Good afternoon, and thank you for waiting. Welcome to the earnings call for Unifique Telecomunicações as we discuss our earnings for the fourth quarter of 2022. Today we have Mr. Fabiano Busnardo, the CEO, José Wilson Jr., the Financial Director and Investor Relations, and Guilherme Galvão Villani, the Investor Relations Manager. We would like to let you know that this event is being recorded and all participants will only be listening during the earnings call for the presentation. Soon after, we will begin the Q&A session where more information will be provided. If any of you need support during this earnings call, please select star zero and you will have support from one of our technicians. This event is being broadcasted simultaneously online through the webcast and can be accessed at the unifique.com.br address where you can find the presentation. The selection of the slides will be controlled by each of you.
The replay for this event is going to be available soon after its closing, and we want to remind you all that the webcast participants can register any kind of questions they have for Unifique that will be answered after the completion of the conference by the investor relations department. Before we proceed, I would like to clarify that any possible statements that could be made during this earnings call related to business perspectives at Unifique, forecasts, operational targets, and financial goals are based on beliefs and assumptions from the company's management as well as information that is currently available to Unifique. Future statements are not a guarantee of performance and thus involve risks, uncertainties, and assumptions as they refer to future events and thus rely on circumstances that could or not occur.
Investors and analysts must understand that general market conditions, sector conditions, and other operational factors can, of course, affect future results and earnings for Unifique and could lead to results that differ materially from those listed in such future statements. We would also like to pass on the floor to Mr. Fabiano Busnardo as he will begin the presentation. Please, Fabiano, you may begin.
Okay, good afternoon. Hi, guys. Thank you for your time and attention. We will start off with a quick summary of the overall scenario in 2022. It was a year that was very challenging for us because we identified that at the end of the first quarter, there was a significant increase in our non-payment rates.
This, of course, led to negative consequences, which were the increase of what we call involuntary cancellations, where Unifique is the one that has to terminate a customer's contract due to non-payment and not fulfilling their commitments with us. Also we had a year where we had an inflationary process that was very significant and ended up adding on some additional costs. In some way, this pressures us a bit in our margins since this inflationary process could also reduce purchase power of general consumers. Along with this, we also had a significant growth in our network. This was very accelerated, and this also imposed an increase in costs as the occupation rates due to these strong investments in the new networks. The second biggest cost we have in the company is the right of passage, and this pressured our margins a bit.
But we believe that if we take a look at the full year of 2022, we are going to notice that if we take a look at part by part in the year of 2022, we reached the end despite pressure in our earnings. We were able to notice that we reached a reduction in defaults. We were able to also reduce our churn rates, which is, of course, making us think that maybe we have gone through the worst period. Now, despite the situation not being very easy, we think we have been able to improve quite a bit so that we could have a better perspective in 2023. Then Mr. José Wilson can, of course, give you more details about this.
One thing I would like to highlight a lot here is that in the beginning of this year, we established a process to reduce the process in building new networks so that we could concentrate our efforts to sell the existing parts. We have a very big volume. Some of our networks have low occupation rates. We want to concentrate these efforts to be able to perform the sale of these parts so that we can improve this relation. Also when we talk about slowing this down, that does not mean we are stopping entirely, right? We are reordering. We noticed in between that there really is a lot to be done. We were able to advance, and we should be completing all of this work by the end of the first semester.
I would like to say that in April we will start with the tests, and we hope that by June, we have reached the point where we could have the commercial launch of the product. In the first version, we did plan to work with the platforms for systems, the core level, the BSS, and all of the structure of systems we have to make the mobile network work. This is super complicated, but we were able to advance quite a bit. Initially, we will be launching this service compensating a network that is already established in the market. Our networks are already interconnected, and I would say that we already have about 90% functional. We do have some small adjustments and tests to reinforce, and then maybe by June we will be able to hopefully launch the service.
All of this work and all of the efforts and dedication we have been working on in this period, unfortunately, at this moment, we will not be able to demonstrate in our results, because we were not able to start selling this yet. As well as some improvements we also verified, where we see really high rates of non-payment, and it started reducing in the end of the year a bit. A churn rate that reached its peak in the second quarter, but in the fourth quarter. I am not saying it is good. I am not going to say it is our final objective. But we must mention that we did have some improvements. We hope that we will be able to reach those 1.4 churn rates that we had at a certain point in time.
I do hope that we will be able to reach 1.6 or 1.5, because that would really be something to celebrate. We are in this constant struggle with a lot of work. We are going to be launching some new stuff as well. That was something that our area involved with innovation, which started off in January 2022. I must say that this first year, actually, we were not able to. This area really grew. We were able to invest a lot of money, and we hope that by 2023, we are going to be able to start delivering certain things. I think we really have a positive expectation for these things. I hope we can have a better phase from now on. As a first introduction, these are the main points I wanted to highlight. I would like to pass the phone to José Wilson Jr., our CFO, so that he can make any statements.
