Earnings Call: Q3 2020

Nov 4, 2020

Good morning, ladies and gentlemen. Welcome to TIM Participasone's 2023rd Quarter Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company's presentation. There will be a replay for this call on the company's website. After Qing Participacides 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 be made regarding the prospect projections and goals of TIM Participacoes 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. Investions should understand that internal and external factors to Qing particulate points may affect the performance and lead to different results than those planned. Session. Now, I will turn the conference over to the CEO, Mr. Pietro Labriola, so he can present the main message for the third quarter of 2020. Please, Mr. Pietro, you may proceed. Good morning, everyone, and thanks for attending our quarter conference call. This quarter was full of positive developments for the company, despite a recovering economic environment and a still very serious situation in terms of the pandemic in Brazil. The gradual reopening of the country is positively affecting our business. I know it might sound a bit repetitive, but I believe we, once again, showed our capacity to be resilient and to adapt ourselves when facing external challenges. So we are delivering very solid results for all our stakeholders. The first quarter was marked by a recovery in revenue dynamics, while we maintained a solid execution on costs and accelerated cash flow expansion. Our approach to managing the emergency of the present is working. Next service revenue, we're back to positive, up 1.3% versus last year, with ARPU growing in all segments. Debt debt was down sequentially and year on year falling by more than 46%. EBITDA minus CapEx saw an increase of 8.5% versus the 9 month of last year. Building a bridge between the present and the future We also had remarkable achievements during the quarter. After 16 years, we are back to the top of mind of foreign newspaper. We were listed in a new ESG index from B3 and SMP. TAC commitments are already being delivered signing a web of FCA Partnership and launch new offers with C6 Bank. Going into more details of our revenue recovery, we saw a positive contribution coming from mobile and fixed services. With all major lines, posting better performances. Mobile service revenue back to positive, growing 0.4% year over year with solid sequential recoveries both in prepaid and postpaid. Team Live Services up by 29%, contributing to double digit growth in fixed services revenues. Product revenue grew 20% quarter over quarter, reducing significantly its yearly loss. We love that top line is back to positive, increasing 1.2% year on year. It's also important to realize that our strategy to move away from a volume approach to a value 1 is paying off. All ARPU metrics grow mid to a single digit. Showing the ability of the specifically in prepaid, the 3rd quarter confirmed the recovery trajectory of recharge indicators. Both the number of recharges and the amount being recharged are back or even better than pre COVID levels. Also, our prepaid gross additions are growing double digit with a better channel mix and always maintaining an efficient approach when it comes to managing the customer base. It's worth noting the important launch done during the quarter called team management agents. We introduced a new manner of giving benefits to prepaid clients with an advantage program that rewards commitment and recurrence. In the postpaid segment, we are also seeing significant improvements postpaid net additions are back to positive and we expect them to continuously evolve, but always respecting our focus on value rather than volume. Chain reduction is a key driver for that improvement. We posted the lowest churn of the last 2 years after key action being taken to improve acquisition quality, churn prediction and customer experience. Besides churn, Penetration of blocking offers and data usage among postpaid customer continue to grow. Once again, confirming the direction set to look for value instead of volume. On a quick remark, team always lacked additional commercial presence in Sao Paulo State. This year, we are taking the step to close that gap and to expand our presence in the countryside region. Still in the mobile segment, this quarter, we started to launch the offering under the C6 partnership. We concentrated the new proposition in postpaid both controller and people's paid, but we also brought benefit to the prepaid. Just beyond 3 months after the signing, we are accelerating the opening of new accounts at the bank. Now, we have reached more than 800,000 accounts while the share of recharges in the C6 app went above 55%. The partnership is presenting better than expected results, improving to be an excellent way to enter new segment, such as Financial Services. But this is not all. Now in November, we will evolve our portfolio, introducing the marketplace of services to our team back plans customers, a disruption moment that will take the entertainment hub concept to the next level. Clients will be able to choose and change the content they want in their packages and also add new ones, ping us and add on. Shifting gears to the fixed segment. Team Life's consistency is again delivering a solid performance. We closed the quarter with this unit growing 29% year over year. Team Life's ARPU grew more than 9% and we added 90,000 new clients in the last 12 months. Now, 44 of our customer base is under FTTH Technology. Our fiber coverage grew 60% in the last 12 months, reaching 3.1000000 Homes in Turkey Cities. In October, we added Guarulhos in Sao Paulo Metro. The process of our Faberco project is going according to plan having received several