Earnings Call: Q1 2021

May 11, 2021

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to the Telefonica Brasil First Quarter 2021 Realtings Conference Call. Today with us representing the management of Telefonica Brasil, we have Mr. Christian Gebara, CEO of the company Mr. David Malcolm, CFO and Investor Relations Officer and Mr. Luis Plaster, IR Director. We also have a simultaneous webcast with a slide presentation on their Internet that can be accessed on the site, www.telefonica.com.brir. There will be a replay facility for this call on the website. After the company's remarks are over, there will be a question and answer session. At that time, further instructions will be given. Before proceeding, let me mention that any forward looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward looking statements are based on the company's management beliefs and assumptions and on the information currently available. Forward looking statements are not guarantees of performance. They involve risks, certainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the company's future results and could cause results to differ materially from those expressed in such forward looking statements. Now, I will turn the conference over to Mr. Luis Plaster, Investor Relations Director of Telefonica Brasil. Mr. Plaster, you may begin your conference. Call. Thank you. Good morning and welcome to our Q1 of 2021 earnings conference call. The call will be divided in 2 parts. First, our CEO, Christian Gebara, will go over main financial and operating figures, initiatives in the digital space and DSG highlights. Then our CFO, Davin Belcon will give you more color on our cost and CapEx structure, digitalization initiatives, free cash flow and shareholder remuneration. Now I hand it over to Christian. Thank you, Gloucester. Good morning, everyone, and thank you for joining our earnings calls. We started 2021 with strong operational momentum and a return to total revenue growth. Consumption and overall market dynamics are beginning to improve and our core revenues are accelerating. In the Q1, We delivered 1,100,000 postpaid net additions, the highest since 2017. And our total postpaid customer base now stands at 46,000,000. In fiber, we posted another quarter of strong growth and take rates, thanks to our best in class broadband products. FTTH net adds of 368,000 was the best performance ever for a single quarter, Tequipipo's Tiber's total customer base to 3,700,000 subscribers, 41% higher than the Q1 2020. In total, we closed the quarter with 96,000,000 access including mobile and fixed. Core revenues up 4.7% year over year already represent 88.1% of total revenues. And this quarter we saw FTTH revenues break the BRL 1,000,000,000 threshold due to an impressive year over year increase of 61.2 percent. EBITDA grew 0.5 percent to BRL4.5 billion with a margin of 41.1 percent and free cash flow totaled BRL2.2 billion, up 3.7% year over year. The combination of sustainable operating performance and financial discipline are the pillars of our elevated shareholder remuneration characteristic to Vivo. So far this year, we have deliberated BRL700 1,000,000 of interest on capital, which represents a dividend yield of 7.9% in the last 12 months. Furthermore, we continue to improve returns through our share buyback program. To date, we have 5,400,000 shares in treasuries equivalent of 0.32% of the company's total capital. Call. On Slide 4, total revenues resumed a positive evolution this quarter due to continued traction of our core businesses. They represent the main factors of growth going forward and are built on cutting edge high speed connectivity in e mobile and fixed combined with a differentiated offer of digital products and services both for B2C and B2B customers. At Vivo, we want to offer more than just the best telco experience. Our aim is to deliver on all our customers' digital life needs, Whether that be advice, content, cybersecurity or cloud solutions for their business. Non core businesses were down 24.1 percent year over year, mainly because they are made up of mature technologies that have less and less relevance for our customers. Turning to our wireless revenues performance on Slide 5. Mobile revenues achieved R7.1 BRL 1,000,000,000 in the Q1 2021 with an increase of 1.1% year over year driven mainly by prepaid revenues which grew 4% and their ongoing recovery of handset sales that were close to 11% higher than last year. Postpaid. We highlight VivoSelfie, a set of co branded plans that offer selection of quality content such as Disney Plus, Netflix and Spotify increasing ARPU and driving a deeper relationship with our customers. Additionally, we focus on younger and increasingly digital mobile users. We co created the VivoIse plan together with DJI Lock. VivoIse is It's 100% digital experience where we can customize the amount of data, voice, digital services and other benefits according to your needs. Looking at our prepaid base, we are seeing an encouraging trend of increased recurrence and a positive shift in customer behavior. Digital top ups jumped 28.8% in the quarter and the number of customers recharging was 8.3% higher year over year. Turning to Slide 6. Vivo's network quality and