Good morning, ladies and gentlemen, welcome to TIM Participações 2020 second quarter results conference call. We would like to inform 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 may be regarding the prospects, projections, and goals of TIM Participações constitute the beliefs and assumptions of the company's board of 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. Now, I'll turn the conference over to the CEO, Mr. Pietro Labriola, so he can present the main message for the second quarter of 2020. Please, Mr. Pietro, you may proceed.
Good morning, everyone, and thanks for attending our second quarter conference call. This quarter was full of very serious and important events. We saw the pandemic impacting significantly the lives of everyone in Brazil as well as the economy. At TIM, we adapted quickly to the new reality and managed to keep focused on the business. More recently, new developments in the market consolidation front emerged. We have a lot to discuss today on the organic side of our business, but I'm sure you have many questions concerning our binding offer on the mobile asset of Oi group. I will make some quick comments on this topic before we start. First of all, it is important to realize that despite the significant value we see in this potential transaction, for sure, this is not a do or die situation.
Of course, we can benefit meaningfully from adding more spectrum capacity, more infrastructure, and more scale. In the past year, we succeeded in turning TIM Brasil around and develop our business quite well, managing the spectrum gap in a clever way, allowing us to have the best 4G coverage experience in the country. You will notice during my comments and in our presentation that we have all the condition to thrive independent of the outcome of this negotiation. Having clarified that, this nice transaction can generate significant value at the condition we are offering and to all the parties involved. We will have to wait for the conclusion since this is a long and complex process. Coming back to the organic world. Last quarter, I started my comments talking about the increase in the uncertainty level we need to operate in nowadays.
Despite that, I believe we, once again, showed our capacity to adapt and be resilient when facing the challenges posed by the external environment. Consequently, we are delivering positive numbers to our shareholders. We divided the presentation in the same way we are approaching our reality, managing the challenging present, but at the same time preparing for the future. My comment will follow a similar flow. The second quarter was marked by a strong execution on cost in order to face the impact from the pandemic that is plateauing with high numbers of infection and death while the economy starts to reopen. It is always worth mentioning to our foreign audience that Brazil needs to be understood as a continent with the size of Europe, having states that are similar to entire countries.
It's quite logical to have regions in different stages of the pandemic and economic recovery that is also uneven. Our solid performance in cost efficiency led to OpEx declining almost 15% year-over-year, with a large contribution from the positive bad debt trend. Therefore, EBITDA growth remained positive, up close to 1% versus second quarter 2019, and with a margin near 50%. EBITDA minus CapEx also had a strong performance, growing close to 30% year-over-year. Other remarkable achievement during the quarter were the signing of the Anatel's TAC and the free software under the partnership with the C6 Bank. As expected, mobile service revenue were down in the second quarter, but mobile ARPU remained positive, growing close to 1% versus last year as a combination of positive postpaid ARPU and negative prepaid ARPU.
As explained in the first quarter, prepaid recharges were impacted by the pandemic, despite showing a recovery towards the end of the quarter trend that is being confirmed in July with the levels almost aligned with same month of the last year. We expect to see a continuous recovery in recharge spending as we enter the third quarter, but we will have to understand how this recovery will hold after the federal aid checks are withdrawn. The postpaid also confirm our expectation, with commercial activities impacted by closed stores. Gross addition and upgrade declined when compared to the pre-COVID level, but this was also the case for the voluntary churn. Today, we have approximately 80% of our stores open. Considering the limitation implemented by municipalities and states, we are running at 30%- 40% of our full capacity.
On the fixed front, TIM Live consistency in delivering solid performance was once again confirmed. We closed the quarter with this unit representing close to 4% of our service revenue. TIM Live starts to grow almost 8%, and we added 100,000 new clients in the last 12 months. This is a consequence of high value proposition and coverage expansion. As we did not stop the rollout of our fiber network because of the COVID crisis, we were able to launch FTTH coverage in Belo Horizonte and Brasília, reaching a total of 5.7 million households covered in the country, of which 2.8 million with fiber technology. Other fiber-based infrastructure also expanded, such as our backbone and backhaul that grew to 104,000 km, and our Fiber To The City project reached more than 900 municipalities. The mobile network continued to be developed, adapting to the changes in traffic profile.
Once more, TIM's 4G coverage was evaluated as having the best experience in Brazil, with the highest availability and very well-positioned in all the metrics. During this period of social distance measures, our digital transformation process helped the company to face important challenges through the acceleration of our digital journeys project deliveries. During the pandemic period, we accelerated 100+ initiatives to prioritize digital experience. As a result, we accelerated the adoption of e-sales in all the product lines, postpaid, control, TIM Live, and prepaid recharges. In the meantime, our caring processes become more self-service with no human interaction growing 75%, driven by the new cognitive IVR. The new system answered more than 3 million calls after the launch. Usage of MyTIM app grew double digit, helping e-billing and e-payment metrics also to grow solidly.