non binding offers. Discussion will continue in the coming month with the different interested parties and we expect a signing in the 1st month of next year. As a final element in our revenue discussion, I will comment on the important achievements we had during the quarter concerning our new ventures. We closed a partnership with Fiat Chrysler to develop a customized solution for a connected car service. Under this agreement, TIM will provide connectivity for cars on board telemetry and entertainment system as well as WAVI. In another front of IoT, we developed a marketplace for agribusiness solution reinforcing our leadership in this vertical. In the third quarter, we managed to turn into reality 2 initiatives related to monetizing our customer base knowledge. Under the mobile advertising initiative, We are enhancing our ability to promote video campaigns after solid first number. 160,000,000 customer session and 45,000,000 views of Eclipse. The second project is an anti fraud solution to improve our customer identification using a score based scale and that application in different areas of financial services. Moving to the infrastructure. We continue to develop our network, both for mobile and fixed services. The main highlight for the quarter was the initial rollout of massive MAMO technology in 4 g, close to 100 and 30 cities add this solution implemented to address capacity necessities. Another point worth mentioning is the first delivery of our commitment with Anatel under the TAC agreement. We are confident we will reach the targets within the agreed timeline. To develop the future of our network, We started rollout of 5 gsolution based on Dynamics petro sharing, which is an early stage of the technology. We are testing fixed as well accesses over 5G in three cities, inviting customers that already use our WTT X in 4G. To test the new solution. We are building a roadmap to future supplier freedom with Opera Run. We are planning trials with this software based solution to be ready to implement it once the technology becomes more measured. Seal on the network front, The network sharing agreement with Vivo is going according to plan, and we should reach close to 190 Cities with 4 g expanded coverage until the end of the year. Another project that is being developed quite fast is the unplugged sites that should sum 1500 new sites in remote areas to expand coverage and improve capacity using a solar based solution for energy. Shifting to information technology, we are implementing important projects that should that pass deliver scale flexibility, reliability, and efficiency. The plan is to have all IT assets running from the cloud in 2 to 3 years with potential savings of double digit magnitude in less than 5 years. While we are just starting our journey to cloud in IT, We have already successfully implemented the new cognitive Advair and the team X project. In the first ties our artificial intelligence assistance is helping to answer 9 minute calls with improved experience and assessable retention upside against the previous IVR system. Timix, a simplified dashboard from Google, is helping human attendance to improve their efficiency and quality of caring. The capabilities we are building with our digital system are helping to accelerate our digital transformation process, which is driving significant cost efficiency and customer satisfaction improvements We're improving all our digitalization metrics from e billing to e payment passing through e sales and digital caring. So much so that we are delivering what was promised in 2018 as a target for 2020 in this third quarter. As a consequence, our NPS for all segments has improved strongly. Early in my comment, I highlighted the rebound of our revenues as a consequence of increased commercial activity and economic recovery, So it's natural that alongside will come some additional costs. Despite this, we are maintaining a solid OpEx performance below inflation that is quarter and down 5.6% year to date. But that, as I said previously, is the main highlight of the quarter for more than 46% year on year with collection cars maintained improvement. Revenues up and OpEx under control means EBITDA growth. We maintained the pace of the last quarter and again, posted the best margin of the industry Brazil. In 9 months, EBITDA grew 3.2% with a margin of 47.6 it's worth nothing. We are above our guidance for 2022, once again, delivering our promises. But in this case, much earlier than predicted. Operating free cash flow showed a very solid performance, summing in the 9 months of the year more than R2.5 billion dollars with positive contribution from EBITDA, CapEx, and working capital. The latter was positively impacted by the improvements in the collection curves and also the postponement of unital fees. With that and excluding the efforts of financial leasing contracts, teams become net cash in the quarter by almost BRL1.7 billion. Including the leasing, net debt declined by more than 20%. 