Good morning, ladies and gentlemen. Welcome to TIM Participações 2020 third 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 TIM Participações 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 prospects, projections, and goals of TIM Participações 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 Participações may affect their performance and lead to different results than those planned.
Should any participant need assistance during this call, please press star zero to reach the operator. 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 third 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. I believe we, once again, show our capacity to be resilient and to adapt ourselves when facing external challenges. We are delivering very solid results for all our stakeholders. The third quarter was marked by a recovery in revenue dynamics while we maintained a solid execution on cost and accelerated cash flow expansion. Our approach to managing the emergency of the present is working. Net service revenue were back to positive, up 1.3% versus last year, with ARPU growing in all segments.
Bad debt was down sequentially and year-on-year, falling by more than 46%. EBITDA minus CapEx saw an increase of 8.5% versus the nine months of last year. Building a bridge between the present and the future, we also had remarkable achievements during the quarter. After 13 years, we are back to the top-of-mind of Folha de S.Paulo. We were listed in a new ESG index from B3 and S&P. Tax commitments are already being delivered. Signing 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. TIM Live services up by 29%, contributing to double-digit growth in fixed-service 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 highlight that our strategy to move away from a volume approach to a value one is paying off. All ARPU metrics grow mid to a single-digit, showing the ability of the company to extract value from all segment of its customer base. Specifically in prepaid, the third 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. 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 TIM Pré Mais Vantagens.
We introduced a new manner of giving benefit to prepaid clients with a TIM Mais Vantagens 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, always respecting our focus on value rather than volume. Churn reduction is a key driver for that improvement. We posted the lowest churn of the last two years after key action being taken to improve acquisition quality, churn prediction, and customer experience. Besides churn, penetration of lock-in offers and data usage among postpaid customers continue to grow, once again confirming the direction set to look for value instead of volume. On a quick remark, TIM always lacked additional commercial presence in São 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 control and prepaid, but we also brought benefit to the prepaid. Just beyond three 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 and proving to be an excellent way to enter new segment, such as financial services. This is not all. Now in November, we will evolve our portfolio introducing a marketplace of services to our TIM Black plans customers. A disruption movement that will take the entertainment tab 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, paying as an add-on. Shifting gears to the fixed segment, TIM Live's consistency is again delivering a solid performance. We closed the quarter with this unit growing 29% year-over-year. TIM Live'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 3.1 million homes in 30 cities. In October, we added Guarulhos in São Paulo metro area. The process of our fiber co-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 first 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 Wi-Fi. 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 two 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 million customer sessions and 45 million views of ad clips.
The second project is an anti-fraud solution to improve our customer identification using a score-based scale and thus application in different areas of financial services. Moving to the infrastructure, we continued to develop our network both for mobile and fixed services. The main highlight for the quarter was initial rollout of Massive MIMO technology in 4G. Close to 130 cities had this solution implemented to address capacity necessities. Another point worth mentioning is the fast 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 the rollout of 5G solution based on dynamic spectrum sharing, which is an early stage of the technology. We are testing fixed access over 5G in three cities, inviting customers that already use our WTTX in 4G to test the new solution.
We are building a roadmap to future supplier freedom with Open RAN. We are planning trials with this software-based solution to be ready to implement it once the technology becomes more mature. Still on the network front, the network sharing agreement with Vivo is going according to plan, and we should reach close to 190 cities with 4G expanded coverage until the end of the year. Another project that is being developed quite fast is the unplugged sites that should sum 1,500 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 help us deliver scale, flexibility, reliability, and efficiency. The plan is to have all IT assets running from the cloud in two to three years, with potential savings of double-digit magnitude in less than five years.
