Oi S.A. (BVMF:OIBR4)

Strategic Plan

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Jul 19, 2021

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to ORE S. CA's Conference Call to discuss the Strategic Plan Triennium 2022 to 2024. This event is also being broadcast simultaneously on the Internet via web press, which can be accessed on the company's ri. Site, www.oi.com.brri, together with the respective presentation. We would like to inform that during company's presentation, all participants will only be able to listen to the call. We will then begin the Q and A session when further instructions will be given. We also would like to inform that the conference call will be conducted in English by the management of the company and the conference call in Portuguese will be conducted via simultaneous translation. We will now turn the conference over to Mr. Rodrigo Abreu, CEO. Please, Mr. Rodrigo, you may proceed. Hi. Good morning, everybody. It's a pleasure to have you all with us here for our plan for from 'twenty two to 'twenty four, what we're calling the new Ory. And as you know, we have a reason for doing this today. Because of last week, we achieved a very significant milestone, which was the completion of the judicial phase of our infrastructure company process. And based on that, we now have pretty much all of the structural transformation elements in place. And we believe it will be a good time to highlight what comes next in our strategy. This means better visibility for investors, better visibility for the market in general. And in particular, what to expect from the new Olli in terms of the key elements of guidance. In terms of flow, what do we intend to do today? First, we'll start with a super brief recap of where we've been and what was accomplished so far. Then I will talk to what will be the new way after this structural transformation takes place and what will be the main areas of execution focus from now on and finally, we'll provide guidance on the key indicators. So let's start directly with a brief recap on going straight to Slide 3. On Slide 3, you can see that actually, Slide 2, you can see that Since 2018, when the judicial recovery plan was approved, we have been paving the way to take us back to growth. And this has been a long process that started with everything that happened right after the judicial recovery plan was approved with The debt restructuring, the cash protection, in particular, instituting a completely new governance, having a capital increase and starting the operational recovery of the company. But then we entered into 2 transformational phases. 1, Starting in 2019, when we announced our strategic transformation plan that brought focus to the core, brought all of the elements of legacy optimization and started talking about the M and A components of our plan and funding going forward. And finally, we engaged into a third phase of our transformation in 2020 when we announced the amendments to our judicial recovery plan, when we had our GCM, in which all of our creditors approved our future vision for the JR plan and when we establish the vision to return to growth, in particular, by doing the structural separation of the company with the sale of very important new PIs that will allow us to get there. With all of that, what we're doing is we're reconfiguring the company going forward and really paving the way back to growth. In the next page, on Page 3, we can see What were the results thus far? In particular, the operating results. Since we announced the plan, obviously, we had all of the significant steps and the three phases I just talked about. But the most important thing for us was to be able to deliver solid operating results because without those solid operating results, there will be no transformation history. It doesn't matter if we're able to restructure the company. It does matter if we need if we were not able to really execute on our operating results and transform the company in terms of paving the way for future growth based on solid operating profitability. And that's exactly what we did with the FTTH expansion. If we look at what happened, Now actually, we're already approaching the 3,000,000 homes connected. We have an over 300% CAGR Since we started this process back in 2019 to Q1 2021, we have more than 10,000,000 homes already and are fastly approaching the 15,000,000 homes passed at the end of this year. And this means over 150% CAGR. And most importantly, when we announced this plan, we said that we were targeting for 2022 a 25% take up rate that would allow us to sustain our growth in terms of homes connected over homes passed. And in reality, We're already pretty much there. In the Q1 of 'twenty one, we achieved a 24% take up on our Homes Connected. So this gives us what it takes for us to look for the future with a solid growth base that will not only pave the way for future revenue growth, but we'll more than compensate for everything that has been happening with our legacy revenues as we have been constantly talking about. In addition to that, our core, the fiber, was actually able to recover the confidence in our brands. And in reality, when we look at what was happening before we announced this plan back in 2019, results of a long period of underinvestment. Even though we have struggled and actually succeeded to maintain a good operational indicator with pretty much all of our key operations. In reality, Because of the lack of new investment, the brand has suffered. And this was significantly reverted when we started with olefibre. We can see here some indicators that say that if you just look at consideration preference and rejection, On the consideration front, we now have a consideration of 77% among oil fiber customers Compared to a 34% old broadband base, we have a 69% preference among voice fiber customers compared to a 24 number from the legacy base. And most importantly, Ory is now 75% less rejected among ODi Fiber customers is just a small 4% number versus the 16% significant rejection that the company had before we engage into this transformation. So all in all, in addition to having all of the elements that were delivered to the market in terms of its transformation on governance, its transformation on funding, on asset sales, on not creating a new plan, we now have also credibility with the market, but primarily with customers. And this can be confirmed in the next page, on Page 4, where we can have some testimonies from customers in terms of brand perception. And it's in reality something very important for us because this is what space to explore a host of new opportunities with customers in the future. We can see that there is praise connection stability and speed. They're sprays from our proactive service, and this comes from our strategy of having access and actively monitoring our customers' homes. And we also have a lot of praise for our installation capacities. And I'll talk about this in a second because actually one of the hidden secrets of our strategy so far has been our ability To really, really tightly control how we install and how we get into our customers' homes. So In addition to all of the operating results and the customer perception, the company also works to make it possible to Sustain all of our transformation based on quality, based on delivering the promise, but also based on being able to sustain the investments that made all this possible. And in the next page, we can see what happened in terms of investments, what happened in terms of getting access to new sources of funds for the company to embark into this transformation journey. Obviously, as we all know, the company had to invest in the core for its transformation, and this was made possible by a combination of both selling assets and getting access to new capital and financing. On the divestment program. It all started with the sale of Unitel back in 2020. But after that, we had done numerous transactions, including over BRL300 1,000,000 in real estate. We have sold our towers and our data centers. We have pretty much signed and are now in the process of having the 2 key M and A operations completed by the end of this year, beginning of the next, which are the sale of the mobile operations and the sale of the stake in the infrastructure company. And we still have in progress work for actually addressing also our TV operations. All of those Actually brought to the company or will bring to the company at the end of this process close to BRL 35,000,000,000. It's a significant amount of resources that were actually funneled to sustain our very substantial CapEx levels that were resumed when we announced this plan in 2018, 2019. Our CapEx for the last 5 years amounted to over BRL 30,000,000,000, actually BRL 31,500,000,000. And if we look at what happened, we came from, again, level of underinvestment back in 2016, which got slightly recovered in 2017 2018, but in reality, cranks up to a sustainable CapEx investment for the future in 2019 2020. And out of those, We can see that fiber, which were virtually nonexistent previously to 2018, We presented 15% of the CapEx investments in 2018 and going up all the way to 65% of our investments in 2020. All of this was also made possible by a very successful funding and refinancing program. As we all know, in 2019, we had a capital increase of BRL 4,000,000,000 and then we had several additional funding operations that were done to sustain the operations of the company while it's still recovering in terms of generating positive cash flow, starting with debentures and back in 2020. And then we had several tax recoveries. And finally, we closed 2 very important rounds recently, one on the infra coal convertible debentures for $2,500,000,000 and we signed the mobile bridge loan for $2,000,000,000 which pretty much guarantees that we have a consistent funding for 2021 up until when our transition in terms of the divestment program and all the cash ins of the new sales are completed. But now that we have substantially completed The first three phases of this transformation involving our core activities, our funding activities and the restructuring of our company and our strategy. We need to move on to completing this process in the next 3 years. And as we like to say in Page 6, You can see that we are now entering what we call the final phase of our transformation. After all of the structural movements, We are now looking to create an entirely different company in the next 3 years, and we're calling this our Phase 4. This is our 4th transformation to get to the new way. And the new way is a company that is simpler, that is customer centric and that will provide much more than connectivity in terms of its future revenue growth. Obviously, to start that in the very, very immediate future, we need to complete our structural M and A operations, both on the mobile side as well as on the infrastructure side. And this is all going according to plan, by the way. So we expect to Complete both by the end of this year, beginning of next year, and this will bring not only that cash in associated with those operations, but also The structural transformation need for the company to become leaner. And after that, we have to focus on 4 pillars of our transformation, which we'll detail later on. Those pillars are: 1st, making sure that we accelerate our core business and that we accelerate also our new revenue sources, which will guarantee the future revenue growth for the company. The second pillar consists of organizational transformation and a readjustment, a complete readjustment of our cost structure. The 3rd pillar is actually