500,000,000 will be distributed this month in interest of capital and we expected additional decision before the end of this year. So all the distribution will be concentrated in the 4th quarter thus benefiting from the merger of team part into team essay. Considering that last year, we declared interest on capital in the third quarter Year to date, net income shows a reduction compared with 2019, but would be present a significant growth in the 4th quarter. Despite unprecedented challenges faced during the year, Much has been accomplished and we are optimistic about the 4th quarter and about the speed we can enter in 2021. A quick recap, we concluded the last step of a long process of corporate simplification with important tax, financial and operational efficiency. By the way, we are now team s 3 in Beatrice Stock Street and team b in NYSE. Our commercial machine was reactivated. New offers, new campaign, and finally stores reopen. Our ESG mentality is growing strong with initiative in all pillars. As you probably noticed, we are being tib to our energy consumption and generation. That is why we have 19 power plants from renewable sources 7 gas. This year, we start to look more towards diversity and inclusion and we are implementing a program to promote equality. Last but not least, governance. Novo Mercado remains always a key differentiator versus our peers. Looking ahead, we are expecting the public auction of the mobile assets of OI to occur in the mid December, but it's important to highlight we do not control this timeline. We should have more novelties under the beyond the core initiative shortly, including news on the equity stake in CC As I finish my comments, I'd like to point out the resilience of the company that managed to recover at a solid pace as soon as the condition become less constrained. We will maintain our focus on the sustainability of the business with a rational approach and solid execution. Thank you. We will now open Now we will begin the Q And A section. First, we will take questions from analysts followed by journalists, both in English. We ask each you. The first question comes from Mr. Rodrigo Villanueva from Bank of America. Please, you may proceed. Thank you. Good morning. So my first question is related to the IoT ecosystem. I think you've been very active new initiatives to develop the internal things. So apart from what you already announced, in agribusiness, connected vehicles and other initiatives. Are there other alternatives that you have been analyzing And if so, how relevant do you think the whole internet of things could be as a revenue growth driver for team? Hi, Rodrigo. First of all, I think that, we are, delivering what we promised because I think that it's really important to stress that, when last year we started to discuss our strategic plan that was discussing about strengthen the core business and go beyond connectivity. Sometimes it could appear like a PowerPoint. So I want to stress that all the items we took as a commitment, we are starting to deliver 1 by 1. On IoT, on financial services, on mobile advertising and customer based monetization jointly with our capacity to deliver and improve our numbers on mobile. Now let's move to your question that is related to the IoT ecosystem. Now we are focused our attention on these two industry. The agribusiness where we took a competitive advantage compared to the other player because we have the widest coverage in narrowband IoT. We've signed the contract with 4 among the first six main company in this field. And we have we are enlarging our portfolio because the launch of the, marketplace with the ecosystem indication and product is something that we are looking to further improve also the marginality of this kind of services. Then the result with Fiat Chrysler Auto is not something that come from nothing. It's an activity that we look through for 2 years because we are thinking that this is a big opportunity, not only in the IoT, but also as an upselling opportunity on our consumer customer base. Once a customer that buy a Chrysler car, have a team SIM in the car. It's quite easy that we can try to upsell them something to have in car connectivity without working black familiar. So, we are looking also for other industries But, we want, 1st of all, to better develop and monetize what we have been placed. Because sometimes the risk is that we can reduce the level of focus while in this 2 area, we can gain a competitive advantage. So in Synergies, we are looking by opportunity for other industry, but we want to further accelerate in these two industry 3s, where we are gaining a competitive advantage compared to the other. Understood, Pietro, very clear. And secondly, Several wireless carriers across LatAm experienced strong prepaid net adds after the COVID lockdowns were lifted. I was wondering if you could please share with us why this was not the case for team and if there is a plan to accelerate prepaid net adds over the coming quarters. Rodrigo, really thank you for this question because allow me to better clarify Not necessarily increasing net adds means increasing revenue. The real KPI to generate value is the increase of rechargers and the increase of the average recharge per customer. As you can see in the presentation, we are achieving both but it's clear that it's fair to give you some more colors related to the result of the net adds. We have negative net adds on the prepaid, mainly for 2 reasons. The first one during the COVID period We leverage the opportunity to do a kind of improvement of our sales channel. So we reduce the contribution of sales channel on the prepaid with, let me say, a worse trade off in terms of cost versus benefit. It doesn't mean that we will not be back to the level of gross addition that we had in the past. Because as we stated in the presentation, we are back to grow in the gross addition, but with channel that's guaranteed to us a lower cost and a better quality. In the meantime, what's happened is that usually Our roots is that we guarantee to the customer to continue to be alive. If he does a recharge in the last 105 days. If he doesn't do any kind of recharging this period, then we proceed to cancel because due to the fixed cost makes no sense to keep it in our base. If you do the calculation, 1 out of 5 days is 3 months and hours. And if you be back from September of 3.5 months, you are back to April to May. That were the 3 months, the 2, 3 months, where we were by the COVID situation. In that period, we had several customers that were using the SIM and Mailed number to be connected in Wi Fi or just to use the number with WhatsApp that stop it to recharge, but these are not the heavy user or ice bender. So what's happening is that if you calculate 105 days, what's happening is that in the third quarter, we had the cancellation of all these customers. Now to do a synthesis, What is what you can expect for the next quarter? In October, we are going to post minus 100,000 net adds on the prepaid. That is one of the best number of the last 12 months. Why? Because the change of the mix channel is starting to give result and we are able with the existing channel to compensate the reduction in channel with higher costs and lower quality. 