Earnings Call: Q1 2018

May 29, 2018

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to OE SA's conference call to discuss the first quarter of 2018 results. Audio and slide are being broadcast simultaneously on the internet. At the company's RI website, www.ri. Oa.com. Br. And on NZIQ Platform. All participants are not only in listen only mode at this point. Later, we'll start the question and answer session. When further instructions will be given questions sent via webcast will be prioritized. Should you require any assistance during the conference call, would also like to inform you that the conference call will be done in Portuguese and by the company's management and will be in English by simultaneous translation. This conference call contains forward looking statements that are subject to known and unknown risks and uncertainties that could cause the company's Actual results to 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'll now turn the conference over to Yuri Cutelli as the CEO. Please, Ms. Erica, you may proceed. Good morning, everyone. Thank you for joining our conference call today. I have here with me, Giusek Claudia Gonzalez, Chief Operating Officer Bernardo Vennick, Chief Retail Officer Karl Is Eduardo Maderis, Chief Regulatory Officer Silver Almeida, Chief Administrative Officer Carlos Brindown, Chief Financial And Investor Relations Officer and Marcelo Ferreira, and our RI team. We'll begin the presentation of our results on Slide 3. With an overview of the first quarter 2018 highlights. We started the year with significant progress in the operations and in this step of the judicial reorganization process of the company. At the extraordinary shareholders meeting, we approved the financial statements of 2017 and filed filled, sorry, the 20F format SEC, a crucial step to move forward with the debt restructuring process with the capital increase. As for the operations, in the first quarter 2018, EBITDA was of 1 1,567,000,000, a substantial increase of 20% quarter on quarter and which is on the same level as previous quarters. In line with the EBITDA and the judicial organizations report for the end of 2018. Focusing on operating efficiency and on the digitalization of our services, we managed to reduce our costs by BRL318 1,000,000 year on year and BRL426 million quarter on quarter. It's important to point out that a strict cost management is accompanied by the constant improvement in our operating and quality indicators. As for our revenue, many challenges still lie ahead. Various reasons such as the unstable economic and political scenario, the growing unemployment rate, our limited investment capacity in recent years which is below market levels and the uncertainties related to the judicial realignment process. All of that contributed significantly to this challenge. However, the approval of the judicial organization plan in December gave us all and our customers more confidence and clarity to think about the future of the company and the company's sustainability. We are working on several initiatives to increase revenue in 2018 in all segments which will be further detailed by Brandel. Some of these actions have already been rolled out and started to yield the first positive results regarding the growth of the customer base and some of our products. Another key step to improve revenue will be the acceleration of our investments in fixed and mobile access, which will be financed by the capital increase. We are complying with all the steps of the judicial reorganization plan and working to bring forward At the same time, the company continues to prepare internally for the start of a new cycle. And I'll give the floor to our CFO Carlos Windell who will detail OE's financial and operating results in the quarter. Thank you, Erika. Good morning, everyone. Let's start on Slide 4. Net income from Brazilian operations closed this quarter at SEK5.6 billion, a decrease of 7.2% year on year and 2.6% quarter on quarter. Some of these factors combined caused this decrease, amongst them, the fierce competition, especially in the mobile segment, the recovering macroeconomic scenario, which is still recovering, right? And the increase in the unemployment rate which has arrived correlation with the prepaid mobile market and the company's judicial organization, mainly in the B2B segment. Revenue will be recovered through both of the following measures. The first is more related to our structure and will happen, thanks the capital increase of proven the digital reorganization, which will fund the acceleration of investment, mainly in fixed and fiber access and in 4G mobile coverage. The second will be specific strategic measures in each segment, taking advantage of market opportunities, We'll provide further detail on these measures throughout the presentation. Our cost efficiency efforts had positive results again in this quarter, down 7.3% year on year and 9.5% quarter on quarter. The main reasons for this reduction were basically a result of our operating efficiency and utilization measures. Delivering even better Anatel quality indicators. The quarter on quarter comparison was impacted by the seasonal effects discussed in the 4th quarter 2017 call as well. Our better cost management offset the decrease in revenue and contributed to an EBITDA in line with our judicial reorganization plan in the quarter. Our CapEx in the quarter was R1.1 billion, a drop of 8.3% year on year 38.7% quarter on quarter. As you mentioned in our last call, this reduction was already expected and reflects the early investments made in the court, the 4th quarter 2017, which focused mainly on