focus on improving the customer journey allow us to maintain solid leadership in the mobile segment with 33.1% market share as of March 2021. Our postpaid churn repeated similar trends in the previous quarter and stood at record level of 1.1 Chat. When looking at convergent and Family Plan customers, engagement levels increase and churn is up to 50% lower, boosting customer lifetime value. The volume of postpaid net additions continues its positive trajectory reaching 666,000 this quarter, the highest level since the Q4 2017. Turning to core fixed business. Revenues are about to present a strong year over year growth of 72% Given the demand for high speed broadband and digital services, FTTH revenues were up 20.3% with FTTH revenues advancing an impressive 61.2% year over year driven by ARPU increases, enhanced sales of OTT bundles and the ramp up of new activations. Accordingly, with the expansion of our fiber footprint, we continue to the significant IPTV revenue evolution that was up 25.9% year over year. Another positive result in the quarter was the return to growth of data and ICT revenues that rose 9.5% year over year. This is a promising sign that companies are gradually starting to invest again. Call. Cloud revenues are gaining relevance and practically doubled year over year confirming the large opportunity B2B with companies engaging in a profound digitalization process to thrive in this new environment. Moving to Slide 8, Viva's harvesting from a well executed strategy to capture opportunities in fiber and after sizable and rapid expansion of HomePass in the last years is experienced accelerated demand for its premium UBB offer. In the Q1, we posted record FTTH net adds of 368,000. This is more than twice what we had a year before and 1.5 times what we saw last quarter. At the same time, VivoFever customers are demanding higher speeds and a wider variety of content options. In fact, around 30% of our gross additions were bundled with OTTs or had speeds above 300 megabits. Moreover, more than 35% of our net additions were convergent customers. With that, we are able to increase FTTH ARPU by 16.2%, reaching 95 KIs. In addition, on the top right hand side of the slide, you show the evolution of FTTH Home Pass, up $4,600,000 year over year that were further enhanced by our multiple expansion partnerships aimed at reducing time to market and CapEx allocation. On Slide 9, we give more color on P Brazil, our neutral fiber network that's expected to be fully operational by the second half of the year, further accelerating FTTH deployment. V Brazil is partnership between Vivo, Telefonica Infra and CDPQ and the setup of the company's progressing according to plan. On April 6 23, we received the approvals from the Brazilian and European antitrust agencies and we are now waiting on Annabel. This initiative will allow us to accelerate our fiber rollout and consolidate our leadership. VIVO will manage all good merchant and customer service activities while remunerating VIVASIL for the use office network. VibraZeal will start with 1,600,000 home passed and will be carved out from Vivo and expected to reach more than 5,000,000 homes Pass over 4 years taking fiber to both greenfield and brownfield cities. On Slide 10, we show the progress of our objectives to build a digital ecosystem. Combining Vivo's unmatched set of enable such as customer base, brand, channel capillarity, big data and billing capabilities to mention the Q1s. With partnerships with some of the most relevant players in the digital space, We are creating new platforms that complement our telco services. The aim is to capture growth and further engage our client base result in increased loyalty and higher recurrent revenues. 1 of those platforms is VidaV, which is centered on eHealth. We have just signed a binding agreement with Teladoc, one of the largest telemedicine companies in the world, which represents another step towards the creation of a health marketplace around VIVO. Our plan is to provide a set of services such as immediate and scheduled doctor appointments, grant discounts in more than 27,000 drug stores nationwide, make prescreening of symptoms through artificial intelligence engines and give digital certificates, exam requests and prescriptions to patients. The platform has been established to include and attract other players and partners and its initial focus will be on people without private health plans. Moving to the right hand side of the slide, we present our strategic partnerships with DOTS, an engagement platform based on one of the most important loyalty programs in Brazil and CDF, one of the key B2B to see marketplace for home assistance and tech support in the country. We are very excited about both. Not only we are strengthening our crest of customer digital life for the combination of our businesses, but BIB is also executing its plan to have equity stakes in companies with great growth prospects that are the champions of their segments. Talking about financial services on Slide 11, we are enthusiastic about the recent launch of our very own digital account, Vivo Pay. Call. The service allows customers to carry out banking transactions like paying bills and making cash transfer via PIX, recharging