2nd, out of the COVID, in some way, the customer that we're using the SIM, just to use the number on WhatsApp was clean. So our expectation is that in November December, we will further improve our number of net adds. But again, I think that it's important to stress that rechargers recharge are growing and this is a proxy of value generation in our business model. Very clear. Thank you. Our next question comes from Mr. Marcelo Santos from JP Morgan. You may proceed. Hi, good morning. Thanks for taking the questions. I have two The one is on the infrastructure company and fiber deployment. Could you please provide some information on the outlook cost deployment for the next couple of years, what sort of room do you see in Brazil? We have been doing a fiber deployment from all the players. So what is the potential that you see in the country and is there a risk overview? And the second question is regarding price increases. Do you still have some increases last to be done in this year or are you done with what do we intend to do on both fixed and mobile? Thank you. Infrastructure, if I got clearly your question because the line was a little disturbed. So, madam Tory, the first one is related to the fiber development and the risk of overbilled in the country for that. And we charge the opportunity in this country. I'm, I mean, for rain, are you in Brazil? And sometimes we forget that Brazil is a country that is more a continent than a single country. So when we say that there is a risk of overbuilding Brazil, that is big like Europe, I think that it's relatively low risk, I think in mind also the level of infrastructure of the country as is today. So I don't think that this is a risk, but in any case, it's important to state that, we don't imagine that the future of the of this country would be only based on fiber, but it will be a mix of solution between FTTH and fixed Eduardo Access. In this, at this moment, we don't see that. But in any case, we see huge opportunity to further accelerated increase, the fiber coverage, and this is the reason for which we are working on this infraco, Yuko, that could allow us to increase the level of investment, to further accelerate the coverage without any kind of impact on our numbers. Keep in mind that it will be also an opportunity for us because increasing the coverage, we can also increase our capacity to sell in, other areas of the country. But again, for sure, the name of this game is speed. So we have to accelerate the process, as we promised, on the creation of the infraco. To be able to exploit this window of opportunity of the next 12, 24 months. And for sure, one of the main characteristic in this field is that there are a lot of players that are telling that they would like to invest on fiber. But the solution that we are putting in place with our infracom is one of the few that, associated to the capacity to invest an anchor customer that can guarantee a minimum return on investment. In the other cases, when you start an investment activity without an anchor customer, you increase the level of risk. This is the reason for which we think that, our solution It's quite clever, and we are trying to fully accelerate the project. If I catch in the right way, the second question is related to the capability to do price increase. Is it so? Actually, what's if you were done with the price increases that you intended for this year, or we still have some more pressing business to to execute. Okay. What we did, it was just at the end of September, for a part of our customer base, a small, price up price increase. But I think that it's important to allow that going ahead, what we are building that we we started to have a lot of customers that signed with us. Contact with a commitment of 12 months. So when they got this kind of commitment, they have a lower level of price. Every time that the the the contract, hence, we do a small adjustment of the price, and we put it in place a war room that is able to manage this situation and negotiate with the customer the price increase reducing the level of claim and the level of churn that you can see also in some of our keypad that we showed to you. With ARPU increase and the churn reduction. For the next year, I think that, we will proceed with the present policy today, it's too early. But in any case, if we will do that, we will do that with our traditional approach, it is more for more. What I mean, the customer need and con and we will con and they will continue to need more data. Because, also during the COVID, they understood that connectivity is key and that they need more data. So do a price increase with this approach, with a more for more approach, reduce the level of risk in terms of claims ensure. But this is something that we will better define in the following weeks, sir, having a better understanding of the environment and the economic recovery. Thanks. Just to follow-up on the first question, you were deploying homespest at a rate of 300,000 more or less, right, per quarter. So given your comments