Earnings Call: Q1 2021

May 6, 2021

Good morning, ladies and gentlemen. Welcome to Team S. A. 2021 First 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 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 Team S. A. Constitute the beliefs and assumptions of the company's Board of Executive 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 Team S. A. 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 Q1 of 2021. Please, Mr. Pietro, you may proceed. Good morning, everyone, And thanks for attending our results conference call. We started the year with high hopes that the worst of the pandemic was behind us. Unfortunately, already in February, the 2nd wave started to hit some Brazilian cities and spread more broadly during March. Of course, this time, we were more prepared to sustain the impact from more strict measures to control the spread of the virus. Also, the fact that Citi's implemented those measures in different moments of the quarter made a difference in how we were affected. In all, the consequences of the 2nd wave in our business were smaller than the 1st wave a year ago. Considering this, we are not altering materially any part of our strategic plan disclosed to you in our TIM Brazil Day. Neither the project nor the targets are going to be changed. We are confirming our entire guidance. The Q1 was marked by excellent execution. We accelerated our recovery started in the second half of the last year, And both revenues and EBITDA are growing more in our recent results. We closed the quarter with Service revenue growing more than 3% year over year. EBITDA came in very solid, up 4.5 percent versus last year, it's some more than BRL2 1,000,000,000, representing a margin of almost 47%. As you probably saw last night, we reached an agreement with AHS completing the deal for our Fabreco, A great deal for both companies. As I said, our customer platform plan is moving forward, And we are much closer to announce new partnership for Business Learning Education and Digital Wallet. On the technology front, we reached more than 4,000 cities covered with 4 gs and more than 120 sites In the Sky Coverage project, we also signed the agreement with the vendors for our Journey to Cloud project. These achievements show our commitment to improve the quality of our service, implement more cost efficient solution And last, generate social and environmental positive impacts as we detail in our ESG plan. Last but not least, this quarter TIM Live was appointed as the best broadband service in Brazil. Detailing our revenue acceleration, we saw positive contribution coming from mobile and pixel services with our lines 2.8% year over year with postpaid segment growth also spending up to reach almost 4%. Mobile service revenue is also receiving the contribution of customer platform projects, and this is the 2nd quarter that we book revenue from this new Revenues 3. In this quarter, it's some BRL17 1,000,000. In parallel, fixed services are also growing faster, up by 12% with a solid contribution from TIM Live of more than 20% year over year. ARPU improvements in all segments are a significant driver for both Mobile and fixed accelerations. The key element of our mobile recovery amid the 2nd wave of pandemic It's the ability to play our game from volume to value. Despite having stores closed across the country impacting our commercial activity, Our mobile ARPU grew almost 7% year over year with postpaid and prepaid contributing positively to the performance. We expect to improve even further our prepaid dynamics. In the Q1, we increased the participation of eRE charges To 55 percent of the total and accelerated the adoption of TIM Myzvantages Advantage Program. In March, prepaid recharges were slightly positive versus last year, but in April, they are up by 9%. For postpaid, churn reduction was a highlight once again. At the same time, We continue to differentiate our offers with the OTT marketplace and try to monetize data consumption with a more for more approach. Still in the mobile arena, but now talking about new initiatives under customer platform name, Our projects are starting to bear fruits. Out of the BRL17 1,000,000 in revenues, 11 were generated by Financial Services and 6,000,000 were generated by mobile advertising. The latter was driven by the evolution in team apps and in formatting platforms. Besides data rewards for video apps, We are working on lead generation service and app installations. In the Q2, we Talking about the future, the customer platform roadmap is full. Also in the Q2, we expect to sign an MoU with an e learning platform, And our digital wallet negotiations are speeding up, so we expect news by the end of the quarter. This time, We either managed to bring other telcos on board or we do it alone. On health, we are starting the first negotiation, So it will be something for the Q3. Changing gears and moving to the fixed services, It's not a surprise that TIM Live's consistent performance, combining ARPU and customer base growth Produced solid results in the past years, and it's no different this quarter. Additionally, we are developing the connected house FICOTC posed by 1 year of pandemic, we managed to keep growing our coverage, reaching 3,500,000 homes passed with FADA, Up 40% against last year. This is a remarkable achievement, but we believe we can do more. That is why TIM is partnering with AHS in the FiberCo project. As we