to resolve all of the concession issues associated with the legacy of copper and STFC and making sure that we are able to do a soft landing of the concession operation given that On a structural front, obviously, we know that this is a revenue area that is year after year being eroded because of the market demand, which is again going down very, very rapidly for all of the copper revenues and in particular, the fixed philosophy. And 4th, we need to make sure that we are able to successfully develop the infra co not only in what we're doing with the structural separation, but making sure that after the separation, the company goes according to plan with a new investor structure and with a very successful development, which will not only help us sustain the growth of the new Ory, but also will generate additional value for the company in the future. So turning to the new way, what will this company be? In the next slide, we can see the structure and then finally, the strategy of the new wave. On the structure on Slide 7, We can see that we started by simplifying our entity structure. After all of the transitions, we will remain with 4 key entities in the group, what we're calling the new Ory, which is Ory S. A. And this new Ory will have basically the B2C and SME customer operations, obviously with the focus on fiber, which we are calling our core revenues, but also with some of the legacy revenues coming from copper, TV and all of the associated fixed telephony revenues and with the new revenues coming from digital services. So we will have this as one of the key pillars of sources of revenue. And this will be added with the second pillar, which is the B2B clients that we're calling Ory Solissoin since 2019. Sorry, guys. We're having some feedback here that the audio quality has been having some issues and on the webcast. So we're going to make a very quick pause to So coming back, and sorry for that Brief interruption, but we were receiving some feedback that some of the callers on our web of our Portuguese webcast. We're having some issues in following, but we have now seen that both on the phone and on the English webcast, I believe that there is no issues at all, and there may be some issue with the webcast provider server in the region, in the local region, which is being addressed right now. But we will continue. And again, as the team has remembered here, it's important to highlight that the whole call will be recorded and will remain available talk about what will the Ory Group be after the completion of our M and A operations. And I was saying that we started by simplifying our entity structure. And after the transaction, our entity structure will remain with 4 key entities, starting with the new Oi, And this is Oi S. A, the entity that will have incorporated pretty much all of the other key entities in the group, including Telemare, including Oi Movo. And this new Ory has on the customer front 3 pillars of customers: B2C, SMEs and corporate clients. And on the B2C and SME customers, we obviously have all of the fiber core components. We also have the legacy components of copper and TV, and we are adding the digital services components as a we have been focusing on connectivity. But more importantly, we have been already developing an IT solution area of growth for the company since 2019, and this will continue to be a key focus of the company. And finally, The company will still remain with some infrastructure, not the fiber infrastructure, which is, again, being separated to the infraco, but selling infrastructure for all of the digital offers for IPTV, for DTH before we announce any activity on the M and A front with TV and the copper structure that serves the concession. This new Ory, With the exception of the legacy components of copper, we'll be a much more asset light company focus on connectivity and digital services, having a platform view and being customer centric. In addition to that, we have a 42% participation. We will have a 42% participation in the infraco. As I highlighted at the beginning of the call, the judicial process was just completed. And so now we We should expect the signing of this agreement with BPG for the coming weeks. And in RiJAN, we're going to have the fiber call, the infrastructure company, as a neutral network with a very accelerated and sustainable investment that will help us actually grow the new Ory, but also will be an independent source of value creation. And finally, We have 2 companies, Serjegi and Tato, which are 2 100% subsidiaries of Oi and which I'd like to say that have been 2 hidden secrets of our transformation. Serreje is our field operations company, is 100% owned by Oi, and now we have a national physical presence in both technical and logistical services that covers over 3,300 municipalities in the company in the country with over 23,000 employees. Serjei has been instrumental for FTTH strategy growth. And in the future, we'll not only continue to help us do that, providing services both to InfraCo and to the new way, but also we will open new avenues of growth for us in the logistics and services areas directly to our end customers. On the contact center side, we have TATO, the former BTCC. Entato is a customer relationship and service platform that initially was operating only for Oi, that has since a few months ago starting to provide its services for 3rd parties as well through the portfolio of ORE Solujoins. Santato today has around 12,000 employees, and this base for customer relationship has also been instrumental and the recovery of our quality perception and the dedicated attention that we have been providing to our customer base. So this is going to be the entity structure of the group. But more importantly, what it will be the vision and the mission of the new way, and we can see this in Page 8. When we started designing the new Ory strategy, we started by consolidating a new vision and a new mission. And the new vision is to be the leader in digital solutions and fiber optic connections, which improve the life of people and companies across the country. And in terms of the mission, we actually changed the mission of the company to be not only straightforward and simple, but to reflect what we will do in the future in terms of those new avenues of growth for the company. And the new mission is to create new features by enabling the digital life for everyone. This vision and mission become attached to a very strong set of assets, starting with a huge customer base. Today, we have over 50,000,000 RGUs, and now we know that part of those views come from our mobile base, which will soon be divested. But in reality, we will maintain a relationship with a good part of those RGUs even after the mobile base is gone because of our additional services that will continue to exist. And in addition to that, we have over 13,000,000 residential RGUs, which gives us a nationwide presence with a very, very important asset, which is a presence in our customers' homes. In addition to that, We have long term relationships and recurring revenues with our entire customer base. We have access to the customers' homes. We have a brand awareness that always existed and now is being resignified with a new purpose. We have unmatched capillarity in terms of physical presence and last but not least, a massive sales force and specialized technical team that allows us not only to continue fulfilling our core services, but allows us to do a host of other activities in pursuing additional revenues for the company. Based on those, we have then crystallized our strategy and execution components that can be seen on Slide 9. On Slide 9, we can see that there are 3 key components of our strategy and execution. It all starts with simplicity and operational efficiency. We're going to have a reorganized company, which is simpler, lighter, more efficient, And this all started with the structural separation components. With our focus being entirely on customers, we can be Sempra. In a way, we're going back to simple. When the Ory brand was created, one of its key purposes was to be simple, was to be straightforward, was to be a brand that brings services and options to customers without any of the regular complications of the telecom sector. And we're going back to that. This means that we're going to be lighter and more agile, focus on the future with no needs to focus on a very, very strong asset in terms of infrastructure, which will be managed by the infrastructure company. In addition to that, we're going to obviously bring a lot of additional cost reduction and simplification to our legacy reduction and coming from the structural separation itself. So simplicity and operational efficiency come by design, Not by me, not by wish. The second component is to be client centric. In reality, our simplicity here is leading to a full focus on customer service. This will be the key thing that the company does Without the need to really be focused on the infrastructure, which is being managed outside in the infrastructure company. In order to do that, we not only are doing our structural separation, but we're changing both our organization, our systems and our processes to do this. We're going to start with digital first, omnichannel, data driven, and this will allow us to focus on a simpler accelerated time to market with modular portfolios. Obviously, we're already doing that, and we're already changing our organization and our systems. But there's still a good journey in front of us to really completely fulfill the promise and bring the value associated with being customer centric. And the 3rd pillar is once we have completed the structural separation to have a company that has not only the core revenues coming from connectivity, but also to be much more than core connectivity by having diversified revenue leveraging Ory's scale and assets to develop and capture those new revenues in multiple areas. Our real focus here will allow us to explore our asset base, will allow us to work with our customer base, both in B2C as well as in B2B leveraging solutions coming from pretty much all fronts on the IT and the physical services scenarios. So now let's look at the 4 pillars of this next phase, starting with the core. On Page 10, we can see that on fiber, Our results and high NPS showed us that the possibility to increase revenue per home connected is real. It's not imaginary. We already have a very strong ramp up. We continue with this very strong ramp up. And our share leadership not only now is attainable as we can see from the overall market share ultra broadband In all of the municipalities where only fiber is present, we have been closing the gap very, very fast and being only one of the Being one of the only 2 players that have been growing market share in this segment, it's basically us and the small ISPs. And 2nd, the leadership, when we look at all of the key capitals, is already there. We are the market leaders for OE Fiber in pretty much all of the capitals that we started operating with the exception of Sao Paulo, which started operations a few months ago. And our Ory Fiber NPS is already 25% higher than the global benchmark. So the key conclusion here is that there is ample room to start capturing more value for fiber customer. Based on this, what we expect on our core growth, both for B2C and for the small and medium enterprises. And we can see this on Slide 11. Here, we start giving calls for what to expect in terms of growth for our core services, in this case, for B2C and small enterprise. And we see that our plan calls for over 30% growth in homes connected and over 45% growth in