Earnings Call: Q2 2021

Jul 27, 2021

Good morning, ladies and gentlemen, and welcome to Chin S. A. 2021 Second Quarter Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in listen only mode during the company's presentation. There will be a replay for this call on the company's website. After team SA remarks are completed, There will be a question and answer session for participants. At that time, further instructions will be given. We highlight that statements that may be made regarding the prospects, projections and goals of TIM S. A. Constitute the beliefs and assumptions of the company's Board of Executive Officers. Future considerations are not performance warranties. They involve risks, uncertainties and assumptions as they refer to events that may or may not occur. Investors should understand that internal and external factors to TMSA may affect their performance and lead to different results than those planned. Now, I will turn the conference over to the CEO, Mr. Pietro Labriola, so he can present the main messages for the Q2 of 2021. Please, Mr. Pietro, you may proceed. Good morning, everyone. Thanks for attending our conference call. We are becoming more optimistic about the situation of the country and the business. After the 2nd wave of the pandemic hit Brazil between March May, we started to see Some life at the end of the tunnel following the vaccination acceleration. Overall, the economic activity is coming back Thank you, is the speed of our business. In the second quarter, we continued to present a solid recovery With our revenue lines improving on a year over year basis and the quarter over quarter. For the telecom sector, the first wave was the worst moment of the pandemic, but an easy comparison base Doesn't explain all the evolution we see in the business. That is why we are very confident in delivering the Company's targets. 2nd half expectations are high, not only due to the recovery process, but also because of the Spectrum auction and the closing of the deal with Rui. Without further delays, let's move to the results. Once again, the quarter was marked by admirable execution. We accelerated our recovery, growing solidly In all major lines and more rapidly than our recent results. We closed the quarter with service Revenues growing near 9% year over year. EBITDA coming in very solid, Close to 6% versus last year. We are posting yearly growth for the past 20 quarters. Not all businesses reached such consistent and strong performance. In July, We announced another venture of our customer platform strategy, this time in the Edutec arena with the Cognac Group. This last partnership led to a new control offer in mobile. So we took the opportunity to refresh the entire mobile portfolio. In parallel, we also updated TIM Live's Portfolio. In the 2nd quarter, we continued with the financing plan for the acquisition and issued The 1st sustainability linked bond in TIM's history. We issued BRL1.6 BRL1 1,000,000,000 in debentures attached to ESG targets, the largest in Brazil so far. By achieving social and environmental goals, we reduce the cost of funding while producing positive impact for society. Still on this front, we improved our disclosure information following the release of our annual ESG report and a brand new section on our IR website. We focus our environmental actions on reaching our long term targets, adding 15 Renewable Energy Plants and reaching 1 point 7,000 Biocides. On the social front, we also had a great quarter. I was personally engaged in launching the partnership with the Mulheres Positive Initiatives together with 9 other large companies to foster career development and women's access to the labor market. We also adhere to the LGBTI plus And finally, we see recognition for our work winning the GSMA Award for Diversity in Tech. Detailing our revenue acceleration, we saw positive contribution coming from mobile and fixed services, With all major online posting better growth rates than the first quarter, Mobile service revenue accelerated to grow 8.5% year over year, with the postpaid segment also speeding up reached almost 9%, while prepaid expanded more than 5%, reverting past quarter contractions. In parallel, fixed services also posted a solid evolution, up by 11% With a substantial contribution from TIM Live expanding more than 20% year over year. The critical element for our mobile recovery amid the 2nd wave of the pandemic is the ability to execute The volume to value strategy. Despite having still some store close across the country impacting our commercial activity, Our mobile ARPU grew more than 10% year over year and 1.2% versus the 1st quarter. It's worth noting that our ARPU is growing for 22 consecutive quarters. Since March, we have seen an improvement in the recharge level. This trend was confirmed in the Q2. Andrew Postpaid ARPU also increased by more than 5% year over year, backed by positive performance In Intrasegment Migrations, the quest to differentiate our offers by moving away from the price per giga It's clearly paying off. As I mentioned earlier, we refreshed our mobile portfolio, adding Unlimited music will deserve go to our main prepaid proposition. In pure postpaid, the Entertainment tab grew It's optioned with the addition of HBO Max. While in controller offers, we added the education content from the Ampli platform under our EdTech partnership. Going into more details of this new venture. We are joining forces with the largest education player in Brazil, the Cognac