Earnings Call: Q3 2020

Nov 13, 2020

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to our safe conference call to discuss the first order of 2020 results. This event is also being broadcast simultaneously on the Internet via webcast, which can be accessed on the company's ROI website. Ww.boy.coi.com.cr/ri together with respective presentation. We would like to inform that during the company's presentation, all participants will be only able to listen to the call. We'll put we will then begin the Q And A session. Computer instructions will be given. In case you need any assistance during the conference, We also like to inform that the conference that the conference call will be conducted in English by the management at our other company, and the conference call in Portuguese will be conducted via simultaneously translation. This conference call may contain some forward looking statements that are subject to no and unknown risks and uncertainties. That could cause such expectations to not materialize or diffuse materially from those in the forward looking statements. Such statements speak only of the dates they are made, and the company is under no obligation to update them in the light of new information or future development. I will now turn the conference over to mister Rodrigo, CEO. Please, mister Rodrigo, you may proceed. Thank you. Good morning, everybody. Welcome to our, q 3 call. And, as usual, it's always good to have you with us and talk about the progress on the execution of our transformation plan. Q 3 20, as you know, was the 1st full quarter under the effects of COVID 19 pandemic. So it's important to put that into context when looking at the results, but you also see that in our view, the company did a pretty good job in managing it. And, at the end of Q3, not only, we were gonna talk about the results, but also about the very significant event that happened to our transformation, which was the approval of our judicial recovery plan amendment at Boyd's 2nd general creditors meeting. This approval was already validated by the judicial recovery court at the very beginning of q 4. And this allows us to keep executing on our transformation journey and its key movements. So let's first take a look at some of the highlights of the quarter. Which as usual will be detailed in the upcoming chart. Turning to page 3, as we can see in q 3, despite the pandemic, The company continued to deliver, we believe, on both the operational and the transformational fronts. And the approval of the plan amendment was in addition to that paving the way to the sustainability that the plan, looks for. Starting with the operational results, on the top left corner, we can see that fiber had yet another stellar quarter. We had 1.75000000 FTTH customers reached with 7.9000000 Homes passed with fiber. And this continues to maintain the very fast pace of deployment that we have been showing consistently for the several last quarters. We reached an average of almost 150 k new customers, per month on the quarter. With an average of almost 400,000 new homes passed per month. And this, obviously, but the company on its track in terms of the strategy for fiber. Still on the operational fronts, talking about mobile in the left low corner, we can see that mobile, despite the pandemic, actually, has a pretty good recovery. And on a sequential basis, we had a 2.1% growth in postpaid and 8.2% growth in prepaid revenue despite the fact that overall, there was a little impact on year over year growth, for the mobile segments. The postpaid showed positive growth. The prepaid showed negative growth, but on average, the quarter showed very good recovery considering the pandemic situation. This all led to very good results in revenue. And we showed 3.5 percent of sequential revenue growth which obviously is a very positive feat considering the impact of the pandemic on on mobile revenue. We can see that this happened with a very good contribution from pretty much all segments, but we would like to highlight the residential segment which consistently had been a source of concern given the decline of copper revenues, but we can see that thanks to the very good performance of fiber, we are now on the positive route on the residential segment as well. All of that actually was complemented by a very good work on the cross site. We continue the progress of our simplification and efficiency efforts, and all of that lasts to almost 10% of OpEx reductions year over year. Which led to a positive EBITDA growth year over year of 2.4%. In terms of cash, Obviously, this is one of our key metrics, and the cash management management of the company actually did very well during the quarter. And we ended, q 3 with 5,700,000,000 in cash that's missing some of the concerns in terms of, the cash burn that, had been shown in some of the previous quarters. And finally, on a transformational side, the GCM approval led the unlocking of many of our M and A processes. And we now have, defined dates for the judicial processes that will, concludes the operations for the sale of towers, data centers, and our mobile operation. On the infrastructure company side, we continue to have our M and A process, firmly in course. And we would expect to actually have, the first results of that by the end of this year, beginning of next year. So next, turning to page 4. Let's look at some of the details starting with fiber. On fiber, due to the scale and speed of our fiber deployments, or it can once again content for the overall broadband market leadership. With a very strong competitive position. We always said that this was something that the company wanted to achieve by resuming its position on broadband due to the fiber operations, and it's happening. As we can see, we continue to outrun all of our large peers in terms of the fiber deployment. And if we look at, what happened during the last 12 months, We have now surpassed the combination of our 3 largest competitors by almost 17%. This consolidates our leads in the overall Ultra broadband market for all technologies. And if we look at the net add for Ultra broadband, which is above 34 meg on the third quarter in 3rd quarter, 20, we can see that we beat the second player by almost 20%. And if we look for the results in September, we can see that also we were the best performance in all of the broadband technologies and speeds for the first time in a very, very long time. Obviously, when we look at the scenario, the ISPs continue to do very well, but we would like to put that into