While we are just starting our journey to cloud in IT, we have already successfully implemented the new cognitive IVR and the TIM X project. In the first, TAIS, our artificial intelligence assistant, is helping to answer 9 million calls with improved experience and a sizable retention upside against the previous IVR system. TIM X, a simplified dashboard from Google, is helping human attendants 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. It's natural that alongside will come some additional costs. Despite this, we are maintaining a solid OPEX performance below inflation in that this quarter and down 5.6% year-to-date. Bad debt, as I said previously, is the main highlight of the quarter, falling more than 46% year-on-year with collection curves maintaining improvement. Revenues up and OPEX under control meant EBITDA growth. We maintained the pace of the last quarter and again, posted the best margin of the industry in Brazil. In nine months, EBITDA grew 3.2% with a margin of 47.6%. It's worth noting we are above our guidance for 2022. Once again, delivering our promises, in this case, much earlier than predicted.
Operating free cash flow showed a very solid performance, summing in the nine months of the year more than BRL 2.5 billion with positive contribution from EBITDA, CapEx, and working capital. The latter was positively impacted by the improvement in the collection curves and also the postponement of Anatel fees. With that, and excluding the effects of financial leasing contracts, TIM become net cash in the quarter by almost BRL 1.7 billion. Including the leasing, net debt declined by more than 20%. BRL 500 million will be distributed this month in Interest on Capital, and we expected additional decision before the end of this year. All the distribution will be concentrated in the fourth quarter, thus benefiting from the merge of TIM Part into TIM S.A.
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 fourth quarter. Despite unprecedented challenges faced during the year, much has been accomplished and we are optimistic about the fourth 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 TIMS3 in B3 stock exchange and TIMB 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 very attentive to our energy consumption and generation.
That is why we have 19 power plants from renewable sources saving us. 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. 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 CSX. 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 the floor for question. Please, operator.
Thank you, Mr. Pietro. Now we will begin the Q&A section. First, we will take questions from analysts, followed by journalists, both in English. We ask each participant to restrict himself to two questions at a time. To ask a question, please press star one. To remove the question from the list, please press star two. The first question comes from Mr. Rodrigo Villanueva from Bank of America. Please, you may proceed.
Thank you. Good morning. My first question is related to the IoT ecosystem. I think you've been very active with new initiatives to develop the Internet of Things. Apart from what you already announced in agribusiness, connected vehicles and other initiatives, are there other alternatives that you have been analyzing? If so, how relevant do you think the whole Internet of Things could be as a revenue growth driver for TIM?
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 appears like a PowerPoint. I want to stress that all the items we took as a commitment, we are starting to deliver one by one on IoT, on financial services, on mobile advertising, and customer base monetization, jointly with our capacity to deliver and improve our numbers on mobile. Let's move to your question that is related to the IoT ecosystem. We have 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 have signed the contract with four among the first six main company in this field, and we are enlarging our portfolio because the launch of the marketplace with ecosystem application and product is something that we are look to further improve also the marginality of this kind of services. The result with Fiat Chrysler Auto is not something that come from nothing. It's an activity that we look through for two years because we think that it 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 Fiat Chrysler car have a TIM SIM in the car, it's quite easy that we can try to upsell them something to have in-car connectivity with our TIM Black Família.
We are looking also for other industries, but we want, first of all, to better develop and monetize what we have in place, because sometimes the risk is that we can reduce the level of focus, while in these two area, we can gain a competitive advantage. In synthesis, we are looking by opportunity for other industry, but we want to further accelerate in these two industries where we are gaining a competitive advantage compared to the other.
Understood, Pietro. Very clear. 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 TIM, 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 recharges and the increase of the average recharge per customer. As you can see in the presentation, we are achieving both. 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 two reasons. The first one, during the COVID period, we leveraged the opportunity to do a kind of improvement of our sales channel. We reduced 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 guarantee to us a lower cost and a better quality. In the meantime, what's happened is that usually our rules 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 recharge in this period, we proceed to cancel because due to the fixed cost, makes no sense to keep it in our base. If you do the calculation, 105 days is three month and a half. If you be back from September of three and a half months, you are back to April and May.