Entering the future, I'd like to highlight the initiative that will contribute organically to a self-sufficient development of our network infrastructure. We put forth a commitment to reach 100% of Brazil's municipalities with 4G until 2023, bringing to those cities the great 4G TIM experience. To achieve that, we plan to leverage on four major projects that are starting to be implemented. The first one, the implementation of the measure agreed following the signing of the TAC or Conduct Adjustment Term. Under this commitment, we will expand our coverage adding more than 1,300 new cities and also implementing fiber backhaul to more than 230 cities. Second, as you all know, our network sharing agreement was fully approved. We are moving to the first stages of the implementation. It will be a step-by-step project with significant impact for mobile coverage and capacity.
Third, the new project of unplugged site uses a Network-as-a-Service approach to close coverage gaps in areas of difficult access or roads and highways. Fourth, after several live network tests in the past year, we are moving to the implementation phase of 4G Massive MIMO. This project can boost our capacity by three times in area where it will be implemented. We expect to have 200 cities already benefiting from this in 2020. On another front, and continuing with our strategic approach to 5G, we expect to launch commercially our first three cities to explore opportunities with Fixed Wireless Access broadband services. For sure, we will leverage on the experience we gather from the trials with WTTx. A high-quality network will help the transition from volume to value that we expect to continue to execute in the upcoming quarters and years.
As key pillars in the transition, a new brand signature was developed, and the reposition of portfolio is being implemented. We want to position our offers away from the mainly price per giga competition. On prepaid, we will focus on convenience, on the control in the new experience. On the postpaid, we'll be further developed as a family entertainment and service hub, while TIM Live broadband will focus on the freedom to choose content. In the B2B, our top clients will be approached with integrated service under the strategic vertical defined in three-year plan. As you well know, Agro business is the most developed so far. For the B2C, we plan to leverage on the partnership with C6 Bank to develop differentiation. Already in July, we launched the first set of products combining telco and financial services.
In the first three weeks, daily average new accounts were multiplied by eight times, reaching around 200,000 new accounts. TIM share of recharge was boosted to more than 50%, and our website visits reached a record high after the launch. In the next month, new developments will come to TIM Black Plan, always focusing on the combination of benefit. It is always worth remembering. We intend to create value with this partnership in two ways. With direct compensation related to active accounts coming from TIM's client base. This compensation comes in the form of activation fees and equity stakes subject to reaching certain goals, and with increased customer loyalty and consequently churn reduction, offering differentiation and cost saving with recharge and payment fees. Still under the section preparation for the future, we believe significant value can be created through four projects.
Two of them I have already mentioned earlier, the network sharing agreement and TAC. With the network sharing agreement, besides the improvement in customer experience, we will create value in the form of CapEx and OpEx saving. Each phase of the project will have its contribution, but the last one related to the full single bidding city below 30,000 inhabitants is key to unlock material efficiency. In the TAC, additional to the expansion of coverage, the company has agreed with Anatel to ex change BRL 639 million in sanction for investments, reducing its contingency burden. Similar projects concern the creation and the consolidation of a neutral infrastructure vehicle to accelerate FTTH rollout. The process of finding a partner and signing an agreement is expected to happen by year-end. TIM has received several indication of interest, and we plan to shortlist them before entering in the detailed negotiation.
The last project is related to the final step of a long process of corporate simplification. With this project, the company plans to generate operational and tax efficiencies after the merge of TIM Participações into TIM S.A. After the conclusion of this incorporation, TIM S.A. will be the sole listed company. Quickly going over some financial trends. As I mentioned earlier, we were already expecting a decrease in revenues, and our net service revenue confirmed this by coming down 3.4% versus last year. In order to compensate this performance, we reinforced cost control and efficiency measures, making OpEx to fall close to 13% year-over-year. This strong performance is explained by improvements coming from lower volume related to the pandemic. Second, better operational performance such as bad debt. The last, reduction in discretionary expenses. Bad debt is worth going in a little bit of detail.
This line alone was down 15.6%, bringing the nominal number back to 2018 levels. This can be explained by structural changes implemented and improvement in the collection curve since the end of the last year. Despite having revenues declining, OpEx performance more than offset this impact, maintaining EBITDA on the positive side with 0.9% year-over-year growth. EBITDA margin also expanded by almost 400 basis points. The last 12 months operating free cash flow grew more than 40% when compared to recent period, showing a clear evolution on the cash generation side. I also take the opportunity to reaffirm our EBITDA minus CapEx over revenues guidance of above 20% with a mid-single digit growth in EBITDA minus CapEx. Both metrics are being met in a year-to-date view.
As I finish my comment, I'd like to point out the resilience of the company that managed to perform decently during this crisis. We will continue to focus on the sustainability of the business with a rational approach and solid execution. The new reality emerging in the second half of the year will create significant challenges, focus on execution, a clear strategy will confirm TIM's solid organic path. Thank you. We will now open for questions. Please, operator.