the core of the network, but also on seizing a few market opportunities. Slide 5, we'll talk about our customer base. In the residential segment, the highlights are due to the growth in the pay TV base, supporting our convergence strategy as well as the growth in ARPU in this segment, which was 1.5% year on year. In personal mobile segment, the decrease observed in the prepaid base was mainly due to the policy to disconnect inactive inactive customers. In the postpaid segment, the base had a slight decrease year on year but started to show the first signs of recovery in the quarter. In B2B, we have stability in the number of customers, both year on year as well as quarter on quarter. However, I like to highlight the growth of the B2B mobile base, especially in the small enterprise segment, with a 50% increase in gross additions year on year. Slide 6, I'll present the results of the Residential segment. The company's strategy for the Residential segment is based on 3 pillars: 1, convergence focus on upselling with higher speed broadband offering proposals. The value proposition for convergence focuses on prices similar to those in the market, that offers more added value through larger amounts of data and packaged content generating positive impacts of the churn rates in the segment and in the increase and home offer. Offer breakdown. Making use of tools developed by the company's digital transformation process, such as the NDA next best action to offer each customer the most appropriate plan according to their customer profile. 3, better customer experience, which in the residential segment will come not only from the higher broadband speed and application services, the virtual technician, but also through products like OIplay, our over the top content service with over 30,000 titles, including movies and series, available to OE TV subscribers and more recently as value added content to broadband subscribers. The presented indicators show that we have been able to make progress and these strategies making good use of our existing base and infrastructure, and we will naturally boost this improvement with the acceleration of investments in fiber through the cattle increase. Slide 7 now. We'll talk about the results of the mobile segment. Despite the drop in mobility revenue, the positive responses from physicals in recent months have shown that the market related well reacted well by that. To the Mother's Day offer indicating we might expect a recovering top line in the coming quarters. In the prepaid segment, the decrease revenue is closely correlated with the deterioration of the unemployment rate. To cushion this effect, we are working on the increase or working to increase Oi Libre's share in the base. In this quarter, almost 70% of our prepaid base was already in the Oi Libre offering, which in addition to improving customer experience with our products it allows them to exchange voice minutes for data through the app. It also contributes to the revenue given that the average top up per user is almost 14% higher than in other offerings. In the postpaid segment, revenue strategies involve voice, data and content offering. Being supported by digitalization through MENA OE app to improve customer experience with our product. In addition, we started refiming the 1.8 frequency gigahertz for the 4.5 gigahertz of rain starting with 22 life that is in the course of this year. With Fortilisa and Salvador already being delivered in July. In line with our strategies, we launched OE MIME's digital on Mother's Day, This new portfolio offers data packages and unlimited voice minutes to all operators in Brazil in all clients. As well as providing free access to video content services, partners such as Fox, discovery, ESPN, depending on the plan. The OE Mice Control E plan's portfolio has also been redesigned and all plans have unlimited voice and larger data packages. The response from the market was extremely positive. With this offering, we observed the net additions in April and postpaid segment was the highest in the 18 months amounting to 72,000. Slide 8 will present the results of the B2B segment. And a stable microeconomic and political scenario in the country. Large exposure to segment and governmental customers, uncertainties regarding the resolution of Oasis Recognization Services. These are just a few of the factors that contributed to the low performance of B2B in the last year. Although the macro and political scenarios still are recovering. The approval of the judicial organization process in December brought a degree of transparency in greater clarity to the negotiation with larger customers. With a more favorable business environment, we started to implement our segment turnaround strategy, also based on 3 pillars, attracting new customers monetizing our base and loyalty and loyalty and retention. We had an organization restructuring to strengthen our position and capture synergies in other segments. We are working on several leverages to protect and monetize our customer base and to prospect more customers well as to attract new customers with appealing products. The first results are encouraging. The first quarter, which historically has worst B2B results due to lower number of business days has already started to show more stability in revenue. In addition, we had a net sales result in March. That was higher than the whole monthly average for 2017. We believe that we have good opportunities to improve performance in the segment. Slide 9, we will detail the cost reduction in the quarter. While the effect of our measures has not yet generated increased revenue, the focus on