That were the two, three months where we were hit by the COVID situation. In that period, we had several customers that were using the SIM and mailing number to be connected in Wi-Fi or just to use the number with WhatsApp. That stopped to recharge, but these are not heavy user or high spender. What's happened is that if you calculate 105 days, what's happened is that in the third quarter, we have the cancellation of all these customers. Now, to do a synthesis. What you can expect for the next quarter? In October, we are going to post -100,000 net adds on the prepaid. That is one of the best number of the last 12 months. Why?
The change of the mixed channel is starting to give result, and we are able with the existing channel to compensate the reduction in channel with higher cost and lower quality. Second, out of the COVID, in some way, the customer that were using the SIM just to use the number on WhatsApp was clean. Our expectation is that in November and December, we will further improve our number of net adds. Again, I think that it's important to stress that rechargers and recharge are growing, and this is a proxy of value generation in our business model.
Very clear, Pietro. 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 of deployment for the next couple of years? What sort of boom do you see in Brazil? We have been hearing a fiber deployment from all the players, so what is the potential that you see in the country, and is there a risk of overbuild? The second question, is regarding price increases. Do you still have some price increases left to be done in this year, or are you done with what you intended to do on both on fixed and mobile? Thank you.
Infrastructure. If I got clearly your question because the line was a little disturbed.
Sorry.
No, don't worry. The first one is related to the fiber development and the risk of overbuild in the country for that, and which are the opportunity in this country. I'm a foreigner here in Brazil, and sometimes we forget that Brazil is a country that is more a continent than a single country. When we say that there is a risk of overbuild in Brazil, that is big like Europe, I think that it's relatively a low risk, having in mind also the level of infrastructure of the country as is today. I don't think that this is a risk. In any case, it's important to state it that we don't imagine that the future of this country will be only based on fiber, but it will be a mix of solution between FTTH and fixed wireless access. At this moment, we don't see that.
In any case, we see huge opportunity to further accelerate and increase the fiber coverage, and this is the reason for which we are working on this infraco, newco, 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. Again, for sure, the name of this game is speed. 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.
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. The solution that we are putting in place with our infraco is one of the few that associate 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 is quite clever, and we are trying to further 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, it was if you were done with the price increases that you intended for this year, or do you still have some more price increases to execute?
Okay. What we did, it was just at the end of September for a part of our customer base, a small price increase. I think that it's important to highlight that going ahead, what we are building that we started to have a lot of customers that sign with us contract with a commitment of 12 months. When they got this kind of commitment, they have a lower level of price. Every time that the contract ends, we do a small adjustment of the price, and we have put 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 KPI that we show to you with ARPU increase and the churn reduction.
For the next year, I think that we will proceed with the price. Obviously, today it's too early. In any case, if we will do that, we will do that with our traditional approach that is more for more. What I mean, the customer need 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. Do a price increase with this approach, with a more for more approach, reduce the level of risk in terms of claims and churn. This is something that we will better define in the following weeks, having a better understanding of the environment and the economic recovery.
Thanks. Just to follow up on the first question, you were deploying homes passed at a rate of 300,000, more or less, right, per quarter. Given your comments, should we assume that this is going to see a relevant acceleration in the next 12- 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 infraco. That could be an accelerator of that, but it will happen once we close this deal. This is a way to deconsolidate the CapEx and will allow us to further accelerate. As is today, with our existing plan, we confirm the actual speed.
Perfect. Thank you very much for the answer.
Our next question comes from Mr. Fred Mendes from Bradesco. You may proceed.
Hello. Good morning, everyone. I thank you for the question. I have two questions here as well. The first one, Pietro, it seems to us that TIM is once again, in terms of the strategy, is starting to focus more on the prepaid segment, right? I just want to understand if this reading is correct, that if we look let's say over the next two, three years, the prepaid segment is the one that you see the highest opportunity for growth. That would be my first question. My second question, I think the level of bad debt called attention, significant reduction, 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, 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. What we are doing, we are continuing on the postpaid, and as we mentioned also in the other call, we are looking for value and not necessarily for volume. We posted positive net add in the third quarter.
