Earnings Call: Q2 2021

Jul 27, 2021

Good morning, ladies and gentlemen. Welcome to TIM 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 TIM S.A. 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 TIM S.A. may affect their performance and lead to different results than those planned. Should any participant need assistance during this call, please press star 0 to reach the operator. Now, I'll turn the conference over to the CEO, Mr. Pietro Labriola, so he can present the main messages for the second quarter 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 second wave of the pandemic hit Brazil between March and May, we started to see some light at the end of the tunnel following the vaccination acceleration. Overall, the economic activity is coming back, and so 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. Our expectations are high, not only due to the recovery process, but also because of the spectrum option and the closing of the deal with Oi. 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 reach such consistent and strong performance. In July, we announced another venture of our customer platform strategy, this time in the EdTech arena with the Cogna Group. This last partnership led to a new control offering mobile. We took the opportunity to refresh the entire mobile portfolio. In parallel, we also updated TIM Live's portfolio. In the second quarter, we continued with the financing plan for the acquisition and issued the first sustainability-linked bond in TIM's history. We issued BRL 1.6 billion in the ventures 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 of 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 1,700 biosites. On the social front, we also had a great quarter. I was personally engaged in launching the partnership with the Mulheres Positivas 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+ rights forum. Finally, we receive 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 line 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 to reach 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 second wave of the pandemic is the ability to execute the volume to value strategy. Despite having still some stores closed across the country impacting our commercial activity, our mobile ARPU grew more than 10% year-over-year and 1%-2% versus the first quarter. It is 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 second quarter and drove prepaid ARPU up more than 11% year-on-year, with the quarter-over-quarter expansion as well. Postpaid ARPU also increased by more than 5% year-over-year, backed by positive performance in intra-segment migrations. The quest to differentiate our offers by moving away from the price per giga is clearly paying off. As I mentioned earlier, we refresh our mobile portfolio, adding unlimited music with Deezer GO to our main prepaid proposition. In pure postpaid, the entertainment tab grew its option 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 Cogna Group, to accelerate the mobile-first Ampli platform. 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 Ampli 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 TIM clients to open and use a bank account at C6, generating new revenues and improving the lifetime value of the TIM customers. We are hitting the targets for equity and book an additional stake in the second quarter, which bring us to a total of approximately 2.9% of C6 capital. Our mobile advertising project is maturing day by day. We keep growing our audience pool with more than 19 million opt-in threads. We develop an insights platform respecting all the data privacy requirements. We are developing new channels such as TIM Fun, Associate, Games with Ads, and TIM News with the dual content plus ads. First results from the TIM Ads platform are coming out. Campaigns are reaching millions of people. We are doing large-scale surveys, rewarding users for their engagement with ads. Brick by brick, we are building a new revenue stream. Completing the discussion around the revenues drivers, let's move to fixed services, specifically TIM Live operations. 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 second quarter, blended ARPU was up by more than 8%, with FTTH ARPU reaching close to BRL 110 per connection. Our customer base continues to evolve towards higher speeds. The new portfolio counts with 500 and 600 Mbps speeds and more OTT contents. FTTH coverage also expanded, reaching 3.8 million homes passed. A quick update on the FiberCo deal. In June, we got the approval from CADE, 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 FiberCo and wish to build great things 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 4G and 20% more in 4.5G. We are also preparing our network to receive Oi 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 execution is helping us to anticipate our tax commitments. The network sharing agreement with Vivo continues to evolve. Now, all three fronts are showing progress. Combined coverage expansion went above 250 cities. Single RAN trials are being run in 20 cities, while 2G reach out 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-over-year, but this is basically due to the return on variable costs and expenses reduced due to the first wave of pandemic and other volume related impacts. To confirm this understanding, we can compare this quarter against the second quarter of 2019, and we get a slight variation, while, versus the first quarter of 2021, we posted a slight decline of 0.6%. 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, e-sales of lines and recharges keep growing in adoption. Despite this specific situation with OpEx, EBITDA growth also accelerated to 5.9% year-over-year, summing BRL 2.1 billion. Margin stood close to 48%. This performance helped net income to go above BRL 680 million, representing a two and a half fold increase. Our investments reached BRL 900 million, a growth of more than 30% year-on-year. In this context, operating free cash flow for the first six months of the year grew more than 50%, surpassing BRL 1.8 billion, which drove our net debt down 27%, and a cash position of BRL 7.1 billion. It is worth mentioning, our financing plan for the acquisition is underway and going smoothly. Beside the venture issuance, we took BRL 1.1 billion in bilateral loans and we also have the cash proceeds from the FiberCo deal. We expect to take additional debt lines for approximately BRL 1 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 increase while expanding EBITDA