cost efficiency has helped stabilize EBITDA. In the fourth quarter, we reported net debt below historical levels, which explained is which, as we explained, rather, is due to seasonal adjustments. This quarter, without these effects, regular EBITDA returned to historical levels in line with the digital organization plan. As a result, the quarter ended with a regular EBITDA of BRL 1,567,000,000. Reals EBITDA, 25% higher quarter on quarter and in line with the results reported in the quarters of last year. The company reaffirms its commitment with an EBITDA of R6.1 billion as established in the judicial recognition report for the end of 2018. To that end, we continue to work on several business initiatives impacting both revenue and cost. Slide 10. It's important to highlight that the cost reduction achieved by the company relates to operational efficiency and quality improvement. We are leveraging structural initiatives turning our services digital and taking advantage of internal synergies. The result is that our quality indicators continue to improve. Complaint loss with AnatEL declined 24% in 1 year with ProCon to decline 5% and the small claims court they fell 22% over the same period of the year. Several other operational and satisfaction indicators have improved and this ongoing cycle translates into lower costs and improved customer experience. Slide 11, we'd like to highlight the company's digital transformation program. The process of digitization of our service started due to the company's need to reinvent itself and to innovate. So as to face the challenges of a traditional reorganization process and its impact on Always results, Applications such as the technical virtual, the virtual technician, and machine learning systems to define better offering profiles, such as NBA, NetSpax action, and more recently, the progress of our virtual assistants to reply to messages on Facebook Messenger, they are just a few examples of the features designed and developed by our digitization team. Now looking at the figures. We already had a 53% growth over last year in the number of online accounts, reducing our costs with mailing and printing. The number of calls filed in our customer service decreased by 15% in the same period reducing service costs and our online sales increased by 38% year on year. Reducing personnel expenses as well. These solutions not only contribute to the cost reduction we are presenting, but it also improves customer experience and satisfaction with our products and services. The digitalization is a priority and a key pillar in the company's strategy, and we continue to make progress in this direction. Now Slide 12, we'll talk about CapEx. We ended the quarter in investing a total of BRL1.1 billion, As we said in our last call, this reduction was already expected not only due to seasonality but also because we made early investments in the fourth quarter 2017 to be able to take advantage of some market opportunities in the fixed and mobile access networks. Thus, we are getting the company ready to start a new investment cycle, mainly focused on access the expansion of mobile coverage and high speed broadband. We already have a very well structured plan for additional CapEx. Which will be funded by our current base by reducing the churn rate, offering better services with faster residential broadband speeds through SFTTX, and mobile through 4.5G. And to increase revenue with customer based growth focused on data and value added service To revise this strategy, we broke the country down into more than 9000 plus accessing demand, existing infrastructure, and competition in each one of these areas. We ranked these areas according to metrics that optimize the use of capital and We did it based on NPV and IPV focusing on those that have the best return rate on invested capital accelerating value creation. Slide 13, I'd like to present the company's cash in the quarter. We ended March with a cash position of R6.2 billion. A reduction of SEK 773,000,000 against the cash balance this in December 2017. This decrease is explained mainly by 2 factors. 1,000,000 of CapEx turnover. This happens because there is a mismatch which are investment projects contracted and the payment of these projects. Since we have brought forward a high volume of investment at the end of 2017, these payments occurred in the 1st month of 2018. Payment of group companies have that have taxable income. I'd like to remind you that the plan has a cash of CHF 6,000,000,001 100 and CHF 88,000,000 rather than 2018. This number considers the capital increase of CHF 4,000,000,000 in a CapEx of CHF 7,000,000,000. I should also remind you that fluctuations were considered in the plan, especially in the first half. As due to specific characteristics of our business, we have a higher concentration of payment. Slide 14, I'd like to stress some concepts regarding the debt balance after this restructuring process. As well as the shareholding restructuring process. The approval of the plan will enable Oi to reduce its debt by around 36 1,000,000,000 reels on a fair value, fair value basis. That's the new gross debt balance of the company will be of CHF 13,500,000,000. The net debt will be 7,300,000,000. And the new shareholding structure chart on the right we show an estimate of new number of OE shares after the conversion of the bonds into shares and the capital increase. Based on the results of the choices of the plan's payment, the bond conversion will result in a dilution of 72.12 percent of the existing shares, resulting in a new post conversion total of approximately 2,400,000,000 shares. As approved in the