to have hit a soft patch, subsequent economic data point, data point which hasn't been short lived. The Fed continues to affirm that they expect the Fed interest rate increase in years to take place in 2015 with market expectations entering in September mode. Against this backdrop, we are seeing a mixed bag of economic indicators throughout Latin America, With Mexico's economy appearing today gaining momentum, retail sales have exceeded expectations. Brazil is continuing to go deeper into negative territory, Colombia simulating the blow to the economy from the drop in oil prices and the rest of the region experiencing relatively stable, albeit decelerating economic growth. We ended June with 367,000,000 access lines, 1.4% more than a year before. This figure includes 288,000,000 wireless subscribers, 34,000,000 landline, 22,000,000 broadband accesses and 21,500,000 pay TV units. Our wireless subscriber base rose 0.8% year on year, while our fixed high EUs increased 3.7 percent for important increases in Colombia and in the Central America and Caribbean block. Our widely subscribed base team is joined with 288,000,000 clients after net disconnections of 850,000 subs in the quarter, including 739,000 in Brazil, 582,000 in Ecuador, 464,000 in Colombia and 298,000 in Argentina. On the other hand, Mexico contributed with 559,000 net gains, the the Central America Caribbean Block with 448 new tops and Chile with 151,000 net additions. Our wireless postpaid base grew 5% in annual terms, reaching a total of 60,000,000 subscribers. We added 608,000 contract lines in the quarter, of which 293,000 came from Mexico. On the Fishland platform, broadband access has increased 5.2%, pay TV accesses 3.6% and voice access to 8% year on year. Triple play packages represent nearly 2 thirds of the net additions of 5 gs used on the fixed line platform. AmecaMovix consolidated revenues totaled ARS 220,000,000,000 in the 2nd quarter, bringing to ARS 440,000,000,000 the cumulative number through June. EBITDA of ARS 68,300,000,000, and that's ARS 136,600,000,000 through June, was down 5% year on year as the EBITDA margin declined from 32.6 percent to 31.1 percent. At constant exchange rates, service revenues were slightly down in the period, minus 0.5%, while EBITDA came down by 3.1%. Mobile data revenues continued to be the main engine of revenue growth with 9%, followed by Pay TV at 8% and 5th data revenues at 7%. Both revenues were down on both platforms. Heavy revenues continued the trend. In Central America and the Caribbean, they maintained a stable growth rate. In the South American block, they experienced a solid though declining expansion. In Europe, they are trending up. And in Mexico, growth rates kept coming down but seem to be stabilizing. Our operating profits reached ARS 36,000,000,000 and were up 2.32% from the year earlier quarter. Depreciation and amortization charges were down 11.9% year on year. As the prior year, Telecom also had registered an impairment of its Bulgarian investments of €340,000,000 Our comprehensive financing costs, Ps. 11,000,000,000 were down 24% from the year before. Our net profit totaled ARS 14,000,000,000 and was equivalent to ARS 0.21 per share. In the first half of the year, capital expenditures reached MXN 70,900,000,000 and our share buyback is MXN 23,000,000,000 while net debt was up MXN 6,800,000,000. This figure reflects the reclassification in May of our investment in KPN from a long term investment value at cost to an available for sale asset also value at cost. As such, the shares are now included in the cash and securities item line with a carrying cost of ARS 39,500,000,000, which is deducted from gross debt to come up with a net debt figure. It must be noted that at the end of June, the carrying cost is lower than the market value of the shares, which was Ps. 51,400,000,000. Our net debt to EBITDA ratio stood at 1.77x EBITDA at the end of June. Thank you. And with this, I would like to pass the floor back to Daniel so that we can open the Q and A session. Okay, Alex, we're ready to take the first Your first question comes from the line of Amir Roshnodowski with Barclays. Please proceed. Thank you very much for taking the questions. I was wondering if we might be able to discuss some of the new initiatives that you folks announced yesterday, specifically sort of the offering in which there'll be an elimination of roaming fees with traveling to the U. S. I was wondering how we should think about the potential impact if this was a significant revenue generation tool for you folks? Or do we think that this probably helps to grow the customer base? Would love to hear your thoughts around that. Well, I think that what we announced yesterday was a very good plan, is that we're eliminating the borders between Mexico and U. S. In the telecoms. No long distance to U. S. And no roaming when you are there. We have income we have some revenues coming from those segments. But I think we're