by more than 5%. Customer platform revenues summed BRL 46 million and considering the new partnerships, we have a clear path to reach our year-end goal of BRL 100 million. A year ago, those initiatives were only a PowerPoint chart. However, today, we are proving we can create value with them. On the M&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 Oi deal 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 Anatel and CADE, 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 and October. The essence of an infrastructure focus auction is being confirmed. Before I conclude my presentation, I'd like to give a special thanks to Adrian Calaza, my friend Adrian Calaza, our CFO. By the end of August, he will be returning to Argentina and 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 these last weeks. Thank you. We will now open the floor for questions. Please, operator. Thank you, Mr. Pietro. Now, we will begin the Q&A session. First, we will take questions from analysts, followed by general public, both in English. If you're listening through webcast, your questions can be sent by chat. We ask each participant to restrict himself to 2 questions at a time. To ask a question, please press star 1, and to remove the question from the list, press star 2. Our first question comes from Marcelo Santos with J.P. Morgan. Please, Mr. Santos, you may proceed. Hi, good morning. Thanks for taking my question. Can you hear me well? Perfectly. Thank you. I would like to ask a bit about TIM Live. You had a slowdown in ads this quarter. I understand that you're adding a lot of fiber to the home, but you're losing fiber to the curb. Could you please comment on the outlook for this? 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 and competition? How do you see this outlook? Thank you. 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. We have to try to understand which are the real capabilities of all the different players in this market. If you look at that, everybody want to compete, and FTTH is the key element for this competition. Other technologies are less competitive compared to that. Part of the actual coverage in FTTH of some of these player 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. I'm very happy to announce that to clarify better on the market who is able to compete and stay in this market, we are going to launch by the end of October, our two new offers at one and two 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. Second, it's clear that the 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'm used to say every time, there are rooms to have more than one players to cover the different state. It's clear that it's really important to understand where makes sense to go and compete, because there are no place in the world where you can have more than two or three player able to make this business a 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. I think that I'm very curious to see what will happen in the following months relating to this item. 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. Again, let's see very well the evolution. There are some players, smallish, that if they want to really compete, they have to grow. To grow, they are going to lose some of their fiscal advantages that are related to the size of the company. Again, let's see, and I think that we have the possibility to further increase our development. Coming back to the first question that you related to our speed. This is true that we have a slight 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 discuss of other player, we should divide our revenues and our net tax in FTTC and FTTH. If you look at FTTH continue to grow more than 40% year-over-year. Sorry, FTTH continue to grow more than 40% year-over-year, while what is happening is that FTTC is slowing down and we are in a negative trend in terms of revenues. 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 continue to have a decrease of FTTC revenues, an increase of FTTH. As a math, we will be back in the first quarter of the next year with a growth that will be closer to 20%, because FTTC will continue to reduce and the contribution will be lower and lower. About the numbers, I leave the stage to Alberto that can give a different light on the real number of the second quarter. Alberto, please. Yes. Thank you, Pietro. Hi, Marcelo. Just a few additional points in terms of overall performance in fiber access. When it comes to the FTTC that is suffering more in terms of churn rate over the last months, we, as a structural move, decided to start an overlay in Rio de Janeiro and São Paulo, a brownfield overlay. We are pretty well advanced in Rio de Janeiro, where we are already seeing an improving performance in terms of reducing churn. We started also in São Paulo this year. 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 second quarter. This have a specific effect on the churn rate of this quarter. 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 BTG Pactual. Please, Mr. Mendes, go ahead. Good morning, everyone, and thanks for the call. I have 2 questions as well. The first one is strong performance on the mobile service revenue. You mentioned that upselling continues to play an important role. Just want to get a little bit more visibility. Where that's mainly happening? It looks like it's not as it was in the past from prepaid to hybrid. Just wonder if you're doing that mainly in the post-paid and where you see more opportunities to do for the next quarters. That'd be my first question. My second question on the customer platform is still at an early stage, but this quarter reported significant growth, almost BRL 30 million. Just trying to understand how confident you feel about this line of growth and if the margins on this platform are 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 three or four 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 post-paid. 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. The fact that we have to control also the rentability of the migration, because you have to remember that we have to continue to create and generate value in this activity and not just posting some numbers. We are more focusing on the migration from control to post-paid. It doesn't mean that we are not continuing to migrate customer from prepaid to control. We are doing that with much more attention, looking at the bad debt, the cost, and the level of ARPU. It is also demonstrated by the continued increase in the prepaid ARPU growth. On the migration from the control to the post-paid, what is important to highlight is we have always to check the amount of giga that we put in our plan. What we are doing is that we define a certain amount of giga on the control that are not big enough to keep the customer on that plan to try to solicitate a migration from control to post-paid 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. It's the strategy that we call a blend of giga. 