plan, the price per share in the capital increase of R4 billion in cash is, takes into account a market's capital R3 billion dollars for the company's total equity capital divided by the number of post conversion shares, which is around 1,400,000,000 shares. As a result, the price per share of the capital increase would be BRL1.24 per share, which would result in the issue of another BRL3.2 billion. Leading to a total of approximately 5.7000000000 issued shares. Last quarter, we explained that the approval loan ratification of the judicial organization plan would have several accounting impacts on the company's balance sheet through the recognition of the main assumptions of the plan in the equity accounts. And that, for that reason, in the fourth quarter 2017, these accounts adjustments would lead to a net equity that'd be temporarily negative and that with adjustments considered in the debt restructuring plan, the company's net equity would be positive again. Therefore, as expected, these effects occurred in the first quarter with the recognition in our balance sheet of the debt restructure covered in the judicial regulation plan. That's the equity, the net equity for the first quarter of 2018 was once again positive closing the quarter at around R29 billion dollars. Slide 15, I'll talk about the next steps in the judicial reorganization process. The company's shareholder at the extraordinary general meeting held on 14th May approved the financial sentiments for 2017. On 16th May, we filed our 20 F report at SEC for the years of 2017 2016. There are only two steps left for the company to have its capital increase. The recognition of the judicial reorganization plan, the authorization that is Dutch American Portuguese and English courts and the conversion of the bonds into shares. We are already making advances on these processes and expect to complete them in the first half of twenty eighteen. After these two steps, the company's focus on the capital increase which will drive the CapEx growth in the coming years. This incremental CapEx will be directed towards investment in fixed and mobile aspects fiber and 4 g coverage, aiming to increase the participation in the various market, generating incremental revenue and sustainable EBITDA growth in the medium term. And I'll give the floor back to Erika for his final remarks. Thank you, Brenda. I'd like to conclude today's call by reinforcing the main messages that we presented. We continue to complete important steps into the digital rigization process. We approved the 2017 accounts. And in May June, we will achieve more and convert the bonds into shares. We are fully committed to the judicial regulations report and to delivering an EBITDA in line with the estimates. The company's cash remains healthy and in line with that estimate in the judicial regulations plan, giving us the confidence and stability to move forward in our investment path We continue to work in cost reduction opportunities, supported by the digital transformation of our services and by the operating efficiency initiatives. Always in a rational manner focused on improving quality. We have taken on under revenue challenge and are working on several strategies in the segments, taking advantage of our existing infrastructure and opportunities to grow the market. We have a ready to go CapEx plan. We're working on the judicial organization steps to bring forward the capital increase and that will fund this plan and will accelerate the growth of our revenues. We have reduced our debt. Our equity is positive. We're financially healthy again. We are finally ready and motivated to make its way back into the competitive position in the market by delivering to society, customers, shareholders, creditors and employees the return they expect of us. Thank you for your trust, support and dedication over the years. We have taken an incredible step in the judicial approval, but that was only the first step. And now open to the question and answer session. Thank you in advance for joining. Thank you. Questions sent via webcast will be prioritized. You may remove Good morning, everyone. We have opened for question and answers, questions and answers. Brendan has a couple of questions and we're going to start answering them. Thank you, everyone. Good morning, again, everyone. We're starting with a question and answer session. We'll start off with a webcast platform. The first question we received has to do with revenue. What is the company doing to reduce the trend for revenue to go down? Is there a chance that we're going to see revenue go up in the short term? Bernardo Vinic, our commercial officer, will answer that question. Good morning, everyone. It's important to say that we are going to make investments and with the investments, we're going to see improvement again. In Mobility, we have been working on our commercial strategies. We have been working on, like, example, the offer we did on Mother's Day, and we have been reaping the results. This is a 1st quarter crawl, but we have already published the data for April. And in April, would it better than in the whole first quarter? In this trend, continues in May as well. Another point we're addressing is that 1.8 gene, we started that process, that project rather and 22 Cities in the Northeast. Fortaleza and Salvador will be ready in the next quarter. That should also help us with our coverage position, especially in the areas where we have our market share. We have also been working on channel and portfolio synergy for the B2B, especially with SME, smaller and medium enterprises. Another point worth mentioning the residential segment, is