have been saying from the start, This deal has an industrial orientation, different from other deals you can find in the market. Summarizing the deal, the FiberCorp will receive TIM Live's last mile network in FTTH and FTTC. And Tim will hold 49% of the capital of the new company. Tim will drive the networks rollout, but The fiber will be open to other players to run. The fiberco was valued at 21 times In terms of enterprise value on ABDA Multico, Entyme received DKK1 1,000,000,000 in proceeds from the transaction. As a consequence of the deal, we will deconsolidate a large portion of TIM Live's CapEx. And even if new Costs emerged from the last mile rent, the net effect will generate a positive contribution to free cash flow. Maintaining our discussion on infrastructure developments, I'd like to remark that it was not only the broadband coverage that grew solidly despite challenges of the moment. Mobile coverage also expanded suddenly, 17.5% more cities covered with 4 gs, 27% more in 4.5 gs, more than 40% growth in cities covered by 700 megahertz And more than 120 sites with the Deskate coverage project to cover remote areas. But network developments didn't stop there. We are preparing our network for OS asset integration and planning the 5 gs rollout. In this context, massive mammo rollout, site modernization and the network sharing agreement with Vivo Before moving to IT evolution, I wanted to remark that despite 5 gs DSS being the 5 gs of marketing, it has its importance, And we know how to play this game. That is why we are ahead of the competition on this front as well. Today, we have the broadest coverage in this technology with 19 cluster of cities and approximately 150 DSS stations. Also, our customer access the 5 gs DSS technology more frequently than our competitor clients And to complete the 5 gs topic, TIM was the 1st Brazilian telco to test 5 gs standalone with commercial equipment, Reaching speeds above 1.8 gigabit per second. Now on the IT front. I'd like to remark TeamSpire's move with the support of Microsoft Endoracle to be the 1st operator and one of the 1st company in Brazil To migrate 100 percent of its data center to the cloud. We already detailed the project during our Investor Day, But I want to use this as an example of the importance of having an integrated approach to ESG. In this project, We combine innovation, cash flow focused efficiency and positive environmental impact to take TIM To the forefront of IT IT solution, it is essential to highlight this is not a unique example. When we analyzed the outputs of our digital transformation in Caring Services and how they positively impact NPS in different segment, It is becoming clear that technology will help us deal with 1 of the most pressing ESG challenges for Atakio in Brazil, It's customer satisfaction. One of the beauties of digital transformation is it's dual API. For sure, one of the consequences of the pandemic, e recharges, e bills, e payment, e sales And the authorization all presented double digit increases versus 2020. On top of that, Peaks, which was launched 6 months ago, already has more than 2,000,000 team invoices paid. In this context, our OpEx continued to be under control, rising well below inflation. It went up just 1.7% versus 2020. Bad debt continued to show solid performance. But as we mentioned in the Q4, the main structural changes were done. Improvements would be more incremental than transformational, And we need to account that we have more than 60% of our revenues in postpaid. Clearly, The combination of revenues going up and costs under control is well known. It produced EBITDA growth, In our case, a solid 4.5 percent year over year. And this is the 19th quarter with positive EBITDA growth. Additionally, it also generated margin expansion to reach 46.6% And net income rise of almost 60%. As I mentioned earlier, We are preparing our network for OE's asset integration and resuming project initially scheduled For 2020, so our investment totalized BRL1.3 billion, growing more than 40%. Before I conclude my presentation, I'd like to highlight that the mobile sector Certain point in the Q3. On the Oi Mobile deal, it is worth pointing that the transactional approval process It's going according to expectation. We have completed all the necessary steps with CADE and AMAPEL for both to conduct their analysis. Now we must wait. As for the auction, we continue to view it as having a well designed structure, Which will privilege investments to serve customer in the best manner. As we stated before, TIM's focus will be the 5 gs frequencies. We are waiting on TCU's contribution to complete the details of our strategy for the auction. Ending my comments. I want to remark on the sound result we are delivering amid a very complex environment, which confirms the company positive momentum and solid fundamentals. So we will continue to work on Mobile Growth Acceleration, the expectation that vaccination can represent an upside. Implementation of the deal with AHS To grow further our FTTH business, continue developing our customer platform strategy to increase its contribution, Transforming our infrastructure and preparing the company for the future and last, maintaining the focus on profitability and financial discipline. 