perspective. In terms of the sheer number of, customers that we have been adding on fiber on a monthly basis and obviously looking at our less results of Q3. When we look at the top 5 ISP fiber customer base, we can see that, the largest player has a little bit over 500,000 subscribers And the top 3 player is already on the range of a slightly over 300,000 subscribers. But in that into perspective or during the quarter, added a top 3 ISP just by its fiber subscribers. So we continue to be very competitive, not only against the large operators, but also competing with small players whenever we are present. All of that led to a market share increase in Ultra Broadband. And by the way, we were the only company that actually continues to increase and push market share consistently quarter after quarter. So next, turning to page 5, Let's look at how this performance was translated into revenues for fiber fueled by continued efficiency and the rapidly expanding base coupled with the introduction of new plants, our fiber revenues have grown almost five times year over year. We can see that the number of homes passed has already reached a a very large number of close to 8,000,000 homes passed and we expect to close the year with around 9 million homes passed. In terms of homes connected, we are also already very, very close to 2,000,000 subscribers at this point in q 4. And we closed q 3 with, almost 1,800,000 subscribers. Looking at that, we can highlight as well the take up rates during q 3, which was above 22% getting very, very close to the 25 percent, plan that we had for 2022. So we're really accelerating the take ups and solidly on track to executing up the plan that we said we would execute on the fiber deployment. When we combine that with the new planes that were launched during the quarter, not only the 400 megabit bit per second plan, but also the 500 megabits per second plan, we can see that our base starts to shift slightly to higher speed plans So, during the q 3, we already had, close to 5% of our fiber customer base move into the higher end plans. And this led also to an increase in our fiber ARPUs of over 3%. We are already reaching during Q3 on ARPU of close to 90 AIs, 88 KIs, to be more precise. All of that led to very positive results in the revenue. And we reached over 400,000,000 in revenues and highlighting as well that B2B on the small and medium enterprises started to gain some traction, and we have a firm and solid plan to continue expanding this expansion. All of that was actually instrumental to reach an inflection point in our residential revenues as we can see on the next slide. On page 6, we can see that as we set in our plan, fiber would be the way to replace the old legacy copper revenues. And this is already happening. We see that fiber is poised to become the largest component of our residential re revenues, helping the segment return to sequential growth for the first time in eleven quarters. So it's a long time after, this happened, but now that it happened, it it is consistently happening, and we see a no return path for this inflection point. Starting with the the net adds, in terms of number of residential RGUs, on the left hand side. We can see that in Q3, for the first time, we now have a positive net adds for residential RGUs. And we look at when we look at the broadband customer mix, we can also see that we increased almost two points compared to the last quarter and, almost 30 points compared to, the third quarter of 'nineteen. And we have fiber representing already, virtually 40% of our customer base mix. In terms of revenues, we can also see that the revenue mix has been improving and fiber is already the number 2 components poised to become number 1 very soon, but we also can see that the fiber revenues have already surpassed all of the copper broadband revenues. And it's very close to reaching the copper voice revenues. When we look at the declines and, and growth, in all of the revenue components, Obviously, we continue to experience the decline in the legacy revenues at the clip of minus 31% on copper and minus 35% on, on copper voice minus 35% on copper broadband. And also with a slight, slightly less inclined curve on DTH of minus 14, but the fiber revenues grew 4 91%. And this led on the 3rd quarter, the residential revenue to grow sequentially 2.7 percent to 1.625000000000. Obviously, this is very positive and it saw due to the acceleration of fiber that continues. And, as we can see, our annualized revenues at the end of q3, for fiber alone are already almost 1,700,000,000. Obviously, this shows very good operational results they are coming and the fiber strategy is working. On the next page, on page 7, we can also look at the details of mobile. Any mobile, as you know, we had the segment that was hardest hit from the pandemic. But, we can see also that recovery started to occur still in q 3. Our mobile revenues, they resumed sequential growth in the quarter with a great resiliency of postpaid results, both on the quarter over quarter and year over year metrics. While prepaid obviously suffered a little bit more initially, but experienced a fast recovery from the early days of the pandemic. Oi continues to charge or have on mobile, not only on the results, but also on the innovation. And we did our 5 g pilot launch in Brazil. On the revenues, we can see that we have a 4.8 percent sequential revenue growth, and this was due to, a growth both in postpaid and prepaid. We look at the details year over year, postpaid continued to show a very good performance of almost 4% and prepaid was hard hit, often with 9.6 negative growth. But again, starting to show the signs of recovery and already growing sequentially. On postpaid, it's also wording highlight worth highlighting that our customer base grew almost 10% year over year. And on prepaid, we can see a recovery in the top ups. The top ups have gone down from, 1st quarter 20 to 2nd quarter 20. But they started to go up again on the third quarter 20. And we have a pretty good number considered considering the beginning of, of of the year. Next, let's look at B2B and wholesale on page 8. Both segments also fell fell the hit of, pandemic on traffic. But we can see that B2B, also is starting to recover from the early impact, especially on traffic, showing sequential revenue growth, in particular with the help of IT services, while the wholesale revenues, they also improved to stability with a recovery of non regulated revenues. And, as we we showed good prospects with increased sales to