clearly, I assume this is going to see a relevant acceleration in next 12 to 24 months window. What is happening is that we will continue with the speed of our existing plan. It's clear that we are working on the creation of this infracom that could be an accelerator of that. But it will happen once we will close this deal because this is a way to de consolidate the CapEx and will allow us to further accelerate. But as is today, with our existing plan, we confirm the actual speed. Perfect. Thank you very much for the answers. Our next question comes from Mr. Fred Mendes from Bradesco. You may proceed. Hello, good morning everyone and thank you for the questions. I have two questions here as well. I mean, the first one, Pietro, I mean, it seems to us that the team is once again, and in terms of the strategy, it's starting to focus more on the prepaid segment, right? I mean, I think, so I just want to understand this is reading, it is correct. And that if you look at, say, over the next 2, 3 years, the prepaid segment is the one that you see the highest opportunity for growth. So that would be my first question. And then my second question, I think the level of bad debt, call detention, you know, significantly reduced almost 50% year over year just wondering if you still see more room to further decrease this bad debt? Thank you. Okay. Thank you, Fred. It's important to your first question because allow me to better explain what we have told until today. We don't think that we don't have further room to improve our postpaid trends. What we told is that we see a future in which we have to act both on postpaid and prepaid and due to the fact that prepaid until a few months ago was just considered as a swimming pool to get new fish and move to the postpaid is something that was not completely explored in the right way. So what we are doing, we are continuing on the postpaid. And as we mentioned also in the other call, we are looking from for value and not necessarily for volume. We posted the positive net debt in the 3rd order. I can tell you that the October will be the best month of the last 4 months, but in a sustainable and the rational way, betting on the ARPU and the quality of the service for the customer. It doesn't mean that we cannot grow on postpaid. It means that we can grow on the postpaid with sustainable and rational approach, as you can see also with the recovery of the ARPU. When we move on the prepaid, we think that we have opportunity on the prepaid because it was a segment that in some way was not, matched by the focus of all the different players. It's clear that the prepaid has its own dynamics to be addressed. And this is the reason for which we started to launch a new offer, a new application that is called team Maisbantajans. Whose aim is to increase the level of loyalty of prepaid customer, allowing them to gain. Some price if they are continuously recharging on prepaid. If they move from a term recharged tier theory as we charge, giving us also the opportunity to build a relationship with this customer base that we can leverage also on the advertising. So I see the prepaid as an opportunity, but it doesn't mean that postpaid is not an opportunity. We think that the growth for the next year come from the growth of both area. And to be clear, we have to start to think that prepaid and postpaid are 2 meters of payment. So, if you want, I can increase the number of net adds, adding a lot of postpaid customer with an ARPU of 20 reais, but this destroy value and do not create value. This is the reason for which I will stress is that on prepaid, the KPI are increase of recharger, increase of ARPU, increase of recharge on the postpaid is ARPU jointly with net adds. Just one of these 2, only net adds and ARPU Makes no sense. You can also double the number of net adds, but if you reduce by 1 off the ARPU, you are not generating value. So these are the the way in which we are working and we want to further increase the quality of service. The fact that we posted the best level of churn over and more or less. Reinforce our thought that we are on the right path and we have to continue like that. And also giving a look too, the first KPI of the 4th quarter, we are looking for further improvement. As I mentioned, that we have net adds positive on postpaid in October, we have the lowest level of negative net adds in prepaid. And we think that November, December, we will confirm that giving us a good exit speed for 2021 where we think that we start to further recovery. Going to the bad debt, it's clear that you have always room to improve. But we cannot exaggerate. I want to stress that in the third quarter, we already reached our target of EBITDA of 2022. So now our effort should be to continue to keep this level to conclude. For us, the result of our bad debt in the 3rd quarter wasn't a surprise. And the result that we are foreseeing for the last quarter is likely better than the third one. Is not a surprise because it is the result of an activity that we started several quarters ago that we always commented here to everybody. We never hide that we had some problem at the operational level. We never had that we were looking for sign of improvement. And if you look to the curves of collection, it's quite understandable improvement. Then on the bad debt, when you start with a problem on the curve, you see the impact some operator as when you start to see improvement on the collection curves, the result come later some months later. Again, 4th quarter will post a number that will be slightly better the third one and that demonstrate that it wasn't a result out of the blue sky, but it was a consistent activity that we did through all the previous quarters. Perfect. Perfect. Peter, that's clear. And I