Thank you, Mr. Pietro. Now, we will begin the Q&A section. First, we will take questions for 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, and to remove the question from the list, please press star two. Our first question comes from Mr. Fred Mendes from Bradesco BBI. Please, Mr. Fred, you may proceed.
Good morning, everyone. Thanks for the call. I have two questions here to start. The first one, we saw an increase in ARPU of almost 1% year-over-year. I just try to understand, how important are the stores that they were basically closed throughout the quarter? How important is the fact that the stores are open for you to upsell to your client base? Obviously, in this quarter, there was a negative impact. That would be my first one. On my second one, I guess it's much more like a strategic question. Let's say in a hypothetical scenario where TIM does not get the spectrum from Oi's mobile operation, should we see some sort of change in the company strategy? My main point here is, how can you compensate for the potential lower spectrum that you'd have versus the other players in this scenario?
Thank you very much.
Hi, Fred. Let's start with the second question that is our strategic path. It's important to remember that we already stated in the previous call that the possible market consolidation, it's for us an opportunity, but is not a do or die option. We always mention that we were proceeding in parallel with our strategy, working, as I mentioned during my speech, on the use of new technology, as is the case of Massive MIMO, where we will be the first player in Brazil to use this new version of Massive MIMO that can improve by three times the network efficiency. We are working with the network sharing with Vivo that finally was approved by the CADE. Let's remember that we always told that there are always the opportunity of the upcoming auction for the 5G and the 700 MHz.
What is important is perhaps to underline that we have already demonstrated in the last five years, as we were able in the past to exploit in the best possible way the frequencies at our disposal. It's clear that if a market consolidation happens, and there is a possibility to acquire from the sale of Oi mobile frequencies, it's for sure a good opportunity. This is not the only way that can allow us to further proceed with our strategy. I leave the stage to Leo to give some more colors about how we can exploit better the existing frequencies and how we can move in the future.
Good morning, Fred. Just complement what Pietro mentioned. We have tests on field with the Massive MIMO, and the results were very interesting in terms of improved capacity with the existing network. We have to highlight that, I guess that, in the, let's say, last month, all the society and some public administration considering telco as essential services. With that, we saw some kind of improvement in terms of role in important cities, let's say, to give more freedom for new towers. What is good because we can use data in the sense for density where it makes sense. We can highlight, for example, Belo Horizonte or Curitiba, Brasilia, and Porto Alegre. That cities that now we are seeing, let's say, a very interesting opportunity to deploy sites.
The last is, Pietro mentioned about the new frequency spectrum auction. It's interesting highlight that we are seeing the 700 MHz. At the same time, the 2.3 GHz is a very interesting spectrum that will be available on this auction. Just to give a number, today, more than 20% of our devices, smartphones already are supportive for this 2.3 GHz. Again, we have data on the test about the refarming to use a new spectrum and to use, let's say, the most advanced technology. We are prepared to do that again. I guess that our track record, when we did the leapfrog from the 2G to 4G, we can use all this expertise to have this, let's say, organic plan to support the upcoming capacity.
Fred, coming back then to your first question that is related to our capability to continue to upsell our customer base. Before to leave the stage to Alberto, that is leading all this part in our company, I would like to point out some element to remember our strategy. I remember that we started to talk about the importance to move from volume to value. We discussed in unsuspected times that for us was more important to get new customer with a reliable profile than to get net positive net sales at any cost. Why I'm highlighting that? Because during the call, for sure, will arise question related to our improvement in the bad debt.
Remember that we started to tell in the third quarter of the last year that our bad debt should be improved by an improvement of our processes, but also due to a rationalization of our commercial approach. We did a great job in this period closing sales channel with not the best trade-off in terms of acquisition cost and quality of the customer. It will be reflected also in the following months about our result. Last but not least, I imagine that your question is coming also to understand better how we can continue to grow in terms of ARPU. It's important to remember that on the postpaid, in the comparison year-over-year, we were unable to apply our yearly price up that will arrive more ahead in the year. The comparison with the last year, in some way, is not completely fair.
Again, we are satisfied about our result, and they are completely in line with what we were imagining. I leave the stage to Alberto to give you more details about our channels.
It's Alberto speaking. Just adding on Pietro's comments. Basically, we work our customer base and try to cross-sell and up-sell across all channels. They mean stores, of course, but all our BTL channels as well. During this pandemic, of course, we lose traction in the store because they were closed, but we continue to work on these activities of cross-sell our customer base through our digital channels and our inbound and outbound channels. This is something that the BTL marketing approach is quite a priority to our strategy. These channels that were up and working during the pandemic continued in this effort.
Thank you, Pietro, Leo and Alberto. Very clear, important information. If you allow me just one very quick point on the bad debt, definitely was impressive. Just how important was the improvement in billing here? You think that was much more a choice of, let's say, a more robust customer base? You think that the billing made a major contribution for this improvement? Thank you.