I can tell you that October will be the best month of the last four months, but in a sustainable and 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.
This is the reason for which we started to launch a new offer, a new application that is called TIM Mais Vantagens, 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 BRL 10 recharge to BRL 30 recharge, giving us also the opportunity to build a relationship with this customer base that we can leverage also on the advertising. 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 areas. To be clear, we have to start to think that prepaid and postpaid are two method of payment.
If you want, I can increase the number of net adds, adding a lot of postpaid customers with an ARPU of BRL 20. This destroys value and does not create value. This is the reason for which I will stress that on prepaid, the KPI are increase of recharge, increase of ARPU, increase of recharge. On the postpaid, it's ARPU jointly with net adds. Just one of these two, only net adds and no ARPU, makes no sense. You can also double the number of net adds, but if you reduce by one half the ARPU, you are not generating value. These are the ways 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, or better, more or less, reinforces our thought that we are on the right path and we have to continue like that. Giving a look to the first KPI of the fourth 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, 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, cannot exaggerate. I want to stress that in the third quarter, we already reached our target of EBITDA of 2022.
Now our effort should be to continue to keep this level of EBITDA in all the lines. To conclude. For us, the result of our bad debt in the third quarter wasn't a surprise, and the result that we are foreseeing for the last quarter is slightly 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 hide that we were looking for sign of improvement, and if you look to the curves of collection, it's quite understandable the improvement.
On the bad debt, when you start with a problem on the curve, you see the impact some months later, as when you start to see improvement on the collection curves, the results come some months later. Fourth quarter will post a number that will be slightly better than 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, Pietro. Clear another point for you, for the extended verified agents to more specific one. Do you already have a date for the final step related to Oi's mobile operations or not yet? Thank you.
If I catch your question is related to the date for Oi's. Is it right?
Yes, exactly.
As I told at the beginning of my presentation, unfortunately, the timeline is not defined by us, because if it was the case, we could further accelerate. In any case, we are quite optimistic that the date of the middle of December that was announced is something feasible. We continue to be optimistic on that.
Thanks very much, Pietro. Very clear.
Our next question comes from Ms. Susana Salaru from Itaú. 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 it 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 savings, that would be our first question. The second question is related to the C6 partnership. What will be the next steps, and when should we expect it to actually be a relevant revenue line for the company going forward? Thank you.
Good morning, Susana. I'm Adrian. I'm going to 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. Remember, even we're talking about the 2000s. This last step of this restructuring plan was basically the reverse merge of TIM Participações into TIM SA, because it was the only asset that TIM Participações had until the closing was 100% of TIM SA. Naturally, it was the step that we needed to take. It clearly has significant benefits in terms of Interest on Capital distribution. You know very well that at each step of the structure, you need to pay basic tax for every distribution of IOC. Since we restarted the distribution of IOC in 2017, this was the natural movement.
You can make the calculation, considering the levels of IOC that we are distributing. It has obviously some other cost savings. You're always having different companies have intercompanies OPEX that you can cancel. It's interesting because you have significant levels of savings. We are talking of a large amount of money. 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, the math is over there. I'm going to leave to Pietro for the second question regarding C6.
Thank you.
Hi, Susana.
Hi.
Good morning. About C6. In this first phase, we have worked mainly on control. It was a phase that was very useful for both sides to better understand the organization, the process. Now we are doing some fine-tuning because we continue to see real good opportunity from this kind of partnership that had to be enlarged to the postpaid. Until today, as I was mentioning, we have been working mainly on the control. On the postpaid, there are huge opportunity. We'll try to launch something by the end of this year for TIM Black Família. Also on the prep, there are important opportunity that we can catch. What is also really important. In this case, I cannot say that we planned 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 of this market. I think that you are experiencing the amount of advertising that everybody are doing on Pix, on the TV. That is something that until three months ago, no one knew. This is the time on which all the customer have to evaluate or better, who don't have yet an internet banking app. This is the time to do that, and this is the time to switch.