just want to study for the extended EBITDA, if I may just a very quick one. Do you already have an update for the final step over there to Osmobile operations or log in? Thank you. If I catch your question, it's related to the date for ROE. Is it right? During my begin, at the beginning of my presentation. Unfortunately, the time line is not defined by because if it was the case, we could further accelerate it. But in any case, we are quite optimistic that the date of the middle of December that was announced is something feasible. So we continue to be optimistic on that. Thanks very much, Basil, very clear. Our next question comes from Ms. Suzana Salgado from Itau. You may proceed. Hi, guys. Good morning. Thank you for taking our questions. The first question we have is related to the restructuring. You concluded the restructuring this quarter and you mentioned that should yield some cost savings and also tax savings. If you could elaborate a bit more, what would be those savings? And if you could quantify somehow the safety. That would be our first question. And the second question is related to the C6 Partnership what will be the next steps and when should we expect it to make, to actually to be a relevant revenue line to the company going forward? Thank you. Good morning. Susan, I'm going to ask answer the first question regarding the restructuring. As you know, this is probably the last step of a restructuring plan that started many years ago. I remember even we are talking about the 2000s. This last step of this restructuring plan was basically the reverse merger of team participants listening to team SA because it was the only asset that team Cepacitors had until the closing was 100% of TMA. So it will naturally, it was the step that that we needed to take, then it clearly has significant benefits in terms of of interest on capital distribution. You know very well that at each step of the of the structure, you need to pay Visa cofins for every distribution of IOC. Since we restarted the distribution of IOC in 2017, this was the natural movement. So you can make the calculation considering the levels of IOC that we are distributing. Then it has obviously some other cost savings. You're always having different companies have intercompany's OpEx that that you can cancel. So it's interesting because, you have significant levels of savings we are talking of a large amount of money. So, but the calculations are pretty easy considering the levels of IOC going forward. Since we always said that we will try to maintain these levels of IOC, It's the math, it's over there. Then I'm going to leave to Pietro for the second question regarding CICE Thank you. Hi, Susanna. Good morning, about C6. In this first phase, we have worked mainly on controller, and it was a phase in which that was very useful. For both sides to better understand the organization, the process. And so now we are doing some fine tuning because we continue to see real good opportunity from this kind of partnership that have to be and large to the postpaid because until today, as I was mentioning, we have been working mainly on the controller. On the postpaid, there are huge opportunity, and we'll try to launch something by the end of this year, 14 black familial, but also on the because also on the credit are important opportunity that we can catch. But what is also real important? And in this case, I cannot say that, we plan for that. Sometimes it's also important to be lucky. We found to create this partnership in the right time because due to the COVID, but also due to the revolution of the Open Bank, we are in the window of opportunity debt. I think that you are experiencing the amount of advertising that everybody are doing on peaks on the TV. That is something that until 3 months ago, no one known. So this is the time on which all the customer have to evaluate or or it's or better. Who don't have yet? And internet banking app. This is the time to do that. And this is the time to switch and for this reason, this is right time that could allow us to further improve our partnership and our position because it's important that This is a way also from the marketing point of view to avoid a competition just based on giga and price, but on level of services. Then about the impact of this partnership, it's clear that when we will show the number of the plan for the next year, we will be able to show you some more course about the impact on the revenues, and the possibility of the valorization of the free stake minority stake in the 66 in the 66 that will happen in the following months. But again, it's an opportunity and, perhaps we were clever to perceive that financial services was an important area of evolution, but we were a little lucky to get the right time. For sure, we didn't plan the COVID that was an accelerator for the digitalization also in the financial environment of all the customer Our next question comes from Bank of America. You may proceed. Thank you for the 2nd round of question guys. And with CapEx to around 19% so far this year. I mean, I was wondering if you expect to see a significant increase in 2020 particularly to develop the wireless projects that have been delayed at this point. And also particularly considering that that will have 5 g spectrum auctions potentially in the first half of the year. That would be my first question. Thank you. Hi, Rodrigo, again. Regarding the CapEx levels on revenues. Maybe we will be closing probably this year or something around 20% and at the end, we will be very near the level that we defined in our plan for 2020. We are having a good performance also in terms of EBITDA. So this helped a lot. Remember that we always made a lot of emphasis about our main target being the EBITDA