prepaid plans and purchasing credits from mobile apps like Google Play, Uber and Spotify. This initiative allows Zebra to be part of a journey to promote financial inclusion, focus on prepaid customers with top up recurrency that probably do not have bank account. Additionally, People Money, our 100% digital personal loan platform is delivering consistent progress, having doubled its credit origination quarter over quarter. Finally, we launched the Vivo Itau card, Our co branded credit card created in partnership with Itau that offers up to 10% cash back and other important benefits that will help us scale our market place and stimulate in store commercial activity. On Slide 12, I would like to comment on Vivo's most recent ESG highlight as we believe that having a social and environmental footprint is key to fulfilling our purpose of digital life to bring closer. To help the most vulnerable families still affected by the economic downturn, we are participating in the campaign United Against Hunger with the NGO, Shareholder Coins, to raise funds for the purchase of food kits in support of the Movimiento Panella Sea. For every donated kit by Vivo's employees, Fundacao Telefonica Vivo donates 2 more. Also in the social sphere, Fibo is the 1st Brazilian company of the sector with the ISO 26,000 certificate, which validates the compliance of our initiatives on human rights, diversity and social impact through the implementation of the best practices in the market. This alignment encompasses all the measures regarding our employees, partners, supplier and also the society. In addition, we are proud to announce our first solar power plant in the northern region of Brazil located in Maraba in the state of Para. It has the capacity to generate 2,190 Megawatts Hour Per Year, which we use to power 632 of our energy Conception Unit. This is the 16th out of 70 renewable power plants we plan on having up and running by the end of the year. Finally, we are rated as having the best reputation of the sector by the BOKON de TEMA Mercurco jumping 13 positions compared to 2019. These initiatives enhance our performance and sustainability which is based on economic, environmental and social balance and contributes to our main purpose of bringing people together. I now turn the call over to David, our CFO, to take us through the financial highlights. Thank you, Christian, and good morning, everyone. On Slide 13, we saw how cost in the Q1 remained stable year over year. This is a result of our on remitting focus on efficiency measures and the ramp up of our digitalization and simplification efforts. It's also important to point out that our cost by mix is going through a significant transformation. As Christian detailed before, We are launching a new revenue streams and investing in the shift towards becoming a digital hub. Vivo is no longer a pure telco company and already offers B2C and B2B customers a diverse set of services that go beyond connectivity. The segments have their own peculiarities and this quarter we decided to show cost accordingly to convey a more transparent view on how they impact our business. Cost of service and goods sold that are directly linked to supporting and enhancing revenue growth accounted for 30% of the total cost and increased 19% year over year. Discuss our catalyst to underpin positive revenue trends. In this specific quarter, the increase was driven by the encouraging performance of handset sales, the gradual recovery of B2B and the growing relevance of digital content and services. OpEx from operations, where we constantly focus on the elimination of non quality cost contracted 6.5% year over year, benefited by our significant efforts to find efficiency and adapt our operating model to our customers' ever changing needs. Network and commercial expenses dropped 1.1% year over year, mainly due to savings related to call centers, billing, corrections and higher usage of alternative digital channels. On Slide 14, we present some key figures to illustrate How our efficiency oriented mindset is fast tracking the digitalization and simplification journey, resulting in enhanced customer engagement, cost reduction and increased lifetime value of Vivo's customer base. In the Q1 this year, we had 9 17 robots executing automated processes with an average effectiveness of 91%. More than BRL200 1,000,000 have already been safe since December 2020 front and back office processes as a result of these initiatives. We are also seeing a significant evolution of commercial activity through digital channels. Online FTTH sets, for example, rose 83% year over year and the share of digital migrations from pre to post dropped 14.9 percentage points in the same period. Question. Shifting to E Care and considering its impact on customer preference, the Miovivo app added 2,700,000 unique users year over year and now has EUR 19,400,000. Epiling penetration is 88%, up 13.6 percentage point year over year and payments using digital platforms represent now 65% of all collections. Quarter. Moving to Slide 15. 