ISPs. On the b to b side, we can see that we had stability on the corporate segments, and and, obviously, growth on a sequential basis. And on the small and medium customers, we reached again stability from the second to third quarter 20, but, we are also working on a recovery plan that will benefit from our FTTH deployments also for the segment. In terms of IT revenue evolution, the highlights is that, we are already reaching almost a 190,000,000 in the quarter. It's a 50% compound growth since the launch of hoistole soy. Which points to the correct direction of our strategy in terms of corporate corporate revenues and obviously having IT increasing quarter after quarter as a percentage of our revenue mix. On the wholesale front, we also have a, growth considering, the results from, last year to this year. We faced, some challenges during the beginning of the pandemic, but the numbers, as a whole, they stabilize. And we can see that the unregulated revenue also started to increase again while the low speed legacy regulated revenue in particular due to the impacts of traffic had a slight decline. But, on the wholesale front, it's also worth highlighting that our net sales to ISPs have increased it dramatically. And when we look at the results compared with last year, it's almost a 400% increase. Showing that this is a very promising segment that we believe will be one of the basis of the growth and infrastructure for the future to come. So moving on to page 9, let's look at our cost efforts. And here, the focus on simplification and efficiency continues to pay off leading to progress, on digital transformation, further OpEx reductions, and a return to annual EBITDA growth on the OPEC side. As we already highlighted at the beginning of the presentation, we had an almost 10% reduction virtually in all cost components. And how did we do that? We did that through a combination of several different initiatives starting with digital first. And in this case, the pandemic actually helps to move things to digital faster, both internally and externally. And this leads to numbers such as 85% of reduction of the interaction story of our clients through digital channels, leading to a great reduction in terms of, the human contact which obviously is a more costly components of customer care. We also had close to a 140,000,000 in savings with front office and back office optimization due to robotization and automation of processes. And our customer care operation continues to deliver very good results on cost reductions. This was aided by innovative solutions such as the increase of the use of our digital assistance and over in artificial intelligence and also a very good increase in the usage of our self care solutions, such as On the structure and processes front, we also had some very important progresses during, the quarter. And in addition to that, right after the end of the quarter, we announced an incentive program for our workforce reduction that will lead to an annualized savings of over 200,000,000 next year. On the operational front, we also focus the heavily on efficiency in particular on the legacy costs, which led to OpEx reduction by virtually shutting down, all of the legacy portfolio sales. Reducing the number of legacy stations and migrating whenever possible from copper networks to fiber. All of that led to a growth in routine EBITDA of 2.4%. And it's important to notice that we also include increased the EBITDA percentage. Next, talking about CapEx on page 10, we can see that the CapEx strategy was a continuation of the things that have already started to occur since the launch of our strategic plan and the allocation profile of the CapEx continues to evolve in full alignment with the company's fiber strategy, obviously increasing the allocation to FTTH and reducing significantly the investment in legacy. As we can see on the FTTH compared to last year, we had a 20 points increase from third quarter 'nineteen to third quarter 'twenty in the allocation to fiber and a 13% 13 points reduction, on the legacy, in particular, the copper investments. Obviously, this is important, align with our strategy to, center the activities of the company around the core aspects of fiber. But despite the CapEx ribbon, our cash management was really tight as we can see on page 11. On page 11, we demonstrate that, we had a strong commitment to financial discipline, and this allowed the company to control the cash consumption Obviously, with the approval of the plan amendment, helping to ensure that the funding options necessary to deliver the execution of the transformation plan are now in sight. Both with the, execution of our M and A processes, but also with the reduction and deleveraging of the company, considering not only the repayment of that, but the restructuring of part of it. On the cash flow side, we ended the quarter with close to 5,700,000,000 in cash after having started it, with, just slightly over 6,000,000,000. So a cash consumption overall of less than 400,000,000. And considering the investment period that the company is going through to fund our fiber expansion, This is a very positive result. This was helped by the increasing roots in EBITDA. And we also had one extraordinary effect in the quarter, which is the anticipation of the CASTEL payment, the surplus of CISTEL, which helped us increase the cash by a slightly over 400,000,000. Obviously, we also continue to count on, the noncore, effects and, given the approval of the GCN, the noncore effects that going forward will continue to occur, coupled to the sale of some of our core assets. And this helped the company to bring in close to 200,000,000 during the quarter. On the debt, we see, in an increase, through 21,200,000,000 of net debt. And this was in effect primarily of the increases in interest, FX variation, and the fair value amortization increase due to the the the pro progression of the period of the debt. Obviously, we see all of that, under the lights of the, approval of our judicial recovery amendment. And, obviously, the sale of the UPI, so we'll we'll help us address a key concern of the company, which is that the funding of not only the investments for the time to come, but also to the reduction of the debt. And all of the projects continue working very well and progress seeing very well, towers, data centers, mobile, the infrastructure company, and also the initial phases, all of our efforts on TV. All of that will allow us to, adapt, leads to adapt to prepayments and deleveraging of the company both by repaying bridge loans and the NDS and by repaying local banks and ECAs already with a restructuring of 55% announced and approved during the GCM. In addition to that, we also have added, in the plan, funding optionality to do a funding transition during this period while we complete all of our operations by, resorting to some approved preapproved options in our plan to fund the transformation journey. This, has components such as a potential bridge from, the UPI mobile sale in an amount of up to 5,000,000,000. 