charging for that it's the Ps. 50, it's a very low charge. But I think it's going to be so interesting for the people that we're going to have a lot of people joining to this plan. And I think it's going to be good at the end of the day, not immediately, because not everybody is going to subscribe immediately. The ones that not subscribed are going to stay the way they are. So I don't feel that we're going to maybe in the future, we can add revenue depending on the amount of people that we have on the subscription. Thank you very much. Should we expect a near term impact to revenue associated with? I'm just trying to assess sort of how much revenues you folks have been earning from roaming fees that were traveling abroad? I don't have the number exactly here, but I think at the beginning maybe we can have an impact both in the medium and long term. I don't think we're going to have an impact. Maybe we're going to have an increase on revenue. In the other side, it's going to be very important to have this plan because make us very competitive in plan because make us very competitive in the market. So people I think the elasticity they are going to use more minutes, more data in the U. S, maybe they are going to have more minutes and more here, the border of Mexico, a lot of people traveling to the U. S. So there will be a lot of people using more and more this type of services. Remember, we have in Mexico the Thank you very much. And then if I may just one follow-up on the investment side. There is a commitment for you folks to add an additional $6,000,000,000 of investment over the next few years sort of regionally. How should we think about this relative to sort of strategic initiatives for upgrading your networks? Where do you expect sort of that investment to flow through? And what type of returns do you expect? And then I guess lastly, any update on the Telecyte spin off would be most helpful. Thank you very much. Yes. On the announcement yesterday about the $6,000,000,000 I think the $6,000,000,000 are for 3 years in Mexico. And I think it's more or less what we have been investing in the last years in Mexico. So we have been investing EUR 10,000,000,000 in the last 5 years. I think we're going to invest EUR 6,000,000,000 in the next 3 years. So it's more or less the same. It's going to be on capacity, more or less the strategy that we have been having for the last years and it's what we think we're going to do in the next 3 years. On the telesites, Carlos can talk a little bit about all the processes of Telesize. On Telesize, we expect it to take place in August or September, but certainly in the Q3. And it's we're basically just awaiting some regulatory approvals. I think basically everything is set. The shareholder approval was already obtained some a couple of months ago. So I think everything is ready to go in terms of the actual spin off of Andres Gamov. Remember that the spin off of the tower company itself, of the operating tower company already took place back in January. So the tower company, Opsimax, Tophera Dora Sitios, has been in business since early January. The other ones that have been conducting all of the maintenance and the construction of the towers a specific separate entity. Thank you very much for taking the questions. Thank you. Your next question comes from the line of Ric Prentiss with Raymond James. Please proceed. Yes. Good morning. Thanks for taking the question. One follow-up call or question on the no borders offer. In the document last night, it talks about leading the integration of the U. S. And the Mexican marketplaces. Will TracFone be able to offer any similar type products on the U. S. Side? Yes. We're going to do this in Mexico. And shortly, we're going to announce some programs in Tracfone that will allow that the people from Tracfone will roam also in Mexico. So there are going to be new plants that we're going to announce in maybe a couple of months. Great. And then in Brazil, you mentioned that you had lost 112,000 pay TV on the DTH. Can you talk a little bit about the triple play strategy in Brazil and how video is fitting into that? Yes. As you mentioned, we disconnecting the satellite TV product platform. As you see, given the economic slowdown of Brazil, we've seen the low end well, we've been decreasing a little bit the figures on triple play, but around 70% of our net adds goes to triple play offering in the market. So we expect that we will continue to grow on the triple play and double play offering through net services. I think we had a very great product in broadband and as well in pay TV offering with a triple play in net services. Your next question comes from the line of Veda Roti with Goldman Sachs. Please proceed. Thank you. Talking about Brazil, what are the reasons for the slowdown in revenue growth this quarter? It's higher competition or is the macro environment? And the second question is, are you seeing weakness on prepaid ARPUs as well? Thank