that we are to launch OE Total and Optic fiber in the second quarter as well. Which should also leverage our competitiveness, especially in increasing a number of customers in broadband One last point I'd like to mention, and that applies to mobility as well to the residential segment. Is that we have been working hard to reduce issues with customers especially in charging, and having customer scholars related to problems of the invoices that were sent. And another point is that we have been working on the profiling of the products we sell. As well as in both in residential and mobile, we have been segmenting offerings we make so that each customer profile is met. That was also mentioned on the call. We have the B2B turnaround. We have started to reap the results. Companies are coming to us, a lease agreement with the creditors. It's made people less concerned about coming to us and having us join projects with them. We have been joining in bits. We have been taking part in several bits, both in the public as well as in the private sectors. We have been winning a few bids, and we can see improvements in the commercial side. The UGR has been going up. Our base has been going up. That should have an impact on the coming months as well. Thank you Bernardo. We have a second question from the webcast platform regarding the company costs. Is it still possible to reduce costs and volume in a sustainable fashion? What was the cost reduction in the quarter? The cost reduction is related to activities that we have been doing as per our strategic plan. And our chief operating officer Navao will be talking a little bit about them. You, Bruno, and good morning, everyone. Cost reduction is important and sustainable. We have been working on that in the recent year, but we have been working hard in the last year. And we have been focusing on improving operation, okay, and improving customer experience. We have now in bridge, we have taken in the network companies and improved our productivity We have over 7 activities a day. This increase in productivity also allowed us to improve our focus on preventative maintenance and reducing corrective maintenance the latter is more expensive The number And all of We'll continue to focus on that and we intend to continue to improve customer experience and cost reductions. The digitization is also very important. We have been using that to improve productivity as well or operating efficiency. We have been innovating using these platforms, like the virtual technician, MingA OE, there's a number of actions that help us to make processes digital, which expedite the process for the customer to get the service and improve the customer's experience as well and reduce the cost on our side, reducing back office and reducing existing cost structures. Better improvement and quality has a direct impact regarding contingency funds. There are fewer people filing complaints against this in the small civil court. So we reduced costs on that front as well. As for the future, we'll continue to focus on cost reduction and operational efficiency as well as improved customer experience As I said, OI Digital is a very important platform. There's a lot that can be done through that to improve customer experience. We believe in a lighter, faster company, that will allow us to improve revenue and improve our performance in the market. Good morning, everyone. Thank you for taking my question. I have two questions actually. The first one has to do with the clusters that are used to break down the country. You said that your focus on return on investment. What is the minimum return on investment that you expect for these clusters and the ones that you prioritize? That's the first question. The second question has to do with refarming. And there's 1.8 Refining. Will that be enough? Will that be enough for 4G? Or do you, as we know, yet in the end of digital organization process, is there anything, any chance that will change? Thanks, Stella, for your question. Let's start off with a cluster question. We haven't prioritized it based on the return investment itself, but by the ratio between VPL NVP and the net present value and the net investment value. We'll look at capital use, which increases value generation for the company. We prioritized it based on the less metrics. And of course, we took into account the resources we have at hand. And how we'd be able to carry the project out. That is, of course, natural in the sort of investment We were looking at the net present value and the net invested value. And made our decisions. That's where the 1.8 refarming, there's still a long way ahead of us. Before we can derive profits from that. We have the biggest So there's a long way ahead of us in combining that with 2.5. The 22 cities we mentioned already take that use of that frequency into account. And we looked at our base, so we have a higher market share. We'll always look at the option of increasing our share. And of course, we'll always take into account the return, the economic return will get looking at the frequency, also looking at the price. So WESSA has become an option to the company. We'll certainly take that into consideration, and then we'll make that decision. Our next question comes from Carlos Sakeda from TDG Pactual. Good morning everyone. We apologize. We're not able to listen to the question. There's a problem with the connection. Of course, I'm not able to listen to the question. We apologize. We apologize. Connection was very, very bad. We were not able to understand your question. I think the first question was related to income tax. Is that correct? The first quarter has the income tax payment related to the tax income on the Internet. I looked at it from a fiscal perspective, to try and bring efficiencies to the tax results. This is only applied to this quarter. We have already absorbed internet into Oremarville, making it a more efficient vehicle. As for tax impact. They haven't yet happened. We'll probably see impacts on the second quarter. As we're making the conversion now and move in new debt restructuring, there will be tax impacts, which we planned around the judicial organization. I'm not sure if I understood the questions. The connection was very, very bad. I'm sorry. About CapEx for 2018. Thank you for answering my question. But CapEx 2018, what are our expectations around CapEx for 2018? 