Earnings Call: Q4 2019

Mar 26, 2020

Good morning, ladies and gentlemen. Thank you for standing by and welcome to OASA conference call to discuss the fourth quarter of 2019 results. This event is also being broadcast simultaneously on the Internet via webcast. This can be accessed on the company's IR website, www.oi.com.br/ri together with a respective presentation. We would like to inform you that during the company's presentation, all participants will be only able to listen to the call. We will then begin the Q And A session when further instructions will be given. In case any assistance during this conference, please request the operator by pressing the star 0. We also like to inform you that this conference will be conducted in English by the management of the company and the conference call in Portuguese will be conducted via semitism's translation. This conference call may contain some forward looking statements that are subject to known and unknown risks of ink and uncertainties that could cause such expectations to not materialize or differ materially from those in the forward looking statements. Such statements speak only as for the date we are made, and the company is under no obligation to update them in light of new information or future development. I will turn now the conference over to Mr. Rodrigo Gabriel, CEO. Please listen, Rodrigo. You may proceed. Hi, everybody. Good morning and welcome to the 4th quarter 'nineteen conference call. And for obvious reasons, this is not typical call because we are not in the middle of any ordinary period as we all know. So recently, the challenges of the new coronavirus pandemic are impacting the entire globe in Brazil with no difference. But we believe that in the middle of all of this, we have kept our focus and we continue to move forward. While at the same time, we have a conscience that OI and the entire telecoms system and not only in Brazil, but across the globe is an important contributor to help us overcome this immediate challenges. And in our particular case, with our infrastructure, with services with our enormous commitment from the entire team, we believe we're going to help make it pass. But let's talk about last quarter and also about last year results and how they reflect the execution of our strategic transformation plan. So moving forward to page 3, We can see that, during the fourth quarter, we have several highlights that intensify the execution of our strategic plan. And allowed us to go into 2020 with a very solid base. As stated before, we have 4 key pillars to executing our plan and they represent here in the boxes in the chart. The first pillar is the funding. And on the funding front, we know from the last call we had in the third quarter that going into the end of 2019 and beginning of 2020, we had several challenges. But, gladly, we were able to overcome many of those challenges and successfully executed an enormous part of our funding challenges. We closed the Unital View. We received the PISCOFINS tax credits We received a surplus distribution from our pension funds. We were able to close $2,500,000,000 in a bridge loan at the very end, very beginning of the year. We started our real estate sales process and we still have several things to come. But in reality, looking backward, we believe that we achieved close to 80% of what we were planning to do in terms of funding. The next pillar, obviously, is what we should do on a daily basis is the operations. And on the operations, we believe we have very good operating metrics. And in terms of the highlights, we can obviously point to the very good performance of FTTH and we will talk about the details later. We can talk about the great showing that our mobility operations had during 2019. We can talk about the progress in B2B and in wholesale, we can finally point to how we're going to resolve the copper decline, which, as we know, is a structural thing that will happen to our industry. The 3rd pillar is based on efficiency and simplification. As we had stated, when we announced our strategic plan, we had several areas of initiatives to reduce cost of the company, bring the company to a more lean operation, look at all of the different challenges we have to reduce cost and provide sustainability going forward. And finally, the last pillar are the strategic options we have as a company. When we weave everything together in terms of funding, operations and efficiency, we have several strategic going forward. And we also had several recent developments on the strategic trunks. As you know, at the very end of 2019, we have applied for a judicial recovery extension. And this judicial recovery extension was granted to us and this will allow us to hold a general creditors meeting in order to obtain some plan amendments to give the company more flexibility with this GCM being expected for the second half of twenty twenty. We also started a market sounding process, so for understanding the value of our mobile in case consolidation occurs in the markets. We started looking at several different strategic options for value maximization and progress looking at our fiber operation and how more and how can we receive more investment in the operation? And we also started a full regulatory campaign to help define the future impact of PLC, the new Brazilian thousands law. And how this will help us address many of the sustainability issues in the concession in the copper business. So let's look into the execution of those. Starting with the operation and in particular, as our first highlights with fiber. Moving on to the next page, page 4, we can see that, obviously, we know fiber is at the core of the strategy, but the fiber project implementation after the beginning last year reached a crew speed of around 400,000 homes passed and 100,000 homes connected per month, leading to great results in terms of operating metrics. As we said, the plan would be, we looked at the homes passed and said that we would get to over 4,500,000 homes passed at the end of 2019. And so we did, we got to 4,600,000 homes passed. Looking forward to fourth quarter 2020, We expect this number to go all the way up to north of 8,000,000 homes passed already. Next to the homes passed, the biggest metric that we have is obviously homes connected, which convert homes passed into subscribers. And the results here have been tremendous as well. We can see that we started the year with a very small number of, under 100,000 subscribers and we ended the year with close to 700,000 subscribers in Triber. And if this 2020 with close to 2,000,000 homes connected and a take up rate of close to 20%. This is absolutely in line with what we said we would do in terms of our percentages for homes connected in the plan. Which have a target of addressing 25 percent homes connected by the end of the 3 year plan periods. The next good operating metric that we were able to show as well, regards the FTTH ARPU. Our plan calls for an 85 ARIs per user ARPU and we were able to deliver this ARPU almost to the spot. We look at the published ARPU of BRL 82.3 per subscriber But when we do the pro form a adjustments for the promotions of the 1st month and the pro rata of the incoming customers, which obviously don't have revenue for the entire month. Given the big growth that we have experienced, obviously, this goes back to the 85. And finally, we look at the impacts on revenue. On the revenue front, all of that has led us to come from a very, very small revenue in 2018 to over R100 $1,000,000 of revenue 132 to be more precise in the fourth quarter of 2019. And with the detail that will actually help us in another part of the business, in addition to the residential, we can see that the revenue breakdown already shows a component of SMEs as part of the fiber revenues. Finally, all of that was achieved at our cost guidelines. We have been able to implement the Homes Pass, the Homes Connected respecting the cost guidelines that we have announced during our plan last year and even reducing these cost guidelines by a significant amount. We believe those are great operating metrics and the project barely started at the beginning of 2019, accelerating by June. And we can see that, in fact, now we have a winter project going forward. On the next page, we can see that these results in terms of benchmarking already make our projects 1 of the largest fiber deployments globally, both in terms of speeds of homes passed and in terms of new customer connections. If we look at the benchmark comparison with Q4 numbers and then we got 4 benchmarks here to local and to in the United based markets, we can see that the number of homes connected that we showed during fourth quarter was enormous compared to any player both local as well as international. And as a result of that, in all the first seventy two cities where we have FTTH, we have showed a very consistent broadband revenue growth. And this