Earnings Call: Q4 2019

Feb 12, 2020

Good morning, ladies and gentlemen. Welcome to TIM Participa Financial 2019 4th Quarter Results Conference Call. We would like to inform that this event is being recorded and all participants will be in listen only mode during the company's presentation. There will be a replay for this call on the company's website. After TIM Participa's remarks are completed, there will be a question and answer session for participants. At that time, further instructions will be given. We highlight that statements that may be made regarding the prospects, projects and goals of TIM Participations contitutes the beliefs and assumptions of the company's Board of Executive Officer. Future health divisions are not for fun celebrities. They involve risks, uncertainties, and assumptions at the refer to events that may or may not occur. Investors should understand that internal factors to impact the performance may affect the performance and lead to different results than those findings. Should any participant mute systems during this call, please press star 0 to reach the operator. Now I'll turn the conference over to the CEO, Mr. Pietro Gabriela. So you can present the main message for the 4th Quarter of 2019. Good morning, everyone, and thanks for attending our results conference call. Last I arrived the team with the mission of direct meeting growth and continuing with the sustainable evolution that the company started in 2016. When this new management team was being formed. I believe we are ending the year with solid results and on the right path to transform in Brazil into a 4 Block deal type operator. Some adjustments were necessarily along the way. But we are achieving important things with the best basic mindset and keeping the entire team focused on execution. The adjustment implemented in our strategy helped us to adapt to new reality, maintaining our DNA of innovation, our activity and efficiency. I will walk you through the main highlights of the first quarter. And then the team will ask to answer your questions. 2019 was a year of remarkable achievements. On the network side, we maintain our unquestionable India shipping 4G with the largest and best coverage. Our Usha broadband service was recognized as the best in the country. Network efficiency will become a key area with implementation of initiatives, and we are the first to conduct 1 Metrop Salesforce Projects in Brazil. We also adopted the go to market addressing our product and service portfolio, while revitalizing the image of the company for impacts of clients. With this, ARPU in our segment, and Tim Rod, reaccelerated client acquisition. And efficiency mindset and focus on execution, addressing the company to be more productive while employee engagement and trimester are showing positive improvement. All of this is being translated into our financial numbers with considerable developments in all areas. We started the year growing service levels at 1%, but we managed to accelerate our pace and close 2019 with 3.2% versus 4th quarter 2018. For the full year, service revenue summit R16.6000000000, up 2.4% compared to 2018. EBITDA growth also accelerated, which more than 8% in the last quarter of the year, and totaling 6.8000000000 in 2019. The EBITDA margin was just below 43% in the 4th quarter, building the potassium steel market above 15% a target that was supposed to be achieved only in 2020. Cash generation remained strong. EBITDA, EBITDA minus CapEx surpassed 600,000,000 which is at 60% in other geographies. This cash generation profile combined with Compact to of our financial position. The company received a 3% working profit on Monday. Another indication that our strategy is focused on the faced in the first half of the year by some weak economic activity and tough competition. National revenues accelerated and card generated revenues growth to the 3rd party in 2018 compared to 2018. Being the concept myself, a solid annual growth in Postpaid of almost 7% with the 4th quarter showing an inflection point the digitalization trajectory of this segment. The recovery in prepared geographic service, 4th quarter was the 1st year of the costing annual growth in the last three years. Our bio blended ARPU increased by roughly 6% year over year, which involves 24 gas driven by internal combustion gas shipments compared to 2018, postpaid ARPU, excluding machine to machine, grew by 0 to 6% 3rd. 3rd, the strength of being the transition to provide a the commercial approach was adjusted for the solid sales number, but more importantly, this incurred as a result they transition return to positive in the fourth quarter, and we expect to maintain a reasonable level of current condition in the current quarter. Not satisfactory, not as high as in 2017 2018. The CapEx in the following assembly recording. The churn dynamics are showing the vast amount of net working trends and consumption is gradually growing. Conffficiency in communication strategy after the interaction of Tim Pertoft at the beginning of the year is positively contributing driven recovery, customer experience and brand positions. In sum, the mobile segment improved in the second half of the year. The rest of this evening was not as harsh as in the results. The macro environment showed the first time we went and that our operational is on track and focus on what matters. Consistency is a priority. So we'll continue this past executing what is planned and adjusting like I said, changing