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 public, both in English. Please hold while we poll for questions. The first question comes from Matt Robilliard with Barclays. Please, you may proceed. Mr. Matt, you may proceed. Please hold while we poll for questions. The next question comes from Leonardo Olmos with UBS. Hi, good morning, everyone. Can you hear me well? Yes. Yes, we can hear you well. Okay. Thank you. Sorry about that. Well, I have 2 quick questions. The first one about The fiber could say to IHS, great deal, first of all, congratulations. I wanted to know if you could share with us the EBITDA that this operation was generated, so we can understand a bit about the multiple. And if there are any long term causes in this deal such as right now. Thank you. Okay. Hi, Leonardo. It's Adrian here. It's not easy to disclose those kind of information in terms of EBITDA, but I think that since Pietro Mentioned the multiple that we arrived with the enterprise value that we are considering. You can do the math and it's almost pretty easy. Ben, I missed the most. Sorry. Yeah. Yeah. Well, Pietro mentioned the 21 times enterprise value over the 2020 pro form a EBITDA. So The thing here is that's the 2020 EBITDA in terms of pro form a. Clearly, What we had, it's a very challenging business plan, but is the internal business plan that we had Even before the transaction. What I'm trying to say is probably in the future, we can do more What we put in the business plan? Because at the end, that's the goal of closing this deal and especially with With IHS being them an industrial partner in this case because remember, Leonardo, we always Said that this for us was not a financial deal. It's more an industrial deal due to the fact that We wanted to be in the business of fixed ultra broadband. It's the opportunities that The market will have in terms of new connection of FTTH in the next 3 years up to 11,000,000 of new connections. You can understand that there is a lot of space for many players and we want to catch a portion of that opportunity. So Internally with the actual situations could have been a little bit difficult, because this will Mean additional CapEx being the fixed ultra broadband most much more capital intensive than the mobile. So that's first goal of the 5 OCO project. Then yes, of course. We can also mention the more Financial side of the transaction. And then you arrive there to that multiple of 21 times EBITDA. But it's not something that For us, it's the key. The key for us of this project is industrial. Then of course, The secondary that we mentioned will help us in order to finance the deal with Oi, yes, of course. But be sure that the first goal for us for this project was industrial. I think that you had a second question, Leonardo, was? Yes. Thanks for that, Eduardo. Yes, and thanks for the answer. The second question is related to the agreement you made with Telecom Italia. I understand that You've tested 7 other companies to provide the foreign the submarine cable, the foreign connection. I just want to understand, before this deal, Which company were you using? What were you doing before that to get access to foreign Internet from Brazil? I don't know if I got your question, Leonardo, is regarding our Contract that we signed with Sparkle? Yes, yes. That's it. My question is, you signed the contract with Sparkle, right, For 2021 until 'twenty three. My question is before that, which company were you using? What was the capacity? How much were you paying? This is Vincent speaking. So this information was disclosed Yesterday, in our communication, all the information available about this contract with Sparkle as it's our, related party It's public. I will pass the floor to Mr. Alberto so he can explain the usage since this It's under our Wholesale department. Please, Mr. Roberto. Yes. Hi, Leonardo. It's quite a standard piece of business, meaning that On a yearly basis, we review the terms of conditions of our, tiering Internet traffic. And so we sound the market and we check out the best deal in terms of volume versus prices. And so this specific contract was discussed yesterday. And yes, it has been awarded 12 months renewable. Yes. Okay. Just I'm not sure you got my question. In 2020, who was the sparkle? Who was providing you capacity? Sparkle 2. All right. Thank you very much. The next question comes from Gabriel Figueroa with JPMorgan. Hello, everyone. Do you hear me well? Yes, sure. Okay. Thank you for the call. I have two questions on mobile, if I may, please. The first one you Pietro mentioned during the speech This move from volume to value and indeed we can see that the postpaid net adds from Ting have been softer in In the past months, but on the other hand, you've been able to increase ARPUs and increase postpaid revenues. I was kind of trying To understand the drivers behind that, are you benefiting from price increases or are customers migrating for higher value packages And the second question? The second question is still on mobile. If you could give us a color on Competition, we saw Oi launching unlimited products. How are you seeing these trends right now? Thank you. Okay. Gabriel, first of all, thank you. You catch the right point that is related to our strategy. Let me declare since a couple of years to move from volume to value. As you have seen, we posted a growth Year over year in this Q1, mainly on the postpaid and the growth is related also to the fact that we had Software net adds increased, but in the meantime, we were able to continue to increase