you. I think, Vera, that economic slowdown in Brazil is hitting everybody. I think there's going to be more competition because of that. But I think the real issue is that the economic slowdown is hitting revenues in prepaid is hitting some sales for the new TV customers and that's more or less what is happening in Brazil. But it isn't really all that Mark, because if you look at the numbers, Q1, we're growing 5% service revenues and Q2, we're growing 4% service revenues. And remember that in our case, we are also carrying the reduction in the connection rate. But when you adjust for that and look at net revenues, actually net revenues are doing better than what we are showing here because the expenditures on interconnection fell faster than the revenues that we had on interconnection. But anyway but just looking at growth revenues, we went from 4 percent first quarter to 5% I mean from 5% in the first quarter to 4% in the second one. And if you look at the with the exception of voice, that came down just a bit more in the Q2 than the first. Mobile data is actually better. We were growing 34% in the 2nd quarter as against 30% in the Q1. Fixed broadband is roughly similar. It's about 11% in both quarters. And pay TV is slightly lower from 9% to 8%. So I think all throughout, I don't really see, as you point out, like anything that is a marked slowdown, something that we should consider that is particularly special. And other just other comment in all the fixed products, it's fixed broadband and TV, we're gaining market share in Brazil. So I think that's something more related to the economic situation. Okay. And just one additional question about Brazil. The improvement in EBITDA margins that we saw of 200 basis points on a year over year basis, this new level of like 27.5%, is this the new level we should be considering or thinking going forward? Well, it's what we're working for and better and that's our budget. We feel we can sustain that for the next quarters and we hope we can do it. It's going to depend a lot more on economic situation, it's going to depend also on how aggressive will be the market in the next months in the future, but we are aiming to maintain that 27%. Okay. Thank you. Thank you. Your next question comes from the line of Rodrigo Villanueva with Merrill Lynch. Please proceed. Thank you. Good morning, Daniel and Carlos. I have a couple of questions. The first one is related to wireless data revenue growth in Mexico. We saw a considerable slowdown to 2.9% year on year. I was wondering what is behind this and if you're already implementing any measure to try to accelerate wireless data growth? That will be my first question. Wireless data, we have been growing a little bit less this month that this quarter than last quarters. People is using more. We're growing in volume. But the thing here is that we're being more aggressive in the market. We're adapting all our plans to the reality of the market. And I think data is a very important product for us and we want to be competitive there. So volumes are going higher, prices are going lower and that's really the reason why you're seeing a slowdown in the revenue of data. But I feel it's like it's going to be like the voice, no, you need to give better prices, people are starting to use more and then you are going to see the increase on the revenue again. So that's what we're looking. We have been having promotions, new plans in the market with more data, instead to adapt and to adjust of what we're seeing here in the Understood, Daniel. Very clear. And my second question is related to Telecytes. Carlos mentioned that it has been operating a separate entity since January. So I just wanted to ask if a management team for that company has already been assigned by the Board or when shall we expect to hear more on these respects? Yes. As Carlos said, we have been working as a separate company since January. This company has people who is working with. So this team would go out when we have the spin off, these people would go with the company. And well, at the end of the day, I don't know if the new board or the new people will change some of the management or ask for the people, both the base and the people who is working today, I think they would be out. There's a team working in at this moment and that would be a spin off with the company. Got it. Thank you. Your next question comes from the line of Kevin Smith with Macquarie. Please proceed. Some discussion of a potential capital increase at Telecom Austria. Can you discuss what you think the capital requirements there are there and what your commitment would be? Opportunities for you with Telecom Austria into Eastern Europe and Central Europe. What's out there that's interesting? And what's the timing likely to be on transactions in Europe? Well, I mean, we undertook this capital increase at the end of last year. It was €1,000,000,000 The capital increase was meant to stabilize company's