5,500,000,000. That's our expectation for CapEx, with the leverage of I mean, we hope to leverage that number as when we get the actions in course. We have a 5.5 as a minimum base and maybe there'll be leverage between 6, 6.5 It depends on the resources we get. Now back to web webcast questions. We have another question related to the debt. The debt presented as a new debt or are this quarter this number is going to be reviewed every quarter. What are the next steps? I think this closure, makes it clear what we have been doing relative to debt restructuring. As we said, $36,000,000,000 in financial debt was reduced. So the company is in a more sustainable level, and that's in line with the balance sheet. That allows the company to get into a better turnaround cycle. And from here on and from then on, we'll be much more in line with what is going on in Brazil and much less focus on debt restructure and capital. So I think that is positive and I think that is going to be guiding the the company's marketliner. As for the objective question, if these numbers are going to be reviewed, That is the mess that we have in the balance sheet. That is the debt we need to be looking at in our discussion of the market. These numbers are not going to be reviewed every quarter, which is only once from now on, there's a only going to be adjustments to this number as per regular accounting practices. Our next steps are really focused on converting debt into shares, converting bonds into shares. And we need to wait for the does your organization plan to be approved in Holland, the United States and England? That is an important step in our visual organization process. Another question regarding the company's cash. 800,000,000 cash spent in this weekend. How can the company expect to keep on this level to the end of the year? I think we addressed some of that on the presentation ranks on the call. That's not the level where we have in the company, but the cash spent has to do with the seasonality of like fiscal impacts. And we know that the second half has better cash positions for the company. This is really according to our plan. There was no surprises. I think we should really make that comment as a positive aspect. Every stage, every step is being covered at the right time. Our question is from Danielle Cervelli from Credit Suisse. I have a question around some details. Mentioned, I mean, debt to market, That's going to be reviewed once a year. And this discount rate that you have looked at, how did you consider that. And looking at the debt, because the company is going to put the debt back into the market, that's sort of my question. The second question around capital increase, we know that some bondholders are going to participate. So I'd like to know how much commitment that is? Is this 4,000,000,000? How much is it? As far as the debt adjustment question. That was done alongside with our auditors. We need to see at the incremental cost that the company would have. Looking at the maturity of the instruments we have in our balance sheet. In our press release, we showed a breakdown of the fees and taxes that we're looking to add. So national credits, international credits. And I think that is all the transparency necessary so they can understand how we put that together and from here on. We'll be reviewing the balance we present today, the net balance, the debt balance rather. There shouldn't be any alterations around the mechanics behind it nor to the fees. So corrections should be very transparency from now on. How much capital has been committed already for around this 4,000,000,000 Is that the figure? Is it a smaller figure? We have the EUR 4,000,000,000 committed yet, and the compensations mechanics for this commitment We have, flips backstop an 8% 10% paid in shares, but the full billing has been committed. Yes. And in the medium term, in 2, 3 years that the macro scenario is better, if there's better growth rate and better credits than now after the digital organization. Will that continue to be 6%, 7%? Yes, the rate would be around 6%, 7% would continue the same. Of course, it depends on the macroeconomic scenario, of course. Then we could maybe repurchase the debt. But we're working with that scenario right now. And that's what we said in the press release made it very transparent to the market thing. Thank you. Next question by Fred Dominguez from Bradesco. First one is the more strategic. Once the capital comes in for this incremental capital, We can have higher CapEx. There was one question around the, nice present value NPV. And I'd like to understand NB2B, how that works as well, are you going to be, addressing that or what is the strategy exactly in the scenario that we have for smaller players, bigger players? That's my first question. And my second question, I'd like to have an update on, I mean, there's a very important point around the