2 other lines of 2,000,000,000 each. And the flexibility for additional funds guaranteed by the structuring of the infra company model that we have put together, which will allow it if if required to be re leveraged without any impact on the plan. So next, In order to do all of that, how are we tracking our transformation plans? And on page 12, you'll be able to verify that we're having that with a very structured and disciplined approach to ensure the successful transition of the model The company is carrying out an integrated execution of 15 transformational programs, covering virtually all of the aspects of the change that the company is going through, starting with all of the M and A processes, then looking at the creation of all of the structures we will represent the future of the company in terms of the infra company and the transformation of the new way and the creation of our so called client company. All the way to the efforts of the support areas in looking at digital transformation, transforming our organization. And, obviously, that being very firmly and very strongly on the regulatory agenda. Finally, go into all of the cost and cash initiatives. Such as a drastic cost out program in all areas of the company. The averaging of our legacy costs says we have announced several times before. A very deep review in our procurement processes and our actions to allow for short term financing during this transition. All of that is obviously complemented by the very, very close follow-up of the business execution management. With a TMO approach, which is the transformation management office approach that follows all of those initiatives with a great level of detail. So as we can see, we have lots of work for 2021. And on slide number 13, we can see what is the expected timeline that points to a complete transition of the model by the end of 2021. As we have highlighted already, during September, October, we had the approval of our plan amendment in our general creditors meeting and the confirmation by the judicial court of the plan approval. Now during November, at the end of November, we expect to conclude the competitive bidding process is for both the UPI Towers and the UPI data center. In mid December, we also had an announcement of the date for the competitive bidding process for the UPI mobile. And then we expect the closing with caching of both the towers and data centers. And starting next year, we will have, the infra company and TV company UPI auctions, and, finally leading to the closing of the large processes during q 3 and q 4. And all going according to plan, we already have, a set date for the end of the judicial recovery. Which is by October 21. So looking at all of that, what to expect in terms of where are we going by the end of next year. And on page 14, we can see that the company has and is executing on a very clear vision. At the end of the transformation process, or it will have 2 very strong pillars with clear and distinctive value propositions. On one end, the new OI, which will be an integrated company with technology and digital services platforms that will help people and companies transform their lives and businesses. And we're calling this client's company, a digital experience company. It's not only will be a customer centric company, but we will leverage on a very, very strong customer brand. And this can be shown in the launch of several new initiatives, by, this quarter and, last quarter such as the launch of the Oi Place marketplace for connectivity services and products by the launch of Oi Experts, which is our help desk service to all of our customer base, which is already gaining a lot of traction, but they continued acceleration of how it play which is our content play in terms of aggregating, streaming services by our point program, which has been completely renewed by the use of joyce, by the use of our help, self help, care, tools. And, obviously, by the launch of several new digital services to come. The possibilities are endless, and we can see that, not only we will do that to the, customer side, but also to the corporate side with the continued evolution of voice solutions. On the other end, we'll have the infra company, which without any question, will be the largest telecommunications infrastructure company in the country. Massifying optical fiber, enabling the, very rapid expansion of broadband, not only for the new way, but also for the entire country. Expanding and enabling the 5 g services through the use of our very capital fiber and, also enabling business services across the country. And we see that the infra company already has a mantra, which is one infrastructure multiple networks and all of the futures for the operators in the country. So the largest neutral network player enabling all types of connectivity services based on our extensive fiber network. So in closing, on page 15, We can see that we continue to successfully stabilize and improve our operations. We have already redefined our strategic model and we are delivering a very strong acceleration of our fiber optics plan. The approval of our judicial recovery plan amendment in September was, a firm validation of our ambitious model to accelerate growth. If we will enable the creation of the largest infrastructure company in Brazil, and we will bring back Oi to the long term sustainability that we all have been looking for. The structural separation model, we will allow conciliating both strong growth and financial stability, both for the infrastructure company and for OSA. And the plan amendment also allows for a significant injection of resources into the company through the sale of the UPI's help you secure both investments for the long run and a critical reduction in our company debt. And this transformation will be relentlessly showed through the integrated execution programs that we showed you and that we are executing on a daily basis. And having said that, We highlight once again that this management team and the board of directors