Group, to In exchange for the usage of our mobile operator assets, TIM will be remunerated in the form of CAC revenues and equity, up to 30% of Ample Capital. With this, we expect to accelerate student intake, creating value for both companies. Regarding Financial Services, we continue to accelerate every month the number of additional team clients To open and use a bank account at C6, generating new revenues and improving the lifetime value of the team customers. With that, we are hitting the targets for equity and book an additional stake in the 2nd quarter, which bring us to a total of approximately 2.9 percent of C6 Capital. Our mobile advertising project is maturing day by day. We keep growing our audience pool with more than 19,000,000 obscene threats. We developed an insights platform respecting all the data privacy requirements. We are developing new channels Such as TIM Funded, ASSIO Seats, Games With Heads and TIM News with the Duo Content Plus Heads. First results From the TMAS platform are coming out. Campaigns are reaching millions of people. We are doing large scale surveys, Rewarding user for their engagement with us. Brick by brick, we are building a new revenue stream. Completing the discussion around revenues drivers, let's move to Fixed Services, Specifically, TIM Live operation. The main drivers for the double digit revenue growth we see every quarter in the fixed broadband Continue to be ARPU and customer base uplift. In the 2nd quarter, blended ARPU was up By more than 8% with FTTH ARPU reaching close to BRL110 per connection, Our customer base continues to evolve towards higher speeds. The new portfolio comes with 500 and 600 megabits per second speeds and more OTT contents FTTH coverage also expanded, Reaching 3,800,000 homes passed. A quick update on the Fabeco deal. In June, we got the approval from Cadet and now we are waiting for Anatel's consent. Closing is expected for September or October, and we are planning a smooth transition without disruption in the FTTH rollout. We are pleased with the arrival of IHS as a partner in the Fabrica and wish to build great teams with them. Maintaining our discussion on infrastructure developments, I'd like to remark that It was not only the broadband coverage that grew solidly. Mobile coverage also expanded soundly. 22% more cities were covered with 4 gs and 20% more in 4.5 gs. We are also preparing our network to receive oil customers. Massive MIMO and site modernization Are accelerating for this purpose. Transport network keeps growing with more than 1,000 cities connected with fiber And consequently, more kilometers being laid out. This Solid distribution is helping us to anticipate our tax commitments. The network sharing agreement with DiVo continues to evolve. Now all three fronts are showing progress. Combined coverage expansion went above 250 cities. Single grid trials are being run-in 20 cities, while 2 gs reach off tests are underway. Our commitment to efficiency is a driver for this project and many others. Talking about efficiency. This quarter, it is crucial to go into some details of our OpEx dynamics To clarify any misinterpretations, our OpEx went up 15% year on year, But this is basically due to the return on variable costs and expenses reduced due to the 1st wave of pandemic and Other volume related impacts. To confirm this understanding, we can compare this quarter against The Q2 of 2019 and we get a flat variation, while versus the Q1 of 2021, We posted a slight decline of 0.6%. So it is fair to say our OpEx is still under control. Digitalization efforts continue to play an essential role in TIM's efficiency program, and We have robust improvements in all leading indicators, e billing, e payment, digital caring, The sales of line service charges keep growing in adoption. Despite this specific situation with OpEx, EBITDA growth also accelerated to 5.9 percent year over year, summing BRL2.1 billion. Margin stood close to 48%. This performance had net income to go above BRL618 million, representing a 2.4% increase. Our investments reached BRL900 1,000,000, a growth of more than 30% year on year. In this context, operating free cash flow for the 3 6 months of the year grew more than 50%, Surpassing BRL1.8 billion, which drove our net debt down 27% and the cash position of BRL7.1 billion, it is worth mentioning our financing plan for the acquisition is underway And going smoothly. Beside the venture issuance, we took BRL1.1 billion in bilateral loans And we also have the cash proceeds from the Fabeco deal. We expect to take additional debt lines for approximately BRL1 billion in the second half. Closing my comments, I want to remark on the sound results We have been delivering amid a very complex environment, confirming the company's solid fundamentals And a positive momentum. Let's summarize. In the first half, we posted a 6% Service revenue increased while expanding EBITDA by more than 5%. Customer platform revenues summing BRL46 1,000,000 and considering the new partnerships, we have a clear path to reach our year end goal of BRL100 1,000,000. A year ago, those initiatives were only a PowerPoint chart. However, today, we are proving we can create value with them. On the M and A front, we are executing well what we set ourselves to do. As I said at the beginning of my speech, We are more optimistic about the future. We are confident the OIB will be approved. However, We always knew this is a complex transaction that would require much attention from