1st quarter CapEx evolution is impacted by seasonality and we continue to accelerate investments in forward looking activities. The underlying driving is our incentive focus on fiber and commitment to quality as mobile data consumptions continue to climb. In the quarter, 83% call. BRL1.9 billion of CapEx was dedicated to growth and transformation, while STTH related to investments grew 14% when compared to the Q1 the previous year. We continue to deploy fiber and connecting more customers than ever, resulting in record FTTH net additions like Christian pointed out. Private to the site is also evolving at a similar pace And more than 90% of Vivo sites in the 50 biggest cities have top quality backhaul to cope with the incremental data traffic expected for the coming years. With the advent of IT and the fact that we have the most comprehensive fiber footprint In a continental sized country like Brazil, Vivo is in a unique and privileged position. We have the best combination of assets to maximize value capture from this opportunity and accelerate crops. I would also like to share a brief update about our branch sharing agreement with TIM. This operator has already additional 348 sites with 4 gs coverage and the ongoing pilots are consolidating our mobile network in cities with less than 30,000 inhabitants quarter. Regarding 2 tips, we chose the tests are advancing as expected and we intend to roll out by the Q3 of each year. On LS 16, we present our strong shareholder remuneration. This is backed by consistent net profit and free cash flow generation. We reported robust net income in the quarter amounting to almost BRL1 1,000,000,000 impacted by higher depreciation and financial expenses that were partially offset by lower income taxes. The payment of 220 dividends and interest on capital For a total of BRL5.4 billion, equivalent to BRL3.25 per share will take place as follow: BRL 2,600,000,000 will be paid on July 13 this year and BRL 2,800,000,000 on October 5. Call. On the right hand side of the slide, we show that year to date, we have already declared BRL700 1,000,000 of interest on capital based on this year's net income. In addition, we continue actively executing our share buyback program and have 5,400,000 shares in VIVO Treasury, representing 0.3% of the company total capital. Quarter. To conclude, moving to Slide 17. In the Q1 free cash flow rose 3.7% year over year due to sales operating and financial management. The result is a solid balance sheet and improved metrics. Net cash As of March, we stood at BRL5 1,000,000,000, giving us a unique position to fund the acquisition of OIS mobile assets expected by year end. This strong financial position allowed us to consistently invest in our core businesses, diversify our portfolio, increase engagement and as a result, expect Vivo's relevance in our customers' digital life. Thank you. And now we can move to the Q and A. Thank you. We will now begin the question and answer session. Please hold while we poll for questions. In case you are following the conference call via webcast, please click on question to the host to send your questions. Questions will be taken in the order they are received. Our first question comes from Marcelo Santos, JPMorgan. Hi, good morning. Thanks for taking my questions. I have 2. The first is if you could please comment a bit on the competitive environment in mobile. You had a little bit lower growth this quarter. So I'm just wondering There's something to do with competition. And the second question is about the fiber to the home adds. You had very strong adds. Should we expect the strong pace to team throughout the year. And are these ads coming more from the competition or from conversion of your fiber to the curb and DSL subscribers? Thank you. Hi, Marcelo. This is Christian. So just talk a little bit about the mobile, therefore your first question. And I would highlight first the strong commercial activity that we had this quarter. Important that we are comparing this quarter with a quarter last year that COVID was just Impacting the last 15 days. This year we started with strong January February not compared to what was pre pandemia, But then we also had lockdown in March. Now that impacted results mainly in postpaid and headset. But with all that said, I would highlight our growth in the prepaid. It's 4%. It's important growth. I also have to bear in mind that the government aid It was not there in this Q1. It has a direct impact in the prepaid, but even with the situation, we grew 4%. And then I think we highlighted The increase in the top ups and also the customers topping up. So the percentage of customers topping up also had a very good performance. And the terminals, all the handsets and accessories, they also had a good growth comparing to the year that was before pandemic. I know that was 2020, we could grow 11% even considering that I said lockdown in the last 15 days of this quarter 2021. The postpaid was more flat revenues, but the increase in net adds was Very accelerated. So if you look at numbers without machine to machine, it was close to 700,000. That is the highest number for net adds in postpaid since 2017. If I add to this number, the machine to machine is 1.1 and billion. That's also a very, very extremely high with churn, very controlled. So it's more I think a situation of the market and then There is also the impact of the price increase that was made