revenues in the periods 'twenty two, 'twenty four. So starting with the homes connected, we are forecasting a number of close to 8,000,000 homes connected or 32% CAGR in 2024 with a take up of 26%. So virtually maintaining our take up, this does not mean super aggressive take up in terms of future execution, which gives a lot more certainty of execution for us from 2022 to 2024. And this, by its turn, it's translated to a very accelerated CAGR in terms of revenue evolution. And our revenue in 2024 is expected to be around the BRL 9,300,000,000, which is a BRL 6,300,000,000 expansion compared to our estimated revenue for 2021. This means more than strictly our revenue up to 2024 in a very significant expansion of not only our homes connected by our ARPU. What are the main value generation levers here? First, we start with a new company. It's the new UX, a new IT stack, A simpler, more refined offer that eliminates things such as the hard complex bundles that the whole industry practice in the past. And with the hypersimplification, start with the concept of plug in and legal offers, which make it very, very simple for the customers to understand what they're buying, how they're buying and also to be able to really simplify adding new revenue components to the mix. This, coupled with the sale of higher speeds, will leverage ARPU for the Homes Connected. In addition to that, we obviously expect to have a big transformation in the business model for greater digitization and analytics. And in particular, we're going to build an ecosystem of partners. We are building an ecosystem of partners to offer dedicated services To both retail, but also in particular for the SME segments, including things such as digital marketing, online sales, security, vertical solutions, Ory experts and a host of other offers, which will have the SMEs as a big area of focus for us and expanding revenues. In addition to that, we also have our other core market, which is the B2B, and the Ory Solujoins perspective can be seen in Slide 12. On the Ory Solujoins, We have a slightly different scenario compared to the B2C because on the corporate market, we know that the pure connectivity scenario, we'll still go through a hard time in terms of commoditization and overall reduction. And what we're doing to compensate for that is a solid opportunity for changing our revenue profile with all of the IT services compensating the impact of legacy on pure connectivity. And when we do that, we're able to maintain our revenues for B2B stable, remembering that we're already talking about very high revenue components for the B2B component, while growing our IT revenues over 20% in terms of CAGR and approaching EUR 1,300,000,000, EUR 1,250,000,000 in EUR 24,000,000,000. So in addition to those 2 key core revenues coming from our B2C and SME and then B2B, We would like to highlight next what is the more than connectivity components of our future revenues. And this is a very important part of our growth strategy in the future, even though when we look at the numbers, we are just at the very beginning of this. Turning to Page 13. We can see that Ory is already developing new revenue streams based on its unique assets and scale. And as mentioned, the unique assets and scale are there, and we're acting on it. But it's interesting for comparison purposes to And what is it that we're talking about? We're talking about, as I mentioned, an asset base of over 13,000,000 residences with 630,000 companies in B2B and SMEs. And This comes with a very high capillarity of 4,800 municipalities, access to customers' homes with almost 16,000 field technicians and the 3,700 partners of a large local sales force. When we compare that with other companies, we see That the scale of our assets is not only huge, it can be used strategically to advance our core but also to penetrate the new services. And that is exactly what we're doing, starting with services that come attached and directly associated with our offers, such as Oi Play, our content platform or Oi Place, our marketplace or Oi Content App, which is our digital wallet Oryxpert, our technical assistance service, but also looking at doing things which bring an ecosystem of partners to complement everything that we're doing in terms of all of the key segments that will mean opportunities for developing incremental revenue in our customer base. We know that all of the key segments of health J. Kazimi:] digital home, content, education, financial services and even segments such as energy are now at our reach, within our reach because of our asset base and because we are transforming into an asset light company that can develop new revenue streams without being tied to our infrastructure base. So in addition to our own services, we're opening up what we're calling a huge platform opportunity as can be seen in Page 14. For that, we see that in addition to our key services, which are highlighted in the middle, We can also extend this platform to multiple partners and sellers, and we're calling this almost Vahas on steroids. And we're primarily focusing on the services components, both the global services with partnerships with global cloud players and global software providers and global service providers and content providers as well as national players in terms of our players that provide services and products on a national scale. And finally, on local players, what we're calling our local OE services hub, which will bring together both the physical and the digital and making use of our extensive customer base, but also our extensive capabilities in providing services to this customer base, including channels, including payments, including analytics and including everything else we're going to be doing on top of that. When we look at our assets, we have assets such as payments and credits, which actually go without saying today, what can be very significant to establish this base of a platform business to partners and sellers in the future, including, for instance, leveraging our prepaid credits, not only for mobile as was the case in the past. And now that mobile will not be here, we will be able to use our prepaid credits to actually serve as a payment method for pretty much getting any digital service on the web or even physical products on the web by accessing our wallets and our prepaid credits. We're going to leverage this to transform Ory to a true customer brand focused on services, focused on innovation and bringing together not only the digital associated with our core fiber connections, but also the physical associated with our physical presence in the entire country. So what is the size of this opportunity? And on Page 15, we can start to have an idea of that. We have and initial objectives of having at least EUR 1,000,000,000 to EUR 1,500,000,000 new revenues in 2024, Which will mean around 10% of our future revenues, and this is just the beginning. We have set this objective To really start exploring everything we can do. But when we look at all the components, we see that the examples show that it's possible. And on the left hand side, you can see a list of other operators that started diversifying revenues and some of them with even the structure of the same type of structural separation that we're talking about in our case. And when we look at the percentage of new revenues they were able to review. We start all the way from the 7% in the case of a large operator such as Verizon and then 13% on Orange, all the way up to a 43% incredible 43% new revenue diversification in the case of DOCOMO. Obviously, we are still in the middle of this process, but when we look at our objective of having at least 10% of our revenues coming from additional revenues, not connectivity by 2024, we believe the examples show it is possible. But also, the addressable market shows that it's possible. When we look at the market sizes in 2020 of all of the areas we're talking about, We can have, as examples here, a €4,000,000,000 digital home market, a €7,000,000,000 content market, a €23,000,000,000 logistics market, dollars 126 €1,000,000,000 online retail market, the €50,000,000,000 credit card and insurance market, a €4,000,000,000 gaming market and a 3,000,000,000 And when we going back, when we look at this the size of the addressable market, we can see that pretty much all of the areas provide a gigantic opportunity For us to diversify our existing revenue. Obviously, we know that our share of those markets will be a small share, But actually, a small share is all that it takes for us to start executing on our strategy of diversifying revenues and achieving our vision of having at least between EUR 1,000,000,000 and EUR 1,500,000,000 of incremental revenue by 2024. And finally, Our customer value shows it is possible. And when we look at examples of customer value, we can see that In addition to the core revenues coming from fiber, we can have added revenues to all of our different clients that will significantly increase our ARPU, both on a recurring basis as an example of client A with close to BRL200 a month revenue coming from OiFiber plus OiPlay plus OiExpert as well as even higher tickets, obviously, coming from 1 off purchases that help increase the overall average ticket for our clients as well as another client, which has very spot offers, but also additional recurring revenues even without being our customers in our core connectivity revenues. And this is A very key component of our strategy going forward, not only we're going to have a basis of recurring revenues Coming from our core connectivity and our core fiber services, but we also see possible to leverage on our existing customer base today to bring in additional customers that will not necessarily have to have our core connectivity services in their share of wallet. As we can see, the possibilities here are significant. We're already working with a number of services to make it possible. And in addition to that, we are building the platform business with a host of additional partners and sellers that we'll make sure we deliver on this promise. To make all of this happen, we are reorganizing. We know we cannot address This opportunity by continuing to be organized on an organizational structure level at the same way we were before. And on Page 16, We can see that we're going to have a new work structure, which will be much leaner and much more focused on generating and delivering this value. We basically will have 2 key sets of components in our organizational strategy. One focus on value generation. And this set of components aimed at value generation will have 4 key organizational structural components. 