menos CapEx. So we'll be very near what we defined, but the beginning of this year. Talking about 2021, I won't say it's completely different from the situation of this year. You could see some additional effort, considering that we need to continue to increase our infrastructure that we need some additional effort also considering the arrival of the 5G probably, but nothing different of what you've been seeing in these levels of 20 or 21 or probably 22. But we are not expecting any spike on CapEx next year. At the same time, we think that we can maintain these as Pedro has mentioned, this actual level of EBITDA. So we always try to look the company considering the level of cash flow. If these levels of cash flows allow us to make additional efforts of CapEx, we'll be doing it as we did in the last 4 or 5 years. Thank you. I'm very clear. And then secondly, regarding the infrastructure sharing agreement with Vivo, I mean, I know you already provided some update, but I was wondering if it's possible to share with us potential savings related to this. Thank you. Yes. For us, it was a huge step the network shaving agreements, not only for the possible savings that this would bring, probably more CapEx and OpEx avoidance rather than save than actual savings. But the thing is that probably with growth every year that about the cooperation between the operators. This being said, we expect think, to end this year already with almost two hundred sites each side. On the 4G cooperation. We already started the trials with the 2G single network. This is also important considering the space that we are using and the sites we were discussing internally this morning about what we need to do in terms of additional antennas in terms of additional electronics on each side. So decommissioning part of our network is extremely important. But again, yes, there is some, some OpEx savings, but this agreement is more looking forward in order to OpEx And CapEx of audiences. We're pretty happy with, on how the project is going. We think that we can also to enter into the 3rd phase next year as it was projected. Understood. Thank you very much. And finally, if I may, regarding the potential to see Huawei band from 5G in Brazil. I mean, it would be very interesting to hear your thoughts on this respect, also considering that you have been doing some pilot testing with open run. So any color on this would be very helpful. Thank you. I think that you mentioned some important element, but I want to share with you to be very clear the experience that come from what's happened throughout the world. To be clear, we didn't see any kind of retroactivity in this banning. So we are discussing on something that could that impact on the 5G if it will happen. But in the meantime, the fact that we are, acting as a leader in this moment for the upper run could solve a good part of the possible and potential, problem that can come from the necessity to have just one single run technology. But again, I leave the stage to Mario to add some more color on that. Our next question Just a second. I think you have the Mario speaking. Sorry. Good morning. Thank you for the question. Just to compliment, we Of course, we are following the debate here in Brazil. So there is an international debate, but to think to fact are relevant. First of all, no decision has been taken. And so of course, we are in contact with all these tuition regulators to have the best fit solution for Brazil. That should be an industrial solution, of course. And on the other side, exactly, we are talking only of 5G. And in our opinion, this reinforce even more the idea to have a 5G architecture in an open run and stand alone that this created sort of the coupling between the 4G layer and the 5G layer. This give, I think, the assurance that we are talking only to organize the future and not to reorganize the past. 5, Rudig or do you have some more debts? Because I think that this is an important element and they prefer to discuss and, clarify all the elements because we don't see threats on that. Because as I mentioned, through all the world, no one asked for electricity because there's no country that can take the risk to this month or what was installed to be changed because the amount of money that it could request should be repaid to the customer base in terms of price. And in a moment that telecommunication is becoming, not telecommunications, connectivity, is becoming something that is a must for your professional and personal life. No one can risk to repass the customer, this kind of cost. I think that the way out could be to move from the standalone solution to the open run that will reduce all the different discussion. This is the reason for which we were the first one to move in this direction, trying to accelerate that. And they see that as an opportunity for the country. To be Ladies and gentlemen, please stay connected. Team's conference call will return some minutes. Our next question from Mr. Luis Fernandez Evedo from Safra. You may proceed. Good morning. Just a quick follow-up on Susanna's question. On the partnership with C6. So I'd like to know if you could elaborate a little on what would be the cash in order to receive a participation on the bank. And if it's possible, what could be the size of that? Hello. Can you hear me? Hello? Without any more questions from analysts, we will now start the Q And A session with Ladies and gentlemen, please stay connected. We are back. Let's start again with the question. Sorry for the issue. We can proceed with The first question from Prash comes from Rodrigo Kahjo from a Vallejo newspaper. He asked about a possible delay in the process of choosing a partner for the fiber, enterprise. And what is the new prediction compared to