continue fully committed to executing this new strategic model with, rigor and speed And not only we have this commitment, but we also have our full confidence on the successful execution of our plan. So in general, those were the highlights we would like to present for q 3. And, we believe that we will move on now to the q and a and section. Ladies and gentlemen, we will now begin the Q And A session for investors and analysts. Remember, that question should be asking in English. If at any point your question has been answered, you may remove your question from the queue by pressing the Our first question comes from Mr. Fred Ramirez. You may proceed. Hi, good morning, everyone, and thanks. Thanks for the call. I have two questions here more, for the FTTH. I mean, the first one, when I compare your performance, the FTTH with the the 2nd largest competitor, you know, definitely a really strong, definitely called attention. So I just want you to know Rodrigo here. Why are you seeing, you know, uh-uh, the main competitive advantage that you that you are seeing right now? And if there is any specific region, where you are performing better. I think the main goal is to understand how sustainable is this, let's say, a 150,000 homes gonna per month for how long we we can see that. And if there's room for improvement, this will be the first one. And then the second one on the same line you already reached a take a rate of something like 22%. I guess, the target, for the mutual long term is close to 25%. So I just wonder if there is room to revise, these long term targets, or if you prefer to be conservative, at this point. Thank you. Thank you Fred for the questions. And, while starting with the first one, we obviously have, have been having a very strong performance and, we believe that this is across the board, Fred. It's not a specific, in one region or another. It's, it's in the entire country. And, obviously, what we have been doing is, we have been doing a deployment that is based on a very, very fine grain approach and a selection of targets that we have done a while ago. Obviously, this points to a large demand based potential that we have seen in the entire country. As we have highlighted a few times before, We believe that this overall number, of of viable homes for, broadband in Brazil, is above 30,000,000. It's actually closer to 40,000,000, and that's, the reason why we have, in our plan amendment increased our targets for the infrastructure company to cover over 30,000,000 homes. And so, you can say that we're just starting because, in reality, we are still, less than 1 third of the way. And when we look at, how can we do that? What is the main competitive advantage? Well, the product, to begin with is a very good of advantage. I mean, we're competing, with, an existing customer base where people don't have fiber. Yes. That is based on FTTC, or is based on, on co ops. And, it's, unquestionable when you look at the quality difference in terms of stability, in terms of, off performance that we have a superior product. Obviously, when we compete, with a local fees and we when we compete with fiber directly, we can also point out to, our main competitive advantage being in the very strong performance of our overall core network. Remember that the product. It's not only what goes into the customer home, but it's also how this whole traffic is managed and carried out in the core backbone and the core backhaul. Obviously, we rely, we believe on the strongest, back on and back haul infrastructure in the entire country. And we don't have many of the limitations in terms of a traffic capacity that many or even most of those local players have. And this has allowed us to maintain a very consistent performance even during, at times of a great stress to network traffic, with increases close to 40, 50%. So it's a combination of, of, competitive advantages on the technical side. But then I can still point to, yes, 2, additional components. And we highlighted those before already. One of them is the, very strong sales channel that the company developed. Was, the only company to actually develop sales channels across the country in the entire country. As you know, is the only company that covers, almost virtually all of the the the country's municipalities. And this, even though, this is not being used to to sell copper anymore, and now we we highlighted that, obviously, the knowledge of the local channels and, the knowledge of how to work in the entire country has helped us tremendously. And finally, I cannot go without mentioning the deployment machine that we have. We do have a deployment machine that is based on a very deep learning curve that was done since the beginning of the project. And that also relies on a company that we control. It relies on said hedges. So what we control our field team We control the quality of our field team. We control the speed of our field team. We can, be very rapidly redeploy our field team to do work whenever it's needed, and and, more, productive for us. And, as such, it it's really a a very good combination of a lot of factors. There's no single, single, silver bullet here in terms of competitive advantage. And we believe that this is good because, in reality, it makes our growth not, not super easy to replicate. It's not just throwing money around. It's actually a combination of, a lot of things that have developed over time. In terms of the take up rate, just going back to what I pointed out in the response to your first question, obviously, we had plan when we launched the plan back, in the middle of 2019, we had planned for, reaching 25 up by 2022. So 3 years after the launch of the plan. And we'll certainly get there, way sooner And, when we redone the plan, with the plan amendments, and the separation, the structural separation, with the the increase in investments on the infrastructure company. We saw that, yes, this number can be increased. It can be increased for the infrastructure company. And, by by the same token, it can be increased at Boyd. So, we're we're looking at the number which is already higher than this. And, I would say that, it can approach the 30% take up rate. And when we look at the numbers for, both companies, the 30% take up rates, actually leads, to a plan, a few years down the road on the infrastructure company. To have at least the 10 million homes connected as part of its plan. And, obviously, we believe that the the vast majority, over 70% of those will come from from OI itself. But, we can also benefit, especially