in September last year. So this year there was no price increase in this quarter That may vary a little bit the performance in revenues, but considering what everything that I just mentioned to you, we are positive with the trend and the strong commercial activity, although we had locked down in part of this quarter as well. Consider FTTH, if you don't have more questions in mobile, then I go to FTTH. FTTH has been growing a lot. As you know, I think every quarter we've been Beating the previous number, there is 2 things here to consider. First, that we're expanding our network. As we said a few years ago that would expand our network today, we ended this quarter with 16,000,000 home pass. Now we are occupying this network, so that's the first move. And second, of course, people are now much more demanding a very good ultra broadband connection In their homes and offices and Vivo stands out here because of our leadership and because we have a reach that no one has in Brazil, giving us an accelerated demand that ended the quarter with 3,700,000 customers in FTTH and the net adds of 360 C8000. These customers depending on the city they come for different nature. Some cities we are entry for the first time, it's greenfield cities, most of the cities that we launched in greenfield. So these customers were not people before. So we are capturing new customers from competition, all type of competitors. Some of them are in Sao Paulo that there is an overlay of DSL. Some of them were already missed to our competitor and come back to VIVO and there is also some overlay of DTC. We don't give the figure, but it's blended. Depending on the city, you can assess more or less what is the nature, but there is a lot of greenfield. And going forward, with Fire Brazil, They're going to be just new cities, new greenfields. So in this case, there is no overlay and there is no substitution of legacy technologies. Question. Our next question comes from Christian Faria, Bradesco BBI. Hi, good morning everybody. Thanks for taking my questions. I have 2. First, it's related to the FTTH and I like it. So if we saw that the increase in this quarter Compensated connection in other technologies. We can looking for the traffic to continue. So if you can see a growth in the total users base for 2021. And the other question is related to the new initiative that the company is doing. So regarding the dots and the new agreement with the Telemedicine Company. So what we can expect in terms of revenue looking for 2022 in terms of composition and your presentation in the total. Thanks. Okay. I think the first question is about the I think What I'll try to answer what I got here. Christian, if you have more questions about I think when you see How much net what is non core business as I would call, the non core revenues and more legacy and mature technology, they're all in the fixed side of the business and they are reducing the relevance in our total revenue. And also if you consider that fixed voice ATSL and DTH represented Like 15% of our revenues, total revenues, non mobile fixed in 2020, now in 2021 in the same quarter, it represents a little bit less than 12%. So What is new and here is adding mobile and FTTH and advanced data for on B2B is growing And it's replacing yes, for your question, yes, it's replacing revenues coming from what we call non core businesses or legacy that speaks voice, DSL, DTH that combined are decreasing 24%. Our perspective and that's why the figure that you see in the fixed business is improving quarter over quarter. Here maybe there is something that changes quarter to quarter because of B2B deals, but the essence of the revenues, the core of the revenues you year replacement of FTTH over what is legacy. And this replacement is making us at each quarter more impact in the positive numbers that represented in the growth. If you consider that just FTTH already represents BRL 1,000,000,000 in the quarter in revenues. Note that's a very strong name Number, if I add to this number, what is IPTV that is very combined with FTTH, We are already talking the total revenue more than 10% or 13% coming from these two services. So the replacement is there, it's going to happen because we continue to Generate the footprint of our network with these partnerships not only the one that we signed with CDP going for Brazil, but the one that we also have with American Tower, the franchise and etcetera is improving our reach and will give us More revenues related to fiber and all the service that go beyond fiber. And that also relates a little bit to the second question. When we signed the contract to the CDF, it gives technical support. They are very connected to People who have doubts and they need support in connecting their homes. So we are selling fiber, but we are also selling a service to help customers to interact and to automate their home. So CDS comes with this perspective of what can I build beyond the fiber, beyond the connected home And that's one of the deals that we are presenting today here? TOTS is a different type of deal. It's more related To prepaid and hybrid customers, we want to give them more engagement in our platforms with our company. So if you give them points, it's good because