fistula structures you have for PLC. Then once the benefits are reaped for the fiscal structure. Will that happen in D1 or do you need some sort of authorization Or is there anything around that that's CHF 400,000,000,000, CHF 400,000,000,000 and that could be done once the PLC is over. Thank you. Hello? First question around CapEx. Our focus is to be as predictive as possible with our capital. In the first phase, we're focusing more on fixed than mobile. What is under that sector is better. And then there is an important component, which is giving back into markets where competition is less sophisticated than in what we have in the major cities. We'll be investing in fiber. It's up to be up to a certain station or to the home of our customers. We also have investments in technology modernization where the network is degraded. We should replace copper with fiber. And that will be much better for the customer. As for PLC 79, I'll address the we'll be able to do that in a very fast way. And it's very possible that that will be real. Adrianna Quynya will talk a little bit about that. We don't have a lot of leverage in that. You're right. But she can shed some light on where we stand. We don't have control over it as we've mentioned, but we are monitoring the project because it's extremely important to develop communication sector as a whole, with opportunities to revisit their regulatory framework, and look at measures that have already been taken by the government, a milestone on our timeline would be that once that the PLC79 is over, we'll still have a couple of months ahead a few months actually. But the company would need to make the decision decision whether or not the company wants to migrate. That is an option I need to remind you. And we need to look at the calculations. These calculations are not simple. So it will take a few months to make that decision once the PLC is open. Thank you, Bruno, and everyone. Next question from Andrew Valdez from JPMorgan. Good morning, everyone. Getting impressive results and the mobile now we're seeing April and apparently in May as well. What was that about? Was it about customizing, what is offered to the customers. Is that supported by the network? Thank you, Pedro. All of the developments in the company are based on a lot of research and the product we launched in April. I mean, the results we had in April is mainly due to a 15 day offer that we did the result in May should be maybe available for the whole month, but It brings the customer a very tailored experience that is exactly what the customer wanted. We're really customizing the package through the MENA OA app. There was that product. There was also a lot of communication around that offer. And We have been really successful with sales there. What we see in April, I mean, it's a positive result, and we have similar results in May for the product. So it is the result of the right amount of data and the experience to the customer that no other operator gives them. They can manage the whole, manage experience. They don't need to call the call center can do everything on the MingA OI app as for whether the network supports that. I can answer that question as well. We'll put nothing in the market that we have not studied and made sure it is the right quality for our customers. So I can tell you that whatever we're offering meets our delivery capacity. I have a question for Brendan. What are the main risks you foresee up to the end of the year with additional reorganization with a capital increase with net debt restructuring Is there any other risk you think you should keep our eye on? Looking at our current scenario, I think that we have already completed very important steps that were a big concern in the judicial organization implementation. Having the plan filed and having approvals, having the financial statements approved at the general meeting. I think that we have already overcome the main obstacles and concerns we had regarding the organization plan implementation, but we still have important steps ahead of us. We can look at Anatoe credits for that. The PG Mill 4 visa points that we're watching up close, but I can tell you that. We have achieved already important steps that makes the whole company lighter concerning problems and concerns. So I think this is a positive moment for the company. And it's a decisive point. Once that point is passed, then we can make other investments possible in the future. Thank you. Now I'll turn the floor over to Eurecko for his final remarks. I'd like to thank everyone. Thank you for joining our call today. It was our call for the first quarter 2018. And I'd like to again assure you that we continue to I think the steps in the Tissue Organization Plan, our balance sheet is organized, and we're working towards converting bonds in the coming weeks and accelerate the capital increase as much as possible, which will be funding our sustainable growth. I'd also like to say that we continue to improve our operations and service qualities. We've already intensified our commercial activities. You've seen from Bernardo, Bernardo's words, We're implementing new products. We have OE Digital, and we can see the first positive results yielded in our customer base, which reflects the fact that the company is getting better and better. There is a lot of work ahead of us, and it is clear for everyone that we can see it. But we are working on building a new OA, it is a new company. And I'd like to once again thank you, everyone, and wish you all a very good day. Or is, or is that a conference call and now come to an end? Thank you all for joining. Have a great day.