Fred, I'm very happy to say that we are confirming again what we told in the third quarter of the last year. We told that the third quarter should be the worst one. We try to explain as the bad debt process needs time to show the result, because once you start to improve, it takes at least six months to see the final result. For sure, we were able to improve all our internal processes. That is a good part of this activity. In the meantime, as we mentioned, we didn't want to acquire customer at any cost. I think that this is something that will be better understood by the market once we will be out from the COVID, because we start to have also an improvement on the prepaid.
If you remember, we always told that there are opportunity on the prepaid to have an ARPU growth, avoiding to transform all the customer in control customer.
Thank you very much, Pietro. Very clear.
Our next question comes from Mr. Marcelo Santos from JP Morgan. Mr. Marcelo, you may proceed.
Hi. Good morning. Thanks for taking my questions. The first question is a follow-up on Fred, on the bad debt. Just to clarify, you improved your bad debt processes. You were being more cautious on acquiring clients. Assuming a normalization of the economy, now you would be feeling ready to really accelerate customer acquisition? That's it. I mean, you would be willing to take more risk given that you improved your bad debt? Just wanted to clarify that, assuming a normalization of the economy. The second question would be on the infrastructure business. What kind of goals do you have in terms of deployment? What parts of the network could you put inside this neutral network? If you could just provide a little bit more detail on this initiative, please.
Hi, Marcelo. About the bad debt, as I was explaining to Fred, for sure, there's a main part of the improvement that is coming from our process improvement, because last year, we clearly stated that we have some problem in our processes, and now we are proceeding very well. I want to add also that if you look at the collection curves that we put in the presentation, it's quite clear that this is not an one-time event, because all the curves show a further improvement. We expect to further improve the number in the next quarters. Related to the second part of your question, related always to the bad debt, I shouldn't use the word conscious. What we did was to improve also, thanks to the new technology, artificial intelligence, big data, our capacity to better understand our customer profiling, reducing the level of risk.
In this period, what we did was to further improve all our capacity. What is important to show is that the result that we are having today is not because yesterday we start to work on this technology, but it was the preparation that we did the last year that now is showing its result. In any case, trying to leverage this COVID situation, we had also the time to look in a better way to all our sales channel mix. What we did with Alberto and Adrian was to have a better understanding about which are, by channel, the best trade-off in terms of acquisition cost and customer ARPU. This is something that you will see and will be reflected in our numbers in the following quarters. About infrastructure business, I leave the stage to Adrian, that is leading the process, to give the details.
Hi, Marcelo. Good morning, everyone. Regarding our open vehicle, we try to call it open and not neutral because it's slightly different in terms of what it means, because this vehicle will be driven, or the deployment of the network that this vehicle will do, will be driven by our needs in terms of which markets we want to address, how we want to do it. Yes, after an exclusivity period, those networks could be open. It's different than a neutral vehicle at the end. Basically what we are thinking is to spin off all of our last mile network today on this new company. Basically today, all of our deployments of FTTC and the new deployments of FTTH, starting from the optic, and obviously including the customer connection. After that, all the new deployments will be obviously in greenfield.
It's basically the network that today is strictly dedicated to our TIM Live business. We are not including any other assets. What we will have, and we are defining this in the following weeks, probably this new vehicle also will be able to deploy some FTTS, so fiber- to- the- site, or probably also FTTC fiber networks, always in greenfield. We will not include in the vehicle our actual FTTS or FTTC assets.
Perfect. Thank you very much. Very clear, both answers.
Our next question comes from Mr. Rodrigo Villanueva. Please, Mr. Rodrigo, you may proceed.
Yes, thank you. Good morning, Pietro, Adrian, Vicente. I have a couple of questions. The first one is related to your wireless revenue growth. I was wondering if you could explain a little bit more on what could be behind the softer growth that you had relative to Vivo and Claro. Secondly, following the new binding offer for Oi Mobile earlier this week, is there any potential timeline that you could share with us regarding next steps to watch? Thank you.
Hi, Rodrigo. About the wireless revenue growth and which is the outlook for the next quarter, it is important to say that exactly as we mentioned, we are seeing a further improvement in the trend. Keep in mind that July, I can share with you a first preview, should be the second-best month in the year on the prepaid recharges, with a year-over-year that is going to close the gap and becoming very close to zero. We are discussing about something minus 2%. It shows you a fast recovery on this area. We expect a further improvement because in the middle of August, what we will do is that we will launch our new offer on the prepaid, and always to share with you our strategy.
It will be a new offer that is not based on a giga price competition, but more on a concept of convenience for the customer, adding some elements. This is in line with our strategy that is to compete not on price, going beyond connectivity. Related to the postpaid, we think and we foresee further improvement in the next quarter also because we start to apply our yearly price up, that we have to remember that we already communicated to the customer base in February. It will not be an issue to be repeated in the first quarter of the next year, just to start to speak about the possible 2021 trend. In terms of evolution of our offer, the first signs that are coming from the offer that we had on the control are very positive, and I leave Alberto to give some more colors.