they're going to use DOTS and they're going to top up and they're going to recharge and they're going to use more of my service to get more DOTS. And then I get engagement and it's profitable because I have more customers with also upsell for the current expenditure. The same Can be said about our loan platform, People Money, that's going to be also connected to Dot. So give us opportunities to join efforts with the 2 companies, Both of us trying to generate value around our digital ecosystem. And the third thing that we are announcing today It's the health partnership. We talked before that we have interest in health and education. This time we are able to already share first communication about the binding agreement that we just signed with Teladoc, One of the largest telemedicine companies in the world is not going to be the only partner. We are open to other partners to create a real ecosystem. Again, We're going to leverage on our footprint, our customer base, our big data, our brand, our bidding capability to drive customers, Engage customers and increase lifetime value of these customers with the people platform. So I don't know if I answered all your questions because I personally missed maybe some of it, But that's a general perspective about fiber and new partnerships. And the result of the new partnerships is going to be a sum of different ones. Yes. Just in this call, we are talking about Health. We are talking about Vivo Money, Vivo Pay and also the co branded with Itau. We are open to do more and we may announce more every single quarter because that's the perspective that we have going forward to create this ecosystem around the connectivity that we are the leader. So connectivity in homes, offices, not to mention also cloud deals that we are doing, the cybersecurity. So it's home offices and also beyond the mobile data and segments and what I described for those. The same is for Vibulis, our digital plan that we also are planning to get also partnerships with large digital companies like Spotify, Uber, Ravi and many others. Okay. Thanks. And the number of customers, it's like you also asked about The customer base, no, I think it's for the value of the customer base that we are bringing. I think it's important to say that we are bringing more customers positive to net debt in Ultrabroad brand. But beyond the positive number is also the ARPU that is increasing because we are combining new services together with our core connectivity service. Thank you, Felipe. Our next question comes from Victor Gomes, Banco UBS. Good morning, everyone. Congratulations on the results. About the VIVA V partnership, Can you give us any color on how it would work for Telefonica? Will you have a stake in the new company? Will you earn a revenue Our revenue share for the company acquired. Thank you. We just signed a binding agreement. It's not a JV so far. What we're going to do in the beginning to check the market and to prove the value proposition What we are trying to say is to sell A service they're going to have a monthly payment. So what they we're going to try to adapt here is our ability To have our recurrent services and also to view this customer, so the customer will have a monthly payment that will give them access To our health platform, no, depending on the type of service that they hire, what I have, I don't know, small, medium and large, not only to give you some color on type of plans that we may have here. And they may have some doctor appointments already included, all of them at Ustana Medicine, But they also get some benefits in other partners that we are putting together in this marketplace. So they have discounts in drugstores and they may have also any other type of benefits related to other services like diagnostic or even physical doctors Because we are also considering having some partnership there. So at this point, it's a binding agreement exclusive agreement having Veeva and Teladoc together with this perspective and objective In Brazil, bringing other partners together and depending on the results, we're also planning a possible JV where we're going to have a stake in the company. It's too early to give you details about that. So for now is our position in creating this marketplace. At Teladocco, we're powering all the digital capabilities because you can also give digital prescription, digital information The customers may use to buy prescribed drugs or even also to do some analysis that they may need in some of the partners that we're putting together in the marketplace. We're going to also have content, content very related to health and well-being and we're going to leverage all our channels capabilities including Alterra portal, the Terra portal that is also one of the largest in Brazil to promote and to create this ecosystem around VIDAV and the health and well-being content that we are just describing with some services included in the monthly payment of the customer. That's perfect. Thank you. Our next question comes from Carlos Sequeira, BTG Pactual. Hi, good morning, Christian, David and team. Thank you very much for taking my questions. I have a couple, please. One is, I'm wondering if you can give us an idea, Christian, of what is the marginal