in the areas where OI directly does not operate from the growth in ISPs. As you saw, we highlighted in one of the charts that our sales to ISPs have increased tremendously. And we we could benefit not only from providing back on and backhaul, but also by doing partnerships with them and, and and selling the complete FTTH approach including the home connected. Perfect. Thank you. Thank you, Fred. Our next question comes from Mr. Marcellusosis from JP Morgan. You may proceed. Hi, good morning. Thanks for taking my questions. The first would be on fiber ARPU. You saw a good improvement. This room, to see further improvements as you continue to migrate clients to, faster speeds and also continue to add more products, to to RGUs per per subscriber. And linked to the first question is regarding DTH, which saw a sequential growth. So, I kept wondering, when you were adding these fiber clients, are you initially adding them, with DTH? And if that's the case, is there room for my to migrate into IPTV later and and boosting out the ARPU, Thank you. That that's my question. Thank you very much. Thank you, Marcela. On the fiber ARPU, yes, we obviously believe that, there is space to grow. And, it's a this is a combination of, obviously, having stable customer base that, that keeps increasing. And if you recall, we have been publishing the fiber ARPU and mentioning that while we continue growing at a very fast speed, the fiber ARPU, also will be, increasing just by, the sheree fact of the increase in the customer base and the fact that, as we add another 100 and 150,000 subs a month, this will be added over a base that is getting bigger every day. So, the impacts of dilution, we will we will already play a part in increasing ARPU and stabilizing ARPU around the higher numbers. But, obviously, when we look at the speeds and I, we we showed that not only, we have, reached the, an interesting number already with the product for 400 megabits second. That was launched not too long ago. We have now, launched that the 400 megabits per second we obviously believe that we will continue increasing, our launch in higher speeds. And this, will help us, move the the base to a higher quality base, in particular, those users that, were still looking for reasons to to to switch. And, when we move to higher speeds, one thing is, hey. Should I just, transition my 120 megabit Internet for a 200 megabit Internet. In our view, the answer is obviously yes because it's such a much better quality that, that, the the switch is worth it. But when you start launching the 400 to 500 and up, then the switch becomes more attractive and more clear. And this brings a customer base, a piece of the customer base, which is naturally a higher paying customer base. So, yes, we do see room to improve. In terms of additional products, we, have, started expanding the OI play approach, so the streaming services Obviously, IPTV will play a part in that, and then we will continue to grow. But, I would like to highlight that in the future, and, so the the part of the whole strategy of, the client company and the folk the centrality on on on customers and the focus on customer experience. We believe that we can add, additional components of ARPU, which are not necessarily telecom services. Now just to give you an idea, we have launched our, OA expert service, and the OA experts actually provides a number of services to the home in terms of helping eager and and and run and, and troubleshoot issues, with the home connection. And as you know, in many cases, the the issues are, actually, due to customer devices, we are, looking at, not only expanding our technology to be able to detect that automatically, but also to offer services to help consumers in their own homes. And this has already gained a significant traction. We are also launching other services, in in terms of, offers for the home. The OE place that will play a part in that. We are carefully curating products that can be offered to complement our fiber services. And, obviously, we see room to improve. In terms of DTH, no, we we have not used the strategy of actually going in first with DTH and then migrating to IPTV. The DTH strategy started, on its own, And, it, it, it helped that, obviously, with our local presence and pretty much follow the country, and a good, sales channel approach, we were able to expand DTH, in particular, in areas where there's no other in terms of, off TV services, not no fiber, not even cable. So it's a slot. I would say that it's a service that slightly more resilient than the segment as a whole. But when we look forward, without a question, the the the structural trend not only in Brazil, but globally is that the DTH TV, is, probably coming down. In our case, what we did to sustain this, positive performance was that we closed very good partnerships with installers. So and we, obviously, also closed the very good partnerships, with the companies that are helping us work on the electronics on the set top boxes. And this, has been, approving very helpful in maintaining our customer base and even now increasing revenue slightly in some cases. So, the the market, again, is migrating to OTT we'll see that, this migration will be negative in the long run to DTH, but it will be positive. To, to avoid fiber and to to streaming and to avoid play. And so, it's it's a very good performance but we see this as a natural component of the strategy. And also a little bit of the situation, as you saw, TV, had a a slight, less negative time, given the pandemic because the consumption of content increased during this last period. But we see it, with the structural long term, with the slightly, slightly, still decline, on the overall numbers. But, that's it in terms of DTH. Thank you very much. Our next question comes from Ms. Maria Seres Viveda from Santander. You may proceed. Hi, everyone. Thanks for the call and congrats for the fiber execution solution. Rodrigo, can you comment a little bit on how do you see the fiber ARPUs behaving more longer term? Do you think it's sustainable to keep the same levels as enter more challenging regions than UC room for even inflation pass through in the more longer term. And that will be my first question. And then as follow-up question. If you could comment on the CapEx for 2021, is it gonna be already mostly allocated under the infraquel vehicle and it will also be funded through that in that vehicle. Thank you very much. Thank you, Maria. Well, in terms of the fiber ARPU, I believe that, I touched on many of