In the meantime, we are going to further improve our postpaid offer, where we are not discussing about a review, because we are very happy that what we launched one year and about two years ago with TIM Black Family defined that as an entertainment hub. It seems that is becoming a market standard. It confirms that we are on the right path in terms of the evolution. Before to leave the stage to Alberto, all in all, we foresee improvement in the following quarters, both on prepaid and on postpaid, with a strategy that is completely aligned with what we mentioned in our plan. Alberto.
Hi, Rodrigo. Just adding a few points on the control plan that we just launched.
From a positioning strategic point of view, it follows this positioning whereby we try to add incremental values to the customers beyond the giga. We hit a number of records since the launch date. Pietro mentioned the number of visits. I can add the number of digital transactions. We've been quite successful both in growth adds and on the customer base. We've got more than 200,000 accounts open on our customer base overall, and it's difficult to have a metric in terms of comparison of growth addition because we have the commercial footprint that open up and closes during this period. All in all, on comparable basis, I can share that we increased growth addition on a double-digit percentage after the launch.
Coming back to your second question related to the timeline of the process. We don't foresee any delay in the process. We are imagining that, in any case, the process will be finalized by the end of this year, and then they will go through the regulatory and antitrust step for the approval. Now everything is in the hands of the seller that have to do its own evaluation, have to confirm the date of the creditor meeting, and all the rest will proceed as was planned.
Understood, Pietro. Thank you very much.
Our next question comes from Mr. Diego Aragão from Goldman Sachs. Please, you may proceed.
Yes. Hi, good morning, guys. Thank you for taking my question. Two questions, if I may. The first question is regarding the network swap agreements between TIM and its peers, particularly with Oi. Given that Oi mobile business is in a sales process and the company's infrastructure will be part of a separate business unit, I would like to know the amount of network swap agreements between TIM and Oi. For instance, how much these agreements represent, and understand what will happen with these swap agreements when and once Oi mobile business is sold. Thank you.
About the swap, I leave to Leo and to Mario to give more details. Keep in mind that they are in place. What will happen is that once they will be extinguished or when they will reach the expiration date, keep in mind that there is a possibility on both sides to renew them if both party, and we have no interest to avoid renew that because we are satisfied about the situation, or we can evaluate to do the swap where it is possible with other players. The swap is not in our mind any kind of issue. It's business as usual, and it is in the interest of both parties to proceed. I leave to Mario and Leo if they want to add something.
Just to bring some colors. The main agreement that we have with Oi is related with the RAN- sharing agreement. This agreement has all the base in terms of KPI quality and some kind of obligation from the both sides. We have followed that during the, let's say, the Chapter 11 process that Oi is moving on. It's going well. We don't have perceived any kind of degradation in terms of quality. First, we will be with all the attention to keep and to guarantee the quality for our customers. Again, we are under a certain conditions of quality in the both sides, we and Oi, and we are follow that day- by- day. Till now, we don't have any kind of, let's say, new comments or new issues to be treated on that.
Thank you, Leo, Pietro. Just to follow up and just to make sure that I understood correctly. When we refer to those swaps, are those swaps with Oi mobile business or do you have agreements with now this Oi infrastructure? Let's say that if the group formed by TIM, Claro and Vivo buys Oi mobile business, I would imagine those swaps should disappear, but there might be some costs related to it, right? I just want to understand how much those costs could be and how this should be treated in the case that, for instance, you end up buying Oi or if someone else buys Oi mobile. Thank you.
Well, what we can disclose on that is that first, the swap over fiber is not on the mobile business. It will be on the UPI infrastructure. All right? This is one point. The second is the swap is, let's say regard the balance sheet. The swap we receive and we offer the same amount of kilometers of fiber. There is, let's say a bit neutral on this kind of agreement. It's based again on balance sheet. This contract, I understand that will be under the infrastructure UPI, not mobile UPI. Looking at that, we don't expect any kind of, let's say, rupture or any kind of issue over this contract. Again, we are receiving and offering fiber on the same amount of quantity. Okay? We don't expect any kind of significant change on this contract.
Okay. Thank you, Leo, for that. Look, my second question is just like a follow-up on Marcelo's question. In fact, I just want to understand how the current regulatory framework talks to the spinoff of fiber. I'm asking this because now that we have all companies, and all companies are working to launch or planning to spin off the fiber business. I'm just curious to understand if there is any regulatory risk to that, and also how the antitrust agency could view eventually a consolidation in the fiber business in particular. Thank you.
Hi, Diego. It's Adrian. I will leave the floor to Mario in terms of the regulatory side of this possible deal. There's no concession on our fiber business. I think that there are no issues on that side. On the first part of your question, yeah, we need to remember that we started talking about this, our project, in the first quarter results conference call. We presented our plan with the presentation of our three-year plan. Our project is going fine. We already signed more than 30 NDAs. We think that we are in very good shape on this side. We don't see any issue on the regulatory side. We are pretty happy with our project, how it is going, also in terms of timing, considering the context.