the rest to fleet. Interest revenue growth but more than 11% in 2019. In line continue to be highlight of this result, but in the very strong expansion, of more than 80% of our system affecting, while accelerating the The combination of 8% of the group and when the project for Bouygues platform must be a plan to provide the 50% of fixed fee revenue in 2018. Current big dynamics improved our dealer with net additions actually in the 2nd alpha and looking at strategic technology, replacement margin is the size of our client base. We also obtained and fully signed a proxy account and improve the quality of the service due to the progress that brought the tracking as the new strategies in the country. Combined with intellectual difficulties and implementation flagships. This represents a maximizing our last penschedule. On the website, I don't highlight the following achievements in 2019. 94% of the new double digit share. And that worked the 5G project is accelerating by. Ensuring in the industry of the northeast and the staff of the country. I think that that has been called the extension efficacy by the acceleration of the settlement in the industrial bank, 60% mostly in contact with this acquisition. And 2 impacts from the funding projects that don't sit down any percentage of the population. Unfortunately, and never been the highest fee, our dealer in almost all cities where we have 4 g coverage. Including voice in customer and connectivity for machine to machine solutions. Once again, the network experience metrics show the benefits of our strategy, came with 4G availability, maintaining a solid distance from the number 2 and 3 players. We are continuing as the fastest response time ensuring ability to fuel for the customers. During the biggest new ERCs Foundation in the world, we support the full potential of Marcepa. And innovative technology that has been to handle a huge and concentrated demand. Our clients consume 3 times more data with a 6 times hour buyback Super. And on top of 13 to 6 times more seamless connections. In 2020, we've been pronounced much demand in different areas of the country to improve the quality of the mobile network. Innovation and rental front, auto comes in front of our infrastructure sharing agreements, we've continued Vivo in December. The scope caused a single group nationwide through Genetook, a Portuguese shared message for new call, the GCT deal, for intangibles and it's after over a full single need to ensure involving the operating efficiencies. For the 6 months of July was acceleration of 8 vintage projects received to the exchange median assets. Provides the number 8, 2018. Total capital expenditures reached 5.5000000000. 12 New City drops in drive services in 2017. This factor is using retroactive approach, shape became the best service. More than 100,000 kilometers of fiber is your major milestone for 15,000,000. And I'm ready for us to see that we are in that path to continuously develop our transport network. The IT side of our infrastructure is also being developed post the digital transformation of the company with the goal of improving customer experience and gaining efficiency. However, the success of our digitization journey does not depend on the immune system. It also requires improvement processes to change the way we run our business. So to monitor the evolution of our digital transformation program, we focus on 4 areas. Debtting, building a payment, a feature of clients as compared to the chart. It now has been We have given challenges that empower customers and bring us closer to our 3s board, securing, fulfilling, and short positioning. In the trading front, we closed 2019 with more customers using our digital channels to meet the demand. While the unique sales of net income grew almost 20% and human interaction fell by almost 20%. A return on the payment grew by solid double digit, increasing the penetration of digital solution for Buff. Digital fields also grow strongly, but we're still in control acquisition over the electronic channel were up by 30% or more. For the electronic monthly charges, penetration is reaching almost 40%. The contribution of this and that our traditional initiatives will have made us well our OpEx level. OpEx ended more down by 0.3 percent with inflation. The 4th quarter showed the usual positive decision asking with minus 0.7%, presenting the best performance of 2019. This volume result from costs that could have been even better if it wasn't a further bet. Normalized OpEx, excluding bad debt, decreased 2.3% year on year, even better than the totality of our efficiency plan. However, 4th quarter marked the 1st quarter over quarter decrease since 20 17. Pointing to a positive change in trajectory in the coming quarters. Herto, we are still very cautious It seems that finally, our efforts on the front are materializing. But that remains on an area of growth in month opportunity 14,000,000 in 2020. The combination of a better tender revenues will cause other control Joel EBITDA grew more than 8% in the 4th quarter and almost 3% in 2017. Expanded to 42.9 and 79.1% respectively. This confirms the trajectory that started years ago, which led the company to show market improvement in the past 6 years. Also, our bottom line came strong. 