finances. The company has since been ratified the investment grade ratings that were under negative outlooks. So they are now stable ratings. This company has sufficient equity today, I think, to manage its day to day operations adequately. I don't think that it would need any more capital. But I think the question always would be, if there is any kind of an expansion, would they be able to do it on their own? I think there is nothing that is being considered at this point, but those are the questions around Telecom Austria. Their finances are perfectly well as they are today for the expansion organic expansion, say, as well in the existing footprint. Just to be clear, there is no current plans for a rights offering at Telkom Austria. And again, there is no short term M and A plan. So unless something changes on the expansion front, there won't be a rights offering? Yes, exactly. Okay. Exactly. Thank you. Thank you. Your next question comes from the line of Andre Saba with Credit Suisse. Please proceed. Mr. Saba, please proceed. Take the next question, Alex, please. The next question, please. Next question is from the line of Alejandro Galloza with BBVA. Please proceed. Hi, good morning, Carlos, Daniel. Thank you. Thank you for the call. My question is related to the satellite that you recently launched. How much did it cost? And how this will impact your CapEx? And if you will eventually be able to use it in Mexico to offer Pay TV services eventually maybe? Well, this successful launch. This satellite is going to help us to give more HD channel sets for all our satellite business that we have all around Latin America. So that's the purpose of this satellite to give to have more capacity and to have maybe we can use it also in the data services in Latin America. But the reason, the purpose of this is to give more HD channels or more channels, more capacity to our future, once you get the authorization to Frupe TV? Yes. I think the satellite covers all Latin America, including Mexico and part of the U. S. So that's the orbit that we have. And yes, if we could have in the future a license or a permission to do that, we can use the satellite. Okay. That's great. And second, if I may, The numbers in Colombia have been perhaps a bit discouraging in the past few quarters, certainly driven by regulatory changes. I was wondering if you could perhaps explain what is going on there and then give us your view about the outlook for the next few quarters? And if you think that this type of regulation could eventually be applied in Mexico or not and if this could have a similar impact at home here in Mexico? What is happening in Colombia is that people is starting to change a little bit to renew their there's no contracts, no more contracts in Colombia and they renew them with a lower ARPU. They are being careful to renew or they in the postpaid side to renew reducing the rent of the plan. So it's what we're looking that is happening in Colombia. In the prepaid side, we're starting to see better revenues there. So and in the other important thing in Colombia is a very competitive market. So we have been reducing prices, giving more data, giving more minutes. So that's all overall what is happening in Colombia. But I think that next quarter we're still going to see a little bit of that, but I'm sure that in the next year everything is going to stabilize and we're going to starting to grow faster on data than decreasing that we're having on voice. Today, we're having a decrease on voice and data revenues are not growing at the pace that we want. And I think in the next year, we're going to see less decrease on voice and higher increases on data and that will give us more and that will stabilize more the market. Further to what Daniele is saying, in Colombia, the only thing that came down was voice revenues on the mobile side. All other business segments, voice on fixed, data mobile and fixed and pay TV, all of them are growing very well. In fact, data revenues are accelerating and they are now between the two platforms together, they are growing approximately 15%, a bit more than 15%. Pay TV is also accelerating. It's growing 17% year on year. So I think that once we see this stabilization of both revenues in mobile, you're going to see the underlying growth that we're having in all the business manifest itself. Okay, that's great. Thank you, Carlos. Do you think that since you provided CapEx guidance for Mexico, you could do the same for Colombia and Brazil for the next 3 years maybe? No, I don't have it here. And I don't know if you could talk to Daniela and let's see. But I don't think we're having at that number for the next year or so, Steve. Okay, good. Thank you very much. Thank you. Your next question comes from the line of Richard Dineen with UBS. Please proceed. Thank you. Hi, good morning, everyone. Thanks for taking the question. Can you perhaps give us some more detail on Ecuador? It looks like that's been a