the the first one I made. Also, Bruno Maral from Teletime, I'm also asking about the first buying offers, related to the same fiber core business. So, please, I don't know if you can, address those two points. Thank you. Yep. Regarding the timing of the project, we're pretty in line with what we announced at the beginning of this year, that this should happen by the end of this of 2020, beginning of 2021. We are full on track. The rail received, non binding offers, we are already discussing with the different companies that are interested. So again, if there is some delay we are discussing of month or a couple of months. It's a it's a normal that this can happen. It's nothing that we are worried about, considering also that we will probably have, designing hopefully avoid by the end of this year. So again, it's, we are on track, and, and hopefully, we can arrive to the decision by the end of this year or the beginning of next year. Yeah. On regarding the first non binding that we received, they are probably above even above some some of our expectations. This means that there is a lot of interest in these kinds of of vehicles, the infrastructure will be key in the future. And this also answers the previous question considering or regarding the possibility of have too many projects of this kind. So it's, it's interesting because, we even receive, not only different non binding offers, for a specific design of the project, but we also received some others with different designs for this infrastructure vehicle. So this is what makes this interesting. There will be a lot of work to do, but we are pretty happy with what we already have. This is Vincent again, with the next question from Bruno Marao again from Tele time, portal. He is is is there any good negotiation to offer Disney plus or any other OTT platform in the near future? Hi, Bruno. This is Alberto speaking. Yes. We are always negotiating that we remain OTP providers in the marketplace. We were the first one bundle Netflix, in June last year. And, we are engaging them as a matter of fact. We got some news coming up So, next week, we are going to announce, a new set of high profile partnership in the market for our, value add value I customers. And, is equally important. We are allowing our customer to choose, among the different content providers. So the answer is yes. And, we're going to have more news coming up for next week. That's good for me to communicate about who we are talking with. I think what is important is that we have defined a platform. What we call the entertainment hub or marketplace. This allows to own the content provider to have the possibility to offer their content to customers that not necessary our customer with a credit card. Because as we are we speak better in our next year plan is that we want to act as a customer platform. With a customer base. We have the capacity to bill the sorry. I would like to add 1,000,000,000 of customer. Unfortunately, it's still with me. 1,000,000 of customers. We have now a call center in automatic, in an automatic way to answer. So we are more than open to deal with content provider that wants a larger customer base. Many if they start to want to offer package, mainly mobile has happened, for example, in India. But we will not stop our development and adjust the content. We want to work also on the biggest segment. Adding in our team like family that will become team like family and places. Also, elements that are important for the for the business customer. Certainly that it's important to state this concept of the customer platform strategy that will be one of the key elements of the next year plan. This is again speaking with the last question from Fred from Gabriela Merlo with Bloomberg. Could you elaborate a bit further on the prospects for 4Q profits in 2021? Does the company see revenue growth accelerating the coming months while operating costs continue to be under control? Yes. What's exactly looking at the speed of the 5th quarter and the continuous improvement of our commercial KPI and the revenues KPI. It's giving us the sense that the fourth quarter would be better then will be better than the third one. Cost will be under control. Our target is to continue to perform with the something above 47% in terms of ABG. That, again, I want to stress. We are delivering in the year of the COVID the target that in our plan was for the 22. It's here that that speed image a further improvement for the 2021, but this is something that we will discuss more in details in the following month when we present our new 3 year plan. Ladies and gentlemen, without any more questions, I'm returning to Mr. Pietro Labriola for his final remarks. Please Mr. Pietro, you may proceed. Team Brazil, once again, showed it as a very solid fundamentals. We deliver on the promises we make and we have solid plans beyond our action. As I always say, being focused and agile are key to reaching our goals. Additionally, I invite you to pay more attention to our strategic initiatives that go beyond the call as they are starting to materialize will become very important in our growth engine. I'd also like to thank the dedication and commitment of our team We're delivering great results and took our employee engagement level to 85% among the 10% best company in Brazil. Thank you for participating in our cons in our conference call. Stay safe and healthy. I hope we can virtually meet soon. And I hope also personally in the upcoming events we will be doing with the financial market. Thank you. This concludes the third quarter of 2020 conference call of TIM Participacines. Your lines can be disconnected from now on. For further information and details of the company, please access our website, ri. Team.com. Br. Thank you.