4th quarter net profit grew almost 50% while 2019 annual growth surpassed 22%. Net profit reached a total of 2,000,000 for the full year. Every day, minus tax increased 16% year on year, reaching 17 of total revenues, leading, you know, my life in operating cash flow to TRU.1 billion dollars in 2018. As a consequence, the best natural position through the appeal for handling the new device. A significant reduction in net debt. Leaving the company ready for the future challenges. Shareholder remuneration is consistently evolving and in 2019, with close to $1,000,000,000 in interest on equity. Another promise is effectively delivered. In conclusion, entitlement team was a little of great achievements despite the headwinds faced. We posted a solid 4th quarter, which contributed strongly for us to reach our guidance even though service revenue face challenges. The 2nd up dynamics were better with service revenue remained above 2%. While in the 1st half growth was 30%. Nonetheless, we delivered on our promises. We're able to remove our patient with a focus on the basics value rather than volume, quality, innovation, brand, and customer satisfaction. We will update our strategic plan on March 11th, but the pillars for which it will be billed I already said, expand the scope of efficiency, seeking for more opportunities. Increase role and influence in our B2B segment, actual volume towards a solution, improve customer satisfaction and develop new shoes of revenue. Thank you. We will now open the floor for questions. Now we begin the Q And A session. First, we'll take questions from analysts followed by journalists, both English If you have a question, please press star 1. We ask each participant to restrict himself to two questions at a time. Our first questions came from Victor Pomita. Hi. Good morning, Pedro. Good morning, all. Should be a quick question on our side. So the first is given the 2Q decrease and bad debt this far, if you could give us an update on how the initiatives to improve by debt and collections have been progressing, the trust partner, and that's what level we could expect this line to normalize if it continues to improve. And our second question would be about G And A, the earnings release mentions that G And A was a mostly due to cybersecurity projects in IT if you could elaborate more ideas and on whether they could any specific goals or addressing any specific concern, this would also be Thank you. Thank you, Victor. Before to go through the answer, we understood that some of you per see some issue on the line. I really apologize, and we can go over any doubts during Newton Day. Related to your 2 questions. Let's start from the second one that is rated to our journey and mainly to our cybersecurity expenses. Keep in mind that in 2020, in Brazil, specifically in the month of we'll enter the new law agency that is for people that are, coming from other countries. The new rules related to the data privacy So we started to prepare the company for that moment. That is a key element. And people that are coming from other country understand very well how much is important on these activities. Related to the first question that is bad debt, we are proceeding in sadly, as we stated in the previous quarter calls, we allied to everybody that the 3rd quarter should be the worst one that the 4th quarter could improve later to the 3rd quarter. And we think that we can further improve during the next quarter, quarter over quarter. It's clear that it's a factor and that the early sign of improvement are coming also looking at the collection, result of the first month of January. You. Hi, good morning. Thanks for taking my questions. The first question is if you could please comment a little bit on, give us a competitive update on the mobile market in Brazil? And the second question is if you could comment how do we expect the 5G CapEx play out and mix with the remaining of your CapEx. Do you expect any kind of expansion in that or CapEx should remain roughly as it has been trending. Is there a few questions? Okay. First of all, competitive environment, as we stated, and the thing that is something that was reiterated mainly by all the operator we saw a second half compared to the phase 1, more rational. And the movement that was made by Vivo If I'm not wrong in September in October, the increased price was an another sign of an improvement, in this arena. I think that also the market consolidation that's already starting with the acquisition, by Claro in Excel is helping because it was clear that, there were some player with a more aggressive approach. And so we are quite, positive on, the competitive environment. Also on the prepaid, we are starting to see some early sign of macro recovery that could that pass if they will be confirmed during the year. Related to the CapEx, then I can leave the stage to Ajam and to Leo to elaborate more of that. But we are, we are respecting our guidance in terms of CapEx. And we will release more information, the 11th March, when we will present our CR plan. But as we stated several times, we don't seem much to have a specific difference from what we declared. Yes. Thank you, Pedro. The thing is, regarding the effect of the 5G on our CapEx, we are not seeing, significant effects going forward differently with happened with the 4 g, during 2013 2014. If you remember here in Brazil, the the 4 g deployment has been accelerated because, the country was hosting, 1st soccer workup. And then the Olympics, so it has a specific effect in terms of roll out of 4G. The 5G probably will be more collaborative with the with the 4 g. It will be more stable, in time, if you follow what's, the recommendations