the points, to your question and, when when talking about the sustainability the the the increase given, not only the move to higher speeds, but to additional services. But in terms of, price pricing power and, and inflation, which is was the the 2nd component of your question. We obviously believe that there's always a fine balance between applying all of the, adjustments according to inflation versus maintaining the growth So, obviously, this is, carefully analyze on a strategic basis every every single month. But just comparing a fiber and, and fixed broadband in general to, the dynamics that we saw in the past in mobile. We're obviously talking about 2 very, very different scenarios. On, on fiber and on fixed in general, the switching is, is is is obviously a lot more complex. So it's not as easy to just go into a store and, and change a SIM card. We're talking about installation. We're talking about the the customer drop. We're talking about CapEx investment. We're talking about a a, more difficult process for the consumer, but also in, in particular, a lot more costly effort, by the part of the competitor when having to switch an existing customer. And this by by its turn naturally put some barriers into how aggressive pricing can be. It's obviously a one thing to say, hey. I have a plane flying here in the case of mobile and, the seats are empty. So let's just make sure that, the next ticket is is a cheaper ticket so we can feel the plane. This is not the case in fixed broadband. Then because in fixed broadband, you still have to actually add another seat to the plane. And you have to go and and, add the, the ONT, which is the customer device. You have to build the customer drop So it's not as easy to to to to go to pricing war so to speak on fiber. And, obviously, this helps, not only protects a little bit, the the pricing in the overall market, but it, it avoids, pricing worth and it helps to pass through some of the inflation. So, obviously, this is a market that is still growing. We believe that there's still a lot to be done in terms of, of pricing models. But we see less subjects to all of the very sharp fluctuations that occurred naturally in mobile. So it's it's a more protected pricing environment. On the CapEx front, yes, we do have, every year, we do have a greater allocation of CapEx two fiber as a whole. And, in our case, we do have, the, a higher number of CapEx going next here to the infrastructure company set up. Just, let's remember that when we talk about the infrastructure company, we don't expect to have this closed by by the beginning of the year. It's obviously at the end of the year. But, what we have been doing internally which we all we are already separating the operations, and we have different entities, actually receiving the investments and the, infrastructure company entity is already separate from the rest, and we're already allocating CapEx to it. And, and this is just a natural progression from the CapEx allocation model that we showed. So, when we look at the, over 7,000,000,000 of CapEx give or take that we have been talking about, every year, we're increasing the percentage of fiber next year will be no different. Plus, remember that all all going well and, the competitive process for the mobile sale at the end of the year. Next year, we'll have a a different, year in mobile. We're also obviously gonna invest in mobile because we need to, keep up our speed and performance, and now we're gonna do that. But in reality, we don't need to, to to to be concerned with, actually investing for the super long term if the operation is closed. And this will allow us to optimize that moving a a a greater part of the CapEx to to fiber. And the idea is, on the infrastructure company, to finance as much as possible of this CapEx, already with the the structure of, the infrastructure company itself. There are, several models that, that allows us to do that, even with the guarantees of, the shares of, the the the infrastructure company So even before we close, a deal of selling the the controlling stake. And, as such, we obviously, have it already planned for for the infrastructure company next year. It's also important to highlight yet another thing in terms of CapEx, which is what we're doing is not only increasing CapEx. We're also increasing the, efficiency of this CapEx. Compared to when we started the project back in, 19, we have already, significantly reduced our unitary prices on, installation on the ONTs, on the fiber itself. And this has been helping us to accelerate the, CapEx deployment, the fiber deployment. Without proportionally accelerating CapEx. So this is very important. The, unitary CapEx, numbers are showing very positive results Obviously, we gained scale. We gained an important scale, not only in the overall deployments, but, also, with, with, the, a sheer base that we have. And this has helped us to be a lot more efficient in, procurement. So, we we we do have that, well planned. And we believe that, probably I would say a number here close close to 70%. If not more, we will also be, we already be in the infrastructure company next year in terms of CapEx. Perfect. Thank you very much, Rodrigo. If I may just make a very last question, can you just comment on the strategy for 5 g in terms of the spectrum auction? Thank you. Sure. As as you saw, there were some, very recent news regarding the 5 g model. We're obviously analyzed that, there was a a manifestation from Manateau yesterday. And, we believe that 5 g approach it was is actually very clear. We do have a a view that, while we do not close the transaction. So until the moment we close the mobile transaction, our mobile operation will be an independent operation. And as such, we obviously will consider the participation on the 5 g. We do have, our plans, in terms of what to do with the spectrum should the the transaction close. Let's just remember that, on the 5 g front, obviously, 5 g, the the the on especially on the 3.5 gigahertz spectrum, is, used, certainly for mobile services. But there's a very good potential as well, especially if you consider, some specific regions in the country to use that spectrum to provide, AWH service, fixed wireless access service, in particular, in the areas where the density to provide a full fiber coverage, on the retail front it's still not there. So there are areas where we do have fiber coming up to the city, but, it would be less effective, or, less with slightly less positive turns. Not the returns would not be positive, but slight