That's why we think that we will be having or signing our project before the end of this year. This is extremely important because, we think that we could be somehow ahead of other projects. It's interesting. We will see how things go in the second part of the year. Today, we are targeting the signing by the end of this year. I don't know, Mario, if you want to consider.
Hi, Diego. Mario. Just to complement. In general, infrastructure sharing is a very well-established public policy in Brazil, just because, of course, the country need this cooperation in order to develop connectivity all over the territory. On the other side, historically, from a regulatory point of view, fiber is a key playing field that is very lightly regulated because exactly, just to achieve this private investment boost. What is happening with fiber is exactly what the regulatory framework aim too, to have a different initiative in order to boost investment and deployment of fiber. We think we are perfectly in line with the public policy and the regulatory framework. We and the other initiatives, of course, of the same character.
Thank you very much, Mario and Adrian. Yeah, no, sorry. Sorry for interrupting you. If you can just-
Diego, we will try to understand better your question, and reading below the line, perhaps it's better to give a further statement. The fiber of the swap, it's quite probable that is used both for the mobile UPI and for the fixed UPI. In case, or a certain point, sell all the mobile, I think that your question was what's happened to your swap if they can cancel that? We imagine that is not possible because this is something that is useful also for the fixed line business. I don't know if this one was your question that you put in a too much polite way, and so was it more difficult to understand.
Yes. It was. Thank you, Pietro, for the follow-up. I guess I was just wondering if you can comment on that, ultimately, apparently, if the Oi mobile business is sold, for example, if you guys end up buying it will no longer be like EBITDA neutral as Leo mentioned, right? At least now explaining that this also, let's say, helps the fixed business of Oi, it makes more sense to imagine that it will be like no impact for you. Thank you for the follow-up. I really appreciate it.
Don't worry. Next time, you can be impolite. Don't worry.
Thank you, Pietro.
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Our next question comes from Mrs. Maria Tereza Azevedo from Santander. Please, you may proceed.
Hi. Thank you, everyone. Thanks for the call. My first question is to you on the CapEx. Is it fair to assume that you can reduce the 2020 CapEx by 20%-30% due to rationalization, better deals with the vendors? If we include the rent sharing and other savings for next year, are you also going to keep it lower? Even after you spin off the fiber, what should be the sustainable CapEx intensity level after all those initiatives take place and Open RAN and so forth? My second question would be on how do you see the entrance of a potential wholesaler in the mobile market? Do you believe you could rent spectrum capacity directly in this scenario? Do you see any threat from a potentially stronger MVNO activity in Brazil? That will be all. Thank you.
On the first question, Adrian will give you some highlights.
Hi, Maria. Regarding CapEx, we are not targeting a 20%-30% reduction this year. Because what we are foreseeing is that our EBITDA level shouldn't be highly impacted by this context. If you see what happened in the first two quarters, we are still on the positive side in terms of EBITDA. Yeah, probably the second half of the year will be more intense in terms of commercial activity, you could have some additional impact on OpEx compared to the second quarter. Yes. At the end, we are targeting on the EBITDA side, something or at least without any negative number. Of course, we wanted to maintain our growth in terms of EBITDA minus CapEx. Yes, that's our main goal, that's the main guidance and will be the objective for everybody in the company.
That doesn't mean that we will reduce by 20% or 30% our CapEx. Because we think that all the efforts that we are doing today shouldn't make any harm for the sustainability of the businesses. If we need to continue to invest on our networks, on our FTTH business, we shouldn't take decisions because of a specific quarter. This clearly, we will be reducing somehow slightly our CapEx. We will also probably will need to absorb some effect of the exchange rate, because we know that some of our CapEx are also denominated in US dollars. We need to absorb also that, but it won't be on the 20%- 30% range. The second part of your CapEx question was going forward with our project of the new vehicle for TIM Live business.
Consider that today, the TIM Live business consumes more than 10% of the CapEx, between 10% and 12%. For us, in terms of CapEx of revenues, we are considering that business also. That's why we're probably on the 22%-23% range. Without this CapEx on our balance sheet, which will be the level of our CapEx, probably they should go down slightly, but we are also willing to do more on our mobile and transmission side. That's something that we are working on. Probably, you should see some numbers going down on CapEx on revenues, but we are willing to do also more on that side. Your second question was regarding?
I will give some more colors, and Mario will help me on that. It is about the possibility of a newcomer that put in place a business model on a new sale frequencies model. I think that this is something interesting because in this market, there are always innovation, both on the technology that on regulatory. To do any kind of evaluation, it's important to understand which is the regulatory framework. Up today , there are no details about that, because if the regulatory framework change, perhaps we could do also some evaluation if makes sense to have an integrated company that work on retail and management of the frequencies. As is today, the regulatory framework makes a lot of sense to work in this integrated way. If it will change, must be done other kind of evaluation.