the regulators. Bottom line, All that has happened so far is not a surprise. We are working with Anatol and Kave, answering their requests And clarifying all that is necessary. Another good news is related to the spectrum auction. The process is moving forward. So we should have it happening between September October. The essence of An infrastructure focus option is being confirmed. Before I conclude my presentation, I'd like to give a special thanks to Adrian Kalaje, my friend, Adrian Kalaje, our CFO. By the end of August, He will be returning to Argentina, starting a new career path. I personally was delighted to work with Adrian for the past 5 plus years. He helped us accomplish many things. And for that, Tim Brazil and I will always be grateful. I wish him all the best, but I still count on him to complete the transition in his last weeks. Thank you. We will now open the floor for questions. Please, operator. Thank you, Mr. Pietro. Now we will begin the Q and A session. First, we will take questions from analysts followed by general We ask each participant to restrict himself to 2 questions at a time. Our first question comes from Marcelo Santos with JPMorgan. Please, Mr. Santos, you may proceed. Hi, good morning. Thanks for taking my question. Can you hear me well? I would like to ask a bit about TIM Live. So you had a slowdown in adds this quarter. I understand that you're adding a lot of fiber to the home, but you're losing fiber to the curb. So could you please comment on the outlook for this? And the second question also on broadband. How do you see the outlook for Brazilian fiber broadband, Given that you have many players that are coming to the market that are creating infrastructure companies and have aggressive plans of fiber deployment. Do you think there will be space for everybody? Do you think there will be overlap in competition? How do you see this outlook? Thank you, Marcelo. Let's start from the second question that is more related to the outlook of the evolution of the ultra broadband market. Yes. It's true that we have a lot of players that in this moment are fighting to find some rooms For a possible development. But we have to try to understand which are the real capabilities of all the different player in this market. Because if you look at that, everybody wants to compete and FTTH is the key element for this competition. So other technologies are less competitive compared to that. Part of the actual coverage in FTTH of some of the display are unable To reach high speed services. What I mean that, for example, it's not for everybody to be able to supply a service at 1 Or 2 gigabit per second. So I'm very happy to announce that to clarify better on the market, we are able to compete and stay in this market. We are going to launch by the end of October our 2 new offers at 1 and 2 gigabit per second. It will be clarified who is really able to stay in this market with a network that is able to manage this kind of speed. 2nd, it's clear that the FTT always on the second question, sorry, it's a second point related to the second question. It's clear that Brazil is a continent, as I used to say every time. And so there are rooms to have more than one player To more than one player to cover the different state. It's clear that it's really important to understand where it makes sense To go and compete because there are no place in the world where you can have more than 2 or 3 player Able to make this business profitable business investing on FTTH. I think that there will be a natural process in terms of competition where someone will move from a slogan To a reality. So I think that I'm very curious to see what will happen in the following months Related to this item. But again, I'm quite confident that our strategy that is based on a reliable network With the support of IHS, will allow us to continue to compete in the different area. And again, Let's see very well the evolution. There are some players, Moelis, that if they want to really compete, They have to grow. To grow, they are going to lose some of the fiscal advantages that are related to the size of the company. So again, let's see and I think that we have the possibility to further increase our development. Coming back to the first question that related to our speed. This is true that we have a slightly slowdown in the second quarter. This is mainly related to the FTTC. Just to clarify, when we discuss about TIM Live, usually we look at our revenues as an overall. If I should try to compare TIM Live as we discussed with other player, we should divide our revenues and our net adds In FTTC and FTTH, and if you look at FTTH, FTTH continued to grow more than 40% year over year. Sorry, FTTH continued to grow more than 40% year over year, while what is happening is that FTTC It's slowing down, and we are in a negative trend in terms of revenues. But on this area, jointly with IHS, We are working also on the possibility of an upgrade of the existing FTTC to FTTH. Our expectation for the second half is that perhaps our revenue will be slightly below 20% for Live because we will have we will continue to have a decrease of FTTC revenues and increase of FTTH. But as a math, We will be back in the Q1 of the next year with the growth that will be closer to 20% because FTTC will continue to reduce and the contribution will be lower and lower and lower. About the numbers, I leave the stage to Alberto that can give a different light On the real number of the