the level of consumption In our package by our customer, what they mean that our package differently from what's happened, for example, in some country like Italy or U. S. Do not have a huge amount of Giga. During the pandemic, Customer further increased their level of data consumption and it will allow us to What is important to highlight is that in this number is not yet included the price up that we did in the month of March. What is important is that our price up is not a real price increase, but it's with our More for more strategy, what we do? We add more Giga for the customer, exchange So our strategy that we define from volume to value is composed by Package debt of Giga that progressively time by time are increased in terms of amount of Giga In front of a price increase, this will follow the data consumption increase from our customer That in 2020 was driven by the increase of consumption due to the pandemic, But it is a natural trend in a country like Brazil. To sustain this strategy, we have to further improve our Quality of service. The fact that we were able also to reduce the level of churn, as I mentioned during my speech, It's a further element that confirm that we are on the right path. So When we will discuss the result of the 2nd quarter, we will show a further increase in the revenues of postpaid Year over year, this time, they will be much more driven by an ARPU increase Less driven by a customer base increase. Coming back to the second question that is related to the competition. It's time by time, if you remember, it happened also with NEXTEL in 2019. There are some operators that are perceived in the market with a lower level of network quality. They try to gain space releasing in the market offer with And higher volume of Giga, the good part of the market and of the customers have of this Offer and of these operators, what's happened is that they do not have impact in terms of strong increase of customer base of change of operator. So we do not foresee This offer is an issue that can change. So again, I don't know if you were able to catch all my answer because I understood that there were some technical issue, Gavin. I was able to explain? You were cut sometimes, but I got the answer. Thank you very much, Pietro. Very clear. Okay. I apologize for the issue, but if you want, I can It sounds good. Thank you. The next question comes from Christian Faria with Bradesco BBI. Hi, good morning, everyone. I have two questions regarding the fiber coke deal. So the first one, I would like to understand The estimated growth in terms of home space, if the estimated growth now, we didn't saw Much different regarding the expected CapEx deployment, but we'd like to understand how much did the company can achieve In terms of HomeSpace in the future now with the new investment partner, Vest Preview previously. And second, my other point is that if the primary offer that the company will receive is enough To fully finance the growth expected in terms of capital deployment? Thanks. Okay, Christian. I think that, first of all, it's important to remember that when we presented The new plan during the TIM Day, we clearly stated to the market that The Fabeco project. So once we closed the deal with AHS, The first step of our deal was to use AHS to fulfill what was included in our plan in terms of So in this first phase, we are not I think for their own past, but through the vehicle of IHS, we are going to deliver what was already included in the plan. It's clear that what we have in mind I'll take the question from here because we're having some issues with the connection. But Christian, I think that you heard What Pietro was mentioning. We reached this agreement with IHS For the fiber group based on our actual plan for deployment Of FTTH and obviously operation and maintenance of the actual networks. Clearly, in order to reach the This agreement, we need to base it on what we already have and what we are already projecting. In the first question, here the goal obviously is to accelerate. As you know, the opportunities that we will have in the next Years are big. We want to catch a big portion of those opportunities. So yes, obviously the intention is Make more of what we were projecting. What we have now and the base of this agreement is the actual plan that we have. So that's why you see the figures of reaching almost 9,000,000 of HomePass In 4 years or what we are doing in terms of for the next 2 years. The other part of your questions is regarding the component of the primary that IHS will be paying. If it is enough in order to finance, yes, it's enough to finance the 1st years of the operation, remembering always that The good thing of this FiberCo is that it's born with an anchor customer that is TIM. So the FiberCo will have an EBITDA Since the beginning, probably something different in other cases, but again, we would try to focus on our project. So Of course, with the EBITDA and the capital injection coming from HS, there will be enough cash flow in order to finance The additional deployment. Obviously, every company Can be much more efficient through leverage, and we obviously could consider this alternative. But Again, we are very comfortable with this level of primary, At least to finance the 1st 3, 4 years of the fiber. Adrian, I'm already in. Do you hear me well? Yes. Adrian? Yes. Adrian, do you hear me well now? Yes, Pietro. Okay. Sorry, I