tough market for a couple of quarters. You've had the disconnect this quarter, but the release also mentions some aggressive airtime promotions and higher subscriber acquisition costs. I guess, we think of Ecuador really as a 2 player market with Telefonica. So perhaps we don't expect to see such aggressive competition. So maybe if you can just help us understand what's going on in that market that would be really helpful. Thank you very much. What you could see in Ecuador is we're being more in our we are being more strict on accounting customers and that's what we're looking. We are putting LTE. So we think that the data is going to grow in the next years. And of course, Ecuador is a 2 no, it's not a 2 player market. There's a new third player who has already LTE and is giving us the data. So it's not a 2 player market, it's a 3 player market. And I feel comfortable that in the future you're going to see more growth in data reducing the minutes of the decrease in minutes of use. So that's what you're seeing in all overall. Includes talking a little bit about Peru, you could see that the market has been very aggressive also. We have been reducing our EBITDA because we want to be also aggressive in the subscriber acquisition that we're having there. And in Ecuador also, we're having a decrease rate. So those are the two things that are hitting us in Peru. So Peru is a market very competitive and we have that interconnection as the rate decreasing. Ecuador, I feel that we're going to stabilize in the next also in the next months. Next year, I will see much better growth on data. We're going to have all our LTE platform working. So the growth is going to be better. So these two countries, I think next year we'll see much better results than what we're seeing today. Thank you, Daniel. Yes, and that's really helpful. Thanks for also the background on Peru. So I guess our takeaway from Ecuador is that this is really more driven by the new entrant rather than Telefonica? This is more a sort of anticipating a newer player in the market wanting to retain customers and be more competitive, if that's the right way to think about this? Yes, yes. It's a new entrant that already has LTE that is giving a lot of data to the customers. It's putting a lot of some pressure to the prices. So that's more or less what we're seeing in Ecuador. Being more strict in all our policy, our churn policy, That's what we are seeing in Ecuador. Many thanks indeed. Thank you. Your next question comes from the line of Carlos de la Garreta with TBM. Please proceed. Thank you for taking the question. Just getting back to Brazil, but if I may on the more corporate side, I know you're restructuring the company under the Claro, let's say, corporate umbrella. And I don't know if you can talk about how is that going to help going forward? And if there are any specific plans to rebrand the Net or EmbraTel or something like that? That would be helpful. Thank you. We're still working on with the 3 brands. Embraatelli seen more in the corporate side. Net has a very good brand on the TV, broadband and peaks and Claro as we're doing in the wireless. So we are not thinking to rebrand anything at this moment. Okay. Thank you. And just a brief follow-up, if I may. I guess this is this will be answered by Oscar. In terms of the plans that you guys are offering across South America, basically the social networks and messaging apps that do not consume data. I'm just a little worried that this will be detrimental for your revenues going forward. How much I mean, if you could explain what's the strategy behind this? Is this a short term offering in order to attract clients or to retain customers and it's going to change in the future? I mean, that will be also helpful. Thank you. There are promotions that we're giving in all Latin America and the promotions are in some markets because of the competition that we have in some markets. So that's more or less you could see that in Brazil, we are not the only one who is giving us the social networks as a promotion. So I don't think they are going to end forever. But at this moment, the market and the conditions of the market are and we want to be competitive in the market. So that's the reason why we're doing Sounds good. Thank you. Your next question comes from the line of Walter Piecyk with BTIG. Please proceed. Thanks. Hey, Daniel, before you ultimately spin off Telecyte, can you start to negotiate secondary tenants for those sites again prior to the spin off? Obviously AT and T looks like they're going to invest a lot of money into the market. I'm just curious whether you can start those negotiations now. Well, the tower company, Opsimexo, Peradora Acitios, that's the company that exists since January. They signed a master lease agreement with Telcel. And so Telcel has been paying them the rents for the various sites under this umbrella agreement. And this agreement was basically approved by the regulator because