1, focused on B2C and SMEs 1, which is Ory SoluSign's focus on B2B customers 1, focused on the transition and management of our legacy base, meaning we're separating all of our structure that will take care of our copper and DTH and mobile base in order to prepare them for the transition and the management of the decline of the legacy base. And finally, one entirely new organizational structure, which will be focused on innovation, incubation and our new revenue streams, including OiPlace, including all of the other OiXpert and all of the other services that we will bring to the table, be them our own services, BEM or partnering capabilities in our platform business. In addition to that, we're going to have structuring capabilities, study with a structure entirely focused on customer experience on CX and UX, another focus on the development of the system of partners and sellers and obviously the traditional structure and capabilities of channels, customer service, digital and analytics and our field teams. In addition to those, we obviously are talking about a much leaner company, which will have our regular support functions in place, but much linear with the new Ory, which is the focus of our second pillar, readjusting our cost structure. So moving on to the next page, we can see that when we look at our cost structure readjustment, which is obviously a focus of the company going forward. This is a new objective for the plan 22 to 2024, but this is also a successful focus of results in the past. When we look at what we have already delivered, we see that in 2020, we said that we would deliver close to BRL 1,000,000,000 in cost reduction for the year. And we ended up delivering almost BRL 1,200,000,000 using pretty much all of the main levers of delivering this cost reduction from 3rd party services all the way to personnel and plant maintenance. And we know that this has been a focus, but will continue to be a focus in the future now with what we're calling our drastic cost valves 2.0 initiative, which aims at bringing again more than $1,000,000,000 of additional savings by the end of 2021 annualized savings to the next year and then beyond. When we look at all of the initiatives we have been doing in this program, We can point out to several different areas of operation, including accelerating existing initiatives such as the copper decommissioning that is in place with our networks, including the operation of unprofitable regions via partnerships. It doesn't make sense for us to continue investing in areas That are impossible. We can operate via partnerships even to comply with some of our regulatory requirements. It means an increased inventory turnaround and rework, reuse of existing equipment. It means switching off our legacy IT platforms. And we are well underway in this initiative, having commission for a switch off close to 400 systems already out of the more than 6 100 IT systems that we have. It means redesigning and strengthening our spending governance. It means readjusting the support areas of the new ORE SGA to become leaner given that we're going to have a simpler and smaller company going forward. It means simplifying the portfolio, Having a simple portfolio also trends down all of the associated costs, which always with a complex management of lots of different options in terms of services to customers. And finally, optimizing and closing stores, building central offices and distribution centers. So we're pretty much touching in the entire company to make sure we deliver on this promise. And when we look at the numbers associated with the key areas of reduction, We see a potential reduction of close to BRL 350,000,000 a year in sales, marketing and customer care, another BRL 320,000,000 in terms of simplifying our organization and our support structures, close to BRL 150,000,000 reais in IT systems and processes and obviously BRL 400,000,000 in decommissioning legacy networks and simplifying our operations after the structural separation. So we know that this is an ambitious program, but we know that we have delivered this in the past And we plan to deliver it in the future as well. To understand how this is possible, it helps To understand what will the new oil cost base be. And in Slide 18, we can see what does it mean that To have this reduction program associated with what happens after the M and As. So remembering, after the M and As and the structural transformation, We're going to have a leaner company. We're going to have a smaller company. And obviously, the cost structure has to follow that in order to make the company much lighter, agile and sustainable. When we look at our cost base, we start, as an Example, with our 2021 cost base with a range of 100%, out of which 14% our intercompany costs, which were activated with all of the processes of UPI sales. And then we work our way down to what would be our new cost base After all of the reductions and this new cost base is a 40% cost base compared to the 100% cost base that we have today. How is this possible? 1st, by looking at the structural separation components of both reducing the cost associated with the mobile UPI perimeter and the infra call UPI perimeter, which roughly there bring about 40% cost reduction. Then we go to the TV call perimeter, which will help us adjust another 7% across, in particular, the cost of content with programmers and the managing and operations of our DTH network. And then we go to the leaner company component of Close to 10% in terms of reducing costs to all of our structure simplification and efficiency gains to actually in a company which is much, much leaner than in the past. And finally, to get to the 40% cost base in run rate mode, We have another 3% of costs, which we're calling our FTTH base growth cost just while we grow our FTTH base in a sharp mode. And obviously, this has to be taken out for comparison purposes in terms of what will be the new run rate cost phase for 2021. This 40% cost base then will evolve compared to the 2021 current twenty 21 cost base to a 67% cost base in 2024. And basically, this growth from 40% to 67% means the growth of the company in terms of new revenues. We have to remember that the new Oi will have slightly below BRL 10,000,000,000 of revenues at the end of this year, excluding mobile and excluding the infra co parameters. And then when we look at the revenue in 2024, we're talking about increasing that by almost 50%. So We're going to have a new cost base that grows with the company, and most of the new costs will be variable costs, which is a good thing and allows us to really be super efficient in terms of cost management. So a key component of simplifying All of this, in addition to all of the structural separation movements, is also the legacy. And the legacy is the focus of a 3rd key pillar for us, not only on the cost base, but on all of the structural component of our legacy, which is the concession. And addressing the concession economics for the future is also crucial for Ory S. Y. And that's why we have highlighted this as a third key pillar of execution in Page 19. To address the concession, we have 2 key components. We have the migration of the concession to an authorization as per the new law, which is being refined and worked by Anatol at this point and will allow us And the second one is an arbitration process to actually compensate the company for past issues that occurred with the concession and that we believe are critical because they may impact in a positive way in several billion this passage from the old concession to the new authorization. On the migration side, we know that this is a process that's still going on, but we see a window of this happening all the way from the second half of this year when the agency should finally define the migration model and publish all of the conditions that will be proposed to operators to migrate from a concession to an authorization. And then continuing through all of next year when The projects will be made, the discussions and proposals will be refined by the companies and presented to the agency when the migration windows will be opened and finally, when migration could take place. And we see this happening in the second half of twenty twenty two or even starting and the beginning of 2023. What will this migration address? Basically, all of the unsustainable costs That the concession has today. And just to give an example to everybody, we highlighted 2 key cost components of the concession today, Which will be completely eliminated in the future, almost completely eliminated in the future. One of them is an obligation to support public Telephones that nobody uses, which cost the company roughly BRL 130,000,000 every single year and generate the revenue, which doesn't amount to a few BRL 100,000. The second one is unfortunately, A cost component that has been rolling and has to be maintained because of the obligation to maintain service in pretty much any area regardless The conditions we face, which is cable and equipment tax costs, which have escalated in the last 2 years and now we have a projection of close to BRL 200,000,000 a year. When we look at migrating the concession, those two cost components could be almost completely eliminated, meaning that, yes, there will be a significantly reduced cost obligation cost burden coming from the STFC and the legacy operations. In addition to those, There are also additional cost reductions from other STFC obligation waivers, in particular, the obligation to provide service in areas which In which there is competition, even though those areas are largely unprofitable for us and this will be a key component of the obligation reduction and also all of the other SDFC costs in terms of even the cost obligations to pay concession fees. The second component is the arbitration. And the arbitration, as I mentioned, may generate a positive impact of several billion and this positive impact comes from 4 key components. One of them is the past unsustainability of the concession. We believe that the concession has not been sustainable for a while now, and this can be compensated by the arbitration. A second component is the financial economic balance of the concession given to several different events that occurred in the past and that were not compensated by the public sector in terms of making sure that all of the economic conditions have to realize the economic value of concession were in place and in many instances, this was not the case. A third component is the balance of the obligations of PG and E, which is the universal obligations, which we believe are not what they should be in terms of the value that is being put in front of the company for compensation in the future. And finally, The compensation for the use of assets in the provisional services, which has to do with all of the unamortized investments that the company has been having to make to continue providing the concession services. When you put those 2 components Together, both the migration on one end and the arbitration on the other, we see that the company may have a timeline to be able to migrate our concession authorization without incurring into any additional costs and even by having some cost reduction additional cost reductions coming from the arbitrations. And all of that will help us to finally get to an equation where the concession will not be a cash consumer for us, but at minimum, a neutral component for the company going forward. Well, and finally, as I mentioned, we had 4 key pillars of execution. The last one is a shared one, which is on Page 20, the successful development of the infrastructure company operations. We know that we have just successfully completed another important milestone for the InfraCo process. We know Soon, we should have this agreement signed with BTG as our investing partner and a new controlling partner. And we know that starting next year and we expect to complete this process until the end of this year. We know that next year, the company will be controlled by BTG, but Oi will remain a significant shareholder and a significant participant, in particular, of the results of the infrastructure company and all of its investments in terms of service provisioning. And a key aspect of the infra code, which I would like to highlight, is that even though we're selling the control, Oi not only remains a significant shareholder, but primarily, we will capture A lot of value that will be generated with the evolution of the InfraCo operations. According to the public plans that we have announced when we did our plan amendment last year and all