is not only able to revert the trajectory in terms of broadband revenues, but to alleviate the revenue profile change we are experiencing. And in the next page, we can start to look at how this profile change is behaving. On the revenue side, obviously, we continue to be a big shift. And with a strong FTTH revenue growth, We are now at a 7.2% share of total residential net revenues in fiber. Obviously, the declining legacy continues, And it reflects not only the structural trends, but also our revised approach to copper. We know this copper will structurally go down And in order to actually be very efficient when dealing with this decline, we have reviewed everything we are doing on copper in particular in terms of costs. We stopped selling proactively copper. And obviously, this may have an initial impact in of just keeping this decline at the very step pace. But looking forward, it will bring much better revenues for us at a much more efficient approach. When we look at the specific metrics, on the copper front, we know that copper is going down and it continues to go down very fast. We can see that between the fourth quarter of 2018 fourth quarter of 2019, we had a close to 26% decline in copper voice revenues. And, of course, the 21% decline in copper broadband revenues. So structurally, copper is going down regardless of which service is being served on top of it. Also, structurally, DTH is going down, even if not as in an accelerated base as copper, but structurally, it will go down. We went down probably less than the market, but still show the decline of close to 3.5%, 3.3% to be more precise. In fourth quarter of 2019. With all of that, we can see that FTTH revenues is the best to actually compensate this in the mid to long term. And now we have a great performance in FTTH revenue. With a 700 plus percent growth. Although obviously with a much smaller customer base, the year over year growth in fiber revenue almost already offset the decline in copper broadband revenues, and this is going to happen anytime soon. And with the follow-up of the number of HomesPass and Homes Connected. Obviously, we expect that the FTTH will be the big single component that we'll be able compensate the declining legacy revenues. As we have started in the last quarter, on the right hand side, we present the entire profile of our residential revenues and how they have been changing. Obviously, we can see that on the gray bars, We faced a 19% combined decline of our legacy revenues. But on the green line, which represents the future, as stated, an APAC increase in terms of revenue. And this represents not only a path to achieving or getting close to $1,000,000,000 revenues this year, but look into next year with a great potential of our reverse in this revenue trends. Most likely, this year, still impacted, obviously, the revenues, but this year, 2020, But FTTH can shift this and we have confidence in making it happen with our current trends of FTTH performance. To our second business component. Now let's talk about the mobile performance in the next slide. So moving on to page 7, we can see that mobile also had a great performance in 2019. Our mobility revenues reversed the trend presenting growth year over year, year over year, driven primarily by our robust results in postpaid. As we have been calling the attention to our performance, the full year 2019 postpaid share of net adds for Oui was the 2nd best in the market with 31%, well ahead of very traditional players in the mobile space. This obviously lasts to a significant growth in our postpaid customer base, over 23% growth in our customer base. Which also has a good quality coming into it. When we look at our postpaid FPD trends, the first payment before trends, we can see that we achieved this, big growth while reducing the FPD trends and maintaining the stability of our bad debts. All of that's translated into great postpaid revenue increase of close to 15% and a much better revenue mix on mobile overall. With all of these results, even with the prepaid shrinking and it's shrinking pretty much for the entire market, we can see that we gained shares, both in prepaid as well as in postpaid, gaining share in a mature market is something extraordinary difficult. And obviously, we know that, this is a significant achievement for our mobile business. All in all, after all of this, we can see that we grew our mobile customer revenues, even with prepaid shrinking, as we mentioned. So now, next page, let's look at B2B. Moving on to page 8. You can see that our B2B revenues are also back to growth. Especially due to the good performance on corporate sales of digital and IT solutions. As we have announced at the end of the year during Q4, we relaunched our corporate operation, branding rebranding it, OI solutions. And the OI Solutions has not only a very dedicated approach to the corporate segments, but an extensive portfolio review with a renewed emphasis on IT and new solutions in addition to a new organization that's entirely focused on the corporate markets. We can see that this already started show us very positive trends starting with the corporate revenue trends, which presented growth. The corporate revenue mix which presents a big increase in the IT component of the revenues, transforming us into a much more integrated player in the segments. And if we look at the IT net revenue trends, we can see that the trend not only accelerated, but continue to be at the very fast pace. All of that led to a growth in corporate revenues of 17% give or take, even while the SME revenues had a reduction of 25%. We know that the SMEs are still facing a turnaround in terms of our operation and suffers from many of the same issues that the copper business presents. But this turnaround will be faced also with the help of FTTH as in one of the previous charts, we already showed that we started to sell FTTH connections into SMEs as well. All in all, we had growth in the total B2B revenues, albeit a small growth because of the SME decline, but we believe that it's going to be possible not only for us to continue to sustain this business, but still for moderate growth in the near future. Finally, the last component of our core business and 1, which is greatly based on fiber is wholesale. And we can see the wholesale result in the next page, Page 9. 2019 for wholesale was a transition year. It was a transition year where our strategy focused on the unregulated markets coming from a very high percentage of regulated revenue before. And we are now leveraging our infrastructure leadership and offerings for high growth demand areas, which happen to be all unregulated. We see that the regulated revenues had a decline of 40%. The unregulated revenues remained stable and our infrastructure rental revenues grew by over 20%. When we look at the unregulated revenues, we know that this stability is going to a shift in profile of our approach to the market. In particular, to bringing renewed emphasis to the wholesale business, which in the recent past was not one of our primary focus of performance and attention in the markets. With our new portfolio, we expect the wholesale to face great opportunities in fiber to the ISP, fiber to the tower, fiber to the city, and also when launching a franchise project to address the several different areas in the country where we will not be able to get directly with retail connections. And obviously, they represent a tremendous opportunity for us. All in all, the wholesale revenues were relatively stable, and we consider the mediation impact adjustments of our 1 off adjustments from previous contracts. We can see that we even grew a little bit. And the revenue mix is now going forward much, much healthier than before. Finally, let's look at how we're addressing the legacy challenges, which come with the concession and everything that's associated with our copper businesses. On page 10, we can see that, when talking about our revenues, legacy will structurally go down and now we know that this is a fact So the only way we can address this is by looking at the cost reduction in the legacy businesses facing full on the current concession shortcomings. We know that most of the issues we currently have of reducing costs in the copper business are associated with how the concession actually imposes many obligations to us in serving fixed voice. And ultimately the impact it has and generating negative returns for us going forward. Here in this chart, we have tried to graphically detect what is always concession timeline and how it has behaved over 3 different periods over time. The first one was at the very beginning of the concession, a period where a lot of investments were done to meet the regulatory demands. The second one was a period of a fast growth and a lot of returns in terms of a CAPP the growth of the market, in particular, not only the voice market, but the copper broadband