For this reason, this is the 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. 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 give some more course about the impact on the revenues and the possibility of the valorization of the free stake, minority stake in the C6 that will happen in the following months. 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 base.
Perfect. Perfect, Pietro. Very clear. Thank you.
Remembering, if you have a question, please press star one. Our next question comes from Mr. Rodrigo Villanueva from Bank of America. You may proceed.
Thank you for the second round of question, guys. With CapEx to sales at around 19% so far this year, 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 we'll have 5G spectrum auctions potentially in the first half the year. That would be my first question. Thank you.
Hi, Rodrigo. Adrian again. Regarding the CapEx levels on revenues, if you see, we will be closing probably this year something around 20%, and at the end, we will be very near the level that we defined in our plan for 2020. We're having a good performance also in terms of EBITDA. This helped a lot. Remember that we always made a lot of emphasis about our main target being the EBITDA minus CapEx. We will be very near what we defined with 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 infrastructure, that we need some additional effort. Considering the arrival of the 5G, probably.
Nothing different of what you've been seeing in these levels of 2020 or 2021 or probably 2022. We are not expecting any spike on CapEx next year. At the same time, we think that we can maintain these, as Pietro's mentioned, this actual level of EBITDA. We always try to look the company considering the level of cash flow. If these levels of cash flows allow us to make the additional efforts of CapEx, we will be doing it as we did in the last four or five years.
Thanks, Adrian. Very clear. Secondly, regarding the infrastructure sharing agreement with Vivo, 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.
For us, it was a huge step, the network sharing agreement. Not only for the possible savings that this will bring, probably more CapEx and OpEx avoidance rather than actual savings. The thing is that probably we cross over here about the cooperation between the operators. This being said, we are expecting to end this year ready with almost 200 sites, each site 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 site. Decommissioning part of our network is extremely important. Again, yes, there is some OpEx savings, but this agreement is more looking forward in order to OpEx and CapEx avoidances.
We're pretty happy with how the project is going. We think that we can also enter into the third phase next year, as it was projected.
Understood. Thank you very much. Finally, if I may, regarding the potential to see Huawei banned from 5G in Brazil. It would be very interesting to hear your thoughts on this respect, also considering that you have been doing some pilot testing with Open RAN. Any color on this would be very helpful. Thank you.
Okay, Rodrigo. 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 through the world, to be clear. We didn't see any kind of retroactivity in this banning. We are discussing on something that could have impact on the 5G, if it will happen. In the meantime, the fact that we are acting as a leader in this movement for the Open RAN could solve a good part of the possible and potential problem that could come from the necessity to have just one single RAN technology. Again, I leave the stage to Mario to add some more color on that.
Our next question comes from.
No, no. Just a second.
Rodrigo, Mario speaking, sorry. Good morning. Thank you for the question. Just to complement. We are following the debate here in Brazil also. There is an international debate. Two facts are relevant. First of all, no decision has been taken. Of course we are in contact with all the institution regulators to have the best fit solution for Brazil. That should be an industrial solution, of course. On the other side, exactly, we are talking only of 5G. In our opinion, this reinforce even more the idea to have a 5G architecture in an Open RAN and standalone. This creates 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.
Fine, Rodrigo, or do you have some more doubts? I think that this is an important element and I prefer to discuss and clarify all the element because we don't see threats on that. As I mentioned, through all the world, no one asked for retroactivity because there's no country that can take the risk to dismantle what was installed to be changed, because the amount of money that it could request should be repassed to the customer base in terms of price. In a moment that 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 RAN. 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 I see that as an opportunity for the country.
Ladies and gentlemen, please stay connected. This conference call will return in some minutes. Our next question comes from Mr. Luis Fernando Azevedo from Safra. You may proceed.
Good morning. Just a quick follow-up on Susana's questions on the partnership with C6. I'd like to know if you could elaborate a little on what would be the threshold in order to receive participation on the bank, and if it's possible, what will be the size of that? Hello, can you hear me? Hello?