apologize. Just to complement what Adrian was telling, I was telling before that it is important to remember that when we presented during our team day presentation, our 3 years plan, We didn't include in our numbers the fiber co operation, the fiber co deal. So In this first phase, what is happening is that we are replicating with Fabeco the target of ONPASS that they were In our plan, in our existing plan, it's clear that we have the flexibility to further accelerate Because our goal is to use this vehicle to have an acceleration in terms of coverage, the way in which This deal was built to give us the flexibility to do that. As Darren was explaining, also from the financial point of view, there are All the elements that can allow to have a further acceleration, what we'll do is that once we put everything In place from the operational point of view, the next step will be to evaluate the right speed up that we can have with this vehicle. And again, Answering also to the first question that we received on fiberco, it's really important not to discuss about which The level of EBITDA of this fiber cost, because from our point of view, this is an industrial operation And this is not a financial operation, because if we would like to have a financial operation on that, It was quite easy to increase the level of EBITDA of this company, increasing the transfer price of the cost of the local loop. We kept this level at a low rate because this is a vehicle that will allow us to A financial bill, it has also important financial components, but at the end of the day, Perfect. Thanks, Pete. If you just allowed me to make it, How is it going to be in terms of team branding? So you're able Christian, we lost you for part of your question. Can you rephrase? Perfect, perfect. I just wanted to understand if the growth in terms of Homes Connected It will be exclusive to use the TIM brand. So or the fiber company will be able to offer The other home space to other players as well. Thanks. Okay. Yeah, understood. As we mentioned in the material fact That we issued yesterday. There will be for every new deployment a period of exclusivity for team of 6 months. After that, yes, obviously, fiber could start to offer the infrastructure to other players. That's the main difference when we talk about neutral or open vehicles. In this case, it's not a neutral because the vehicle will have The Encore customer that is team and will have an exclusivity period on every new deployment, but then yes, these networks will be open to to 3rd parties. That's probably what's interesting in this deal, And it we think that it's reflected in the value of the company. So, again, remembering always that We will keep all the management of the customers. We will keep even the management of the Of the home devices, so the modems, because we think that this is an extremely important touch point with our customers. So again, what we are putting here in this fiber, what we are dropping down is From the OLT, from the cabinet until to the customer. So The answer to your question is yes, the networks will be open after a period of exclusivity. Adrian, if mad, because perhaps also do a comparison and help Christian to catch difference between Other model of InfraCo, as Darren was explaining. In the Brazilian market, you will see that you will have Some cases in which the infracost model will be completely neutral. What it means that From tZERO, the day where they built infrastructure, the last mile, this impact structure Can be bought by any operator. There will be no exclusivity of time for One operator to buy from this neutral InfraCo. This is more or less the model of the OI InfraCo. Okay. It is a model that is pure wholesale that have some pros And some calls related to the fact that you don't have an anchor operator customer. Our model, as Adrian was explaining, It's open. What it means, once we will be built the fiber infrastructure For a certain period of time, 6 months, the only operator that could buy that infrastructure After that period of time, it will be open also to other operators. Okay. So these are 2 models completely different because in the second one, the one that was chosen by Tim, It's clear that you can give a strategic indication in the area that must be developed And continue to be synergic with the team strategic plan. This is the reason for which I stress another time, it's more an industrial The next question comes from Carlos Ikeda with BTG Pactual. Hi, Pietro, Adrian. Good morning. How are you? Thanks for taking my questions. I will, Michel, execute the transaction of the fiber company. I think by now I got it, but I just reconfirm Qing's backbone are not included in the assets that are being transferred right to the fiber coal. They will remain Controlled by team, is that right? You told Carlos Backbone, is it right? Yes, backhaul and backbone, yes. They will stay within. Okay. So, you know, any decision by the fiber company? Ado, it's, sorry, it's Adrian here. Yeah, as Peter was mentioning, We always said since the beginning that what we were interested in To know that to find a partner was on the last mile and why this was designed. Because remember that Our backbone and obviously our backhauling are mainly for the mobile Business yet, considering what we have. Of course, as we were saying in the beginning, the Ultra Broadband, It's always leveraging on this mobile