market. But this second stage was also marked by a maturity and a decline of the concession results due to a number of things, including increased competition, the arrive of new technologies and the decline of copper as a viable technology, the change in the customer's consumption profile. And in particular, especially towards the end of the period, due to a lack of adequate regulatory evolutions, including heavy obligations, heavy fines, heavy SLAs, pay phones and the like, which put the concession at the market's disadvantage and in an unsustainable return position going forward. Finally, the 3rd period is the period we're now currently in and it started some point around 2016. And we can see that the concession returns are no longer sustainable because there is a deep imbalance between revenues, costs, CapEx, obligations and cash needs. What do we do to address this? Because as we saw pretty much all of the components of our core businesses in terms of fiber as well as mobile are having very good operating metrics. How can we actually apply the same logic and reverse the negative results in copper and the concession here? We are looking at 3 different things. And our first thing is a project I'm going to comment in the next page about, which we call the averaging. Which is really analyzing the problem in its many individual components and not just looking at the average results of the combined copper revenues and costs. The second is a very, very proactive approach to regulatory action and we know that with the approval of PLC 79 last year, we have a very good first step into helping us address the regulatory issues the concession, but we still need to regulate the NFL still needs to regulate the PLC and this is going to be done during this year. So we are interacting in a very proactive way with the regulator in order to provide our contributions on how we can turn this issue with the concession forward. And finally, we are adopting a number of operational efficiency plans to mitigate the negative NPD impact generated by the concession operation today. So on the next page, we can see what is the averaging that we are talking about. This de averaging means detailed big data analysis of all of the revenue and cost elements of the concession, including an approach of its very granular level of the individual central office source station, throughout the country. Throughout the country, we have almost 18,000 central offices and stations. And when we analyze them individually understanding which revenue they generate how many customers we have in each, what is the individual maintenance costs of each, what are the obligations we have in each we can actually split this 18,000 central offices and stations into different groups, which are a, a profitable group, we're obviously, we have to still selectively invest to protect our customer base to preserve cash as best as possible. A second and third group, which are not profitable, but can be optimized. And, in the second group, we have interrupted all of the proactive sales copper to reduce the running costs going forward and to the extent possible also optimizing maintenance costs. And the last group, which is a group that's intrinsically impossible because of a critical lack of scale, we have to adopt a carrier of less resort mechanism in sync with regulatory evolution because we believe it doesn't make sense for the company to continue to have obligations in areas where there are multiple alternatives to provide a service to cover for the voice needs of the entire customer base. So with all of that, we know it's not an easy project, but we are investing a lot in it because we believe that the potential cash cost savings of this approach will be in the range of $500,000,000 in the short to medium term. And close closer to $1,000,000,000 in the medium long term. To allow for all of that, we need to be very efficient with our CapEx very efficient with our operation, very efficient with our cash, very efficient with our financial metrics because we are still in the middle of a transition period for our numbers and our financial metrics. Gladly, we are see and we are presenting and demonstrating that the operating metrics have been here. When we talk about the financial and the CapEx investments and the cash results, I'd like to talk to turn over the work to Camille, our CFO, And she's going to lead us to the next slide to talk about CapEx, cash, and our financial results. Camille? Thank you, Rodrigo. Good morning, everyone. Thanks for being on our call. Going to our CapEx on Slide 12, we closed 2019 with R7.8 billion dollars in CapEx. This was a 29% growth with respect to 2018. This increase was driven by our strong fiber deployment that we believe we talked about in the previous slides throughout the year, fiber investments represented 39 percent of our total CapEx in the year of 2019. On the other products, we managed to leverage on our popularity and existing infrastructure and also to optimize CapEx and reduce CapEx across all other products except for B2B, which presented a slight $166,000,000 increase necessary to support corporate revenue growth that we also saw on the previous slide. Our plan for 2020 is to optimize our CapEx even further reaching a total $7,000,000,000. But more importantly, we are increasing not only the percentage, but also the total amount that to our continued fiber deployments. OI is already present in 2200 Cities with a fiber transmission network, covering roughly 55,000,000 homes. This enables us to significantly accelerate our FTTH deployment. With our reuse model, we are able to be much more efficient in terms of time to market in new cities. We reached FDA presence in 80 cities already in the end of 2019 and plan to be in an additional 44 new 44 new cities in 2020 with presence in all states of the country, except for Sao Paulo as our strategic plan. Moving to Slide 13, we're going to talk a little bit about our funding strategy and cash position. As Rodrigo mentioned, the recent successful at of our long term funding strategy enabled the company to migrate to a much more comfortable cash position in early 2020 which allows us to fully focus on the execution of our strategic plan for this year. Although we closed our official 2019 balance sheet with a R2.3 billion dollars cash position, which is close to what we consider the minimum level for us to comfortably operate, this was due to the slight delay in the closing of the sale of Unitil, which we have been planning for end of 2019 and ended up occurring right after the end of the year on January 24th. We received $760,000,000 in the closing of Unitil on January 24th. And already received 2 of the 6 remaining $40,000,000 monthly installments in February and in March and expect to continue to receive before remaining installments until the end of July. In early 2020, we also disbursed the additional 2.5 credit line, the bridge loan, allowed in our JLR plan and sold a piece of real estate in Vodafone for 120,000,000 high. With the January Unital proceeds and these 2 other transactions, our pro form a cash position would have been BRL8 billion. Our debt position increased to R18.2 billion dollars during the quarter. And this was mainly to natural movement in our debt interest accrual effect variation and the fair value amortization, and in our net debt reach for R15.9 billion dollars in the quarter without, let's say, the pro form a cash adjustments. Having said that, we continue on our funding strategy with the short term expected catalyst being the sale of mobile towers, which we are on track and expect to be able to announce in early April, the sale of the data centers, which we are in the middle of process with the announcement still expected for second quarter 2020 and the real estate efforts, which we and we'll be able to make sure that we're going to be able to make sure that we're going to be able to make sure that earnings call, and we continue to use it at a pace of around R100 $1,000,000 a month. And we are already and we already started to receive the monthly payments of the announced T cell surplus for a total of BRL 669,000,000 and we are receiving the monthly installments at a pace of R19 $1,000,000 a month and that already started in December. And keeps on going. Moving to Slide 14, let's look at our at our office. Operational efficiency and the digitalization initiatives already started producing cost savings. We managed to optimize all cost lines in fourth quarter 2019 with respect to fourth quarter 2018 except for marketing costs, with a $19,000,000 increase, necessary, to support our growth, mainly in fiber and mobile. Our EBITDA reached R4.51 billion dollars in 2019, a 1,000,000,000 in the quarter, 4.5 being the bottom of our guidance as we had anticipated in our but within our guidance as we had anticipated in our third quarter 2019 release. With that, I'll turn the presentation back