Thank you all. Good afternoon. As we speak about this and provide some continuity to what Fabiano mentioned about the non-payment rates in the company. In 2022, it was a year where we really had a big challenge when it comes to non-payment. We had never experienced something like this with such a high rate of non-payment that is over 4%. This is what happened during 2022. We actually reached rates of almost 4.3% in specific periods of the year, which made us have a little bit more of a rigorous criteria for sale processes. This made us start a score system in the company and also work on different collection initiatives and change how we would collect from our customers. This was positive.
We had good returns. Especially now that we are reaching the end of this period of 2022, and we have a non-payment rate of about 3.5%. It is already positive, and there is a lot of work to be done, but we have already started to reap the fruits of what we did. This is something that we consider to be very positive, this statement. Because we are able to perform better. Another important point I really like highlighting is that we have this issue with the conservative approach in the company. In this period where we had non-payment issues, we tried to implement all the necessary provisions. This entire period where we had difficulties, we registered this in our results, so in our earnings. We had impacts that were actually quite significant due to the registration of this rate of non-payment.
Now in 2023, our non-payment rates are a lot lower, but we do not carry on such a big liability that we did not register in the period of 2022. This, of course, is an expectation for a scenario that is a lot better now in 2023. As you mentioned, the churn I believe is a little bit due to the impacts also of the adoption of this score, and that of course brought in a better performance. We continue to work towards other initiatives, and we can keep this kind of performance and search for these indicators. As we move on to this issue, and we discuss the last quarter earnings, especially for issues related to costs and expenses. In this last quarter, we did have a challenge with incorporating Sygo in the earnings for the company.
This is a company that was performing below profitability averages in Unifique. We improved its performance a lot. We still have work to be done, but of course, this impacted the results and earnings in the last quarter. Another factor as well when it comes to costs and expenses is related to the expansion of the networks. To be able to do this, you add a fixed cost to the company, especially related to renting the posts. The positive point here is that you have a network that is 100% structured and approved. It's official. This is excellent as a differential for the company. However, it's a lot of work, and you have some growing pains. That's part of the business.
We thought of this very well from a strategic perspective, and now as we go to the market and start commercializing the stock of ports that we have. When it comes to the stance of our cash position in the company, we continue where even with all of the investments in this period of 2022. In 2022, as mentioned, we had a strategy to slow down a bit of the M&A process in the company. Even so, if we take a look at what came along with new customers in the period of 2022, we had two operations that were very relevant. We're talking about Guaíba, the end of 2021 and beginning of 2022. These customers and accesses started to be part of our base in 2022 from the moment when we had control over the company. Also the operation at Sygo.
We slowed down the process here at this moment. We understood and took a look at the current moment, and we understood that we had a very precise movement. Why is that? Well, because it placed us in a cash position that's very positive. If we look at the company's cash position, our net debt to EBITDA rate, we're talking about 0.37x . It's a position that's really comfortable. Even if you compare with other market players, we're in a position that's really unique. We have really low rates of debt. When we take a look at the scenario and we see these issues with really having maybe slowed down the M&A process, we were able to have what it took to be in this 2023 exercise with conditions that are very positive.
We noticed that the price of the companies changed a lot, and the players are more willing to, amidst this macroeconomic scenario we're going through, they're more willing to sit down and talk about good conditions for sale and purchases that allow the company to have extremely satisfactory returns. It's really something that we should start seeing a bigger volume of acquisitions within 2023, of course, as long as this is a really good condition. We're analyzing this very closely and taking a look at these operations, and the operations continue to follow the assumptions defined by the management for these acquisitions, especially when it comes to the synergies. We have the conditions to have some initiatives in the field that we believe are going to bring in considerable returns to the company in the next months.
This kind of position, this cash position we have today, is providing us with this kind of scenario. It is a moment, just as Fabiano mentioned, where we slow down a little bit on the construction of these ports in the company. If you compare with 2022, we are going to have the slowdown. This is going to be reflected in the company's cash position. We start having a stronger cash generation that is a lot bigger. We have been feeling this in January and February. This cash position in the company places us in a very comfortable position. We are going to move along and keep up with this position of being extremely efficient during this period in 2023. On my behalf, these are the main topics we would like to cover in this session today. Now, of course, we will start with the Q&A session so that you can mention any of your questions, please.