slightly positive returns. In terms of actually deploying fiber all the way to the end. So the 5 g is an option for a fixed wireless access. And we believe that, we should be able to to look at the the auction and, make our decision, whether to participate and how to participate having this into consideration. We also believe that, obviously, looking at 5 g, there's a a second component, not only the spectrum itself, but, we believe that, it's positive to have the 5 g auction resolved, in terms of its model in terms of its, its definition of timeline, which is the use of fiber itself. So, the the, speed up of the 5 g deployment will help us accelerate the wholesale services of the infrastructure company. We believe that the there's absolutely no way, in which 5 g can be deployed, all over the country without using significant amounts of the infrastructure company fiber services So, all in all, this is the approach. But obviously, the news, the very recent news of the model of, the auction, are just under review right now as we speak. Perfect. Thank you very much, and congratulations again. Thank you. Our next question comes from Mr. McCarthy from BTG. Hi, good morning. Thank you for taking my questions. I have a couple, please. One is, can you give us an update on, on solutions we're gonna tell to move on a post credit to the new new legislation, please, and also on the same, you know, line of discussion. There is this new another piece of legislation that the for the former PO 6229, which is now in the senate. And, and then the question here is, you know, what are the benefits of this new legislation of approval to OI. And the second question, and I'll make them together, Second question, relates to OE's mobile, you know, the option of the mobile division, what does it say, which is now scheduled for December 14th. So would the sale be booked in 2020? And and and if so, the taxable gains that are going to be generated by this transaction would be fully compensated by the accumulated losses of 2020. Okay. Thank you, Kado. So, on your first question there, Anna, tell credits, we're, well advanced into the process, as, you recall, Anatel not only, favorably recognized the the Bozu, which was already, formally submitted to the AGU. So much so that they voted in favor of our restructuring plan of the amendment to the restructuring plan. And, obviously, we are now just on the final phases of having that settled about, closing the transaction. The expectation is that we'll be able to sign this transaction with the AGU, very, very soon. And then it moves on to the final signature of the ministry of communications. We have already discussed this, both with the AG and with Anatel, and, with the the the minister itself, the ministry itself. And now we believe that there will be no issues in that the transaction should be signed this year. About the 6229, as you know, this is in the, in the, the agenda for voting in the upcoming weeks, there was the definition of a new reporter the the reporter mentioned that, yes, there are some things that need to be reviewed. The it's a central, Rodrigo Pacheco, but, in reality, as everybody believes that, this is an important project, especially for this year given that, the pandemics has brought unfortunately, an increase to the number of companies that have filed for, for a judicial recovery. So there is, there is we believe political will to have the project approved. It will be a beneficial project, for, the country and it should be approved. We believe, still this year. If not, now in November, what we believe that, before the the the break, the end of the year, this project should be approved. Obviously, the project, is a positive because, in particular, for our case, the the project brings the possibility of migrating, our existing transaction that is being discussed, and signed with the AGU and, and Anatel, to more favorable conditions. If you recall, our, on a tell credits, have been taken out of the, plan, and into, law 13 988. With a 50% discount in 84 months. And, this new condition under law 6229, I went approved, and and our already allows us to actually move to this more favorable conditions if approved. We would be able to actually increase, the haircuts to 70%. The overall discount on the debt to 70% and increase the terms of payment to a 120 months from, from the, 84. Obviously, there will be, positive things in terms of additional positive things in terms of the 6229. And, the 6229, we'll we'll help all companies actually to avoid the the, almost absurd situation where a company and their judicial recovery is actually paying tax on capital gains, which which doesn't make any sense if, obviously, there is some tax credits to be used. We believe that those 2 will be very favorable And, as far as your last question, remember that we need to, to close the transaction. But, but, obviously, our per actions show that, when we look at just the isolated, effects of, our operations as we have them today, we have, ample space to accommodate for for some of the the gains. So, unfortunately, the, the the tax credit in terms of, tax loss carry forward for us. It's it's it's enough, and, and the the separate companies, the separate entities to accommodate and compensate for, the transactions that we expect in the short term. Thank you very much. Our next question Hi there. Yeah, 2 or 3 quick questions, please. Thank you. First of all, just back to fiber first. Swomit, I guess, Swomit has dropped from the connection. As there are no questions, I would like to turn the floor over to the company for the final remarks. Thank you. So, well, we'll we'll make sure to take, Sumit's question, later on, and we'll we'll follow-up with him. So, his questions don't go and answer. But, overall, thank you guys for, another call. We continue, again, as we highlighted firmly committed to making this plan work. We have the full management team and the full board really committed to it. We believe that the results have been good. We believe that there's still a ton of work to do, but given what we were able to do over the last eight 18 months in terms of delivering on the plan. We believe this will continue to be the case, next year as we prepare for the final phases of our restructuring. And so, thank you for participating with us in the call. We hope to talk to you soon, in our next earnings call at the beginning of next Thank you. Have a great day. This concludes OSA's conference call. We would like to thank you for your participation. Have a good day.