coming from the GMSA, there will be a lot of collaboration between the 4G and the 5G, even the 4G will be, operative even until 2030. So we are not expecting significant effects on CapEx coming from the 5G. Probably, yes. It will depend a lot on how the auction is designed. But, not something as it happens in 2012, 2013, where the company reached almost 27%, 28% of connection revenues. Our next question comes from Mr. Fred Mendes. Hey, good morning, everyone. Thanks for the question for the question. I have two questions as well. The first one, related to the service revenue growth, I just wanna get a a better understanding of the dynamics of this line. Let me looking here at the numbers when I see the revenue generated by the client, it grew 3.8% in this quarter. Last quarter was 1.9. But all the revenues were, they were slightly weaker on this quarter. But, I mean, overall, when I look at this picture, it seems that the quality of the top line growth was much better So I just wanna understand the the dynamics here and what to expect for the next quarters. And I think for the for the second question, When I look at the cash COGS, I mean, a great job on on this line, but, it looks like that the the not looks like it is still did not kick in, the the MoU with Vivo. So I'm just trying to to better understand here to to incorporate the model you know, what kind of savings? I know this is not a guidance, but you can just give us a like what kind of savings we can somehow effect or anything that helps us to calculate and then eventually, which incorporate our models about these these these agreements with VIVO, and how much more could you help for you to control your your cash cost? Thank you, Fred. Thank you, Fred. Related to service revenue, I have to remember that what is happening is exactly what we stated also in the other quarter. We explained that, also, the other revenues is part of our business because mainly swap is an important component to control and help our company further increase our network coverage. And this was something that was healthy for us. In the meantime, we started to say that our service revenue could start to increase with the exception of other other revenues. Also, because the job that we did during the year should start to give us also back results. You can understand that the the service revenue is the result of the increase of customer base and the work that we do on the ARPU. We stated that during, all the other quarter, and now we can say that we are back we we bought it also finally, positive net adds. Generally, we are again with positive net adds. If you look at the our ARPU is going. So let me see. We are proceeding exactly as we stated. The trend of other revenue is not we we cannot be found that there's a fence because they come based on the possibility to close agreement for the swap. What is important is the trend of the service revenue that is confirming that we are on the right path related to the cash cost, independently from, the MOU with Divo and then again, I leave the stage to us and allow to elaborate more we think that we still have, a principle, thanks to our control on cash cost we reached in 2019, our goal that was for 2020. So at my company to our old team, that was able to continue to perform in the cost controlling. 2nd, we think that we still have margin to further improve our cost. Just to share with you, we still have the customer care level. A lot of calls that today are answered by human attendant. Each call if it is prepaid as a cost of 3 ds. If it is a controller call, it's a cost of every ice. If it is postpaid coal, it's a cost of every ice. So it can match a good level of setting that we can reach with the continuous improvement of our digitalization and the use of the app. I mean, I think that just to show that, there are other areas like that where we can further improve, relating with the the the MOU would be, or at least the stage to add them? Yes. The effects of the MOU, we need to to think that this agreement, because it's not anymore than MOU, because it's already agreements, are are long term. Yeah. And, basically, you shouldn't expect significant reductions in terms of OpEx even if the 3rd agreement is not put in place, totally. But we what you should expect is some CapEx future CapEx savings because at the end, if you can see there, 1st of all, 1st agreement, the 2 C agreement, yes, it will bring some effects on the cost side, but basically what the 2G agreement lifts is that we will need to, to focus less on that layer and will leave us space in order to focus on the future layer that will be the 5G. So especially when we are talking in terms of space in our sites in our radio stations. The second one probably the most important in terms of savings is the single grid. Today, what we are having with the second portion of the agreement is that we will increase our coverage in terms of, in terms, especially of the 4G because we are agreeing with Vivo to enter in those cities where the other one is not present. If we manage then after the trial that we're doing to put in place the full single grid in those cities below 30,000 inhabitants, there's where we're going to have the significant impact in terms both of cost and also CapEx. This is more on the economic or financial side. I think that that Leo can give you the view the most strategic view in terms of network that it's also extremely important on this side. Thank you, Autumn. In fact, Afrezza, we