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 post-paid, 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 he has the possibility to have a concierge service. 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 hub strategy. Another important element, again, to guarantee the maximum level of efficiency in our commercial activity, we are continuing to develop our next best action platform that, thanks also to artificial intelligence tool, allow us to understand where makes sense to upgrade the customer. Sometimes for ARPU increase and 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 TIM as a partner for this new journey. I think that it's also important to remember that we want to continue in this way. We are planning to close 3 other deal by the end of this year. We have already announced the telemedicine and financial services with the digital wallet. 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 player as Google, Facebook, in a market that is much bigger. Now, about the marginality, Adrian want to Yeah, just complementing, hi, Fred. It's interesting, your question about the margin. Probably the first time we discuss about margins of this kind of revenue. The thing is, as you know, we are booking revenues coming from commissions of the activations of new accounts of each of these business. 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. 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 Cogna. At the end, in terms of the business itself, yes, it has a higher marginality. There is another variable, probably for us, much more important. That these offers, this new business for us are extremely important in terms of increasing the lifetime of our customers. Obviously there, reducing the churn, helps instantly to increase our margins. 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. Obviously we are probably expecting to go above the initial target that we have for this year. Again, it was interesting your question because it helped 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 on services, quality of the service, and this kind of partnership. It's the only way to attribute value to a service that differently could become a commodity. This is what sustain our strategy from volume to value. Perfect. Very clear, Pietro, Adrian, thank you. Adrian, thanks for the great work and the best of luck in your new challenge. Thank you. Thank you, Fred. Thank you again. Our next question comes from Victor Tomita with Goldman Sachs. Please, Mr. Tomita, you may proceed. Mr. Victor, your line is open. You may go ahead. Our next question comes from Soomit Datta with New Street Research. Please, you may go ahead. Hello. Yeah. 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. Couple of things from me, please. First of all, on 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 subscribers to the overall C6 subscriber total? I don't think you'll be able to give numbers, but any sort of sense as to your contribution there. Thirdly, please, I just wondered, there's a comment in the presentation about a digital wallet launch in the third quarter. 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 if and when you launch a digital wallet, how does that change that monetization process, please? I had one more on the Oi deal, but maybe we could do the fintech stuff first, please. Oi, Soomit. 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 two one. About the J.P. Morgan 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 J.P. Morgan process, and once we receive the formal answer, we'll 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 telco industry, everybody asks us if in the next quarter we will improve our EBITDA, our cash, the return on investment on a weekly basis. Then there is another world 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. It's clear that I'm doing a provocation, but I'm joking. What we have in mind 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 so huge amount of CapEx and OpEx to develop that? What I mean, if you look all this project of consumer platform are, for us, project on which we work on a marginally basis in terms of CapEx, OpEx, 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 discuss about the digital wallet, 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. 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 is what is going to pay our salaries in the next future. I 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. Last Oh, no. Let's answer to Renato, then we move to Oi deal. Hi, Soomit. 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. There is a trend of consolidation in the next years. 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. 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. 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 partner. We are not still thinking what to do and how. We have to choose which of the 2 makes sense. 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 deal, I really thank you for the question because sometimes you are too polite to ask, again, I think that in the press, there were some indication that perhaps are generating a misunderstanding. Now I leave the stage to Mario, 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. It's working? Yes. Thank you. Thank you for the question. Now, the point is that some press today describe better the meaning of this procedural step. This so-called declarational complexity is 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. This did not occur. The deadline is the same of the original process. During this complementary steps, CADE, as expected, asked some questions about the MVNO market, access to infrastructures, something that was absolutely expected in this stage. Just to give some numbers about over the past 13 months, CADE has made 22 declaration of complexity, no? Three cases are still in progress, including our case. One was the party withdrew from the transaction, then 18 cases were approved, nine of these 18 cases without any conditions. We consider that this is quite a natural step for an operation of such dimension and the timeline for approval in the third or fourth quarter, we think are absolutely without prejudice. Okay. That's very clear. Thank you for clarifying that. Thank you. Thank you. Our next question comes from Victor Tomita with Goldman Sachs. Please, Mr. Tomita, go ahead. Hello, can you hear me now? Hello? Victor, do you hear us? Hello? I hear you. Yes, we are hearing you. Please. Okay. Thank you very much for your questions. Sorry for the technical issues here earlier. Two questions on our side. The first one is if you guys could provide any additional visibility on expected timing for the Ampli partnership with Cogna. 