infrastructure that we have. So for us, it was extremely key to maintain What we have in terms of back when I'm back calling in house, so that's why the only thing that we're dropping down is the secondary network. It's At the end, as we mentioned, this is an industrial deal and it's probably more strategic. The strategy is to maintain the backbone and the backhauling in house. Then there could be additional subsides In the in the deal, in this FIVCO deal, because FIVCO could be in the future, yes, Deploying infrastructure not only on the FTTH but also on what we call FTT site Because it could be also efficient that what we are dropping down to the company is limited to the secondary network. No, it's clear. And I think this is important to be clear to everybody because we ourselves, when we were doing the analysis, we mentioned On a fee per homes passed and compared to the other deals that happened, but it's completely different, right, because the other deals included backhaul and backbone were not included in Europe. So It's impossible to really compare the different transactions from a valuation standpoint, right? Yes, you are right also because some of the transaction that happened Have all such customer included? In such a case, we are only including the last mile. That is the fiber that go from, let me say, the OLT up to the customer house. Perfect. And a different question. I mean, the expansion plan is pretty aggressive, right? My question is, which Geographies or type of cities you're looking the 5th company will be expanding to, is there any specific target you're looking for, You know, a type of market that you were going to target with the new company? Carlos, it's clear that if we were just in 2 in front of a coffee or a glass of wine, I can give you a lot of details that now could be the disclosure of our strategy. What I mean, it's clear that your question We took a lot of attention at our Geo market model to evaluate exactly where to go. In our plan, there would be for sure and it is something that we can disclose Part of the change of the FTTC and FTTH, what we call brownfield, the choose of the remaining area Will be done based on our idea about the move and the strategy of the other player in terms of Joe, marketing, an analysis about what is the potentiality of each area. And it's clear, you have to consider that there are different factors that you have to keep in mind. Also the strategy of the other players. So There is someone that has to evaluate the evolution of the cable technology, if And how at which cost cable technology is able to scale up to 1 gigabit per second. There is the migration of copper to fiber from some other player. There are some small leads that have Fiber optics network, but with the level of overbooking that do not allow in an easy way To upsell and upgrade the network at highest level of speed. So these are all the Different element that we are evaluating to define exactly our show marketing approach In the different area, what is clear that we will try to avoid overlap and we will never try to be The tip of the 4th player to go to build a fiber optics network, because it makes no sense from the industrial point of view. But in some way, Thanks to the size of Brazil, the untapped market is still huge. So I don't foresee In the next 3, 5 years, huge issue in terms of overlap. That's clear. Thanks, Pietro. Thanks, Adrian. Carlos, it's clear that you have to keep in mind that this is Something that is a check game because you have to consider also what will be, as I mentioned, the strategy Of the other player, they tend to keep in mind that differently from TIM, they have some legacy. So the strategy is Defend the legacy, migrate the legacy, go for untapped market, but it will be difficult for them To do all of that, Andrew, it must be clever adding no legacy to try to fill This, let me say, gap in their strategy that will be less on the market due to the fact that the increase of speed is a fact. We are already moving to offer for of 400 megabits or 500 megabits per second. And you can imagine that There are some technologies that can have much more difficulties to follow this kind of strategy. Yes, no doubt. Thank you, Pietro. Very welcome. The next question comes from Alejandro Galostra with BBVA. Hi, good morning, Pietro and Adrian. Thank you very much for taking my questions. The first one, I'm trying to better understand the strategy of the new FiberCo. The purpose of the fiber coil is to have all the homes passed with FTTH in 4 years and having nothing with FTTC. So that would mean that you plan to upgrade your current FTTC network to FTTH and then increase the FTTH footprint in order to reach the The 9,000,000 FTTH Homes Pass target within 4 years. Is that correct? We are talking about 9,000,000 FTTH plus 3.5 FTTH. And then what will be the infrastructure deployment plans at the team level? That's my first question. And the second question is regarding the personnel expenses. You have been reducing The number of employees at a faster pace in recent quarters, will this trend continue as part of the digitalization process Or it is accelerating because you are permanently closing stores? And how much reduction in the workforce should we expect going forward? And in addition related to this question, You mentioned in the press release that employees will be transferred to the new fiber core. So would it be