it is meant to be the same agreement that oil operators can subscribe. I think it is for the regulator to announce what agreements have been signed or what have not been signed. As you know, there was a requirement on America Movil having been found to be so called preponderant to make sure that this infrastructure, passive infrastructure can be shared. So the way of doing so is basically by providing this agreement to other parties. And again, as I said, I think it would be for the regulator to specify exactly who quite other players have already subscribed or are interested in the process. Okay. Thank you. That's helpful. Carlos, as part of that kind of spin off and that it sounds like it's obviously the regulators are involved. When it's a separate company and everything and Telcel thinks about their network plans over the next 3 years. Is there an expectation that Telcel will be looking at other when they're looking to add cell sites as you grow with capacity and build out your LTE, will you be using other tower assets in the market? Or will your growth continue to be internal and only using these telesites that are getting spun out? For one thing, the team that is in Opsimax is the team or the operating team is the one that was previously in Telcel. So they are very experienced people, both in maintaining towers, but in particular, in constructing towers. Telcel had over the years built roughly 15,000 towers, okay? So they will have this advantage of being an experienced team that can get things done and, obviously, they will be an option for Telcel to work with. It is the case, however, that Telcel in the past has already worked with other tower companies because, obviously, they need to optimize and there's really no point in building something when you have already some other tower available. So it will be for Telcel to optimize the overall spending. But certainly to the extent that they need to define construction of towers, certainly Telesat will be an option that can get them going for them. Thank you. That is helpful. And then just one question on Brazil. Can you just give us just a big picture view on your thoughts on the market? I know there's been some questions about it earlier, but specifically Tim Brazil has been investing more in the network there and to try and return to growth. Telefonica has obviously already invested. Where I know you don't disclose this separately, but can you give us a sense of kind of where your capital investment a potential option? Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. A potential option? Thank you. Well, if you see the breakdown of CapEx, as we've been saying through the conference call, data growth has been picking up in all the platforms, mobile, fixed or whatever. So we've been upgrading the network. We've been doing integration across the different networks that we have. As you know, we acquired Net Servicios, Claro and Embraer. So we are merging the network in order to bring some savings in the growth of data. We are doing as well. We reduced the construction of home passes in net service use. Last year, we did it like a $2,500,000 We expect to do less than $1,000,000 this year. So mainly it's variable CapEx that goes to triple play connections, modernization of the mobile network getting to 4 gs and fiber to the radio stations. But I think we are in the same path that we did last year, upgrading the network, variable capital that goes is a revenue driven CapEx and mainly goes to that kind of investments. Thank you. And then just any thoughts on consolidation there? Thanks. What about the consolidation in Brazil? Consolidation, we are not talking about consolidation. Right now, we're having body. So right now, we feel we have a very good platform and unless there is something clear where we can be interested in, we are not doing nothing at this moment. No. Okay. Thank you. Thanks. Your next question comes from the line of Jonathan Dahan with Royal Bank of Canada. Please proceed. Hi, there. I had two questions. The first one, could you just go back to the Brazil TV growth? Because if I look at the change in revenue generating units, then I get you added 138 wireline, 144 broadband. But then if you then the missing number is 112 and you said that you disconnected satellite TV. Does that mean that you're not growing cable TV customers? So you're just the actual sort of original net TV base is not growing? Or the way the RGUs are calculated? [SPEAKER JOSE MARIA ALVAREZ ALVAREZ:] You are totally right. I mean, on satellite TV, as we mentioned before, we have some disconnection in the low end of the market. And in cable and in pay TV, given the slowdown with the economy, the net adds has been reducing through the quarters. And you are totally right. But if you look at the revenues, we've been focused on operating the pay TV offering. And in our revenues, we are growing in the net service revenues 14%. So it's a combination, but you are totally