to our CEO. Thank you, Camille. Well, we talked about funding pillar. We talked about the operating metrics. We talked about the results that those operating metrics generated and the financial results. So now let's talk about on Page 15, our 3rd pillar of the plan execution, which is efficiency and simplification. And in the fourth quarter, we kicked off many initiatives as we said we would. And as stated before, in key different areas of efficiency and simplification. Starting with sales, marketing and customer service, we continued on our portfolio simplification, reduced the legacy portfolio and accelerated the digital sales channels as in 2020 annualized numbers of between $150,000,000 $200,000,000 a year. In particular, here I'd like to highlight, as I already mentioned, the complete interruption of the proactive selling of copper services. In the first moment, while this release is obviously the number of copper users and, pretty much accentuates the decline in the copper customer base It generates value for us because it reduces dramatically the cost in terms of copper sales. And in the end, this will provide value to the company in terms of cash preservation. On the second area, process and organization We continue with our ongoing simplification efforts and organization changes are being implemented. Tomorrow, we will now slight changes in our organizational structure with a dedicated focus on transformation and digital with a dedicated focus on wholesale and franchises and with a simplification of our structure overall. Through a review of the company's processes and the implementation of a centralized automation initiative, We expect as well to have in 2020 and annualized impact again between $100,000,000 $150,000,000. On the business support front, we kicked off many different initiatives, including the implementation of CSC for coming support functions across all companies, not only OI, But, as well, our service companies say, hey, you connect and BTC C call center. We started a supply chain efficiency project at the very beginning of 2020 and we expect significant results from it in the mid to long term. We started back office reductions throughout the nation and extension of BPO contracts, and we also kicked off many energy efficiency initiatives including a recent contract but for our self generation. All of that, again, looking at 2020, we'll have an estimated annualized impact of between $150,300,000,000 $300,000,000 a year. On IT, we already reduced or interrupted that most of our IT legacy projects And this has a rate of reduction in new IT projects over the last quarter of more than 50%. This is significant cash savings and as well a way to point to a new IT spec for fiber operations, which is leaner, simpler, and more efficient. We also elevated our digital initiatives to the company wide effort, as already mentioned, to a dedicated unit as part of our operating structure. Finally, on network and operations, we continue optimizing decommissioning legacy networks And in particular here, the de averaging approach will help us tremendously to reduce operating costs in the field and decommission of legacy equipments. All of that has led to metrics that start to show progress and we provided several different metrics selected metrics on the right hand side where you can see the progress in many of those fronts, including the percentage of our fiber and broadband activations, which, grew 60%. The percentage of our residential base is flat rate terms of portfolio simplification, which had a reduction of 30%, an improvement of 30% sorry, The call volume is human customer service, which had a reduction of minus 20%. The percentage of digital invoices, that had an increase in 14 percentage points bad debt that went down as a percentage of revenues. The energy costs that have been reduced, the percentage of Agile IT, which has increased significantly. The percentage of repairs by FTTH customer base that went down. The fiber technical supportability of channels that has increased tremendously. And hero curiosity, out of the last 2 weeks, when we initiated this corona crisis, our, the downloads of our a virtual technician through a mobile app that increased by 200%, reaching levels of close to 200,000 downloads. And the percentage of repeat the technical calls that also continues to go down. So all in all, we continue to present a very good operating metric to that demonstrate that we are making progress in terms of cost reduction. But before closing, We really need to talk about the current crisis scenario. We know it is expected for us to talk about it. In the next page, we can give you a view of how we're facing in at the current moment. So moving on to page 16, we know that for all of us, this is an unprecedented global scenario. It quickly escalated to a global pandemic crisis. It provided shutdowns. It provided fear And overall, it provided a great level of uncertainty. And we know this uncertainty needs to be addressed. In the face of the global dynamics, what we did 2 weeks ago or over 2 weeks ago is we quickly established a crisis response team we have a crisis room. We have a crisis committee and we are focusing both on ensuring the full business continuity for the operations of the company as well as a formal process to monitor, analyze and respond to the potential impacts with appropriate contingency plans in all fronts. And here, I'd like to highlight 2 very different fronts in which we are taking those measures. The first one is obviously on operations and business continuity. And above all, our key priority when we established that all of this crisis monitoring and committee was, was and is our people. We, obviously, are very concerned about the safety of our people. We have taken all of the different measures to be able to protect our team, to protect our employees, to protect our partners. We have provided support to our few teams, which we know are part of an essential service in the middle of this crisis. We have taken measures to adequate our call center operations. We have initiated a company wide home office effort that has now more than 70% 70 percent of our employees are working remotely in a record time. And this has been our key priority and it should be and should continue to be our key priority. Going forward. But obviously, in addition to that, we also have a great attention to our network and field operations to our infrastructure which we know is going to be critical to help us all support the great challenges that all companies and people have during this difficult time. In terms of our network, I'm glad to mention that we operated very quickly to engage into our monitoring of the demands on our network to very quickly activate new circuits in our backbone. And so far, we have not only been able to maintain the quality of our network, but we have been able to contribute to the stability of the connections in all of our services. We have also looked at our business report. We have also looked at our customer care operations and in particular, we have communicated very extensively both internally and externally. Finally, on the operations and business continuity, and I know that this may be a question that many investors have, is what is happening to our commercial operation, both in terms of sales and revenues. And here, we believe that the telecom sector, fortunately is on the right side of the demand curve. I mean, in the middle of this crisis, our services are more necessary than ever. And we can see this in the increased attention and demand for fiber connections, for example, both from individuals and residential fiber connections, as well as from companies and enterprises trying to establish remote work operations. Obviously, we also know that there may be an impact here in terms of the ability to pay of many of our low income customers. We know that there will be challenges in terms of continuing sales operations in particular with a restriction of movements for a short period of time going forward. But we have, weekly reestablished the priorities of our operation to maintain and sustain the rate of our, commercial operations to as close to normality as possible in particular on the fiber operation. And we have been able to do that so far. On the mobile phones, though, obviously, the mobile phones suffers in terms of sales because of the closing of stores and the restriction of movement. But in reality, this reduction in terms of our mobile sales also come with a corresponding reduction in churn. As pretty much the market is stable. In this regard, here, I'd like to highlight something that all of our, the operators in Brazil, all of the 4 large operators and the additional operators in the Brazilian telecommunications ecosystem have done. For a moment, we have built competition in second plan. We have joined forces. We are working together on a daily basis to guarantee that the