have to celebrate and not adjust these contract. Remember that we are waiting for car gym and a sale appointment. But after that, what we have to celebrate is the new phase of the market team, as Adrian mentioned, for the collaborative environment and, the maturity to share the infrastructure and to face all the the possible, let's say, challenges that they have in the future with the new technology of the 5 g the new obligation of the coverage in rural, on federal, roles, etcetera. So it's very important that now the marketing is started to think together how to face this challenge and how to do that in a more efficient way. So, again, we are celebrating up the justice agreement, but this new mindset, to collaborate in infrastructure. Fred, and if I may have something that is more a general statement that giving an answer to your question and to the previous one related to the factory. Perhaps we are entering in a phase of market rationality, but we can say in a phase of competition, that means that we'll continue to compete because this is our aim on all the core services, but we can cooperate with the other player on the next sort in structure, but also on the development of new social revenues because financial services and mobile advertising are to area with a different player, incorporate more than compete. Perfect. Very, very clear. Thank you, Pia Suwali, and thank you. Our next question Hi, guys. Good morning. Thank you for taking our questions. If you could guide elaborate a little bit more on what are the I'm pleased with the EBITDA margin next year. What are the main levers that we should expect to continue to support margin expansion? We get that we could see an improvement in that debt and also on the prepayment charges, we could see additional to the spiders using the digital channels, but, with what you would like to to hear from you. And on on on a on the 5 gs option, you still have to wait for the rest of the of the option. And if you're aiming for the figure or the smaller spectrum bank that's going to be off? Susanna, about, how we can further improve our EBITDA. Perhaps we can take some vacation because we reach in 2000 and seeing the goal of 2020. Clearly, it's a joke, but for sure, there are different areas in which you can further improve. As we stated last time, when we discussed about our, let me say, not best practice performance of of the bad debt. This is one of the area in which we can have a further improvement to continue to perform on the EBITDA. Digital digitization is a process that is not yet concluded. We will continue to proceed. I was I was mentioning the customer care as one of the eye when we can further improve. If we look at the speed with which we are transforming the recharge from traditional recharge to electronic 1. This is another area where we can have further improvement. I think that one of the next challenge for our company that is something that is between 2020, 2021 is perhaps sir, some activities that we cannot define as traditional BPO. But where in some areas that are not covered, There are some player outside that are able to do automatization process that can be reflected in improvement of our EBITDA. What I mean is that we don't have the 1 silver bullet to further improve our EBITDA. It's a job that we have to continue with our, financial discipline culture that have to try to work in all the lines. And, I think that as we demonstrated also the the ZR, what we promised, we delivered and we'll continue in this way. Related to the 5 g, I need the stage to Mario that will give you more details. But on these things, I want also to put a general statement. It's quite difficult to define root for a 5 g. Once it's not yet defined the market consolidation. If the market will be with 5 player, the rules for an auction are defined for 5 player. If the market will be of 3 players to reflect a market with 3 players. If this is not yet defined, I think that is really difficult to define what will happen. And they think that this factor would be a further accelerator on the market consolidation, but they leave the stage to Mario for more details. It's it's working. That's Okay. Oh, so the point is, Our next question comes from Maria Hi, guys. Thank you for the question. So my first question is on the new revenue lines that you can deliver. So can comment a little bit on your, handset strategy going forward if you think you have some opportunities there as well as on TimPay. And the advertising, what would be the business model that you are envisaging for the Financial Services revenue line? That'll be my first question. Thank you. Thank you, Maria. The 11th March, we will have the presentation, the new plan, where we will disclose all the details related to all this area. As we mentioned, also in the previous call, we think that financial services is when one of the area where we can, have further improvement as for mobile advertising. We cannot go through too many details because, as as it's our approach, we like to put on the table, the element that we are safe that is not only promised, but it's something that we can deliver. So I have to ask you to wait 3 weeks to show more in details of all all the projects that we have in our portfolio. Perfect. Thank you. And then as a second question, I have to ask in terms of the what are your expectations in terms of the mobile consolidation process in Brazil? I mean, players are being a lot more vocal about it. And there's some expectation that Tim could be a leader in this movement. We also have some talks about a potential joint fit. Is there anything that you can share with us in terms of what are your views in terms of the mobile consolidation process? And if you think that this is going to happen, we 4, the 5G auctions? Okay. I think that, some statement can be helpful for everybody. We clearly stated our interest in the market consolidation. 