right. I mean, when you look at the net adds in cable, has been decreasing through the quarters, given the slowdown of the economy in Brazil. Can I ask a follow on question? I mean, with the exception of in most countries, you have the exception of in most countries you have cable, fiber and mobile. I mean, do you see yourself pushing triple play, quad play in more countries outside of Brazil? And as part of that, how many fiber homes connected or passed Brazil, we are doing in all the countries that we have cable operation. I'm talking about Colombia, Chile, Peru. And the path of growth triple play is pretty similar to Brazil. And I mean from the net adds around 50% of the net adds goes to with a triple pay offering in Brazil. In Brazil, yes, in Brazil, yes, but the combination of all of that, yes. So we are offering the same products in all the cable operation, Even in the countries like Central America, Dominican Republic and Puerto Rico, there are telco companies as well. We are offering triple play in those locations. So we have the same product offering like in Brazil. And to add something on Oscar's comment is that we are starting to in all these countries to also offer the 4th place. So we're trying to offer them mobile where we have where we have a house, where we have the peaks, where we have the broadband, where we have the TV and we don't have the wireless, we're offering also wireless there. So we're in almost all the countries where we have fixed, we are offering triple and quadruple. And do you have an update on your domestic Mexican fiber like how many fiber homes passed or customers with sort of high speed broadband or any sort of measure? We're making a lot of investments to give more spill to all our customers, and we are in that process. And mainly some of the investments that we said yesterday in Mexico about the 6,000,000,000 are related to give more data and give more broadband and more speed to all our customers through Mexico, in the peaks and in the wireless, in both platforms. The numbers, I don't have the numbers here, but we are moving in that direction. Sorry to hog the call. Have you guys I know you bought in the international cable, but have you thought about an international tracking stock? Because it occurs to me that if you have sort of AMX International, it would be a 8 or 9 times EBITDA tracking stock similar to perhaps Liberty LatAm? We haven't think on that. So We'll begin to think about it. Yes. Good idea. Okay. Thank you. Thank you very much. Thank you. Thank you. Your next question, Jose? Harry, what Daniel was mentioning, I think in Mexico, what we've been doing is we are mixing different kind of technology. 1 of them is fiber. What we are getting closer to fiber to the customer using new technologies of copper like PDSL or vectoring. So but what we've been doing is to adapt our network to this the bandwidth needs in the marketplace. So we feel that we are doing the right operating of the network to be competitive in the marketplace given the speed that the market is asking for. So we but we are doing a combination of technologies, copper and fiber. Your next question comes from the line of Guilherme Mariscal with Morgan Stanley. Please proceed. Hi, good morning guys. Actually, it's Diego Ragon here. Thanks for taking my question. So the first question on Mexico. Can you explain a little bit more about your CapEx for the next 3 years? I guess, it's the $6,000,000,000 implies like a decrease from $7,000,000,000 we have previously. So if you don't mind just to explain. Thanks. I don't know where we have the or when we said the $7,000,000,000 but the actual CapEx that we review and that's what we review in the last couple of months are $6,000,000,000 I don't know if that's because we're having a better pricing on the infrastructure or something else, but we are not decreasing anything in Mexico. We are still on what we have been budgeting for the next years is what we said yesterday that we're going to do. Okay, perfect. So the second question, if I may, it's regarding Peru. You mentioned the 6 I guess, the 63% cut to MTRs. So can you help us to quantify the impact on revenue and also on expenses? Thank you. I think on revenue, we're doing well. As in all the other countries, the prices has been going down, the volumes has been going out as they are up and we have been very competitive in the market in Peru. The reason of the decrease of the EBITDA is that that we have been reducing prices very fast. We have been giving more subsidies. We have been growing on the postpaid side and also the interconnection rates hit us at some points of EBITDA. But that's more or less what is happening on Peru. But I think as next year, I think we can stabilize all these things, because I'm sure that we're going to grow faster on data and being reducing less on minutes that is what has happened today. Okay. And just one more question, if I may, regarding the DTH in Brazil. I guess we saw