Q2, Alberto, please. Yes. Thank you, Pietro. Hi, Marcelo. Just a few additional points in terms of Overall performance and fiber access. And when it comes to the FTTC There is a 3 more in terms of churn rate over the last months. We, as a structural move, decided to An overlay in Rio de Janeiro and Sao Paulo, a brownfield overlay. We are pretty well advanced in Rio de Janeiro where we're already seeing an improving performance in terms of reducing churn. And we started also in Sao Paulo this year. And so basically, we are putting an overlay of FTTH on top of our FTTC in order to lock in our customer base. Last point to mention is that we made a price adjustment in the second quarter. This have a specific effect on the churn rate of That is not going to repeat in the next quarters at least at the same intensity. Great. Thank you very much. Our next question comes from Fred Mendes with PLFA. Please, Mr. Mendes, go ahead. Good morning, everyone, and thanks for the call. I have two questions as well. I mean, the first strong performance on the mobile service revenue. You mentioned that upselling continues to play an important role. So just want to I mean, where that's mainly happening? I mean, it looks like Snotus, it was in the past from prepaid to hybrid. So just wondering if you're doing that mainly in the purpose space and where you see more opportunities to do for the next quarters. That will be my first question. And then my second question on the customer platform is still at an early stage, but this quarter, we reported significant growth, Almost BRL30 1,000,000. So just trying to understand how confident you feel about this line of growth. And if the margins on this platform, it is similar to what you've been reporting for the consolidated company or they are slightly different? Thank you. Thank you, Fred. About the first question that is related to the upgrade, we are proceeding with exactly the Same strategy that we are declaring since a lot of time. If you remember, I can check also a chart that we show, I think, 3 or 4 years ago, Where we were showing that our idea was to start to migrate prepaid customer from prepaid to control and then progressively move from control To postpaid, it's clear that at the beginning, the volume of customer on the prepaid, the so called prepaid swimming pool was so big that it was possible to have focused mainly on the migration from prepaid to control. Then the fact that we have to control also the rent ability of the migration because we have to remember that we have to continue to create a generated value This activity and not just posting some numbers, we are more focusing on the migration from Control to Postpaid. It doesn't mean that we are not continuing to migrate customer from prepaid to control, but we are doing that with Much more attention looking at the bad debt, the cost and the level of ARPU. And it is also By the continued increase in the prepaid ARPU growth. On the control in the migration from the control to the postpaid, What is important to highlight is we have always to check the amount of Giga that we put in our plan Because what we are doing is that we define a certain amount of Giga under control that are not Big enough to keep the customer on that plan to try to solicitate immigration from controle to postpaid To reach also a higher level of Giga. In the meantime, as we are used to say, we don't want to compete Just on Giga and price is the strategy that we call Alendo Giga. And so If you look at our offer, what we are doing, we are putting in all our package a different level of services To justify also an increase of price and ARPU, just to give you an idea, on the postpaid, we have a service for our Customer base where our customer do not interact in the call center with an IVR, so with an automatic machine, But yes, the possibility to have a conserve service. So I think that perhaps say and discuss only about Giga, It's partially incorrect because we are trying to build a differentiation that come through, the amount of Giga, The level of service that we supply to the customer and the content with the so called entertainment ad strategy. And another important element, again, to guarantee the maximum level of efficiency in our commercial activity, We are continuing to develop our next back section platform that, thanks also to artificial intelligence tool, Allow us to understand where makes sense to upgrade the customer, sometimes for us to increase It's sometimes to churn control. Let's move to the second question, that is customer platform. Yes. We are satisfied about our strategy. As we announced, we closed the agreement with Cogna. And I personally want to thank you, Cogna team to have chosen team as a partner for this new journey. I think that it's also important to remember that we want We are planning to close other 3 other deals by the end of this year. We have already announced the second The telemedicine and financial services with the digital wallet, but we have been planning to launch another one that is much more related to the Value Added Services Environment. Last but not least, I think that we will have real good opportunities Coming from the mobile advertising field. Here again, a call to action to all the telco player To join forces because if we put together all the asset that we have, we are able to stay in the market competing with big Yes. Just complementing. Hi, Fred. It's interesting your question about the margin. Probably the first time we discussed about