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. Victor, if I got your question right, you asked about the timing of the partnership? Yes, sir. Okay. As you probably got through the news and through our announcements, we have signed a contract earlier this month. We have announced already the first offer in our national sales convention on the seventh and eighth of July. This is the first joint offer that we have done with them. Right now we are working on a product roadmap. This is a long-term contract, it's a five-year contract. We expect to be launching new offers with them either in Q4 or Q1 of next year. There is a whole roadmap that is being worked now. We have very quickly launched the first offer that has hit our commercial sales channel already in July. Because as you probably know, the education market has a peak in July, August. We are taking advantage of the peak of the second semester registrations, which happens in July, August, with this new first offer. Right now we are working on a roadmap, and we'll be probably announcing this roadmap of new offers with them in the third quarter results call for the fourth quarter and then for the first quarter of next year. Thank you, Renato. Related to the others 2 questions, competitive environment and postpaid net adds, I 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 offers that are related to some price up, because we did a price up, but also at the end of the day, Vivo 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. It's a natural process that allow us also to proceed with the monetization of the data growth. About postpaid net adds, second quarter was affected also by the price up, as usual and planned, we are coming back to positive net adds in the third quarter. Alberto can give some more colors on both of them. Yes. Hi, Victor. Just adding on Pietro's, I would say that, yes, it's confirmed that the postpaid is rational overall. On our side, we carried out on control customer base or a piece of it a price up in this quarter. On price adjustment, I would 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. This happened with Vivo and 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 mid-terms among the two of them. When it comes to our outlook for net addition for the following month, I would say that we are expecting to go into positive net additions in the following months on the postpaid and prepaid segments. Very clear. Thank you very much. Thank you, Victor. Our next question comes from Vittorio Ricchiuto with UBS. Please, Mr. Ricchiuto, go ahead. Hi. Good morning, everyone. Thank you for taking my question. I also have one question regarding the competitive environments in the mobile segment. When you target ARPU growth and the others are targeting net adds, isn't there a risk of lower growth for you in the future compared to the market? I'm thinking just on TIM standalone without or with mobile. How should we see this equation? Thank you. Vittorio, first of all, I think that your surname being Italian is Ricchiuto. Yeah. Yes. It's fantastic. Yeah, it is. As Italian. Again, if we catch in the right way, your question is related to the fact 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. Again, I think that the answer, it's quite easy to be posed. 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 adds 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 one of the other two player to fill the gap and go to the breakeven. The other element, I'm used always to say that I think that it's not right to look at the number of TIM Brasil in pieces and bytes. What I mean, we are the player that is putting in the market number of revenue growth, EBITDA growth, cash growth, everything under control. I don't want to exceed in some element that can have impact in all the other numbers. 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. At a certain point, the ARPU will be diluted, the increase of commercial costs will explode, the risk of a debt can increase. You are asking me as shareholders or potential shareholders to continue to perform in a financial way in all the line of our profit and loss. It means revenue, EBITDA, cost control. The fact that Brazil has customer 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. Last but not least, let's remember, and I'm proud about that every time we were the first mover in the Brazilian market to set up new approach in the market. We were the first one to start with migration pre to post-paid. On a certain point, we started to understand that a strong push on that do not create value. We were the first one to start to migrate from control to post. We were the first one to move towards a content included services in our package to have a competition that is beyond connectivity. 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 continue to be sustainable. To be clear, I'm not saying that we don't want to grow in terms of net adds, and the next quarter will 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. As a reminder, if you'd like to ask a question, please press star one on your phone now. Without any further questions, ladies and gentlemen, I'm now returning for Mr. Pietro Labriola 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 has great opportunities and many challenges. That is why we will focus on the execution to complete the pending project and close an excellent year. I'm sure years from now, we will look back to 2021 and mark this year as 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. We are really a great team. Thank you once again for participating in our conference call. I hope we can meet soon, maybe even in person. Thus, we conclude the second quarter of 2021 conference call of TIM S.A. For further information and details of the company, please access our website on tim.com.br/ir. You can disconnect from now on. Thank you once again.