of the revisions that were done after that, we see that the EBITDA of the infra company in a few years down the road can present a close to 50% CAGR and can reach numbers in excess of BRL 5,000,000,000 a year. And when we look at all of the comparables worldwide, we see that the multiples by which The infrastructure companies globally have been negotiated are on average in excess of 10x. And by looking at this trajectory and the comparables, we see that both the EBITDA and the EV should grow significantly. And this implies in a potential EV front for the infrastructure company in which we have company that could be valued in excess of BRL 50,000,000,000 in the future. Obviously, those are projections. Obviously, this will depend on how the infra co develops after the controlling stake is sold, but those were numbers that were present in our original business plans in terms of the possibility of having InfraCo generating significant value in the market. And we will remain a key shareholder, remembering that at the closing, we will have a 49 stake in the company and at the structure 90 days post closing after the GlobeNet contribution, Ory will have close to 40% stake in the company. And when we just do a simple calculation what of what would be oil stake in the future, Considering the growth and the multiples of this company down the road, we could see that Oi could have a stake in excess of BRL 20,000,000,000 compared to our OA current market cap of around BRL 9,000,000,000. So Obviously, I would like to highlight that even though we're selling the control here, we're not going away from the economic value that is generated by the infrastructure company. Operationally, The infrastructure company is already proven and will be, we believe, very successful in the future. And in the next page, We'd like to highlight one important component, which is how efficient the infrastructure company can be in terms of its FTTH And we believe this efficient proven growth is future proof, and we thought it was important to highlight Some key unit economics of the HP cost, given that some recent market comments on the CapEx number from smaller competitors ended up questioning if we were having an efficient enough operation in the deployment of our HPs with the InfraCo. And What we're saying is not only we believe that we're having a super efficient deployment of HPs, but we believe that this It's actually what positions the company to a substantial differential compared to market alternatives in terms of our future growth capabilities and lower TCO costs in the future. When we look at our unitary HP cost of around BRL 270 per HP And we compare it to some highlighted numbers from the market that said that HPs could be done for as low as BRL140, BRL 130, we see that in reality, the components to get this lower cost actually sacrifice future capabilities, lower future costs and higher expansion capabilities, including things such as redundant transmission, top quality OLTs, low expansion costs for new clients, the ability to go beyond 1 gigabit per second with the All of the equipment in the customer homes, having lower operational costs, having a quality underground primary network, which greatly reduce the number of failure and failure points in our overall critical networks, Having the addition of new distribution elements without future natural duplication, having smaller fiber segments, which are less subject to failure and service interruption. So in summary, when we look at the unit economics and everything we're building in the InfraCo, We're building a very, very solid network that not only is efficient, but has capacity to grow, has higher quality and has lower operating costs in the future. And this is summed with the other unique physical characteristics in terms of our presence, both in terms of existing fiber assets as well as our capillarity and finally, our network topology, which is prepared to really be a dominant force in the future here on the infrastructure provisioning. So this completes our 4 key pillars. So now let's see what to expect in aggregate. And Actually, before doing that, we can see on Page 22 that in short, we know that we We'll face additional challenges, operational challenges in the future. But when we look at the past, we have already overcome many different challenges, including the RJ challenge, including all of the M and A challenges, including the funding challenges. And now we're focused on the operational challenges. We will continue to expand our fiber connectivity core business. We will accelerate new revenue streams. We will drastically reduce costs to make them align with our new company size. We will address our concession sustainability issues. And we expect together with the new partner to ensure also the infrastructure company success. What to expect out of that then? And then finally, on Slide 23, we can start to see the evolution of and our main indicator and key guidance elements. In terms of the key guidance elements, we can see that on 2024, the new ROI expects We have revenues between BRL 14,800,000,000 and BRL 16,500,000,000, and this is including all of the revenues of the new world, including both core and legacy. On the EBITDA front, we expect this new Ory on a consolidated manner, including both legacy and core revenues to have an EBITDA between EUR 1,900,000,000 EUR 2,300,000,000. And this means a consolidated EBITDA margin there omni way of between 13% 15%. It's important to highlight though that this 13% to 15% includes both core and legacy. When we look at just the core revenues, which we're calling new business here, we see that the EBITDA of the core fiber revenues and B2B revenues should be around 17% to 19%. How to get to those numbers? Well, we have some guidance on the key indicators on the right hand side, and we start with the Homes Connected CAGR revenue, A CABR number of between 31 percent around 31% between 2021 24, possibly reaching 8,000,000 homes connected by 2024. Those 8,000,000 homes connected will have possibly an average revenue of around BRL 94 a month, and this means a CAGR of 11% approximately between BRL 21 and BRL 24. And this BRL 94 a month will come both from the increase in speeds and the increase in higher penetration of higher packages as part of our total base as well as the basic services that we already offer as add ons to our fiber service. Oil Solutions should have revenues stable at around $2,600,000,000 but the IP revenues are growing its share to 40% in 2024 and getting to almost BRL 1,300,000,000, as I mentioned before. So Even though we present a relative stability of revenues at the Ory Solutions level, the revenue is being completely reshuffled here We saw IT growing and just pure connectivity, in particular, legacy connectivity dropping, but still maintaining a significant component of BRL 2,600,000,000. Our legacy revenues, those will go down and we know that and we're forecasting our legacy revenues to be around BRL 500,000,000 in 2024. This is a very sharp drop from the BRL 3,600,000,000 that we had last year. This will be a sharp drop compared to the legacy revenues we expect this year, which will already present another sharp reduction, And we see that this will continue to occur until 2024 when we virtually will have what we're calling a residual revenue on the legacy revenues. And thus, that's why it's so important to address the concession issues and to reduce the legacy costs. The new revenues In terms of additional to the core connectivity revenues, the digital revenues and the new service revenues and the platform revenues, We expect them to reach between $1,000,000,000 and in this case, dollars 1,500,000,000 in $24,000,000 which is our projection. And now with that, We go to that level of new revenues on top of core connectivity revenues of around 10% of total revenues. Our EBITDA margin of the new business or core business could reach 20% by the end of 2024, and this means 18% for the full year between the 17% 19% guidance. And this will continue the growth trend We expect a stabilization at around between 20% 25% after 2024. The EBITDA margin of the new Ory, including the legacy, could reach 16% by the end of 2020 4% 14% for the full year, so between the 13% 15% on the left hand side. The legacy costs Are expected to no longer burden the new Ory from 2026 onwards, but all assets will be made for us to anticipate those savings and to make sure that we have a stability of our costs versus revenues on the legacy front even before that. But in our current projections, we are using 25 as the last year where costs associated with the concession in terms of negative costs impact us for projections. And finally, on the CapEx front, we Expected CapEx over revenues are starting at around 14%. Obviously, we're still in a revenue growth phase and then reaching around 8%, 7.8% in 2024 and expected to stabilize at even lower levels from 2026 onwards, again when we have less impacts from the legacy components. And those are the key operational indicators and key guidance indicators for the company in its path from 2022 to 2024. Out of those results, we can see what would happen with the OE capital structure. And as we all know, we have been going through a capital structure readjustment. Our current debt structure, which is around the EUR 28,200,000,000 in Q1 2021, with those debt components that you can see on the left hand side, the NDS with EUR 4,300,000,000 the export Credit agencies with EUR 4,400,000,000 local banks with EUR 5,300,000,000 the debt that was taken at the beginning of 2020 was around EUR 4,000,000,000 The 25 bonds with $8,800,000,000 and just other credits with $1,400,000,000 And then on top of that, For the transition of our structural separation, both on mobile and on infra co, we took the EUR 2,600,000,000 convertible debt at the infra co level and a EUR 2,000,000,000 bridge loan at the mobile level. The EUR 2,000,000,000 bridge loan was signed but not yet disbursed. When we look at this debt structure, then we will apply to this debt structure the results of all of the M and A proceeds after the end of this year, beginning of the next year. And with those M and A proceeds, we're going to do a complete DNDES repayment. We're going to do a cash sweep on the banks and ECAs, restructuring the debt and paying a 55% on the existing debt and then obviously eliminating entirely bad debt. We're going to do the infra code debt settlement with the convertibles. We're going to do the mobile bridge loan settlement with the cashing of the mobile operation. And finally, we expect to also have DIP refinancing, which is in process as we speak. On top of all of that, which comes from the proceeds, We will have the new Ory EBITDA growth and we will have the new revenue developments that will get us to the levels that we are forecasted for 2024. And then at 2024, we can have 3 different views of what would be our capital structure and our leverage structure. The first one is a plain vanilla one and is one that we don't believe represents well what happens to the company in 2024, which is a straight net debt to EBITDA on a stand alone basis without integrating any of the results or any of the numbers of InfraCo. And this is still relatively high number of 6.6 times. But then we have 2 other views, which we believe are much more representative of where the company will be, Especially having in mind that we want to have a sustainable leverage target, which is to have a net debt to EBITDA below 3x. The first view is if we consolidate the pro form a 40% intra core EBITDA on our numbers and then attribute that to calculate the net debt