Ladies and gentlemen, I will begin the Q&A session. To submit a question, please select star one. To remove your name from the queue, please select star two. Please wait while we collect the next questions. Our first question is coming from Lucca Brendim from Bank of America. Please, you may proceed.
Hello. Can you hear me?
Yes, we can hear you.
Okay. Two questions here on my side. First of all, I want to understand about what caused such a big difference in the drop of revenue, especially the gross revenue for other services. If there is some kind of reclassification that caused an impact or if there is any other factor involved.
In second place, I want to understand how you look at the margin dynamic when you look at the next year for some possible 5G expansions that could pressure you a bit. Also, if you could talk about how much was the effect of the acquisitions and how much pressure you had in the company standalone without Sygo's entrance. Thank you.
Lucca, when it comes to revenue, it is just a matter of reclassification. We did not have any other factors, right? It is just about reclassifying the numbers in the previous period, especially so that we can have a better presentation. This is a lot more related to the other revenues that are more related to issues considering some revenues for installation services. It is just about reclassification and nothing beyond this, right?
You should use the last information that was provided because it is going to give you more precision. About the dynamic for image. When we look at 2023, what we have been practicing in the company, of course, in the last quarter, we did have some penalties in the company when it comes to the EBITDA margin. We have already noticed a bit of an improvement in the period of 2023. What we have been doing is, we are coming from a scenario where we have a budget for 2023. We were extremely rigorous in this process for the 2023 budget, and we have been closely looking at this. We have already started to notice that in January and February, you have a margin recovery.
The expectations are that we're really going to start having a scenario with margins that are going to be about 50%, which is a trend here in the company.
Great. That's clear. Thank you so much.
I will pass the floor on to Fabiano. We have a question from XP, and Fabiano will read and add this answer. The question was the following, and then Fabiano will, of course, talk about this. The question came from Bernardo from XP, and he was asking about the competitive environment and asked if we could explore this a bit more in the state of Santa Catarina, Rio Grande do Sul, and if it would be good to take a look at a little more of information on the adjustments the company has been working on in the commercial environment. I wanted to hear about this, and then I'll pass the floor on to Fabiano for his comments.
Okay. Thank you, Bernardo, for that question. I think that was super relevant. Really today, if we were to separate Rio Grande do Sul and Santa Catarina, then we would see that first Santa Catarina, although it's quite modest, we've been able to advance in the organic growth. I can't talk about Rio Grande do Sul yet because we went through some initiatives with the acquisition to reformulate the technology, and so that we could organize things. We need to understand that we come into this, to Rio Grande do Sul in May 2021, and we started off with basically from scratch. Today we're just standing behind Claro, Oi, and Vivo, and all of the other ISPs in the market of Rio Grande do Sul.
It's almost 800 companies competing with us there. We really have to recognize that we confronted or faced a difficulty that was maybe a little bit bigger than what we were used to facing in Santa Catarina, because Santa Catarina was a territory that we were present in already. Please be sure that in Rio Grande do Sul, we will also reach the same conditions. In the last 18 months, we went from maybe 1,000 employees to almost 2,500 full-time employees. We need to highlight that 900 of these are from Rio Grande do Sul, so you can imagine that we probably had zero a year and a half ago, but now we have 900 people working there.
Unifique is basically a version where we are really having to intensely work on the issues with adjustments, and we created different regional offices in Rio Grande do Sul. We were able to add a manager that we consider is more prepared for these challenges in each of these regions. At this moment, they're actually spending two, three days in Unifique, where we're structuring these adjustments and this new way of working so that we can really reach that growth level we imagine. We invested a lot of technology in stability networks. We also worked on building a lot of new networks, and at this first moment, really generated a bit of a penalty for us. I think this is part of our growth process.
Yes, there are some difficulties and some are even taking a little longer, but we are convinced that we are on the right path, and I am sure that by 2023, we will have an improvement so that we can present.
The other question that Bernardo also submitted soon after was about the acquisitions and what we can expect. Maybe do things a little differently than what we were doing before, so that it can be a business that we can really generate value with for our shareholders. Unfortunately, there were technical problems with the platform which impacted the translation quality. We would ask you to please comprehend this issue, unfortunately.
Our next question comes from Guilherme Guttilla from BTG Pactual. Please, you may proceed.
Well, guys, thank you. Good afternoon. We have two questions here that I think are very simple on my side. I just wanted to understand a little bit more about the one-off results you had in the financial expenses and where they came from. I wanted to understand why you had this additional provision. The second question is really about the M&As. As you mentioned during the presentation, of course, there is going to be opportunities. You guys are super capitalized. But up until which level of leverage do you think would be reasonable to be able to buy these companies?