cost for Vivo to increase the FTTH speeds to 1 gigabit Per second, for instance. And depending on the cost, assuming that is not that high, why not just You start promoting this type of packages, which as we know, some competitors cannot match and that would put a tremendous pressure on these competitors. So that's the first one. And the second one on leveraging Vivo's gigantic client base to offer new service, you're doing a great fantastic Job adding new more and more services every quarter. My question is, it's not a question really, it's if you can share with us Your view for these type of services looking maybe 5 years down the road, how much you expect that to represent on Vivo's business. It doesn't just an idea, just what your goal is or your dream maybe is on this type of services. Thank you. Hi, Cadou. For the first question, we just launched 600 megabits now and I think There is additional cost to offer such a high speed to customers. So we need to be very rational how we do it and to which customers are willing to pay more to do so. So in B2B More room for 1 giga, we already have this as an offer to companies requiring that even SMEs they can have it. In the B2C We are now with the 600 and also not in every place. As you said, there is some cost involved and we need to be Careful and also be also careful about the pricing. Now we need to differentiate pricing to give the value of the ones willing to pay For 600 megabits in this case, it's just our offer right now. We've been very conservative and we hope the market is also conservative and the technology It is impacted and the cost is important to be able to offer such a speed to customers. So we are doing that in a very thoughtful way and segmenting our customer base and offering that to customers that are willing to pay more Either because they live in places where the need it's more demanding. I don't know, let's talk about some Countryside homes that people are now leaving and they are very large homes that they want to have a very high speed because their office is there and the schools are there now because the kids are at home That maybe they're willing to pay more and then we have to price them the right way and do so. So balancing the additional cost with the real demand and not Minimizing or taking value of the 100 megabits, 200 megabits, 300 megabits, 300 megabits that's also very good speed and much above other technologies And that respond to most of the demand of most of the customers that we have. In the second one, we're going to start giving more color on digital service. I hear the most the difficulty that we have is that in the nature of the services are different. Not just Defining what is B2C and B2B, that's already a huge difference. Now in B2B, it's hard to find a customer that we don't have a digital service already As part of the relationship that we have with this customer, that goes from antivirus, a cybersecurity solution to a cloud solution. So We are leveraging and penetrating digital services in most of our B2B customers. So there are different type of customer size of customers in B2B, so it's difficult to tell you The percentage, but I understand that the penetration will be very high almost in 5 years. I believe all our B2B customers Need to have digital services that is built and sold and taken care by people's workforce and both the sales rep, but also the customer care. In the B2C, I would also segment in the 2 types of customers. In the top of the pyramid, I think we're going to distribute services from very well known brands. And if you look the number The percentage of fiber already sold with Netflix, Disney Plus, we just said 30% And this number is growing. So I think our ability to bundle together with our services, services that are very connected to our core will be very high. And I also Think in 5 years that every single customer of people may have something that they bought together with their connectivity that is not our car and it's the digital service. And that goes entertainment, but can be gaming and can be also I just mentioned on the CDF, that's a support technical support that we branded VivoGuru, we also believe a high percentage of our customers should have this customer care VivoGuru already included in their plan and we will charge for that. In the base of the pyramid, there where I think we can launch new business No, that are totally not always connected to the relationship that the customer has with us. So when I launched Piedave, Of course, I'm selling to my customer base, but I'm not bundling it with a plan, because I'm talking about prepaid or hybrid customers that there is no bundle. The value of this new service can be similar to the value of the money they spent with a prepaid recharge. So it's a new business. So this new business will have value in two sides, no, because I'm selling it and because I may have a stake in a new and different company that can add its value by itself. So I see financial service going this direction maybe health for sure, education for sure. So it's a different type of business. I'm not combining. I'm launching new platforms and new ecosystem. So once we have more clarity how to explain and To give you more detail and color