over EBITDA. And this number will be a much more manageable already 3.7x. And finally, we have one view, which we believe is the real view that we should be looking at in terms of our capital structure Because in the end, this is the representative in terms of the state and the value that we carry inside the OE structure. And when we look at the equity value of just our InfraCo stake at the InfraCo in 2024, 2025, We will see that the projected value of the stake is much higher than our entire net debt in 2024. And this means that by 2024, at the end of the year, after all of this process is completed, after We execute on our commitments here. If all goes according to plan, what we would have at Oi if we just consider this We value stake on InfraCo is a company that could have virtually 0 net debt and a customer base of 8,000,000 customers on fiber plus all of the other revenue components coming from B2B of close to BRL 3,000,000,000 plus at least a 10% stake coming from additional services, digital services, physical services, platform services to make for a BRL 15,000,000,000 company with an EBITDA level above 20%. And we believe this is the true target of the company is to transform this process to transform these companies to complete this transformation process in the next 3 years to be able to deliver a company that will again be able to look for the future with a very sustainable path in mind and not only a very sustainable path, but sustainable numbers and cash and revenue generation capabilities. So in summary, those are the key guidance indicators and the key components of our story going forward. But before we close, last but not least, I would also like to call the attention to Page 25, which is that in addition to all of the transformation we're doing on all of the business components and all of the financial components and all of the numbers and cost components of the company. We also will continue to evolve and are continuing to evolve in the ESG agenda objectives. We know we must transform the company. We know the company should be a leaner one, but the leaner company also means that we will continue to observe all of our ESG objectives. And we have prioritized the adherence to 12 of the 17 existing sustainable development goals. And this means that we're going to continue focusing on the environmental side to renewable sources, and we plan to have a 100% renewable sources energy matrix by then. We are continuing to focus on the recovery capacity of our equipment and the use of our equipment to minimize the impact on the environment. We will continue to have the social initiatives on the Ory Fortuno Institute, in particular with the education and innovation programs focusing on inclusion and diversity, in addition to all of internal programs on inclusion and diversity. And we will continue to have very, very focused governance aspect of the company, Including things such as the women on board that we obtained in 2021. We plan to obtain the pro ethics stamp in 2023 and we return to return and we plan to return to the B3 index and the ISE. So all in all, We will do everything we're saying we will do, but without losing focus on having a very, very attentive company towards ESG objectives and in particular, the governance objectives that we know have been helping the company to turn the page and to really look for the future to become a sustainable company again. So all in all, This is what we have to present to you. And obviously, we now have some Q and A. In addition to obviously making this presentation, the recording, the materials and our IR team available to questions Ladies and gentlemen, we will now begin the Q and A session for investors and analysts. Remember that the questions should be asked in English. Question. Our first question comes from Mr. Marcelo Santos with JPMorgan. Hi, good morning. Thanks for taking my questions. I had 2. The first, I want to discuss that if the 11% CAGR in ARPUs that you expect for the 5 year business. I understand it's mostly due to increasing speeds. How does that could you like, it's good that in light that there are many new players I think, like with the market, with the capital boosting the fiber development, how do you see competition impacting that outlook? That's the first question. And the first question, if you could discuss potential strategic alternatives for Cebujeres in Batu. So how do you see a potential divestiture of those assets as well? Thank you. Thank you, Marcelo. Well, on the two questions. First, talking about ARPU and competition and how sustainable that is. To begin with, we believe that the expansion of ARPU coming from the speed increase is a natural trend that will apply not only to us to the entire market. We know that as time goes by, speed will be a key requirement and we've been seeing that With our own numbers now and not necessarily in the future, but now already. And what started as a 2%, 3% penetration of higher speeds in our net adds acquisition has turned to almost 10% already in terms of high speed penetration of our net adds. And if we look at the ARPU of the higher speeds compared to the ARPU of the base plan, the increase is super significant. We're talking about The base case here depending on the regions of between 20% 40% increase in terms of ARPU. So going from BRL 100 to BRL 120 or BRL 130 or BRL 140 depending on the plans and areas. And this by itself, when we look at Just the increase of those 10%, we can see that the ARPU of around R9 to 4 Seems very feasible because it's just a natural trend of the market. In addition to that, when we look at competition, there's two factors. In addition to just this being a natural trend that the entire market should follow because obviously having higher speeds consumes higher traffic and higher traffic carries higher costs. In our case, due to our agreements and due to the structure that we have set up for all of our infrastructure costs. We believe that we have a very sustainable traffic growth architecture for us to compensate for those increasing speeds in the future. And that's not necessarily is the case for everybody because the increase in traffic represents increasing cost and even ISPs Are not free from those costs. Even smaller ISPs or even regional ISPs have to track out with higher costs in terms of traffic capacity and those higher costs leads to higher prices as well. So we don't see this being a significant issue. We really don't believe that the competition in the high speed fiber will occur by price. We believe it will occur by presence, by differentiation, by additional services, by quality. And in this regard, as we showed during the presentation, in virtually all of the capitals where we're present, virtually all of them, We're the market leaders by far because we were able to match our brand with the product quality, with some things that just ourselves do at this point, in particular, in terms of the management and the supervision The services inside the customers' homes. We have established a model where we are managing The ONT, the equipment that sits inside the customer home. And so we can track very closely if that equipment is working, if The service quality is appropriate if there was any service interruption, if there was any degradation to be immediately addressed. And we believe this will make A huge difference in terms of competitive advantages. By the way, when we have started regaining share from the ISPs, This was one of the reasons. And we used to say that one key thing that happened in the last 2 years was the advent of streaming gaining so much importance, so be it for entertainment or be it for video communications. And Pretty much everybody started to notice the difference between a so so quality of broadband connection And high quality of broadband connection. When you're watching streaming or when you're doing video communications, this matters. And that's one of the reasons why we're able to expand so much in our competitive environment. So we don't see any issues in maintaining that competitive position there. We know as well that there will be space for more than us. Obviously, we don't intend to be a monopolist and there's no possibility of doing that. It is a very competitive market, But it's a very competitive market that has to be rational because the CapEx invested and all of the costs are very significant. And it's not like finding an empty plane now when you're doing that because every new fiber connection, every new fiber customer requires specific and individual CapEx associated. It's different from the mobile sector where You're flying an empty plane and if you're not having additional subscribers, you're just not using your infrastructure to the fullest. Obviously, we do have one component of this equation here in terms of the HPs that are available. But Just adding another subscriber means a significant cost of connection. And so we don't believe there's going to be price competition or predatory price competition for the fiber connections in the future. As far as your second question on the alternatives for Serjei and TAPA, we believe that Serjei It's very strategic for us. We believe that this is, as I mentioned during the presentation, this is one of our hidden secrets on how we were able to do everything we did in the last two and a half years, how we are able to maintain the quality, how we're able to maintain the aggressive pace of expansion, how we're able to maintain the consistency between our operations without big fluctuations of performance in terms, for instance, of a number of homes passed or a number of homes connected per month. And we believe that in addition to that, the Serreje equation actually opens up a host of other possibilities for us. We believe that by using our network of technicians in the entire country, we can do things such as providing local service at the customer homes at a reduced cost compared to pretty much anybody else. We believe that we have a trained field force that can work with additional services such as logistics, such as equipment configuration such as delivering technical service to 3rd parties, including retailers and others. And this will continue building on our capability to expand revenue on top of the core connectivity revenues that I mentioned. And so Serjei for us is very strategic. We know that it's very hard to replicate as well. You don't build 20,000 plus employee network nationwide trained with all of the distribution centers with all of the models, with all of the systems, with all the processes in place from overnight. You actually take several years to build this capability, and we have been building this capability over several years. And now we're using it So we believe Serhedy is very strategic and will continue to be. As far as Tato, Tato has been a very important operation for us because it has allowed us to test and try new means of doing customer relationship. We control the cost structure that we know it's an important cost structure at least today in terms of just our relationship costs. And we know that in reality, they also provide service that that can be used as a benchmarking for us to actually also hire additional service from providers. In the case of Tato, One thing we're doing with Tato that may open additional alternatives strategic alternatives, as you're mentioning, is that we have Made Tato and the rebranding of Tato could for this reason. We have Made Tato not only into an internal provider, but into an external provider as well. We believe it's a well run company. It's a company that has the potential to include other clients in its