Brazilian telecommunication system is, in fact, a relief during this moment of crisis. And we have launched a joint campaign to support all of the different requirements in terms of communication needs during this crisis in the next weeks that we're going to have to face together. The second component of response is obviously the strategic response. And we know that while it's absolutely critical for us to maintain our operations and business continuity. We also have to analyze what does this meant for us in terms of strategy in terms of the financial analysis and in terms of regulatory and institutional actions. Here, the sector has again joined forces, but to make sure that we have the appropriate regulatory and institution actions in place. Including declaring the telecom sector, an essential sector to the country. And this will allow to have relief in several different areas all the way from regulatory obligations as well as potentially some relief in terms of financial response to the crisis that all of us must have. So, all in all, we know that there's still much to be assessed in the middle of this crisis. It's very hard to tell what will be the exact impacts to every operation and to every a component of the operation, but we're certainly working very diligently to face it and we are preparing our contingent plans to be able to address this as best as possible. And we believe so far, we have been able to do that. So, on the next page, let's then come to a close. On page 17, we can see that, as a summary, We continue to execute diligently on our strategic plan. We put a strategic plan in place in the middle of 2019, and we have focused relentlessly on its pillars with funding, with operations, with efficiency and simplification, and now with the next big focus on our strategic options going forward. Just as a heads up, we believe that we will have our general creditors meeting in the second half of this year. The courts have already approved a period of no more than 180 plus 60 days of to hold these GCN. So we are working very diligently to finalize our proposal for the GCN, which should be presented to the market. In this proposed plan, without any question, we bring the company a lot of flexibility and actually make everybody better off in order to accelerate the execution of our plan and maximize the value creation both for shareholders and for debt holders. We continue with our market sounding process for the mobile business during the first quarter. And we have see that as adequately communicated to the market, our first non binding manifestations of interested parties. And We are now looking also as a properly communicated the market, capital structure alternatives to accelerate our fiber projects. We know that these are not easy times, but we have been keeping our focus. We have been keeping our dedication We have a dedicated team. We have great assets. And now we also have the confidence that we are doing the right statement that we're going to continue to successfully execute our plan. So, that's it for the initial summary. And I believe that now we can go through our questions and answer session. Thank you, everybody. Ladies and gentlemen, we'll now begin the Q And A session for Regards and analysts. Remember that questions should be asked in English. If you would like to ask a question may remove your question from the queue, present the pound key. Our first question is from Fred Mendes from Bradesco BDI. Fradesco may proceed. Hello. Good morning, everyone, and thanks for the call. I have two questions here on my side. The first one, you mentioned that today you have an overall gross debt of R18 $1,000,000,000 you were taking. Just wondering how much of that is in U. S. Dollar terms and what is the hedge for it? That will be my first question. And also in the presentation, you've been mentioning about a CapEx of R7 $1,000,000,000 for 2020. A part of it is related to copper. So just wondering, do you see room to deliver even a lower CapEx than that? Of course, if you do sell the mobile operations, you should have a lower lower CapEx, but just wondering, especially related to the CapEx of the copper, What exactly is that? Is it basically regulatory CapEx and if you see room for a lower CapEx on that front? Thank you. Thanks. And let me pass over to Camille to talk about the debt and then I'll talk to you about CapEx. Thank you, Fred. So today we have, we have basically 3 types of debt that is denominated in U. S. Dollars. We have our outstanding 2025 bonds. We have our debt with the ECA and that was in December, right? I was up January already. We also have the 2.5 1,000,000,000 high bridge loan, which is nominated in you in HAIs, but follows the U. S. Dollar variation. I'll give you the participation of those lines in the total debt in a while. While I talk about our hedging strategy. So today, we are protected in terms of the cash flows for 2020, both in terms of interest as well as OpEx that we have denominated in U. S. Dollars. And what we've done is we've established a natural hedge for the cash flows of 2020 by leaving a percentage of the Unit Health proceeds outside of the country in U. S. Dollars. So we are fully hedged in terms of outgoing cash flows in U. S. Dollars for 2020. With respect to that to our balance sheet, unfortunately, we will see some balance sheet volatility due to FX, to the health devaluation. But I think it's important to remember that we don't have any short term amortizations of our dollar, our debt denominated in foreign currency. So that is just now is just an accounting effect. We don't have any cash effect but not having hedged our balance sheet. Thank you, Camille. And, Fred, when we talk about CapEx, obviously, we can see that we did have an increase in CapEx last last year as compared to what we were originally saying. So we went up all the way to C7.8 billion dollars. And this increase in CapEx was primarily to kick start our fiber plan. We saw a great opportunity to accelerate our fiber plan and to get a much better run rates to to go into 2020. And now we did that. We see the opportunity. We're able to really increase the speed of our home spec home's connection and now we are at good speeds. So, we took this chance and we knew that it would be a little bit of a sacrifice in terms of cash. But it would be of extreme importance for our strategic plan going forward and so we did it. When we look at that 2020, Going back to the $7,000,000,000 is part of the original plan. And obviously, what changes here is the profile of the CapEx. So, Fiber continues to increase as a total percentage of our CapEx and we will be the primary component for the next several years. And this may even accelerate during the year. When we look at obviously mobile, we do have a mobile CapEx there as part of the plan because we need to continue sustaining the value and approaching the opportunity area in our mobile space in particular with reforming. And we have announced that. So it's obviously something there that we will manage with a lot of care and attention, but it's something that can and has been generating very good results to us. And when we look at the other components of in particular, you mentioned copper and corporate, what's happening with copper and copper there. The first one when we talk about copper, obviously, we once and are working very hard to reduce as much as possible or copper CapEx. But unfortunately, as I mentioned during the concession explanation, there is still a significant amount of regulatory CapEx. And this regulatory CapEx goes to maintaining fiber networks to maintaining pay phones, believe it or not, yes, we still maintain and have to replace a number of pay phones to maintaining central office which is even in areas where it doesn't make any sense in terms of returns. And obviously, we need to into that because of the regulatory obligations, and this is an area where obviously we're working and trying to work with Anatel as well. To be able to not only significantly diminish that, but to do that, not only with our own operational asset, but do that based as well as some regulatory relief because it doesn't make sense to keep addressing a significant amount of CapEx to a business that is dying that doesn't even serve in many cases a social function anymore. When we look at corporates, obviously, corporate is an area of focus for us going forward. And when you see this CapEx increasing here, It's because, obviously, as you know, corporate, the corporate segment has multiyear contracts. We're talking about the 5 year contracts, 6 year contracts, 4 year contracts. And in reality, if you're growing, this obviously consumes CapEx at the beginning and brings significant results and on investment going forward. So that's the only reason why it's not a significant increase. It's pretty much a stable level of CapEx for the corporate segment this year. What we have been doing as well is an overall CapEx efficiency project in terms of reducing the cost based on negotiations and supply chain efficiency. And this will be applied to everything we do. And we have been also obviously privileging on the corporate side, CapEx projects that have shorter returns. Obviously, the overall return on investment is the key priority in terms of analysis. But the shorter returns have been privileged in terms of our focus of pension and dedication to closing corporate projects. I'm sure if this responds to your question, Fred. Rodrigo, just to compliment my previous question, as of December, figure that you're seeing in our presentation 52 percent of the 18,000,000,000 are denominated in foreign currency. 18 of the 18.7 or 18.2, sorry. Sorry, Camilo, 52%, right? In the Westlake? 52%. 52% 52%. Correct. Perfect. Very clear. Thanks Camille. Thank you, Rodrigo. Thank you, Fred. Our next question is from Susanna from Itau. Susanna. I may proceed. Hello. Can you hear me now? Yep. Hi, Susanna. Good morning. Hi, Rodrigo. Hi, Tammy. Good morning. Thank you for taking our questions. Our first question is related to the FTTH take up. We saw that the most recent cohorts are actually being much more efficient in terms of pickup than the oldest cohort. What are the factors that are actually just to find this pickup in the take rate, in the take up rate. If it's the different competition, different region, or there's some kind of a commercial activity, That would be our first question. And the second question is related to the CapEx Optimization. This reduction from $7,800,000,000 to $7,000,000,000 in 2020. Depletization was because you were able to renegotiate the contracts with the disclaimers or you are being, you are actually, reducing the scope of the CapEx that we are going to use in 2020. Thank you. Thank you, Susanna. So, 3 or 2 points, on the FTTH take up and you're right, our most recent cohorts have presented a great improvement in terms of the initial take up rates. And this is due to a number of factors, but in particular, because we are on a fast learning curve here, obviously for us to address the take up rate of our deployments, there are several components, including where do we lay up our fiber, lay out the fiber originally how do we do it? What type of approach do we do? What type of units do we approach? What type of sales channels do we use? Do we go with door to door in different areas. Do we go with, teler sales in, other areas and so on and so forth. So in reality, there is a multiple things here to fine tune now when actually moving forward in the deployment of fiber. And now we have been pretty much fine tuning all of these. So it's natural that our most recent cohorts actually not only present a much better commercial efficiency, a much better precision in terms of where we're laying fiber and how we're actually addressing our addressable targets. And with the with the awareness of the broadband fiber as a viable product for customers as well, We have been seeing that just the awareness of the product has helped increase the take up rates as well. So it's not a single factor It's a combination of all of the factors. But the most important thing is that, this has been a consistent trend. For every new cohort that we actually are reaching better numbers. And when we look at the older cohorts, what we are doing as well. And this is showing in our numbers in terms of the crude speed. We go back to the old cohorts and we also fine tune our commercial operation in the old cohorts as well. So we can see that not only we're able to be more efficient in the new places where we're laying fiber but we can go back to the areas where we already have fiber to address these areas with all of the new learnings from the areas where we have been having very good results. So I mean, we're very confident that, when we talk about the 25 percent penetration in 3 years, but we're going to get there. I have no question that we're going to get there. As to your year in terms of our CapEx deployment because we had an opportunity to accelerate our fiber deployment. If we were to go according to the original plan that was done at the beginning of the year, we would have ended 2019 with close to 3,500,000 homes passed. We are able to accelerate that by over 1,000,000 homes passed. And so that was what's required initially an increase in the fiber CapEx because if you look at all of the other CapEx, components. They still have not been reduced. So, it's not that we're going to do less CapEx in terms of fiber this year because the CapEx is going down, but it's, we're going to do a less of pretty much everything else, and we're going to maintain or even increase our fiber CapEx. And so, the $7,000,000,000 is not a concern for us in terms of, how much we need to invest to be able to fulfill our strategic plan. Obviously, and this is an observation that it depends obviously on a number of things in terms of scenarios going forward. We know that depending on how well we go with the different engagements of the regulatory or the averaging approach on the copper and the concession initiatives as well. We may be able to further reduce, for instance, regulatory CapEx or legacy CapEx to be able to maintain our envelope more efficient than ever. And the one thing we have been doing here as well in terms of reduction, you mentioned renegotiations with suppliers and the like, even though when we look at the $7,000,000,000 to $7,800,000,000, the key component is not a renegotiation, But the key thing is that everything we're doing in fiber, we're not only doing it with a better learning curve on the deployment and on the sales, but we're also doing it with a better learning curve on the cost components of the CapEx. So right now, for instance, we're already operating with a much lower rates of costs per home connected and cost per home pass. Our next question is from Marcelo Santos from Banco Jatate Martin, JP Morgan. Marcellus Santos. You may proceed. Hi, thanks for the questions. Good morning Rodrigo Camille. I have two questions. First, like you, is it possible for you to explore a bit more difference in the impact of COVID-nineteen on the sales of mobile and the fiber. I mean, you mentioned that mobile would suffer because the stores are closed. But somehow you mentioned the fiber you will be able to keep the deployment. So what are the differences that caused this different behavior? If you could expand a bit more on this? And the second question would be about the partnership with MOB I don't know if that's how to spell the to the wholesale to address regions that you wouldn't address. When you do this kind of partnership what could you share about the economics like how much of the revenues cost in CapEx essentially stay with you versus the partner or kind of returns to Gatmin, any color would be interesting. Thank you. Thank you, Marcelo. On the first question, in terms of the impact of this whole pandemic on sales. It's different because of the different sales channels. So, obviously, when we look at mobile, the key mobile sales channels, our stores, our own stores, our partner stores, and our, what we call the small retail, which are pretty much representative and stands and, and boots and small stores. And they all depend on traffic. They all depend on people moving and coming and going. And, obviously, this represents the vast majority model sales because of the requirement of getting the SIM card. And, obviously, the SIM card requires for the most part, physical dislocation, given that, even though digital sales and e commerce on mobile is growing, But the logistics cost of that, if we consider that, just the semi and SIM card to, the home of the consumer has a much higher cost than originally would be involved into physical store sale. Obviously, the physical stores and the physical points of sale have a disproportionate participation in terms of mobile when you interrupt the traffic and you interrupt people going out and when you actually close stores because in, we have, at this point, we have 100% of our own stores closed. And this is, obviously, for the protection of our own team, but also because in many areas, there are restrictions for retail to be open. So it's natural that we have a much higher impact on mobile than on fiber. On fiber, even though we have a door to door sales channel and it is an effective channel, We also have a much, much higher number of sales, both in digital sales. As well as in telephone sales, call center sales. Obviously, as this is something that you need to actually communicate to somebody and schedule an installation and understand the product. It is an indirect sale, which does not require physical presence. And so It's a lot less impacted by the overall restrictions we have on mobility in our seat. In addition to that, obviously, we have been seeing that not only that, but when we look at the mobile