2nd, the market consolidation already started the a cloud on Excel process. I agree with you that, there are some signs that things are accelerating also because one of the player that, is the trigger to accelerate this process, seems that, is accelerating this process. We think that is something that could happen, in any case, could start in 2020. Related to the 5 g again. I expect that there's the interest of all the system to accelerate the the market consolidation to permit then an acceleration on the 5 g auction without the consolidation. I think that it's quite difficult twelve rules well defined for an auction. But, I understood that before Marie was unable to answer to the question, So I need the stage to Mario to fully elaborate on the 5 g. Well, can you hear me? Okay. Perfect. Now just to to compliment course, it is important for us to notice that in this public consultation, there is a very important amount of available for 5 g in Brazil. So I I think this is a very good, a new that are due due because, of course, there are all the the needed spectrum for, an important investment, and, in the new technology. The the detail of the rules are not, yet very known because the analysis was not yet published, but we can of course, consider important to have some more information about the obligations the final, the minimum price, etcetera. That there is a point that, of course, will be discussed the, in the next month about the rule of the small players. That Spectrum dedicated to the small players. In principle, there's nothing that we can consider, in a negative way, but there is a condition that the spectrum should be considered an industrialized It's not a financial asset. So the idea of someone to buy Spectrum only to resell Spectrum that's not belong to the telecommunication industry. So probably this is something that should be very, very well fixed by the government and the regulator. Perfect. Thank you very much, Mario and Pietro. Our next question I have a follow-up to the infrastructure sharing agreement with Vido. This is possible that the medical model contained, we've got a the scope of this agreement, particularly related to the single grid, and it showed which could be the implications of this complaint And then a follow-up to 5G, to the 30 auctions, do you think it makes sense, to have 200 market blocks in the 3.5 year advance and 180 mega block. Considering that new V1 Claro, likely we need to get the 100 megahertz blocks Thank you. Before to leave the stage to Mario to answer related to the CAB implication with Claro and the MoU between Vivo and Tim, It's important to clearly stated that we always declared our availability to share these kind of approach with the other player. Then always to be transparent in the past, in the market. There were some footer on the table, all the players at the same time. And it was quite complex. It's kind of a difficult exercise at the same time to find the agreement between more players. It's just mathematics. So there'd be a loss. Let's start with one player. But to clearly state that we are more than happy to open this kind of approach to the other player because it will allow us to have for their setting. Now I'll leave back to Leo and Mario to elaborate more on both the items. So just just to complement to what appeared, sir, we have to remember that the loan sharing agreement in the past starts with 15. In some moment, vivo show that, he had the interest to, come with us. And in the rest of the agreement, we have a team Vivoenoid. So we are completely open for that. Let's see how, Kajan will be approved this agreement, sir. But again, is not some kind that we are blocking, but it's, let's say, interest to have more efficient on the share and the co appreciation on the market instead of the previous mindset, that everyone will build their own researchers in place that, you know, that there is no return. So now, I need to receive Mario. Thank you. Is a couple of a couple of comments on the, on the network sharing agreement. Is nothing new. This is a a a a kind of agreement that was already approved by by Carter in the case of war and also other allocated. So we, we, we, of course, understand that all the competitors of the players want to, know exactly these this agreement eventually to enter and cooperate with us. We are open to to this as as soon as our, the the this agreement is approved by the authorities. Of course, we can sit and negotiate with the other interested, players. And this is our position, formal position written towards the authority. For the in the 5 g side, of course, again, that should be played, understanding, of course, who are the players, as, and how many of the players. So the the idea to having, a correct number of blocks, to be sold. It depends, of course, on the structure of the market that in the moment of the bid, would be, the the the the real situation. So, apparently, and, mathematically, we have a lot of spectrum to be solved. That means that we have the opportunity to to to buy this asset for the future