margins of this kind of revenue. So the thing is, as you know, we are booking Revenues coming from commissions of the activations of new accounts of each of these business. So In this end, obviously, the marginality is much higher than the normal one because we do not have additional direct associated costs. You may think about our efforts in terms of communication that are high, as always. But at the same time, there is a lot of synergy because it's the same communication that we use for our products, embedding also The different new offers, first one of C6 now in partnership with Kona. So at the end, In terms of the business itself, yes, it has a higher marginality. But there is another variable, probably for us Much more important that these offers, these new business for us are extremely important in terms of increasing the lifetime of our customers. So obviously, there reducing the churn helps instantly to increase our margin. So On the overall, obviously, in terms of margins, it's extremely positive. We are very happy in terms of how it's going, these new businesses. And obviously, we are probably Expecting to go above the initial target that we have for this year. So again, it was Interesting your question because it helps us because it's the first time we discuss about margins on this. Fred, if I can finalize The answer of Adrian, not related to the margin, but again, a statement about the strategy. We foresee For our company, but I think for our industry, a future in which we have to work more and more, more and more on services, Quality of the service and this kind of partnership because it's the only way to attribute value to a service that differently could become a commodity, and this is what sustain our strategy from volume to value. Perfect. Very clear, Pietro, Adam. Thank you. And Adam, thanks for the great work, and best of luck in our new challenge. Thank you. Thank you, Fred. Thank you again. Our next question comes from Victor Tomita with Goldman Our next question comes from Soumit Datta with New Street Research. Please, you may go ahead. Hi there. Hopefully, you can hear me. Thanks very much for taking the questions. And also, Adrian, thanks very much for your help over the years and good luck with everything in the future. A couple of things for me, please. First of all, Financial Services. Just to delve into a little bit of detail there, if I could. Can I check, firstly, I saw the news about JPM taking a stake in C6? I just wonder, does that change anything in terms of Your perspective on the future outlook and does it change anything in terms of deal economics, please? Secondly, can you say anything around the contribution of TIM's subscribers to the overall C6 subscriber I don't think you'll be able to give numbers, but any sort of sense as to your contribution there? And then thirdly, please, I just wondered there's a comment in the presentation About a digital wallet launch in the Q3. I just wondered specifically on monetization, How does that help things going forward? I think at the moment, essentially, you sign up a subscriber And you get paid a share of that. I just wondered what if and when you launch your digital wallet, how does that change that monetization process, please? And then I had one more on the Oi deal, but maybe we could do the FinTech stuff first, please. Hey, Sumit. I was waiting for your question related to the Oi deal, but I will not start from that. Let's start from the easiest one That are the first one. About the JPMorgan C6 acquisition, this is something that Jointly with the second question that is related to the contribution TIM subscribers in the customer base of C6 are information that have to be asked primarily to C6 because it's clear that we don't have all that kind of detail. We asked some details about the JPMorgan process. And once we will receive the formal answer, we will be able to give you some more details. Related to the digital wallet, It's really an interesting question because, again, sometimes when we discuss about the tech industry, Everybody ask us if in the next quarter we will improve our EBITDA, our cash, the return on investment on a weekly basis. And then there is another word outside that is this digital one where it seems that cash is not a king, Profitability is not important and what is important, it's only the amount of customer that will get this kind of services Waiting in the future for a possible monetization. So it's clear that I'm doing a provocation, but I'm joking. What we remind is that why don't we try to enter in this field getting all the best that we have from this New wave of industry without put on the table a huge amount of CapEx and OpEx to develop that. What I mean, if you look, all these projects of consumer platform are for us project on which we work on a marginal basis in terms of CapEx, So with our traditional financial discipline approach, while Creating or helping to create a larger amount of customer base in the future, we can exploit the monetization. When you discussed about digital wallet and I cannot and I don't want to mention the amount of Different player that are doing evaluation, unbelievable evaluation about the digital wallet in Brazil. I never seen any kind of number that explain how this player will monetize really this kind of business. So which is our idea in Synthesis? Let's use our asset that will permit us to stay in these new fields With marginal CapEx and OpEx contribution to try to get the opportunity