All right. Let me answer that one. Well, about the financial expenses, what I can say is we had a survey on our contracts, and we identified that there were a few amounts that needed to be registered in regards to a few previous months. That is when we registered all of this amount now in the last quarter of 2022.
That was the impact we had in financial expenses. This is not something recurring. It is really an accounting adjustment that we placed within the last quarter of 2022. That is basically the only thing we had to face. But when it comes to our cash situation in M&As, I am going to pass the phone to Fabiano.
Well, Guilherme, about this point here, what we considered up until then when it comes to a debt level that we could maybe manage with ease, it would be basically 2x EBITDA. In the scenario we have, that would be a little bit more complex. I would say that we do have the willingness to work below these levels. I think maybe 1%, 1.5%, I think we would be able to administrate well. But what will determine this also is the size of the opportunity that will appear.
If we understand that we have an opportunity here that is really fantastic, then we can even reach 2x EBITDA. But it will be very difficult for us to go over this amount at this moment. At least my feeling here, of course, it is a moment that is going to be passing along and we could reassess this if necessary, but it will be very difficult for us to see Unifique have a debt level that is above 2x EBITDA. Of course, that will depend on the size of the opportunity and how we understand this will add value to the business. We also think that from the second semester onwards, we have a new government taking on, and up until then, we were still a little bit confused. We still do not know, of course, if this will move along.
I hope that in the second semester, we have some kind of indication of if things are going to get worse or not, and then we'll make our decisions in a scenario of a possible worsening scenario. If things are going to get better, then maybe we'll change our decisions process a bit. We're kind of going slow and be careful with the situation so we don't get left in a tight situation. I've already said this a few times. At least my sentiment or my feeling here at Unifique is that we're at a marathon. We are here kind of holding our breath because we have a long path ahead and we need to follow. We are not going to take a sprint now and then maybe become not have the necessary oxygen for the next phases. We're in this direction.
Generally, we're a bit frustrated in our results in 2022 because we were expecting more. But when we look at the scenario that's so challenging and that we were submitted to with stress, I'm here for 25 years, and we never went through such difficulties as we had in 2022. We did go through some difficulties in 2016, but then we were able to also reinvent ourselves. We had to find other pathways and exits and reach the point we've reached. But that's why I'm so optimistic about 2023, right? With all of these adversities and difficulties, and I believe that we're going to have a year 2023 that's going to be better even because we really needed to work a lot on this.
[inaudible] is like, "Oh my God, we worked 2x more and we only profited at half." Well, that's the truth, but a lot of the work we did in 2022, we're now hopeful to reap the benefits of in 2023. You're going to see. I have no crystal ball here, but I do hope that our margins will get back to normalization in 2023. We went from a reduction in margins a bit, but now I really think we reached the bottom of the pit in 2022. I hope that now, if nothing else happens, really, that's so tragic, that is out of our control. I do have conviction that we will recover our margins now in 2023.
Thank you, guys. Perfect.
Well, guys, we have two more questions. One is related to our policy for dividend distribution. As you all know, we performed the distribution of interest on equity. This month, this is related to our earnings in 2022. We incorporated the interest on our own capital, and we consider this in the minimum mandatory dividends. But of course, with everything we have as plans for the period of 2023 and payments, et cetera, this is what we have for this period. If we have anything additional, it'll be at most BRL 10 million, not more than that, which is what we have as expectations to be able to distribute within 2023. We actually paid this through interest on equity, the minimum mandatory dividends, because the situation in the company allows us to do so. That, of course, helped a lot with the effective rate of our income tax.
We reached an effective rate, which is about 22% in this exercise of 2022. This was something that I consider to be extremely positive. Another question also is about our scenario for CapEx within the year of 2023. Generally speaking, what we have is a slowing down of the construction of the ports. As I mentioned, this should make our cash position be a little bit more robust due to this. We were able to keep up the expectations also for 5G payments within the period of 2023 at about BRL 25 million. If we extend this a little more and we talk about the acquisitions, we mentioned an expectation of acquiring at least about 200,000 customers in this period. I want to highlight that as one of the financial aspects, we are building some contracts that are indexed according to IPCA. The negotiations we've been working on are basically related to IPCA indexes.
Ladies and gentlemen, at this moment, we have ended our Q&A session, and I would like to pass on the floor to Mr. Fabiano Busnardo for his final remarks. Please, Mr. Fabiano, you may proceed.
Thank you for your participation, guys, and I hope to see you guys in our next call and the next quarter. Thank you so much, everyone.
The earnings call for Unifique Telecomunicações is now officially ended. We want to thank you all for your participation. Have a great afternoon, and thank you so much for using Chorus Call.