portfolio. Solutions to our own clients, to our own corporate clients. And the next step is to offer that to SME clients in a way that SMEs will have access to customer care to professionalize, outsource customer care, which was not a possibility in the past. And so we see a good avenue of growth there. If there are some additional strategic alternatives for Dassault in the future, obviously, we will consider. It's an area that We have been scanning the market. We have been looking at the alternatives. We know it's a market that we'll go through a lot of consolidations still. And so this opens up yet another possibility for us, but there's no set space there's no set path there For us, we just know that this opens up a lot of other possibilities. Thank you very much. Thank you. Our next question comes from Mrs. Anna Kalantzis with Brookfield. Hi, Rodrigo. Thanks for the very informative call. I have two quick questions. The first, I was hoping you could elaborate on how folks should be thinking about modeling fee arrangement between New OY and Interpol for the residential and corporate clients. Hi, Ann. Well, thanks for the question. Obviously, we are working with a modeling that is What we have agreed in the basic plan that was provided as far as the competitive process went on the judicial process. We know that there will be many different components as well coming forward in terms of how this equation goes for the future because it not only includes everything we're doing in terms of basic connectivity, but also includes other services. And we know as well that most likely now from now on, this, which was a very public projection, Obviously, it starts to develop into a private relationship and some of the cost components here will evolve according to what was already public, but some will evolve in a private relationship between us and InfraCo. Obviously, InfraCo will have A neutral network stance and we'll be able to provide the same services to other players in the market. But obviously, Every relationship will be unique and as far as what are the components that each player assumes. And in our case, we are taking on a number of components to ourselves, such Just for instance, monitoring the customer homes and obviously having a component of the installation ourselves, etcetera. And so What we have done for modeling the growth here, when we model the EBITDA growth and when we model the revenue growth, It already models everything that is in the cost projection for our relationship with Intraco. Obviously, we're not going to open up precisely exactly what are the cost components with InfraCo because obviously, we have to understand that It depends on our specific model. And this without the question, be a strategic information in the market for competitive purposes. But what I can reaffirm is that, 1, all of our projections already include the growth of those costs. And that's why in the cost base slide that I showed, you see our cost base coming from a 40% after all reductions in 2021 to a 67% base in 2024. This growth is virtually the growth of the variable components and the key variable component is obviously the infocall components. And maybe just to ask a follow-up. Is there I understand that arrangements will vary from customer to customer and I understand your concerns about the competitive nature of the exact arrangement. But is there a rule of that folks can use to just model that variable cost nature of the fee? Well, I mean, the rule of thumb is what was set in the competitive process. There was the earlier cost basis that was roughly around the basis of the competitive process and which by the way was part of our amendment to the RJ plan last year. And so as such, You could see that if you just look at the infrastructure components of every cost structure, it would not be something very different from the But if you look at that, obviously, it is a significant share of the costs. It's the highest cost by But again, we prefer not to give too much detailed information on exactly how much Will we incorporate as that cost from the infrastructure company just for competitive purposes? It doesn't make sense. Understood. Understood. And I guess one other follow-up question. Can you discuss CAGR on EBITDA margin and CapEx between 2021 and 2024. You folks did disclose some additional detail on CapEx CAGR. But I was hoping to get some help, again, on modeling the EBITDA margin CAGR between now and 2024. Sure. Well, we meant that the CAGR Should put the CapEx reduction sorry, not the kicker. The CapEx should put the CapEx over revenues reduction Starting at the 14% level all the way down to close to 8% in 2024 and then stabilizing even below that. And this happens basically because we're going to have a lower CapEx coming from legacy operations. We don't believe that the CapEx on existing operations is going to change all that much, but the lowering of the CapEx comes from reducing the CapEx associated with legacy operations, in particular, the CapEx attached to the concessions. If you recall, I mentioned in one of the slides that just to give an example in terms of CapEx, just in terms of cable CapEx and other CapEx Associated with maintaining the concession. We had in just 2 components there over BRL 300,000,000 and this is a number that in the end We've reduced from our CapEx, and that's why the CapEx can go all the way down to 8%. If you look at the number today, The reason why it's still at the 14% range is obviously just because of the scale of revenues. If we just pick our scale of revenues, The CapEx over revenues will go down because we eliminate CapEx on the legacy components, And we keep growing our revenues to a clip of almost 50% in 4 years. Then when we look at the EBITDA components, the EBITDA components actually happen Exactly because of the same reasons. The first reason is we complete the transition of our cost structure by simplifying everything that we're doing in terms of reducing and removing costs from the current operation. We're going to reduce costs from pretty much all fronts and in particular from the legacy fronts. And this is what allows The EBITDA margin to expand. If we look at the EBITDA margin today, obviously, the EBITDA margin today is well below what we expect And 3 years down the road for a couple of reasons. The first one is scale. We're going to have not a heath, but relatively sizable fixed cost that we need to spread over the scale. And this fixed cost will not grow as we restructure the company, only the variable cost will grow. The second one is the cost on legacy And the legacy cost will go down as well. And this, again, allows us to recompose EBITDA going forward. And then we have to remember that the growth of EBITDA margin happens Because in the end, after all of that, we're not going to have to keep investing in infrastructure. And what we'll have there It's an EBITDA margin that goes towards stability, which was designed last year, which is virtually no increase in fixed costs, just the increase in the variable costs. We're going to have the scale. We're not going to have legacy. And this is what helps us get Where we are in terms of the modeling there. Obviously, when we have projected the EBITDA margin down the road, we also We have already projected both the growth of the variable costs as well as the stabilization of all of the other costs of the company. We have been very lean in terms of what we have been projecting for the company in terms of other G and A costs. And this is how we're going to actually achieve the 17% overall 16% to 17% overall on average numbers for 'twenty four. Got you. Thank you very much. Thank you, Rodrigo. Thank you. Our next question comes from Mr. Matthew Woburniard with Barclays. Yes. Good afternoon or good morning and thank you for the very useful presentation. I had a few questions. The first one was regarding the new revenues and really the new beat, not so much the one related to B2B, which is Something that's a number of companies do, but the rest of it, I was curious about how you were building the assumptions on margins there. Because again, on IT services, we kind of know where margins are, maybe 15%. But on these new services, it's very hard for me to get a sense of what the margins can be. So maybe if you have a few examples or a few elements that help us understand how you come to your margin guidance for all the new revenues, that would be great. And then I'll ask the following questions. Okay, Mathieu. Thank you for that. In terms of the new revenues, What we're doing is we're looking at the nature of those new revenues and we're taking as a basis what we already have Today with several of our partners and several of our own service revenues and extrapolating that towards The future in terms of what we believe will be the expected composition of those types of revenues in the future. But virtually, If you look at the $1,000,000,000 to $1,500,000,000 in new revenues that we expect by 2024, we have used an aggregate number of around 20s, but mid-20s, okay? And this comes from the fact that it's a mix between service revenues that are between 20% 25% and other revenues in terms of our revenue share components, Which may be between 60% 70% or meaning 30% to 40% revenue share in terms of components that are added to our own revenues. And then there is obviously a smaller component of revenues that come From product sales and from marketplaces that then obviously are sub 10% revenues, but we don't expect those to be the majority component of our revenue plot. So it's virtually a mix there between revenues that are service revenues between 20% 25% and revenue share components that are between 30%, 40%, give or take. And this gives the mid that we're using for this €1,500,000,000 additional revenue plus. That's great. Very helpful. And second one was about The migration from concession to authorization. So as you've explained, It seems that your core scenario is that net net, there will be kind of a positive offsetting factor Payment to you, which obviously is a big change from certainly what we discussed in the past where you would have to pay for keeping some of the reversible assets and maybe pay to exit the concession. So I just wanted to make sure that I got clear that Net net you expect the payment. You're not just talking about receiving something but having to pay something else on the other hand. That's right, Mathieu. That's exactly right and that's the exact reason why we entered with the arbitration. And we believe that the arbitration actually has to correct several issues that the concession had over the years that were not addressed and that should have been addressed. Actually, even by contractual terms, they shouldn't have been addressed in the past, but they were not. And with that, we believe that the positive offsets coming from the arbitration would be actually bigger Then the supposed migration costs that should be presented as far as reducing obligations and other net costs that will have to be presented to us or benefits that would have to be presented to us to be compensated. And by that, we would expect to migrate without actually incurring in any additional costs. Obviously, how much this will be, It will depend on the whole process because the arbitration is a complex process. If you just look at what's going on now with the arbitrations, Our arbitration will come after the arbitration of Telefonica. Telefonica has already presented some of the numbers And we're not giving any numbers yet because we're still in preliminary phase. We're about to sign the arbitral agreement. And just after that, we'll be