some disconnections recently. Can you explain the main reasons for those disconnections on the pay TV side? Thank you. I think Oscar already said that. But to add a comment on the DTH, I think the DTH are the customers who are more sensitive to the economic slowdown. So that's really why you are seeing that they are the low end customers, the customers that we're having more on the outside of the countries on the rural areas. And I think that's the reason why you are Brazil. Okay. Thank you. Thank you. Your next question comes from the line of Balder Nogueira with Santander. Please proceed. Good morning, guys. Two questions. First, we have been seeing recurrently a change in the mix between voice and data, especially on your mobile offers throughout Latin America. Is that a target that you guys intend to reach? Or what is the balance that you guys believe you can achieve on the percentage that you get from voice and percentage that you get from data? Ask that because that's very important to determine what is your real profitability in each of these units. Is that a target? There has been significant changes in this mix towards data. Is that a target that you work with that the first question? No. There is no target to what we're working on. I think the increase on data depends a lot on moving 2 gs subscribers to 3 gs and the 3 gs subscribers to 4 gs. And that's the reason people are starting to use more and more when they have 3 gs. And when they have 4 gs, they use more and more data. So that's the reason people and young people start to use more data and chat more than talking more. So those are things that are going all around the world. I think our best the highest country where we have is around fifty-fifty voice and data is where we are, 50 on the revenues on voice and 50 on the revenues on data. So there is no target. We don't have any target. So we are going to do more applications, mobile valking, e commerce, e advertising. So we're going to add more and more revenue as our customers move from 2 gs to 3 gs and to LTE. So that's the reason, no targets. So we are moving as the market is moving. That's clear enough. And the second question, back on some questions regarding telecytes. You have this master agreement that is submitted to the regulator regarding the prices that Telcel pays to telephides. How do they differ from the existing prices in the market either on existing tower capacity or build to suit capacity? Well, the prices for the sites, I mean, there's already a well established market in Mexico. There's at least a market with roughly some 15,000 towers already owned by other operators, most importantly, American towers. They work with all the operators in Mexico, including Telcel. So the market prices for Itau are very well established. They depend among all things on location. There's certain regions where they would be more expensive. They will depend also on the nature of the tower. Not all of them can support the same equipment, etcetera. So we cannot get too much into the only to say that there's a fairly large market, a number of players already there, well established prices, and all of those have been basically seen and acknowledged by the regulator. Okay. Thank you, Carlos. Thank you. Thank you. And we have time for one additional question. Your final question comes from the line of Martin Lara with Actimber Securities. Good morning, Daniel and Carlos. I have one question on Mexico. Where do you see the EBITDA margin going forward? Do you think that we could see some improvement in the next few quarters? [SPEAKER JOSE RAFAEL FERNANDEZ:] We're not giving any detail on our guidance on the EBITDA. But What I can say in Mexico is that there's going to be coming more competition. We're going to compete. We want to invest. We want to have the best network. Today customers are choosing us and we're going to follow that path. So that's more or less the strategy on Mexico. But one thing Martin that is important to consider is Mexico or the telecom sector is going to see much more investment in the next few years than it saw in the past, particularly from the competitors. So you're going to see a more lively market. It's going to be more energized. You're going to see a lot of growth. And that bodes well eventually for margins. So I don't know how we're going to pace ourselves in that regard, but certainly the market has a very bright perspective in the medium term. Okay. And I have another question. Could you please give us an update on the video license in Mexico? What are your plans there? We still doesn't have anything to comment on that respect at this moment. Nothing new. Okay. Thank you very much. Thank you. And thank you everybody for being in the call. And there are no further questions in queue. I would now like to turn the call over to Mr. Hodge for final remarks. Okay. Now just say thanks to everybody for being the call. Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect.