Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Oi S.A.'s Conference Call to present the Company's Strategic Plan. This event is also being broadcast simultaneously on the internet via webcast, which can be accessed on the company's IR website, www.oi.com.br/ri, together with the respective presentation. We would like to inform that during the company's presentation, all participants will be in a listen-only conversation. We will then begin the Q&A session when further instructions will be given. Questions sent via webcast will be prioritized. In case you need any assistance during the conference, please request the operator's help by pressing star zero. We also would like to inform that the conference call will be conducted in English by the management of the company, and the conference call in Portuguese will be conducted via simultaneous translation.
This conference call may contain some forward-looking statements that are subject to known and unknown risks 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 of the date they are made, and the company is under no obligation to update them in light of new information or future developments. I will now turn the conference over to Mr. Carlos Brandão, CFO. Please, Mr. Carlos, you may proceed.
Good morning, everyone. Thank you for joining our conference call for the presentation of the strategic review. I have here with me the management team and the board representative, Rodrigo Abreu, who is the Coordinator of the Transformation, Strategy, and Infrastructure Committee. Over the past years, Oi started a successful turnaround journey. Through an extremely complex judicial recovery process, several important milestones were conquered. We have fully restructured our debt and capitalized the company. After years of underinvestment restricted by our financial capability, we are now able to accelerate the deployment of our fiber plan and take advantage of our unique infrastructure. As you know, Oi started a transformational project in the beginning of the year to review the strategy, balancing two key objectives, short-term sustainability and long-term value creation.
The board, the management, and our independent advisors, including BCG, Oliver Wyman, and Bank of America, have worked together in a true joint effort. In this process, we revisit our strategic positioning in all markets, considering market trends, regulatory trends, short- and long-term financials, our assets, and our competitive positioning in all of them. We invested significant amount of time and deeply analyzed every single opportunity and all the combinations of viable models, making sure no stones were left unturned. Today, we want to present the results of the strategic review to you. This plan will be the foundational guide for the company in the upcoming years and will generate significant value for our shareholders and the company.
Let us begin on slide one, where I will summarize our transformation strategy focused in our indisputable leadership position in fiber and infrastructure and in our ability to create significant value by pursuing strategic options. Oi is the indisputable leader in fiber and infrastructure. Our advantaged position allows us to be the national leader in fiber and the 5G enabler in Brazil, leveraging our high capacity and capillarity network, two times larger network than any other player in Brazil. Fiber is the heart of our strategy, and we will continue strengthening our competitive advantage through the massive acceleration of fiber to the home. Our goal is to reach 16 million homes passed until 2021, more than 3x the 2019 plan. This goal represents a 50% increase over our previous plan for 2021.
We also identified an opportunity of more than 30 million households with an attractive return and that can be profitably served. Our fiber-related revenues will grow over 30% per year, and we will be able to address the decline in fixed business, offsetting the downward trend in copper and stabilizing overall revenues by 2021. We will also accelerate our wholesale operations, leveraging our significant infrastructure advantage and expand opportunities to full potential, doubling our wholesale revenues over the next years to achieve market leadership. In mobile, we will capture all pockets of value to maximize strategic optionality, leveraging our available network capacity to grow. We expect a full-year growth in mobile revenues this year while exploring all strategic options to maximize shareholder value. To fund the plan and focus on infrastructure, we will work in two fronts. First, we are already implementing a material cost reduction program.
We expect this program to net over BRL 1 billion on our annual cost base by 2021, above and beyond all existing efforts. These efforts, in addition to the early signs of revenue stabilization since February 2019 and our expected revenue growth in the mid-term, will enable the company to increase significantly our EBITDA until 2021. Second, the company will divest non-core assets estimated from BRL 6.5 billion-BRL 7.5 billion and release cash through non-operational events like the use of PIS/COFINS credit. Of which BRL 2.1 billion is already under a favorable court decision. We will generate over BRL 12.5 billion with these initiatives. As of now, we are advanced in the negotiation process of some of these assets. With our operational cash flow, our cost reduction program, the divestment of non-core assets, and cash inflows, we have the comfort to execute the plan.
As you can see, there is significant value in the sum of the parts. The plan will lead to an increase of over 2x the enterprise value, focusing on financial and operational sustainability. The value potential could be even higher by exercising some of our strategic options. Now let's move to slide two. As mentioned, we revisited our business strategy and positioning with the objective to maximize the value creation for shareholders and for the company. Along the project, we assessed all of our business segments individually and identified viable options for them, considering a portfolio logic and focus on our strength and competitive advantages. We prioritize effective allocation of the capital, always keeping the discipline to guarantee the funding of the plan and the maximization of the value.
This work was done with extensive and heavy collaboration of the board with the management and our independent advisors, including Boston Consulting Group, Bank of America, and Oliver Wyman, guaranteeing a strong alignment for the execution of the strategy. Moving to slide number three. As mentioned before, our strategic focus in leveraging our indisputable leadership in fiber infrastructure will entitle us to be the 5G enabler in Brazil. We have a strong leading starting point to provide transport and access countrywide. Oi has more than 360,000 km of fiber, more than two times the second player, and we serve more than 2,000 cities, over 1,000 more than the second player. We are preparing to have all our IP core needs fulfilled for the next three years, and we have 43,000 km of ducts, the highest integrated infrastructure in Brazil.
All of these points illustrate that fiber will be the core of our strategy, having a critical role along all the business segments. We will seek market leadership in fiber, both in retail and wholesale. We will migrate our TV products to IPTV and OTT platforms. We will leverage our connectivity capillarity in B2B corporate, and we will be the 5G enabler in mobile. In slide four, we show our plan for broadband. We will aggressively target investments at fiber to the home deployment, expanding frontier markets and reaching 16 million homes passed by the end of 2021, representing a 50% increase versus previous plan. We will deploy the fiber to the home using a reuse approach. This will allow faster growth and lower costs. We are also assessing partnership models that will enhance our fiber deployment at a faster pace, mostly in attractive areas with lower infrastructure readiness.
In addition, we also have the potential to double the total homes passed with additional funding and partnership. In some of these areas, we can explore wholesale model as an opportunity. In terms of our execution, we are at full speed in fiber deployment. This year, we are pointing to an overachievement of homes passed above the targets of our initial plan in 2019. We are also deploying our fiber in a de-average strategy, considering three different tiers depending on the regional competitive context. We will compete through direct and aggressive investment in our network. We will form partnership models to accelerate fiber deployment. We will enable smaller cities with transport infrastructure and additional service. Our plan is to deploy additional 15 million homes passed between this year and 2021, reaching a total of 16 million homes passed by the end of 2021.
Continuing on slide five, we will show the key economics of our fiber deployment. With a 40% IRR, fiber will be the one of key drivers of future EBITDA and cash flow. Our business case, based on actual results, has shown some attractive numbers. We have a very low cost per homes passed, leveraging our high capillarity and cost advantage to build our network using the reuse approach. Our take-up rate over the constructed infrastructure is expected to be higher than 25% in a steady state. As you will soon see, early results are confirming a fast pace on our take-up rate. We firmly believe in our commercial success, as we have a great customer quality, perception, and a solid NPS. Our fiber ARPU is already higher than copper, reaching more than BRL 85 per month.
This value is expected to increase over time and will enable to smooth and fixed voice revenues decrease. Important to notice that our IRR calculation does not consider any assumptions in ARPU increase, but considers a nominal discount rate. Maintenance costs are considerably lower versus copper, ranging from 30% - 50%. In terms of customer lifetime, we see a healthier churn rate in fiber versus copper due to a superior speed and reliability. This will enable us to reach an average of five years of customer lifetime. We will be able to deploy FTTH cheaper and faster with a payback ratio of less than four years and IRR higher than 40% on a conservative projection. Moving on to slide six. In this slide, we can see the results of fiber in practice.
On the left side, we can see the revenues in the 10 cities where we launched our fiber offer in 2018. The results show a strong performance in revenues, which reverses the decline trend in copper. As of the first quarter of this year, fiber represented over 20% of revenues in those cities. These results were mostly driven by higher monthly take-up rates that reached 80% of average after three to five months of implementation and reaching up to 11% in best case cities. In addition, there was a 70% reduction in monthly churn rate versus copper, and in some of the cities, the reduction reached 80%. The numbers reiterate the solid performance of our fiber business, which would not be possible if it weren't for the quality and reliability of our network. Once again, Oi was ranked first place in the Netflix broadband rank in June.
We have been in this position since we started participating in the ranking, having increased the delta to the second player over the past months. Now on slide seven, we show our strategy for the wholesale business. With the increase in data demand, our strategy is to become the national provider of transport network and enabler for the 5G infrastructure in Brazil, making the network widely accessible to players and reducing duplicated investments in Brazil. We will do this by accelerating our operations in wholesale. The wholesale market is a growing business in the country, estimated in approximately BRL 9 billion revenues in 2018, mainly driven by last-mile demand. We will expand the opportunities to exploit the full potential of unregulated fiber market, investing in last mile and fiber to the site, capitalizing on our extensive and non-replicable infrastructure.
We will increase our commercial efforts to sell IP connections to internet service providers and explore new technologies to enhance multi-service capabilities. We will expand our fiber to the site reach to cope with the growing data traffic demand, and we will exploit our passive infrastructure sharing, providing access of ducts and fiber to the other operators and ISPs. With all these initiatives, we expect the wholesale segment to become a very relevant business focusing on non-regulated revenues and almost doubling revenues by 2024. Our strategy will preserve and emphasize Oi's leadership role in infrastructure in Brazil. Moving on to slide eight, let's talk about the B2B segment. We have consistently worked on our operational improvements in our traditional service and also to rebrand and reposition our business, which from now on will be referred to as Oi Soluções.
Oi will become an integrator and provider of telecom and ICT solutions. Beyond service and products, adding value through an advisory and customized positioning. We are bringing a comprehensive portfolio of ICT solutions to the table, impacting the customer across the whole value chain from connectivity by providing reliable infrastructure and technology to our customers up to ICT solutions, focusing on IoT, cloud outsourcing, professional service, among other strategic services. As a result of this new positioning, we will revamp our B2B segment. ICT will be the main driver of growth, reaching 20% of the total corporate revenues in 2021 and 32% in 2024, offsetting the revenue decline in the segment by 2021. We expect to grow 3.4% per year from 2021 to 2024. On the next page, slide nine, we show our strategy in mobile.
We will maximize the value capture in the segment, leveraging our available mobile network capacity with a competitive product portfolio. We will rationally invest in 1.8 GHz spectrum refining to defend our postpaid base using our ample spectrum available. We will capture market share in high-value segments using the excess capacity we have in 1.8 GHz and maintaining the successful commercial strategy in postpaid. This strategy will lead to lower levels of CapEx in the mobile segment. Mobile revenues will grow already in 2019 due to the increase in the number of postpaid subscribers and postpaid market share. With this, we will capitalize on the postpaid momentum, leverage our infrastructure in preparation for 5G deployment, while we keep exploring all the strategic options to maximize shareholder value. On slide 10, I highlight the simplification plan of our operations.
We will engage the organization in order to simplify our operating model with an efficiency-focused mindset and digital transformation that will enable us to transform the operations and structurally reduce costs. We are putting in place a deep structural cost takeout and digital programs, which we divided in five work streams. Examples of initiatives we are developing in each of these work streams include the following actions, but are not limited to them. In sales and marketing, we will simplify our portfolio, our customer journey, and review our channel footprint. In our organizational process, we will review and simplify our process, leveraging opportunity for digitalization and automatization. In IT, we will optimize our portfolio of products and service and simplify IT systems and architectures. In procurement, we are building a rigorous demand management system at the same time that we are rationalizing our suppliers and specifications.
In network, we are working on a value-based rollout program, energy efficiency, and the commissioning of copper stations. These efforts will enable the company to reduce its cost base in over BRL 1 billion per year, achieved by 2021. Moving on to slide 11. We highlight our focus on improving financial and operational performance that will lead the revenue and EBITDA increase with a sustainable business model. On the left side, we can see initial signs of revenue stabilization since February 2019. We are pushing our commercial efforts, and despite the traditional pressure in our corporate revenues, we expect a 2% CAGR in our top line until 2024. As a result of our fiber investments, mobile strategy, wholesale growth, and cost reduction efforts, we will expect our EBITDA to increase between 15%-20% per year until 2021, with room to further improvement through structural transformation.
For this year, EBITDA is being pressured by our increasing commercial efforts, aligned with our strong momentum and traction in mobile and fiber, effects headwinds on foreign currency costs, and the downward trend in corporate revenue, which will be offset by 2021. We are confident on our plan, and we highlight our tremendous effort and commitment to improve our financial performance and deliver sustainable results for the company and shareholders. Now, moving to slide 12, I highlight our strategy to fund the journey. We will divest on non-core assets and release cash through non-operational events. The potential impact will vary from BRL 12.5 billion-BRL 14.5 billion. There are five non-core assets that we list in the left side of the slide, with an expected value between BRL 6.5 billion-BRL 7.5 billion, including towers, data centers, Unitel, real estates, and other non-strategic assets.
In addition to the divestment of non-core assets, we concluded in the beginning of this year the cap increase of BRL 4 billion, which was planned at our judicial recovery process. We are also in the final stages of approval of the PIS/COFINS credits, which we already received a favorable decision of BRL 2.1 billion pending on legal decision to collect an additional BRL 1 billion. In a nutshell, this comprehensive portfolio of non-core assets will fund the execution of the plan. Now moving on to the last slide, page 13. Our investments will lead to a significant growth in our fiber-related business, which will drive the value of our company toward fiber and infrastructure. Over 80% of the value will come from fiber-related business. Oi is transitioning from a traditional telco business model to a much-focused fiber and infrastructure company.
As we can see in the middle of this slide, this could lead to a significantly higher valuation for the company. Our final message on the right-hand side. This model enable us to unlock significant value from our core competitive advantage, such as our unique and non-replicable infrastructure. There is a huge potential to increase our enterprise value in the future, and we are confident on our capacity to execute this plan. I would like to end this presentation of the strategic plan review by reinforcing the company's strategy for the coming years. We worked hard in these past months to identify the sources of value for Oi. We studied the possibility in all segments, considering our right to win in each of them, and the feasibility to guarantee a successful implementation of this strategy.
I have total confidence that this plan is the right path for Oi, and it will generate tremendous value for the company and the shareholders going forward. Our focus on fiber and our leadership position in infrastructure puts us in a differentiated competitive position to place the company in a path of sustainable growth. We have a well-defined strategy, a highly qualified team, and the company is now 100% focused on the executing of this plan. We will now begin the question-and-answer session.
Ladies and gentlemen, we will now begin the Q&A session for investors and analysts. Remember that questions should be asked in English, and those questions sent via webcast will be prioritized. If you would like to ask a question by the telephone, please dial star one. If at any point your question has been answered, you may remove your question from the queue by pressing the pound key.
Good morning, everyone, again. Here with me, I have to support the answers, the questions, we have Roberto Guenzburger, our B2C marketing director. We have Carlos Eduardo Medeiros, our regulatory and wholesale vice president, and we have the board representative, Rodrigo Abreu, who is also the coordinator of the transformation and strategy and infrastructure committee. Please, let's start with the questions.
We have a question via webcast. Mr. Daniel Hong from BlueMountain Capital Management asks, "Can you discuss the cadence to take up rate after passing homes? How long to get to 25% take up?
Thank you for the question. I will ask Roberto Guenzburger here to answer this question.
Okay. Hello. The take-up rate right now is running at 10% on average. After we accelerated the deployment of fiber in the third quarter of last year, in the reuse model where we are deploying fiber, where we already have infrastructure in order to minimize investments, we've seen a very fast growth in the take-up rate. We are running at 1.5% per month in the first seven months after implementing the fiber in a specific cell. If you do the math, it's going to be higher than 15% in the first year. Of course, the second and the third year will be slower. We expect that after three years, we would stabilize our take-up rate around 25%. Now, the take-up rate is very critical in our business case, of course. We have specific targets for each individual cell in our model.
On the other hand, the investment of each cell is also very important. Some of the cells are prioritized not because we see a very high take-up rate, but because we don't need to invest so much to deploy that cell. Take-up and investments are the two key variables in our business plan for fiber.
Miss Susana Salaru from Itaú would like to ask a question.
Hi. Good morning. Thank you for taking our questions. The first question is related to the mobile. In one of the slides, you mentioned that you want to explore all the strategic options to unlock value for shareholders. Among those strategic options would include the asset sales of mobile. That would be our first question. Our second question is on fiber. If you were to rank the fiber opportunities, FTTH, wholesale, B2B by size and relevance, how would you list them? Thank you.
Thank you, Susana. I'll ask Rodrigo to support me in this question regarding the strategic options on the mobile business.
Hi, Susana. Good morning. Thank you for the question. As Brandão presented, obviously our strategic plan looked in a lot of detail at all of the business components of the company to evaluate the best possible path forward, and also the best alternatives for value generation and sustainable operations going forward. In this case, as you correctly pointed out, fiber was pointed out as the key component of the plan for the long-term value generation, both sustaining the strategy in FTTH, wholesale, and B2B, as you mentioned, in addition to being a key component for mobile. Mobile for us plays an important role given that we have very valuable current assets, including spectrum, including a very solid customer base, including a good market position with recent very positive performance. You have been looking at that with the performance of postpaid throughout the last year or so.
Our plan for mobile calls for maximizing the value capture initially through a very competitive portfolio, which has been going on for a while. This portfolio uses our network capacity and spectrum availability. The good thing about the plan, the way we analyze it, is that it preserves multiple optionalities going forward, we believe. If any combination on other non-organic opportunity can generate significant value, without a question, it will be seriously analyzed and considered. It's worth highlighting that the plan does not depend on a single course of action. That's the good thing about our plan and how mobile fits in our plan. There are multiple sustainable models for the company going forward. If there is a very good opportunity to consider something different, we will look at it seriously.
We do not depend on it to have a successful plan going forward.
The second question regarding the, if I understood correctly, the capital allocation, how you prioritize the investments. Is that correct, Susana?
Actually, the opportunity size within fiber, which one among the opportunities that you are going to pursue, FTTH, wholesale, and B2B, which one is the most sizable one in terms of revenue generation and return?
In terms of revenue generation, no doubt about that it is the FTTH approach. In terms of returns, the wholesale has attractive returns because it takes advantage of the existing fiber. With our incremental investments, we have the ability to provide the infrastructure service. It's a complementary approach.
Okay, thank you. Just a follow-up question on Rodrigo's answer. You mentioned that you want to maximize the value, specifically on the postpaid, we saw in the presentation that you guys are going to reform part of the spectrum. My question is: what about 5G auction next year? Are you guys prepared to participate in the auction? How would you deal not having the 4G or participating or not in the 5G auction next year?
Well, we have to understand that obviously there will be two auctions next year. First, there will be the 700 auction. Then we'll have the 5G auction. As part of the strategy, we are considering participation in both auctions. Obviously, it will depend on how the plan is moving along. The consideration for participation in both is part of our analysis. Obviously, as I mentioned, it fits into the whole mobile strategy for generating value. Anything that generates value, we will consider, and those two auctions are no different.
Okay. Thank you very much. Very clear.
Mr. Fred Mendes from Bradesco BBI would like to ask a question.
Good morning, everyone. Thanks for the call. I have two questions as well. The first one, if you can give us an idea, I'm not sure if you have this information, but if you can give us an idea about the EBITDA standalone for the mobile operations, this would be great. Then as a second point, also, if you could give us an idea in terms of the CapEx to implement the plan to 2021. To be honest, I didn't find this information here. Of course, you mentioned the possibility of selling assets between BRL 12.5 and BRL 14.5, I'm wondering if all of these would be used for the CapEx. Thank you.
Regarding the mobile information, it's not public, so unfortunately, I cannot provide to you. Regarding the CapEx, it's not a guidance in the plan. It's close to our previous announcement on BRL 7 billion per year with minor adjustments. This year, we expect a growth since we are increasing our ambition on FTTH.
Thanks, Brandão. I have just one more follow-up question, if I may. Just as a worst-case scenario, let's say if you are not able to sell Unitel until the end of February, of course, there's this recovery process, and also the other sales of the other operations, they also do not happen. You do have a gap of BRL 4.5 billion in the plan that you should, let's say, close, right? Just wondering, what would be the obligations you have related to this BRL 4.5 billion, and what would be the alternatives you have, let's say, the worst-case scenario, the sale of the assets does not go through until February? Thank you.
Thank you, Fred. Regarding this question, as you know, we highlighted in this plan the portfolio of assets that we have, and we are on track on our strategy, so we don't see as a probable scenario that we miss this achievement. On the other hand, we are also in parallel discussion with banks, alternative credit lines. We have a very broad portfolio of alternatives to fund the company to implement this plan.
Very clear, Rodrigo. Thank you very much.
Mr. Carlos Sequeira from BTG Pactual would like to ask a question.
Hi, guys. Brandão, Rodrigo, how are you? Two quick ones. One is, can you give us more information on the potential sale of Unitel? Not only the potential sale, but if it takes a little longer, is it reasonable to assume that you can get some of the dividends or retain in the company back to Oi in the short term? A second one, I know you might not have much information about it. Maybe Cadu can help. What is going on with the PLC 79, what are the expectations for it to finally move in the Senate? Thank you.
Regarding Unitel, what can I say about it is that we have, as you know, the plan A and plan B. The plan A is to sell the company. The plan B is just to orchestrate a dividend. I can say that on plan A, we are having important developments recently, but we have still room for improve and advance the negotiation. Plan B, we have our management there, they are now assessing alternatives to orchestrate dividends if plan A is not well succeed. We are very on track on this management of this asset. I'll ask Cadu here to comment on the PLC 79.
Hello, Cadu.
Hey.
As you probably know, PLC 79 is a subject that's already ready to run from a lot of time. Since 2015, we had the public hearing. In 2016, Anatel put in broadband as and the resources from where the funding would come to finance this new public policy and all the guidelines to reach it. In 2016 also, we had it approved on the lower house, coming out from the constitutional committee at house, and at the same year in the infrastructure committee at the Senate, the upper house. We had some problems on the Supreme Court. It was not approved in the end. It came back for the CCT, the Science and Technology Committee at the Senate. We are already in the second reporter, writing the final report after the first report made by Senator Flexa Ribeiro. We think it's ready to run.
It's feasible in 2019. It would turn all the public license for the voice services in private license and would give us the resource to invest in broadband for the new public policy. It was already done in places like Spain and Portugal; there is no news about it. It was made here in Brazil also. You can remember that when we had the privatization in 1999, the mobile services were also public. In 2004, we had the migration from concession to authorization in mobile services. There is no news about it. We need to have the same thing for the voice. We need to put the broadband and infrastructure on the center of the public policy, and we think that it's ready to run. And also, this would be something that would help in the economic growth that we need for other sectors, too.
We think that the PLC is feasible in 2019. We hope that when the recess is gone, it comes back and would be put to vote at the CCT, and after that, in the plenary.
Thank you, Cadu. Do you have any opinion on what is holding it back at this point, given that everything is ready?
I don't think opinion would be feasible in my comments right here.
Okay. That's fair. Thank you very much. Thanks, Cadu.
Thank you.
Mr. Soomit Datta from New Street Research would like to ask a question.
Hi there. Two questions on the guidance, one on asset sales, please. On revenue guidance, can you give a sense as to when you think revenues will stabilize? I think the chart you put in one of the presentation slides look quite promising on a monthly basis, do we think 2020 or even 2019 is the trough year? I know you've given some longer-term steer on revenues. Just as a follow-on, what are you thinking about wireless expectations within that? You don't give any explicit wireless revenue growth. I was just curious about that. Second question on guidance, please. Just on EBITDA, I think, if I've got my math right, the guidance implies absolute EBITDA in 2021 of between BRL 6 billion and BRL 7 billion. I just wondered what was the driver of that variation.
Is that uncertainty over revenue, or is that based around cost or macro environment? I just wondered what the wide variation was based upon, please. Finally, if it's okay, just 1 on asset sales. You've talked about towers and data centers, real estate, et cetera, BRL 6.5 billion-BRL 7.5 billion. What would the EBITDA implications be of selling those assets? Obviously, potentially cash would come in, I assume you would need to allocate some OpEx to some of those businesses. How much EBITDA would that impact, please? Thank you.
Thank you, Soomit. I'll ask Rodrigo Abreu to answer to you the first two questions, I'll ask about the asset sales potential impact.
Hi, Soomit. Good to talk to you. Let's talk about the guidance first, both revenue and EBITDA. If we look at the revenue, we're obviously in a situation where we have to do a revenue substitution for the revenue to begin to grow again. This is a fact of obviously we having fixed revenues that are declining associated with copper, associated with other regulatory things that obviously bring the revenue down. While at the same time, we do have a very promising path forward in terms of revenue acceleration on all of the fiber lines, including FTTH, including wholesale, including B2B, exactly as it was described as a focus in our revenue plan. If you look at the recent months, in fact, we have achieved a very solid stabilization.
We do see that what will happen for us to really cross this threshold of having revenue growing again is exactly when we get to the point of the fixed decline really being surpassed by the FTTH growth, which we are accelerating, and we expect that to happen sometime around 2021. This is what's in the plan right now. Obviously, we're going to work to accelerate this as best as we can, and at the same time, try to work on the declining revenues on copper to the best extent possible to try to accelerate that crossover.
In terms of implications for EBITDA and how mobile plays a role in that, first of all, obviously, mobile has been presenting a good revenue behavior as well in the recent months, and in particular in the recent year, because of the changing strategy that the company did, really going after higher plans, going after customers that can bring higher tickets for us. This has been showing in our recent postpaid growth. With that, we will expect our subscriber revenue to go up in mobile. Contributing to obviously reverting the scenario of revenue downward trends, given particularly the fixed components. We look at what's going to happen with EBITDA and the guidance that we put on the plan, we're obviously on the very beginning of a transformation plan, which is focused on the mid to long-term value creation, but also short-term sustainability.
We necessarily have to balance over time, the financial, the operation, and the strategic goals, right? When we look at the guidance for EBITDA, we have decided to work with ranges exactly because there's a lot of things going on at the same time. For 2019, we understand that it may be a little bit wider than expected, but we are starting an acceleration phase. When we accelerate, obviously, we don't want to restrict ourselves of achieving our mid to long-term objectives just to really be very, very precise in achieving a very short-term EBITDA guidance. We do see that we're going to have investments here, as Brandão mentioned, in accelerating FTTH sales. We are accelerating some of the CapEx. We are working with commercial efforts, which will also put some pressure on the OPEX there.
That's why we have decided to use a wider range for 2019 EBITDA. Obviously, we're going to work with all of the plan to try to approximate to the higher ends of the ranges, but we're working with this range. For 2021, obviously, you mentioned the wide range there of six to seven. Obviously, as I mentioned, we are at the very beginning of the journey. We have to work with the cost programs and the structural transformation of the company. Obviously, it still takes a little bit of time for us to achieve the correct run rates in all of that. We have to execute on growing revenue. We have to execute on turning around some of the areas that we discussed over the presentation.
Likewise, we have decided to work with this guidance because we believe it's possible to approximate of the higher end of the range. It will depend on execution, and we're at the very beginning of execution. I believe it's a little bit too early to actually point out to a very narrow range for 2021. At the same time, it's important to mention that some of the things that may happen throughout the way are not considered as part of those guidance's. In particular, if you look at what's happening with PLC, what can happen with the additional non-organic movements that you just commented as well. This is where we are right now. We are very positive in general of having a sustainable plan and obviously trying to pursue the higher end of the target ranges.
Regarding the potential impacts on the asset sales, specifically, we are talking about the non-strategic fiber, the data centers, and the towers. We estimate around BRL 150 million impact per year.
Sorry, do you mind saying that number again? I missed it.
BRL 150 million per year.
Fantastic. Great. Thank you very much. Cheers.
Thank you.
Mr. Adam Pieczonka from Knighthead would like to ask a question.
Thanks, guys, for taking the question. Looking at page 13, you've got a 3.4x multiple for Oi versus 11.7 for infrastructure comps. How do you guys expect to realize the multiple differentials there?
That's a complex question, Adam Pieczonka. Thank you very much for the question, but that's a complex one. It depends on the valuation of each one. We have our internal valuation that we cannot make it public. We are trying to provide the market all the elements to make their own valuation. In our internal analysis, it's significantly bigger than 3.4.
Yeah. If I may, Brandão, Adam, just complementing the answer. There's two steps here of potential valuation for the company in terms of value creation, value generation. The first one is just to bring it back in line with our comps, which obviously depends on a successful execution of our strategic plan. We're presenting it right now, and we believe we have all of the potential to make it a reality in the coming years. Just by doing that, obviously, we have an important multiple change there to approximate from the usual comps.
In addition to that, by focusing and providing a lot of emphasis on the fiber and infrastructure components of our value creation generation options, we believe that it's possible to go beyond just the traditional comps of the 6.7, because it's not subject in many cases to the very volatile equations of super high CapEx every single year. We do believe that there's two steps here possible. The first one is just to bring back in line the company with the factor. The second one is with our focus that we're presenting with the right to win that we have in the infrastructure sector, which will be here no matter what, no matter where the telecom sector goes, the infrastructure will be required, will be a key component of anything.
We believe that there's this second jump possibility to providing higher comparables and higher multiples for the company.
Would you guys consider providing results like EBITDA for fixed versus mobile, so it's easier for the market to determine what the value of each side of the business is?
No.
Yeah. Obviously, it's impossible to do that at this point. When we start to execute the plan and we have more clear details, obviously we can come back to this question. At this point, no.
Ms. Maria Azevedo from UBS would like to ask a question.
Hi. Thanks for taking the question. Following up on the mobile strategy, can you please share your views on the importance of fixed mobile convergence and bundled offers to your plan, or do you think that this is becoming less relevant even on an industry-wide logic? My second question as a follow-up would be if you can expand on your views for wholesale infrastructure sharing, or even a potential unbundling of your non-FTTH fixed network. Thank you very much.
I'll ask Roberto Guenzburger to comment on your first question.
Hi. Thank you for the question, Maria. It's always been a key component of our strategy to make use of our copper infrastructure and converge clients selling more RGUs to those clients. Fixed mobile convergence is important, but it's not the most important strategy for us at the moment. The key component right now is really the quality of the internet connection, be it fiber to the home or 4.5G. More important than convergence right now is offering a better connection to the customer, be it mobile or fixed.
Hi, Maria, this is Rodrigo. Just on your second question about wholesale. Now we have Cadu here as well. Obviously, when you look at wholesale has been traditionally just a support component to the company, and it was not intensively explored as a very critical business unit and business component of the operation. Just because, first of all, obviously, we had to invest in other areas of the company. We had some restrictions in terms of CapEx. There were some strategic decisions that had to be considered in terms of competitive movements. As such, it was more a support side of the business, obviously, with some revenue generation based on the things that you mentioned in terms of infra sharing. When we look forward, we highlight that we believe that Oi has the right to win in infrastructure, wholesale gains a lot more importance.
This is absolutely apparent, not only because of the infrastructure that we already have, but because we can make some definitions of actually starting to explore some areas that we have decided not to in the past. This is the case, for instance, of really understanding that in order to support the growth of FTTH and of broadband in Brazil, we have two paths. One of them, which we will pursue, is to expand our own FTTH operations, and this obviously dramatically depends on infrastructure. Also we can provide wholesale infrastructure for areas where we decide not to invest, or we decide to partner and collaborate instead of going directly. In addition to that, if you think about 5G.
5G will need infrastructure, regardless, again, if it's for ourselves or for the entire market, we believe we are second to none, and we are uniquely positioned to be the national wholesale backbone for 5G, considering the amount of fiber that will be required. As such, wholesale gains importance in the whole strategy. That's why we believe that it's possible to double the revenue in a relatively short time compared to what we had before. Obviously, this requires a strategic decision, which we have already made. When you ask about infra-sharing and unbundling, in the case of infra-sharing, we do have some infra-sharing agreements that will continue, obviously, and it's part of the strategy that we have decided.
I believe that we will see some things happening in complement to that as well, because we have a lot of wholesale capabilities that have not been explored and that can serve as alternatives to sharing agreements with us, providing wholesale as an option instead of just sharing. In the case of unbundling, obviously, we have seen a lot of changes in the regulatory environment in the recent past. Right now, a lot of what we do on wholesale is non-regulated, and we believe that the non-regulated components of wholesale will expand even further. This is healthy for the market, and we believe that this is part of the reason why we have decided as well to make wholesale such an important part of the strategy going forward.
Perfect. Thank you very much. All the best.
Welcome.
Good luck. You have a good one.
Mr. Valder Nogueira from Santander would like to ask a question.
Good morning, guys. Thank you for the call, thank you for taking my question. First of all, first question, you talk about the strategic options for mobile. Of course, there is the spectral value, there is the subscriber value, and there is a huge value of a potential in-market consolidation if you decide to divest the business. One important point for us to do this math, to see this potential value lies on what is the size of the fiscal benefits that currently lie on Oi mobile business? That's my first question. On my second question. Do you want to answer the first one?
Yes, I can. You're talking about specifically on the IR and CS credit that we have on the balance sheet on the mobile business?
All type of fiscal benefit that you could have within the mobile business, either that already exists, or you could allocate to it, or even transferring that from the consolidated side, just the mobile business. That is very important in order for us to assess what could be the potential valuation for this type of asset if the choice is to divest it.
Okay. Of course, since it's not a decision, we have lots of room to discuss it. Specifically regarding our credit benefits that we have, fiscal benefits that we have. We have around BRL 12 billion on credit benefits on the fixed business. Any sort of move in this direction will be a trigger to maximize the usage of this benefit. It's not in the agenda today. We are now focused on implementing the strategic review we are sharing with the market.
Okay.
Yeah, if I may complement Valder, obviously, any structure that would result from such a consideration would take this into a detailed consideration and will be structured in a way to maximize the usage of the benefits, obviously. Right?
Yeah.
There's no set answer to that because there's not a case in point at this moment. This would obviously be a necessary consideration of any structure that we put together to think about something like that.
Exactly. In a typical process like this, we consider all the drivers that we have in order to maximize the value of the transaction. Certainly, we will consider this if that's the case.
Okay. When you mention the BRL 12 billion, you're saying this is the consolidated amount. How much of it is within just the mobile business?
In mobile, the credit IR and CS is around BRL 1 billion.
Okay. That's already a good number. Okay. That's my first question. My second question, I'm very happy that you spent a lot of time talking about the wholesale, the infra business, because I agree with you. I see a lot of value in this. My question is on slide seven and on slide 13, you make very good arguments of how this is not properly valued within the structure of Oi as it is today. You talk about non-replicable infrastructure, you talk about the opportunities on 5G. I have asked this question to you guys before, it's good to ask this question also in the call. Why not think about spinning this off? I know there is a fiscal angle to it in order to avoid double taxation, but why not?
As you well presented in the presentation on page 13, you talk about the implied multiples of infrastructure companies, traditional telco companies, and how Oi looks like today. Why not pursue this or even IPO it or spin off it? You're talking about just on the wholesale revenues, a company that has revenues of over BRL 3 billion if the plan is properly executed.
Thank you for the second question on wholesale. Wholesale for us, it's a key piece of the strategy. We ran some exercise in this direction, spinning off wholesale, and the fiscal impact, it barely annihilates the value created by these alternatives. In our view, at this point, of course, we can always reassess and rediscuss this strategy. At this point, the way we picked these elements of the plan, that's the way we understand that maximize the value.
Valder, just complementing Brandão as well. I believe Brandão correctly pointed out that we did a lot of analysis of each of the components of the business in detail, including the cash requirements, including the return on investment, including the timing, including the possible fiscal and operational models, and that was no different with wholesale. With the way we have the plan right now, as Brandão mentioned, it wouldn't make a lot of sense initially. Obviously, we have a lot of time to execute here in terms of how this is going to develop over the next two years. We will continuously assess if something makes sense or not. At this point, we have to remember as well that we do have a lot of integration for all of the other fiber-based activities.
When we look at FTTH, when we look at B2B, obviously, there is a very important component of using those resources for retail and B2B. Obviously, this is what ends up impacting the potential result of doing a spinoff initially. Over time, we still have many things to happen. We have 5G, and I mentioned we want to have a preeminent position in 5G as an infrastructure provider. We still have to understand how some of the projections are going to play out over time. This will be always something to consider. At the initial exercise, it didn't make sense.
As a follow-up question on this infrastructure, how fast is deployment with partners? Deployment of infrastructure, not the sale per se. How fast has it been you deploying the fiber with partners, not necessarily by yourself? How, in your strategy, does the sale of this fiber will be done by you or by partners?
Specifically, this number is not a public number. It's not in this deck that we have shared. We are in the beginning of the process of building up this sort of partnership. We are not, at this point, mature to share with you the details of this strategy. I can say to you that it's an important driver for the achievement of the 16 million of homes passed .
Yeah. If we look at page four, Valder.
Yeah.
When we go back to the number of households that we believe have very positive economic potential for broadband there, we see three buckets, right? One where we have most of the existing layers, obviously those are the focus of the initial deployments. The second one where we have obviously slightly less components, still a significant advantage there in terms of infrastructure. Then a third layer where we do have a very important component, which is the transmission, but not necessarily the other layers in the network. When we look at this last one, this is the bucket where we expect to make most of the partnerships. Replying to you, if you look at the international models, you'll see that there's no single model out there, probably what we're going to be doing is a combination of models.
There are areas where you see models where the infrastructure company enters with infrastructure only. There are areas where it enters with infrastructure and products. There are areas where part of the infrastructure is done by the local partner, but the sales is done by the company. There's no single set model, that's the beauty of it, probably in the case of Brazil, if you consider that we do have fiber infrastructure in over 2,200 cities, there's still a good amount of cities out there for us to partner and explore different models. As it is a very diverse country, it's not homogeneous. Having one single model would not cut it. In this last bucket of 11 million homes, it's precisely where we believe that there's a lot of space for partnerships, we're going to capture this space certainly with different models.
That's a great answer, Rodrigo. That's exactly what I was trying to reconcile looking at that slide. Would this also involve potential partnership with existing ISPs?
Yes, absolutely.
Okay.
Absolutely.
Thank you, guys.
Thank you.
Thank you.
Mr. Eli [Benson from AIIM] would like to ask a question.
Yeah. Hi, guys. Thanks for your time. Just a couple of questions. I was just hoping to get a little bit more granularity on the EBITDA growth in 2021 and what the major drivers, if you could break that down. Also on the laying the fiber and the FTTH, can you give us point to some examples where you've seen this succeed in the past and what kind of data points we should look at as investors just to watch Oi do the same thing? Thanks.
Hi, Eli. Regarding the EBITDA, the main drivers for the growth are a more efficient capital location. For example, we are accelerating the changing from copper to fiber, which brings to us potential increase on EBITDA because the costs on fiber are lower than the copper. We have the growth on wholesale, which typically has a higher margin than B2C operations. In exchange of that, we are decelerating the DTH business, which will also release some cash for the company. On top of that, we have the cost-cutting initiatives that we are putting in place. All these things together will drive the growth on EBITDA in 2021. Can you please repeat the question regarding the FTTH?
Yeah. Just any examples that you could give us from the past. You guys clearly have a plan, and you didn't do it in a vacuum. Where you've seen this in different places working, executed.
Oh, thank you for this question. I think on the page six, we tried to address it, highlighting the examples of the performance we are having in some of the cities that we have deployed the FTTH. As you can see, once we started the operation, we stabilized the revenues, even on fixed business, fixed and broadband, and with lower churn, higher customer experience. We think we are in a very good position to accelerate and massificate this strategy. That's where we rely our confidence on the success of this FTTH strategy.