Without any more questions from analysts, we will now start the Q&A session with press in English. Ladies and gentlemen, please stay connected. TIM's conference call will resume in some minutes.
We are back.
We are back. Let's start again with the questions. Sorry for the issue.
We can proceed with the press questions, please.
The first question from press comes from Rodrigo Carro from Valor Newspaper. He asked about a possible delay in the process of choosing a partner for the fiber enterprise. What is the new prediction compared to the first one made. Bruno Amaral from Teletime, also asking about the first binding offers related to the same fiber core business. Please, Adrian, if you can address those two points. Thank you.
Yeah. 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 2020, beginning of 2021. We are full on track. We already received non-binding offers. We are already discussing with the different companies that are interested. Again, if there is some delay, we are discussing over a month or a couple of months. It's normal that this can happen. It's nothing that we are worried about, considering also that we will probably have the signing, hopefully, of Oi by the end of this year. Again, we are on track, hopefully we can arrive to a decision by the end of this year or the beginning of next year. Yeah. Regarding the first non-binding that we received, they are probably even above some of our expectations.
This means that there is a lot of interest in these kinds 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. It's interesting because we even received not only different non-binding offers for a specific design of the project, but we also received some others with different designs for these infrastructure vehicles. 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 Vicente again, with the next question from Bruno Amaral, again from TeletimePortal. He asks, is there any good negotiation to offer Disney+ or any other OTT platform in the near future?
Hi, Bruno. This is Alberto speaking. Yes, we are always negotiating with the main OTT providers in the marketplace. We were the first one to bundle Netflix in June last year, and we are engaging them. As a matter of fact, we got some news coming up. Next week we are going to announce a new set of high-profile partnership in the market for our value-add customers. Equally important, we are allowing our customer to choose among the different content providers. The answer is yes, and we're going to have more news coming up for next week.
Bruno, Pietro speaking. Without going into many details about who we are talking with, I think what is important is that we have defined a platform that we call the entertainment hub or marketplace that allow to all the content provider to have the possibility to offer their content to customer that not necessarily are customer with a credit card. Because as we state better in our next year plan, is that we want to act as a customer platform. We have the customer base. We have the capacity to build billion. Sorry, I would like to have billion of customer. Unfortunately, we're still with million of customer. We have the same channel. We have now a call center that allow in an automatic way to answer.
We are more than open to deal with content provider that want to enlarge their customer base, mainly if they start to want to offer package, mainly mobile, as happened, for example, in India. We will not stop our development, just the content. We want to work also on the business segment, adding in our TIM Black Família, that will become TIM Black Família Empresas. Also elements that are important for the business customer. I think 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.
Vicente again speaking. With the last question from press, from Gabriela Mello with Bloomberg.
Yes. There
to Pietro. Pietro, could you elaborate a bit further on the prospects for Q profit in 2021? Does the company sees revenue growth accelerating in the coming months while operating costs continue to be under control?
Yes. What we expect, also looking at the speed of the fourth quarter and the continuous improvement of our commercial KPI and the revenues KPI, is giving us the sense that the fourth quarter will be better than the third one. Cost will be under control. Our target is to continue to perform with something above 47% in terms of ABG. Again, I want to stress, we are delivering in the year of the COVID, the target that in our plan was for the 2022. It's clear that with that speed, we imagine a further improvement for the 2021. This is something that we will discuss more in detail in the following month when we'll present our new three-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.
TIM Brasil, once again, showed it has 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 Core, as they are starting to materialize and will become very important in our growth engine. I'd also like to thank the dedication and commitment of our team, who is delivering great results and took our employee engagement level to 85% among the 10% best company in Brazil. Thank you for participating 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.
Thus, we conclude the third quarter of 2020 conference call of TIM Participações. Your lines can be disconnected from now on. For further information and details of the company, please access our website, ri.tim.com.br. Thank you.