from evaluation that are far from The traditional telco evaluation. It doesn't mean that our team will lose one second In the execution of the core business that it what is going to pay our salaries in the next future. Then I'll leave a couple of minutes to Renato to give some more details about the digital wallet, if you want. But again, This is the philosophy. And last, let's answer to Renata and then we move to OIBDA. Sumit, thanks for the question. The digital wallet, as you know pretty well, it's a market that has several players in the Brazilian market now. And there is a trend of consolidation in the next years. So we are looking to that market. We are looking to the players, and we are Waiting for the right partnership with the player that we believe will be a survivor in the consolidation of this market. Because there are it's easy to launch a wallet now. There are many solutions which are off the shelf now. They could quickly launch, But that doesn't secure a future that doesn't secure a success. So we better wait and find the right partner for doing the right solution That will have a likelihood to be a survivor in the consolidation market and generate value for our customers and for our shareholders. As I used to say, let's put some number. We are in a finalization of a list of 2 potential partners. So we are not still thinking what to do and how. We have to choose which of the 2 makes sense. And we are evaluating that also With other player other telco player in the market because this is another area where jointly we can create more value for all our shareholders. Here we discuss about cooperation and less about competition. Coming to the OI Della, I really thank you for the Question because sometimes you are too polite to ask, but again, I think that in the press, there were Some indication that perhaps are generating a misunderstanding. Now I leave the stage to Mario and we will not Tell you what we think about. Mario will mention to you numbers that better than everything explain which is the real situation. Mario, please. Yes. Thank you for the question. And now the point is that Some press today described better the meaning of this procedural step. Now this call declaration of complexity It's a technical step provided in the law that aims to request additional information and eventually works as a necessary step To ask for an extension of deadline, but this did not occur. The deadline is the same of the original process. So During this complementary step, CADE, as expected, asked some questions about the MVNO market, access Infrastructure, so something that was absolutely expected in this stage. And just to give some Numbers about in the past over the past 30 months, CAD has made the 2022 declaration of complexity. In 3 cases are still in progress, including our case. 1 was the party withdrew from the transaction, then 18 cases were approved 9 of these 18 cases without any conditions. So we consider that this is Quite a natural step for an operation of such dimension. And the time line for approval in the 3rd or 4th quarter, we think are absolutely without prejudice. Our next question comes from Victor Tomita with Goldman Sachs. Please, Mr. Tomita, go ahead. Hello. Can you hear me now? Hello? Peter, do you hear us? I hear you. Yes, we are in you. So please. Okay. So thank you very much for our questions. Sorry for the technical issues here earlier. So two questions on our side. The first one is if you guys could provide any additional visibility on expected timing For the Amply partnership with Cogna. And the second question would be on the competitive environment in mobile during the quarter. If you could give us any additional views on how competition has behaved during the quarter and specifically on the dynamics of postpaid net adds. Thank you. Okay. Thank you, Victor. About the Ampli Visibility, I leave to Renato to give you some more details. So, Vitor, if I got your question right, You're asking about the timing of the partnership? Next slide. Yes. Okay. So as you probably got through the news and through our announcements, We have signed a contract earlier in the month. We have announced already the first offer in our national Sales convention on the 7th July. This is the first joint offer that we have done with them. Right now, we are working on a product road map. This is a long term contract, a 5 year contract. We expect to be launching new offers with them either in Q4 or Q1 of next year. So there is a whole road map that is being worked now, But we have very quickly launched the first offer that is has hit our commercial sales channel already in July Because as you probably know, the education market has a peak in July, August. So we are taking advantage of the peak of the 2nd semester Registration, which happens in July, August with this new first offer. And right now, we are working on a road map and we'll be probably Announcing this roadmap of new offers with them in the 3rd quarter results call for the Q4 and for the Q1 of next year. Thank you, Renato. Related to the others, two questions on competitive environment and postpaid net adds, I'll leave to Alberto to answer, but Just a quick answer. The market continued to stay rational, competing, putting services, increasing sometimes The amount of Giga in some offer that are related to some price up because we did a price up, but also at the end of the day, Veeva and Claro did a price up. I think that it was a natural move related to the fact that