Okay, thanks.
Mr. Daniel Federle from Credit Suisse would like to ask a question.
Hi, good morning, everyone. Thank you very much for taking my questions. The first one is related to asset sales, real estate sales. It says in the presentation that they are immediately available for sale, right? Under the current regulatory environment. Why the company is planning to expand into the first quarter of 2021 to sell those real estate assets? That's the first question. The second question related to the broadband business. I'd like to understand how much of the fiber clients are actually expected to be a migration from copper broadband to fiber broadband, and how the ARPU in copper compares with the ARPU in fiber. Thank you very much.
Thank you for the questions, Daniel. Regarding the real estate, we are already working on the process of selling it. We of course will have to maximize the value and run a process aligned with the market potential, not in order to lose the opportunity to maximize the value of its process.
We are now, as we speak, working on it. For the second question, I'll ask Roberto Guenzburger to support me.
Hi, Daniel. The fiber, 75% of the new customers on FTTH are new to the plan. They are not migrating from copper. 25% are coming from copper, be it because they have a fixed line or because they have a fixed plus a broadband on copper. The importance of migrating cannot be neglected because once we migrate the customers, we can reduce the cost of maintenance of our copper network, and improve, of course, the satisfaction of the customers. On one hand, we don't have the new ARPU because the customers already have revenues with us, but we are able, with the migration, to reduce costs. The ARPUs of fiber are significantly higher than the typical broadband. By significantly, I mean over 20% higher.
Okay, perfect. If I may, only a quick follow-up on the EBITDA guidance. Is it under the new IFRS standards?
No, it's not.
Okay. Thank you very much.
Miss Pilar Santos from Morgan Stanley would like to ask a question. [Peter Andrew Pantis] from BTG Pactual would like to ask a question. Mr. Valder Nogueira from Santander would like to ask a question.
Just a follow-up on the answer that you gave to Daniel Federle. 75% of the new broadband clients are new to FTTH, while 25% are existing clients, correct?
That's correct.
The price that you're charging on FTTH is on average 20% higher than the DSL guys?
Yes. The ARPUs are 20% higher.
Okay. How does that ARPU compare with the ARPU that your competitors practice, either through equal or different technologies?
We are very aligned in terms of prices in the marketplace. The competition is more on speed and availability of the fiber. From a market perspective, there is no significant difference at the moment.
Yeah. It's worth highlighting, Valder, that obviously one of the things that the team has done, because of jumping slightly late to the bandwagon on fiber, is actually to have a better technical strategy into having a very good quality. If we look at what's been happening with the Netflix index, it just proves that. There's a lot of care in terms of how we're positioning our fiber in terms of speed and latency and availability. In reality, we believe we have a superior fiber quality compared to competition at this point, and this can be seen by the Netflix index. This is where the real competition is right now. Obviously, there is a relative alignment in the market for fiber.
Okay. Within those three layers of infra that you put, how are they pretty much dispersed within your coverage area? Where do you need to do more CapEx than in other areas? Are you focused the initial deployment on large cities or mid cities? How it's being done?
Hi, Valder. We initially focused the initial deployment into the areas where we have less CapEx involved. In the first layer. These areas are concentrated in large to mid-size cities. What we're looking at after deploying those areas is that our penetration rate is surpassing our estimates in the suburban areas. Suburban areas, large or mid-size cities in the outskirts of the larger metro areas are the cities that we are experiencing better results, where typically we are facing ISP competition. For instance, in some areas outside of Belo Horizonte, in four months, we've managed to reach 22% take-up rate. Or in some areas in the south of Brazil, in Porto Alegre metro region, we managed to reach 10% after two months. These are the areas where we are
Driving more of our investment at the moment.
Let me just add, Roberto and Valder, complementing the answer. There's one interesting advantage here, which probably is not very visible, which is given the fact that we already have a very good part of the infrastructure layer in place, we can be a lot more granular in our analysis as we deploy fiber rather than having to focus, "Oh, I need to fiber this city. I need to fiber that city." We already have fiber in many of those cities. As such, we can be granular to the point of saying the best possible investment return is, let's focus on this area and this city, that area and that other city, that third area and that third city, and so on and so forth. We don't have to focus first on cities. We can focus first on the most attractive areas within the cities and work from there.
When you go to the second layer, the conversation starts to change a little bit. We still have a pretty ample room there in terms of the almost 13 million homes, to be very granular in how we address infrastructure investment in fiber. We don't need to fiber the whole city.
Okay. That's the beauty of that chart on page four.
Absolutely. It's different than traditional players, and you know who I'm referring to, which even with a good expansion strategy, they have to first consider which cities they will focus on, regardless if it makes sense in the entire city or not. Then they have to go and look at the areas. There is less granularity possible when you don't have all of the network layers that we do.
Let me make a final question. How does this reconcile with the potential regulatory, let's say, benefits that the PLC 79 will demand you to make CapEx of broadband in more remote regions? How does this reconcile with this strategy here, especially the 11.6 parts here?
Valder, it's Cadu speaking. The methodology, once the PLC is approved, will be defined as the methodology. We think that if you look at the PGMC of Anatel, you have the cluster three and cluster four We think that the cluster three will be the ones potentially defined to spend some resources coming from the PLC 79 to build broadband. Then we have to reconciliate this definition with our strategy. Right now, it's too early to say something about it.
It tends to overlap with the third layer, no? With the 11.6 million home pass.
Potentially, yes.
Okay. Thank you.
Thank you all, guys, who have just run all the Q&A list here. I would like to thank you very much to participate in this call. This is a very important milestone for the company to reopen this operational chapter in the company's agenda. I'd like to thank you very much for participate in this milestone with us.
Thank you all.
This concludes Oi S.A.'s conference call. We would like to thank you for your participation. Have a good day.