From our understanding, this is something that is out of the scope in this moment. Mario will elaborate on that. I complete adding other two points that are important. The second, MVNO. Brazil is not a country without MVNO. There are a lot of MVNO. What is important to understand that, at least from my knowledge, through all the world, usually, the MVNO business becomes successful when, who manage the MVNO, is trying to bundle the traditional telco business with something that is related to their real business, that could be large retail or whatever. I imagine that in the future, if you want to discuss about 5G. Let's think, what will do a car manufacturer in the future? Perhaps they will become a kind of MVNO of the 5G and will bundle the self-driving car.
They will sell a car with a service that allow them to exploit the network. This is something that is not necessarily negative, but the business model, as is today, have seen success bundle traditional telco services with the other because there are other players that were unable to reach the economy of scale. Usually, MVNO is looking for the synergy coming from two different world. Last but not least, and I think that this is really important if we discuss about customer. If you want to become an MVNO and use an amount of frequencies that up to date was unable to compete in terms of quality, it's not because you are an MVNO that you can transform these frequencies in something that allow to keep the customer satisfied.
I don't want to give any kind of details. If you look at the report that were released in this day by some of the main players that do the evaluation of the network quality, you can see as in Brazil, there is some player that is unable to guarantee the same level of quality of the other. If you transform this player in several MVNO, this amount of frequencies will not improve the quality for the customer. I leave Mario to argue more on the regulatory framework.
Mario speaking. Just a couple of information. MVNO regulation in Brazil is in force since 2010. Of course it's a business that is already in place with its own regulation. On the other side, an idea of full mobile wholesaler is outside of the scope of the current regulation, because today, to hold the mobile authorization and spectrum authorization imply necessarily, the activities towards the final customer. It's not possible to hold spectrum without fulfilling retail offers and, of course, coverage obligations.
Perfect. Thank you very much, Pietro, Adrian and Mario. Very insightful.
Our next question comes from Mrs. Susana Salaru from Itaú. Please, you may proceed.
Hi, guys. Good morning. We have two questions here. If you could elaborate a bit more about your partnership with the bank C6, how is evolving the cross-selling between clients? If you could elaborate a little bit more, how is going to be the revenue share between TIM and C6? That will be our first question. Regarding the project TIM Live, you mentioned that you are going to seek for partnerships. If you could elaborate a bit what is going to be the nature of this partnership, if you have anything already in the pipeline or a roadmap of those partnerships. Thank you.
About C6, the business model it's quite easy. I cannot go too much in details because it's clear that is another confidentiality agreement. Mainly it is made by two parts. One part where we act as a sales channel, and in this case, we can get a kind of sales commission by each customer that we going to get. The second part is reaching some well-defined threshold. We can have in exchange some shares of C6. This threshold is defined in a way that will not exceed the specific percentage that could oblige us to get responsibility and compliance related to the rules and the law of the financial market. That is a different business in which we don't have the competency to compete.
About the commercial result, they were very positive and I ask Alberto to give some more flavor about the result of C6 partnership, and then Adrian will give you the answer related to the TIM Live.
Thank you, Pietro.
Hi, Susana. Basically, I was mentioning this sort of partnership of course, have two main objectives. The first one is to sell the services or bundle the services to our customer base with the objective of reducing churn, giving a better value proposition to our customer base, which at the end of the day, at this stage of development, the market is our main objective. The fact that in a very short time frame, we manage to penetrate or to upsell around 200,000 subscribers is very important to us. The second objective, of course, is to be more appealing to Brazilian customers for gross additions. In that case, the fact that we tied up together the C6 to a bonus bundle with incremental giga. Basically, if you download C6 and pay our bills through them, the customer get a 4 GB bonus.
This of course, is in our view, a good way to give a giga bundle to our customers and get in exchange an increased use of digital services, digital payments, and at the end of the day, a lower churn. As I was mentioning on a parity of comparisons before launch and after launch, we increase the gross additions of double digit, which is a good result for us so far.
Sorry, Alberto, you increase the net addition double digits in which type of in postpaid or in control?
The offer that we just launched is available for prepaid, but it's not been widely communicated. Our prepaid customers get giga bonus if they made the recharge through us. The offer that we just launched was launched on the control plans. When I mention that we increase our gross additions double digit on control. The other good news that we increase as well on postpaid, because at the end of the day, we get our customers to get into our shops. Then our sales representative managed to be effective either selling that plan or increase or move the customer to a most valuable postpaid plans. For post plan and G6 and C6, the offer is going to be deployed in the coming months as Pietro mentioned in the main speech.
Okay, thank you.
Yeah. Susana, on your second question, I'm Adrian answering here. What we are looking for with our TIM Live project is to create a new vehicle that will give us infrastructure services for a remuneration coming from our side. We are working these days on the final definitions of how this will work. Probably this will work with a combination of a fixed and variable remuneration. These infrastructure services will include also the installation of the customers. At the end, your question was, what are you looking for a partner here? We don't have any consideration at this point. We have in our list infrastructure funds. We have PLs. We have operational companies also interested. We will see. We're very advanced with our project. We think that we could be receiving some non-binding offers by the beginning of September.