sector, the mobile sector is is really well penetrated as we know. And many of the sales now are being conversions from prepaid to postpaid and a little bit of competitive movement from side to side. So we've been able to gain share last year, even though the market as a whole has shrunk. And when we look at the period of crisis, it's not that people are not having access to mobile phones. They do. It's just that there's a lot less movement between operators, a lot less churn, a lot less migration from carrier to carrier. In the case of broadband, we still have a significant and full field demand and actually this is what actually makes for the great opportunity we have in FTTH. A gigantic number of customers still have very low speed broadband at home based on copper, based on old technology. And when especially in a time where, we have the needs to stay at home and the need to be connected, The demand increases is kind of a growth counter, many different factors, but the demand in broadband increases and increases significantly. So even with all of the restrictions we have in terms of door to door sales and all of that, we do have an increase in demand that pretty much compensates for this, restriction in some of our sales channels for fiber. As well as for the partnership with the mob, the mob Telecom. Mob Telecom is a significant player in the so called group of independent internet service providers in Brazil. And when we know that the opportunity for FTTH and for fiber is much, much bigger than what our plan entails even for the next 3 to 4 years. So we have said that we want to cover in 3 years, 16,000,000 homes passed that we see 40,000,000 homes viable, we knew that we should be able to address the remaining areas where we do not provide retail service directly at least the very beginning. We knew that there should be ways to address those in partnership with the local ISPs. And by doing that, we kick off a franchise project which will pretty much have 2 types of model and the partnership is the 1st model we have. The 2 models First one is a model where we get an existing ISP with an established brand such as, Mob Telecom, And we do a partnership to help them grow in terms of the basic infrastructure. So we provide the backbone capacity We provide data connectivity. We provide access to our locations and co hosting of facilities. And they obviously do the last mile and then continue to expand on their businesses. By doing that, they're able to use and associate their image, their services to our infrastructure And now we have created a use of our brands to do that, which is with OI Fiber. And in addition to that, they're able to actually have better services, for instance, by using cash by using a number of other resources that they wouldn't have access to if they were alone. But they still retained their brands. And they still retain most of the operation locally. In those types of partnerships and those are just initial estimates, initial guidelines, Marcello. We believe that we'll be able to get something around 15%, 20% of the results of those partnerships. So it's significant because it's an area where otherwise you would get a lot less. The second model of franchise is one which we are still to keep costs. And as I mentioned to you, we have now created a dedicated units to wholesale and franchises. We expect the 2nd model to be a model where the OI brand will be much more important. And the OI support the local players will be much more important with a lot more components in place provided by or improving customer care, including the standardization of portfolio. And so it will be more akin to a traditional franchise. In those models, We expect to have a higher percentage of revenue, but obviously a higher percentage of cost. But it will be an only branded franchise model. So those are the 2 models we have kicked off the first partnership with the mob. We expect to kick off several different other partners in the time to come. Our next question is from Gido Renzas from Goldman Sachs. Gido, you may proceed. Hi, team. Thanks for the presentation. A couple of questions here. Chris, regarding the RJ plan meeting date. I know that there's a 180 days, plus 90 days of that were 60 days of legal period. And just in terms of when do you actually expect this to take place? I understand it's the maximum timeline that is provided by law, but any kind of idea on timing and what space case would be appreciated. Another thing also on the COVID impact of CapEx deployment, particularly with respect to fiber, do you think that that's another area of the could be potentially affected. And then also on the asset demobilization that you guys have mentioned tower sales for the second quarter, there a number of towers that you could provide as potentially being discussed or what the size of the portfolio would be that you potentially look to sell? Thank you. Thank you. Thank you, Guido. Well, let me ask Camille to address the first question about the RJ plan the timelines that we're seeing at this point. And then I'll come back and talk about the COVID impact on the CapEx deployment and we can talk about the noncore assets as well. Thank you, Rodrigo. Thanks for your question, Gibo. So regarding the creditors meeting, you're right. The 180 days plus 60 days is the maximum time that the judge has allowed us to have before we call the creditors meeting. The company is working to call the creditors meeting as soon as possible. We don't intend to use the entire amount, that was given us by the judge. But of course, we want to be very, very careful to be fully prepared for the creditors meeting. So we should see the company is seeking to anticipate the creditors, the creditors meeting, not to use the entire, 2 40 days, 180 to file for the documents and 60 days to have the credit to hold the creditor's meeting. We are working as hard as we can to anticipate that, but we will do that very carefully in order to be able that we are fully prepared. Let me address the 3rd point and then I'll give it back to Rodrigo so he can talk about CapEx. We are not giving out guidance on the number of dollars and cash proceeds expected from single transactions. The guidance that we are giving out and we are maintaining that, including power sales, data centers, and the pieces of real estate that we intend to sell until end of July, including the 2 pieces of real estate that we already sold, the one in the south that was announced in December and the one in VacaFOLD that we announced and already received, which amount for roughly BRL200 1,000,000. So including these two pieces of real estate towers and data centers, we expect to raise around between 101.5, closer to 1,500,000,000 Thank you, Camille. And I'll give you a question on the COVID impact on CapEx deployment. This is, in reality, something that we address ahead on the very beginning of the crisis. So far, we have been able to maintain almost normality in it. Although there are some restrictions to movements of technicians between cities and there is a little bit more difficult for instance find hotels and restaurants and all of that has an impact. But so far, because telecoms was declared an essential service, This was instrumental in actually removing some of the restrictions that we have in terms of mobility. So, even though in certain areas, for instance, even though general movement is prohibited, We do have our technicians being able to go back and forth and to continue with their services because of fiber installation, fiber maintenance, etcetera. Is actually a priority. And because of that so far, we have no major impacts. What we have done is we did analyze what would happen if the gets worse. And if we get some limitations to our CapEx deployment, in particular with fiber. And the team actually did a a tremendous job here because the operations team created a simulator where we have a pretty detailed simulator analyzing what is the impact of that incentive in the workplace in the workforce and the field workforce. And so we have several different scenarios in terms of what happens if we go from the status we're currently on in terms of the percentage of technicians that are actually been able to work to a much higher percentage. Right now, we're at the very, very low single digit okay. So it's minimal. It's no impact. But what would happen if we went all the way to 20% of restrictions What would happen if we went all the way up to 30% restrictions? What would happen if we go all the way up to 50% our field force not being able to work. And then we simulated what would this represent in terms of impact, both in terms homes fast and homes connected. And now when we look at even the most critical scenario, obviously, the most critical scenario that would take place the 4 duration of close to 2 to 3 months. This is the simulation. Even in the most critical scenario, we would have a yes, an