able to present in more details what is our claim and or our claims And how much should we be expecting in terms of the speeds there. But suffice to say that, obviously, we're talking about several billion. And when we're talking about several billion, we expect those to be more than enough to compensate for any additional obligation that outcome in terms of the migration. Very clear. Thank you. And the last one, if I may. My understanding is that the RGA as it is structured now has basically been voted or approved until May 2021 as in allowing for all the transactions to happen between now and then. And I was wondering if for some reason, which we can't foresee at the moment, some of the deals that you have announced are delayed, How does that play out? Is there an automatic extension to the current RG process? Is it pretty seamless? Or do you need to call Thank you, Mathieu. On this last one, there's actually 2 dates there, okay? There's May 22, which was the date that we presented and got approved by all creditors last year. The date that The amendment brought was May 22 for the end of the RJ and this got approved by all of the creditors. In the approval process by the judge, the judge actually said, let's try to complete this RJ sooner than that. And obviously, this is contingent and subject to an appreciation of what's happening with the timing of the M and A operations, in particular, mobile and InfraCo. As we expect both of them to be completed by the end of this year, beginning of next year, the May 22 date would be well within range, even if there is a delay of a few months on one or both of the operations. And then by May of next year, we would be able to actually be done with the RJ. Obviously, There is a big discretion capacity by the judge The judge may see fit if there is the need or not to expand the DRJ depending on the conditions. But the way things are going right now, We believe that all of the conditions for us to get out of it is okay, or we don't see any issues with that. We see that May 22 would be a final period. We see this year as A year where the transactions would happen. We don't see any big risk of loan delays. And as such, we don't see any issue coming from this. Great. Yes. Sorry, I didn't mean May 22 at the deadline. Thank you very much. No problem. Thank you. Summit data with new research. Hi, Thanks very much for taking the questions. I had 2 or 3 quick ones, please. I might Can I just double check, have you given please the current run rate for UK EBITDA in there? Obviously, you've given some guidance for 2024. I just wanted to check if we knew when for either 2020 or even just for the kind of Q1, just to get a sense as to Where we should be moving forward from? That's the first question, please. Secondly, again, just To clarify, you may or may not be able to give this. How much legacy cost will still be in the business in 2024, Please, I mean, you've talked about it potentially falling away from 2026, but I just wondered, do you know how much that is in 2024 roughly? And then a third point of clarification, sorry, if that's okay. On Slide 18, You did the cost kind of pacing going forward. I just wanted to double check what the starting point was 2020 to 2021 cost base in absolute terms. And there's a small adjustment in leverage, I think, about 14% or something. I wasn't quite sure what that was either, but I was just trying to get a sense of to what that starting cost base was, please. Thank you, Sumit. Well, starting with the new coal projections, when we're talking about the new coal projections, we're Talking about both the consolidated new co projections, no InfraCo. So it's just Oi itself, obviously, with all of its components. Excluding InfraCo, which as we remember is not consolidated as we're not controllers. And Obviously, whenever appropriate, we're trying to separate between what are the numbers for just the core revenues, excluding legacy and for the aggregate numbers, including both legacy and core activities. And by core activities, we mean, Obviously, the fiber, the digital revenues from B2C, SME and B2B. And so the numbers do not include Infocom at all. It's Just new way and new way includes everything, okay? When we're talking about the legacy costs, Obviously, even though we have the projections for the migration to occur somewhere between 20 To be associated with that, that have to go down over time. So after you migrate, There will be several things that will be removed in terms of obligations. For instance, you will not need to be mandated to Provide service in areas which already have competition, already have other providers, which are unprofitable and this happens today. And so what will happen over time, and this has started to happen after 2023, is you start a process To decommission those areas, decommission those networks, reduce the associated costs, but that doesn't come overnight, as I mentioned. It comes over most likely 2 or 3 years. And so for 2024, we still have a situation where revenues are already well below what we have today. Remember that revenues for legacy have been coming down at the clip of between 25% 30%. And so if we go to continue on the same clip, You can see that the revenues by $24,000,000,000 would be already under $1,000,000,000 And if we look at costs for 2024, Obviously, they're still not there yet. They still are slightly above that. And so that's why it will take a while for us We will completely eliminate the impact of the negative costs on the legacy. But then on 2025, revenues will have decreased more. And we already We hit the end of the obligation phase of the migration because the migration will carry some obligations as well. But that 2025 will hit the end of the obligation phase, and we will be able to decommission pretty much most of the legacy structure and just remain with that, that is actually either neutral or slightly positive. And that's why we say that The cost of the legacy still impact us all the way until 2025. We're not giving the detail the specific details of this number. But again, suffice to say That those numbers will still be higher than the $1,000,000,000 in $24,000,000 And then from then on, they can go down pretty significantly. And tell you that in cost base, the cost base on Page 18 on Slide 18, What we looked at in terms of cost base was actually the numbers that we entered 2021 with. It was everything that Got published as our cost base at the very beginning of 2021, which were the aggregate numbers for 2020. Okay. Thank you. Actually, just to double check then, on the new co EBITDA, I understand it's the consolidated EBITDA excluding in plateau. Do we have a run rate for Q1? Do you have some incentives already off base? You mean for Q1 when, sorry? Yes, exactly. Just what is the kind of current run rate Well, we're still not giving the run rate For Q1 today because we're still in the middle of all of the separation of the structural operations, Sumit. And so it would not be realistic to provide a number Given that we still have a lot of integrated components that serve both new coal and legacy coal, and it's very hard to separate. It will be Our next question comes from Ms. Maria Teresa de Veneto with Bank This is Maria. You may proceed. Hi. Thank you. Sorry, guys, I'm having some audio problems. In terms of the F and C H pricing, that will be my first question, Rodrigo. In your business plan, are you forecasting price increases and inflation pass through? And also with your commercial agreement with Interco. I understand you're not going to disclose the details, but is it going to have any inflation path to adjustment as well. And is there any client activation costs related to the new Oi, the CPE? Or is everything under InfraCo. And then my second question will be on Serjei. How is going to be the relationship between InfraCo and Serjei? Is there any views on the economics of that? Is it going to be a fixed fee for installation? Any color on that would be super helpful. Thank you for the presentation. Thank you, Maria Theresa. So three questions there. On the activation costs that remain with Ory. In terms of the structure that we put in place With InfraCo, there's no acquisition costs that stay with us, only if there are additional costs But we want to provide ourselves with no relation to InfraCo and there may be things such as that. As I mentioned, As we are responsible for the management of the customer home, including its supervision, There may be additional costs for service for installing additional equipment, for installing our wireless mesh, for installing additional Wi Fi and those all come to us. But the base equation in between us and InfraCo actually covers all of the installation costs and all of the activation costs at the very beginning. As far as the relationship between Serhegi and InfraCo. It will be a provider vendor provider relationship. Obviously, it's an arm's length relationship, but they are 2 independent companies. But obviously, Serhegi has put together process for installing HPs and HCs that we believe is not only extremely competitive, but it's well integrated into all of the operating processes of InfraCo. So obviously, the new InfraCo shareholder controlling shareholder, We will have some contracts which are already underway, and we'll have discretion to actually I'll do other things as well in the future, but we believe that Serhii is extremely competitive, not only from a cost standpoint, But in particular, for an efficiency standpoint. So we expect this relationship to continue. As far as your question on inflation, Our modeling does not incorporate full inflation. Obviously, it does incorporate some growth of ARPU for increasing ARPU given higher speeds and higher plans, but it's just a partial incorporation of inflation. Our next question comes from Mr. Marcelo Santos with Jatapemburg. Hi, thanks for the follow-up. Just two quick questions. The first is, is the EBITDA presented under IFRS 16 or pre IFRS 16 is the first one? The second one is about revenue build up. So I would just sum in here the oil solutions of 0.6 €1,000,000,000,000, the legacy €1,500,000,000 and the €9,300,000,000 on application SME, that's 14,000,000,000 And you're guiding to a number that's above that. Is this because you're considering DTH as Yes. Thank you, Marcelo. Yes, well, just confirming our First question, there's no IFRS impact. It's just straight on. And when we look at the revenue builds, we have already Excluded the DTH, okay. So for the future, it still impacts the numbers today. But for the future, for all Practical projection purposes, we have excluded DTH from the mix. We have included all of the other content contributions including IPTV and including OiPlay. And then the mix will be a mix between legacy components, meaning at CFC And corporate broadband. Then, new OY were core components, which are FTTH, both from B2C and B2B plus The B2B Ory Solutions revenues. And then on top of that, we have the additional revenues that I mentioned that we have a target of having between $1,000,000,000 $1,500,000,000 or 10% of total revenues in 2024. So Those components actually separate that. And this means that if you just do the calculations there, You see that the $94,000,000 ARPU applies only to the FTTH. And then on top of that, you add the legacy revenues, you add the Ory So BOSCHOR revenues and you add the EUR 1,500,000,000 revenues in 2024 to get to the range of EUR 14,800,000,000 to EUR 15,500,000,000. And strategic and strategic and strategic. I would like to turn the floor over to the company for the final remarks.

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