about the numbers, we certainly do that differentiated B2C, B2B, what is totally bundled because has value and combined that Netflix plus fiber and versus what is a new business like it's People Money, there is a new business that is a loan platform. I have VIDAV There is a new business and many other things they'll be launching in the following quarters. Don't like to answer, Edu, but it's what I can share at the moment. Thank you very much, Christian. Very clear. Thanks. Our next question comes from Marcelo Santos, JPMorgan. Hi, thanks for the follow-up. I have two questions. The first one is in the fiber expansion. We are seeing all players expanding fiber with plans to expand fiber aggressively in the next couple of years. What do you think is the potential market for homes passed with fiber in Brazil? And do you see the risk of overlapping networks or not be Difficulties for all the players to execute their plans. And that's the first question. The second question is you're going to have the 2 gs shutdown. How much savings could you get on that? And would that be more CapEx or OpEx? Thank you. Marcelo, in the fiber, we announced that we aim to have at least $24,000,000 whole best by 2024. We already have close to 17. We announced for Q1 16.3. We have the largest customer base and we have the highest market share in the mobile. We have the combination of all the assets to be the leader in this market. So we are very confident about our plan. Brazil is huge. I think we have a gap in house ultra broadband specialization. So if you consider our target market of 60,000,000, 65,000,000 homes and offices, That would be the market that's addressable by fiber. Some of these markets is covered by the smaller players. Some are uncovered today or they have a technology that is not fiber. So this is the number that maybe we should bear in mind. So we are now aiming for 2024 to get to 2024. The risk of overlapping I think is there. I think it's not good because some of these deals that you just mentioned, there is someone behind They need to occupy their network. They're neutral networks, but they need to have a tenant, an anchor tenant and additional tenants. So for that to come true and to be profitable, I think the ones controlling this network should be very wise and not overlap. So in our case, we have a company that we co control. So we may define what are going to be the target cities and we will try to be as rational as we can. Although as I said, we are the leader, we have the largest customer base and we have a lot at stake and we're going to do that because we've done that before and we are the number one Doing that successfully. The others should be also I think they are and they should be very attentive not to do or not to make a mistake of covering Similar areas because I don't see more than 1 or 2 tenants covering different networks, neutral networks to give The profitability that regards for this type of business. That was your first question. The second question was? The second I would say the second one. It's about the savings that we are expecting with the craft sharing with TIM. So there's going to be like 3 different savings. So one have to do with 2 gs switch off. It will bring savings, but mainly on OpEx. And this is something that will start even this Q3. So it's something that we will see a ramp up the next couple of years, but it's going to start right now. The second one is that we are going to have and we already have 348 cities That's already implemented with coverage expansion. So this is a CapEx savings that again, this is something that we have already as we speak, we are already having these savings. And the third one, which has a big potential, again, is that will be a decommissioning Some of the network that today we are joining with the team in most cities. So again, this will bring both OpEx to run those networks and also CapEx to maintain those networks. So we see the 3 as a big opportunity to focus on quality and particularly to cope with incremental traffic and also expand to see what else can we accelerate year with team in the mobile space. Perfect. Thank you both. Thank you very much. Thank you, turning the floor back to Mr. Christian Gebara for any closing remarks. So thank you all for joining us. As said before, it was like solid results, especially in the commercial performance In both the net adds that we had in postpaid and the net adds that we had in fiber that are core products and core revenue that give us optimism about 2021 as the situation hopefully is getting better with the team and the economy recovering and we are in the right position to take advantage out of the accelerating growth that we see in this technologies and this business where we already have the leadership. Added to that, the new ventures that are started to be more concrete And it gives us room to create a real ecosystem around our brand and bringing loyalty and engagement involve our customers. So if you have any more further questions about anything, you know our team is here at your disposal. Thank you and until next quarter. Thank you. This concludes today's Telefonica Brasil 1Q21 results conference call. You may disconnect your lines at this time. Have a great day.