impact. I wouldn't give you the precise number that we will have a small impact in terms of total number of homes passed at the end of the year, but we would pretty much preserve the ability to perform the homes connected. So Right now, honestly, directionally speaking, even with more restrictions to come, because we are an essential service We don't see the CapEx deployment being significantly impacted in terms of operating capacity by the COVID crisis. Understood. Thanks, Tim. Thank you. We have another question from Albin Chiu for a capital company. Alvin, you may proceed. Oh, hi. Thank thank you for taking my my my questions. I think my first question has already been answered previously. So I'll just proceed on to the second question, which is I would like to ask management to comment on the sales process for voice mobile units, you know, can you provide, please provide us with an update on on the status and as well as, you know, the likely timing if possible? Thank you. Thank you, Alvin. Well, as we have announced to the market at the last quarter at the end of the year, we initiated a mark what we call the market sounding process, which was not a formulary process, but as we know, As you know, as we have communicated before, we have retained a financial advisor with Bank of America Merrill Lynch. To help us organize, not only what would be, the assets that we have in terms of interest in the market, but what would be the initial demonstrations of interest in terms of indications of value and indications of interest in competition for So this is what Bank of America has been doing. They organized this market sounding by talking to the several different advisors of different interested parties. During this last couple of months, the World exchange of public information So again, not to avoid not complying with any regulatory restriction given that obviously we're talking about the potential interest of competitors. We have organized information exchange of public information in terms of what would be the basic information required to provide an estimate of input, non binding inputs to our assets. We have received those, as you remember, not only we announced publicly we have received more than one manifestation of interest non binding, manifestations of interest proposals. From interested parties. Now, we're doing our own analysis with our advisor in terms of what would be the next steps. And, I mean, assuming that everything proceeds, given that we are able to get close to what we believe distancing that could generate significant value for the company, for the shareholders, we would proceed to a 2nd phase, which we could be a more formal phase where in the end, we could get the point of receiving binding proposals. Allegacy, all of that is also connected to the General Gracers Meeting that Camir talked about because in the end, for us to be able to formally separate our mobile unit. If, again, we guess to a point where we believe selling it that would make sense for shareholders are based on the values that we're discussing. This would have to be done in the form of what we call in Brazil or UPI and independent production units, which is a legal entity, part of any RJ process. And the key characteristics of these UPI of this or ipU in English is that it will not carry any attachments, any obligations of the RGA proceedings that we are currently attached to, in particular, in terms of the future obligations towards the plane. And this is part of our inputs to general operators, meaning that would take place to give the company flexibility to consider the possibility of doing that in a way that maximizes value. So in summary, we will continue with the current process it may eventually, again, convert into a process of receiving binding offers. This binding offers and the proposal to separate the mobile unit in the form of a UPI would have to be subject to the general creditors needing approval. And based on that, a potential transaction to take place. Thank you. Our next question is from Carlos Circa from BTG Pacto. Carlos, you may proceed with your question. Thank you. Good morning, Rodrigo and Camille. Thank you for the call. My question is on, well, we just saw this week, provisional measure 899 being proven and being voted and approved by by the senate. And, my understanding is that this this measure create conditions for, for individuals and corporations to negotiate and restructure their debts with with the federal government. And and in in a way specific case, there is all this, you know, debate and discussion, involving, it's it's that that it's that's against Anatel. So my question is how do you see, this provisional measure helping negotiations or you know, improving chances that you you you've reached an agreement with Natal on on all this in probably related to the to the fines. There, there, please. Thank you. Hi, Kado. Thank you for the question. And indeed, we did not mention during the call, but indeed the NPA99 was finally approved. It had been approved the lower house last week and I was approved in the senate last night. And obviously, it is a positive approval, we believe, because it gives us yet another option to address our issues with the an adult pest, an adult best. And in reality, it's an additional option, as I mentioned, because what happened was that in the original discussion with Anatel, as you remember, as everybody remember, there was a big discussion from the part of Anatel about if their credits should be in the RJ or not. According to our leases, there was no question that it should be part of BRJ. And so it was decided, so it was judged on the Tower field. It was upheld. So we won the second, in the second instance. And for all practical purposes, we know that the Anadark credits are part of BRJ and could continue to be part of BRJ. Nonetheless, we believe that it's interesting to have options to discuss alternative courses of action in terms of how to treat the NFL Debt And this is part of a scenario of modernizing not only the discussion of public debt, but the judicial recovery law. There are several initiatives to address that. The first one was NP899, which allows for the negotiation, bilateral negotiation, of the credits and the NFL credits would fall in this category. So we could renegotiate the credits with the AGU and actually pretty much get to a point where, we would have an equivalent fair value reduction to what, can be obtained in NRJ proceeding, which by the way is what we currently have. And there is yet a Second Avenue, which is already being discussed, in addition to the MP899, remembering that the AP899 the key characteristic is that it allows for a 50% reduction in the total debt and 84 months of payment going forward. There's a there's a second alternative to that, which is in the form of a law project, which is PL-six thousand two hundred and twenty nine. And the PL-six thousand two hundred and nine actually brings, yes, another alternative, it could be a third alternative to how to treat the NFL credits. And this would allow 4 RJ companies a renegotiation that can go up to 70% of haircuts and the total debt in 120 months for the negotiation of those credits. So We believe that the more alternatives we have, the better, because in the end, we can decide if it's worth for us the fair values are approximate and we believe they can be. We can decide to actually go into an area that would give an alternative that we give with more certainty going forward, more legal certainty going forward. But in the end, it's great to have alternatives. We believe that the current alternative that we have, which is, both NP899 and continuing to tweak the Anatel credits as part of the RJ are already well reflected in our current numbers. So, there will be no concern going forward. Actually, it's just potential improvements. Thank you, Kabi. That concludes our Q And A session. I would like to turn the floor over to the company for the final remark. Well, again, thank you, everybody. We know that this is not just any ordinary time as we highlighted at the beginning of the call. We know that this, we require from all of us, a lot of focus a lot of effort, a lot of attention in terms of not only continuing to execute what we said we would execute, but at the same time, plenty for contingencies and addressing the most relevant challenges that this whole crisis has brought upon us. But we believe that, ultimately, We continue to execute well on our plan. We believe that all in all, we will maintain our focus in all the relevant areas that we have communicated and I reinforce our confidence that we have in order to be able to be well succeeded with the execution of the whole plan as originally stated. Well, thank you for being with us and we'll talk to you in our next quarterly call. This concludes OasisI conference call. We would like to thank you for the participation and have a lot of nice day.