development of the new technology, but the real game will be known only in the moment in which the bid will occur. Understood. Thank you. Our next question comes from Mr. David Tomeka Hello. Just an additional question that Kim has been asked questions here. We see that in the presentation, you mentioned that you might apply Matti's email to network spread situations like the New Year's Eve in Papa Cabana. And one thing you were wondering is whether if you wrote that out to more sites, if that could create an opportunity in fixed wireless assets, And if there could be a, I think there could be a good addressable market for this? And just if you could comment on this. Thank you. Before to to leave Leo to elaborate on that, it's important, related to the element of the feature to Alexa's Masimano with 5 g for sure is an opportunity of, let me say, new source of revenue is more related to the traditional telco services. And Tim, he's the player that can benefit the most from this approach because we don't have a legacy except network. Then about the possibility to increase with 4 g, the Masimo, this is something that you are among the first player in the world to experiment this technology. So we have to thank you to Leo and the network team to continue to be at the leading age of this approach, Natalie, or can you more can you give more colors about that? Very well, to meet the question because, in fact, we are seeing 2 different approach of the massive mine 1. Is to see that we can improve the quality and the capacity on the network. Even with the existing spectrum and the existing towers, what I mean less CapEx and less OpEx in the future, to face all the times that we have with today, let's say, data explosion it's still on 4 g. In the second, about the WCTX or FWA, what we are seeing is that, the part of the difficulty of the 5 gs to explore at maximum this capacity is the kind of spectrum that we use on the 5 gs. That is, let's say, higher spectrum in 3.5 gigahertz or even above that. The point is that with the message my mobile being applied is still on the 4 g where you will have capacity on the lower frequency of 1800 and 2.1 gigahertz. So it can be complemented now capacity with the coverage. So again, you know, that we are, companies that have been very, very see, you know, the usage of the new technology. We see the refarming and now we see the MSCs of mine. So we are seeing that in a very optimistic way in terms to, let's say, open new opportunities of business. Remember, if you have a question, please press star 1. Without any more questions from analysts, we'll now start the Q And A section with journalists. We have a question from, Ms. Ana Lobo from Convergent Digital, and she states. Pietro talks about an acceleration in the consolidation process through the 5 g and thing is supposed to be ready for strategic movement. Is still going shopping. And would the way mobile be a target to be acquired? Pietro, please? Can you answer? Yeah. 1st of all, I think that, the sentence that we eat, during all the calls at the end was that our financial position was constantly improving because we were preparing our contact company for the market consolidation. We this is a journey that we started 3 years ago. And so now from the financial point of view, we are ready to approach the market consolidation. In the meantime, we are starting to perceive that there are all the elements that can allow to further proceed with the market consolidation because from what we are perceiving, some assets can be put on sales in the next month. From this point of view, we clearly stated that in the case of a market consolidation, we will evaluate the acquisition of frequencies and clients, evaluating if it can generate value for our shareholders. So the answer is yes. Ladies and gentlemen, without any more questions, I must turn it to Mr. Pietro, Aviola, for final remarks. Please, Mr. Pietro, you may proceed. In Brazil, it's shown that it had solid fundamentals and is prepared to take full advantage of the economic recovery. This market is not Tissue, but it still has enormous potential requiring focused and consistent consistency to benefit from these opportunities. For this reason, I would like to thank the dedication and commitment of our team who played a key role in delivering those solid results overcoming main challenges. I will personally thank you Adrian, Leo, Mario, Alberto, Renato, Bruno, Jacques, and Maria Doneta. And I'm thanking them in your representation of all their team. Together, we can do more. June Toss, Thomas Miles. During the past year, we were also able to prepare the company to be a protagonist in the future development of the Brazilian market. This ongoing preparation is key. As we expect that the pieces to start moving in 2020, and the work being done will help us to benefit from whatever shift the market days. Thank you once again for participating in our conference call. Have a great day And I hope we can meet soon in the coming events that we will be doing with the financial market. See you soon. Now, we conclude the 3rd quarter of 2018 conference call. Your lines can be disconnected from now on. For further information and the sale of the company, please access our website, ri. Team.com. Br. Thank you. Welcome to conference call detail. Please enter your passcode or wait to speak with an operator. This is Inra Conference Call. Welcome to conference call Please enter your passcode or wait to speak with an operator.