possible to mention the number of Okay. Related to the first question before to leave Adrian to give more details, perhaps my previous Speech wasn't clear. We are not starting to face off the FTTC, Changing everything for FTTH. In our 3 year plan, What we'll do that we'll partially substitute in some area FTTC with FTTH. We don't have to do that once. So at the end of the 3 year, we will continue to have a PTC Customer, but we will be great. Part of them, not all the customer, to FTTH. Okay. So if, now I don't remember, but today we are more than 300,000 FTTC customer. If I'm not wrong, our number at the end of 2023 will be to reduce FTTC customer from 300,000 to 200,000 customers, but Adrian can correct me if I'm wrong. Related to the personal expenses, Keep in mind that first of all, employee reduction. We don't foresee Employees reduction also because we are already a linked company. We have more or less 9,500 employees. If I remember well in 2015, we were 13,500. Okay. So we already did Huge job in terms of use of external forces, outsourcing part of the activity. So we don't foresee these activities. What will happen is that the digitalization process that we put in place It's allowing us to reduce costs that we have externally for some kind of activity that are more human based Then, automatize. Then, in relation to the comparison year over year, If you look at the real labor costs, the increase if you look at the overall Cost it's an increase, if I'm not wrong, 8% year over year. But the real increase on what is exactly labor cost, It was only 3%. It is more or less aligned with the inflation. The remaining part It's related to some contingencies. But again, Adrian, please, if you want to integrate or correct something that I told. No, you said it correctly, Pietro, on the first part of the question in terms of what we will have 4 years from now in terms of home passed, clearly, we want to reach 9,000,000 of Home passed on FTTH, but they will remain still some others on FTTC. Why? Because We will be overlaying from C to H where we need to. As always, we need to be extremely efficient, you know, to maximize the return. So, it's not that we will be overlaying All the FTTC in 4 years. On the second part of your question regarding the Employees that will be going to the fiber call, remember that's, this is a very Limited number of employees. We're not talking about something significant. Anyway, we didn't have Any movement in our numbers of employees in the past, we think that we We are very comfortable with the actual situation. We don't have plans in order to reduce this number. Okay. Thank you very much, Pietro and Adrian. Alejandro, but your question allow me To further give another detail about why Fabrica, next year, But reality, the truth is that already this year, we will have a big challenge that will be the integration Touch wood of the OE asset. So one of the reasons to create a fiber call Was also to create, let me say, a center of excellence in terms of fixed Operation for the last mile, what they mean? Until you discuss about backbone, backhauling, transport network, There are a lot of synergies managing a unique network, fixed and mobile. When you talk about the last mile, It's something that is completely different from, let me say, the last mile of mobile. Mobile is A delivery of a SIM and everything works. Build the last mile, it's a complete different job. So The creation of a fiber core will allow us to have a team that will be completely focused in this Tough job. And we are sure that we will benefit the most also from the operational point of view We have a separate company completely focused on this activity. I've been working on the fix for a lot of years In Italy, and I can assure you that I don't want to say that there's one simplest than the other. But for sure, our 2 activities are completely different, and it is difficult to let them come back. So, the creation of this company will allow our Internal team to be 100% focused on the integration of Oi and discussing about the operation activity. And we will have another team that will be in the new interco that will be completely focused To build this last mile network, then Alberto and his team will be focused to sell, Fixed mobile because at the same level nothing changed and we'll continue to manage the customer. Understood. Very clear. Thank you very much. Ladies and gentlemen, without any more questions, I'm returning to Mr. Pietro Labriola for his final remarks. Please, Mr. Pietro, you may proceed. I've been saying this for the past few quarters. In TIM, we don't use shortcuts. We will maintain our focus on the sustainability of the business with a rational approach and solid execution. The antifragile stance of the company is turning challenges into opportunities to evolve further. So we will continue to use our innovative approach and agility to make the right decision and be ready to take Full advantage of the recovery of the economy. I want to thank the dedication and commitment of our team, We'll continue to overcome many challenges to deliver outstanding results. Once again, together, we can do more. Thank you once again for participating in our conference call. Stay safe and healthy. I hope we can virtually meet soon in the upcoming events that we will be doing with the financial community, But I hope to meet you in person as soon as possible. As we conclude, the