Then we will start to decide which kind of partner we'll have. Today, we're wide open in what we can accept. Probably after September, we will go down to a short list. That short list probably will have different types of partners in order to choose. Clearly, by the time of the binder, we will need to decide if we want higher proceeds or if we want lower cost going forward. Again, we have not any specific kind of partner today that we want to choose.
Without any more questions from analysts, we will now start the Q&A section with the press in English.
This is Vicente Ferreira speaking. Now I'm reading a question from Ivone Santana from Valor. The question is related to the potential partnership with Telefônica to launch a neutral network, if that is the case. If we having also an InfraCo, if TIM would be interesting or willing to offer a proposition for this InfraCo, and if the market also can comport two networks in Brazil. She also mentions Italy and a potential pressure from the government to have integration of these two networks that exist in Italy. What is the difference of this four TIM projects?
I'll answer to the last part of the question that is related to Italy. Being Italian, I have a better understanding about the situation. I think that is not right to compare the Brazilian situation with the Italian situation, because keep in mind that in Italy, Telecom Italia was incumbent. They had obligation to offer last mile services in unbundling to all the other player. They were obliged to offer it to unbundle all the network components, so DSLAMs, verticals and so forth. It's a complete different situation. While when we talk about Brazil, we don't have that kind of regulation, then the discussion is more related to the financial convenience to have two, three, four network, because in this period of time, we are hearing that everybody want to build a further neutral network.
What is important to understand of this model, that at the end of the day, all these business model look for an anchor customer. No one is going to build anything from scratch in a full greenfield situation without have the guarantee that there will be at least one operator that will buy this asset. This is the reason for which we were the first player understanding well this situation and to try to build this new vehicle where we will be the main anchor customer. Adrian and Mario can give some more colors. What is important also to state is from your question is that, no, we didn't do any kind of offer for the InfraCo of Oi. We're interested in the mobile asset. For sure, in the future, we can be customer of whatever InfraCo there will be in Brazil.
Every time we will do our trade-off, if it is better for us to build the fiber or to buy fiber when it is available on the market, mainly for backbone and backhauling. Mario, Adrian?
On our TIM Live project, it's important to remember what's the situation in terms of infrastructure in the country today. Ultra broadband services count only for the 16% of the households. There is a lot to do in terms of infrastructure in the country. We feel that there are several different opportunities out there. What we are trying to capture is, first of all, additional value, with this infrastructure value. You know that also there is a matter of how these companies are evaluated. The second thing, what we are putting inside this company, also for the future, is our plan for the next five years in terms of deployment of FTTH. Additionally, will be also possible to include some FTTC and FTT site, as we were mentioning before. It's not that will be an infrastructure vehicle such as will be the one that Oi wants to create.
With all the fiber networks, with all the transmission side, in this case, it's different. Our project will be driven by our plans in terms of TIM Live. Yes, after some exclusivity period, initially, those networks could be also open. It's somehow what Pietro was mentioning. We will be the anchor of this project, and that's the best side of our Live project. This said, clearly, again, honestly, we are not interested in the infrastructure UPI that Oi will be creating because it's not part of our strategy, or it's not part of our path. We will be customers of this infrastructure UPI that will be created. Definitely, yes.
Thanks again. We had two additional questions from Rafael Bucco, Tele.Síntese, and Bruno do Amaral, Teletime, that go exactly in the same direction. We will assume that they were already answered by Pietro and by Adrian. Now we are closing the Q&A. Operator, please.
Yeah, please go on.
Oh, sorry. There is still another question from Rafael.
Ladies and gentlemen, without any more
Sorry again. There is still another question from Rafael. Related to the incorporation of TIM Participações into TIM S.A., does it mean to offer more stocks in the market in order to capitalize for the consolidation? This is the last question.
Hi, it's Adrian. Rafael, no. We are not aiming to increase our capital with this transaction. What we are looking for is to make more efficient our corporate structure. Today, the group has two holding companies. TIM Participações controls TIM S.A., that's the operational company, with 100% of the shares. TIM Participações, at the same time, has a holding company that controls TIM Participações with 66%. What we are trying to do today, we are not finding any reason to have these two companies, TIM Participações and TIM S.A. We will be much more efficient in operational terms, in taxes terms. What we are doing is a merge of the two companies. That doesn't mean that we will increase our capital and no, nothing at all.
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 show it has a very solid fundamental. With several strategic initiatives being developed at the same time, focus and agility will be key to reaching our goals. I would like to thank you the commitment and dedication of our team, who are surpassing many challenges to make sure we serve the country in the best way during this moment of hardship. Thank you for participating in our conference call. Stay safe and healthy. I hope we can virtually meet soon in the upcoming events we will be doing with the financial market.
Thus, we conclude the second quarter of 2020 conference call of TIM Participações. Your line can be disconnected from now on. For further information and details of the company, please access our website, ri.tim.com.br. Thank you