during the pandemic, the customer behavior changed with a significant increase in terms of data consumption. So it's a natural process That allow us also to proceed with the monetization of the data growth. About postpaid net debts, 2nd quarter was added also by the presser as usual and planned, but we are coming back to positive net adds in the In the Q3, but Alberto can give some more colors on both of that. Yes. Hi, Victor. Just at the Competro's, I would say that, yes, it's confirmed that the postpaid is rational overall. So on our side, we carried out on control customer base or a piece of it, the price up in this quarter. On price adjustment, I will say it's a more for more strategy. So it's a price adjustment in exchange for additional giga for our customers. Our competitors in this quarter increased the price of their postpaid offers. So this happened with Livent Claro. And Therefore, we see, let's say, this rationality to maintain with this adjustment on acquisition plans. At this point, I would say that we are sort of aligned because we were in midterms among the 2 of them. And when it comes to our outlook for net addition for the following month, I would say that we are Going we are expecting to go into positive net additions in the following months on the postpaid and prepaid segments. Our next question comes from Victor Ricchiuti with UBS. Please, Mr. Ricchiuti, go ahead. Hi, good morning everyone. Thank you for taking my question. I also have one question regarding the competitive environment In the mobile segment, when you target ad growth and the others are targeting ad ads, isn't there a risk of lower growth for you in the future Compared to the market, I'm thinking just on being in St. Alona without or always with mobile, how should we see the Thank you. Victor, first of all, I think that your surname, being Italian, is Ricchiuti, Just to point Yes, yes, it is. As Italian, but again, if we catch in the right way your question is related If our strategy let me phrase that in a less polite way, from volume to value with a Lower number of net adds is something sustainable in the medium, long term. So again, I think that the answer, it's Quite easy to be posted. Looking at the trends and the comparison that I cannot do, But you can do on your own related to the trend of the net tax year over year in terms of growth of all the different player, The trend of revenues growth year over year and quarter over quarter of the player, and you can see that we are progressively Reducing the gap and we are close with 1 of the other 2 player to fill the gap and go to the breakeven. The other element, I mean always to say that I think that it's not right to look at the number of TIM Brazil In pieces and bites, what I mean? We are the player that is putting in the market number of revenue grew, EBITDA grew, cash grew, everything under control. I don't want to exceed in some Element that can have impact in all the other numbers. Because again, if we want to increase the number of net adds, if we consider that this is a proxy of value, But I don't think so. It's quite easy for us, but at a certain point, the ARPU will be diluted. The increase of commercial costs will explode. The risk of bad debt can increase. So again, You are asking me as shareholders or potential shareholders to continue to perform in a financial way In all the lines of our profit and loss, it means revenue, EBITDA, cost control. And then the fact that Brazil has customers that continue to ask for an increase of data consumption Allow us to continue to say that there are rooms to further increase in term of ARPU. And last but not least, let's remember and I'm proud about that, that every time We were the 1st mover in the Brazilian market to set up new approach in the market. We were the 1st one to start with the migration On a certain point, we started to understand that a strong push on debt do not Create value. We were the first one to start to migrate from controle to POS. Now we were the first one to move towards Content included services in our package to have a competition that is beyond connectivity. And last but not least, we were the first one to move toward a consumer platform strategy. All of that are the pieces that Allow me to say that we think that in the medium, long term, our strategy continues to be sustainable. But to be clear, I'm not telling that we don't want to grow in terms of net adds and the next quarter we'll be back in positive net adds. I don't want to grow at any cost because net adds at any cost are not a proxy of value generation for our shareholders. That's very clear. Thank you very much. Without any further Ladies and gentlemen, I'm now returning for Mr. Pietro Abriola for his final remarks. Please, Mr. Pietro, you may proceed. I'm happy with the results we delivered in the first half. The second reserve us great opportunities and many challenges. That is why we will focus on the execution to complete the Pending project and closed an excellent year. I'm sure years from now, we will look back to 2021 And Mark, this DRS is a key milestone in the transformation of this company. I want to thank you, really thank you, Our team's commitment and dedication and for delivering at high level despite all the challenges of the moment. Thus, we conclude the Q2 of 2021 conference call of Team S. A. For further information and details of the company, please access our website on team .com.brir. You can disconnect from now on. Thank you once again.