Good afternoon, ladies and gentlemen, welcome to Telkom's Quarter One of FY 2024 trading update for the quarter ended 30 June, 2023. All attendees will be in listen-only mode. There will be an opportunity to ask questions if prompted. If you should need assistance during the call, please signal an operator by pressing star zero. Please note that this event is being recorded. I'd now hand the conference over to Serame Taukobong. Please go ahead, sir.
Thank you kindly. Greetings all. On the call is our Group CFO, Dirk Reyneke, and the investor relations team. We should also have the CFO of Consumer, Mr. Hasnain Motlekar . This morning, we published our trading update for the first quarter of the financial year. I'm assuming that you've gone through it in detail. I will touch on the key aspects of it to allow more time for questions. We'll be unpacking the trading update for the quarter as follows: I will begin with the business performance for the prevailing quarter. Dirk will touch on the revenue and EBITDA performance for the group, as well as per BU. I will come back and give an update on corporate action, regulatory matters, and SIU judgment. I will also conclude on the commercial agreements that we are pursuing to advance the connectivity in South Africa.
We started the new financial year with good momentum, as group performance was pleasing in the face of load shedding, muted economic growth, continuing inflationary pressures, and consumers, and intensively competitive landscape. Our performance continues to be impacted by legacy and fixed line revenue decline, caused by ongoing migration to NGN technologies across our business, as anticipated. Cost savings from our recent labor restructuring process offset the impact of load shedding, but the legacy revenue declines, along with higher ECL provisions, weighed down on our overall group profitability. I will now take you through the performance of each of the business units. In the consumer team, mobile service revenue growth was driven by Telkom Consumer performance. Telkom Consumer recorded an increase in revenue, with the growth largely attributed to the mobile business and the expansion of fiber offerings.
Consumer fiber subscriber base increased by 12.8%, while legacy copper-based revenues continued their downward trajectory and now only account for 4.8% of the gross revenue. Mobile revenue advanced mid-single digits, primarily driven by continued provision of value-compelling propositions, which stimulated data consumption. The biggest contributor to the mobile revenue growth was mobile service revenue, which also grew by 6.5%. Mobile growth was strengthened by year-on-year subscriber growth of 6.9%, bringing the total subscribers to 18.5 million, with a blended ARPU of ZAR 83. The post-paid ARPU of ZAR 183 was derived off a subscriber base growth of 6.6%, translating to almost 3 million subscribers.
The prepaid ARPU of ZAR 63 remains within our targeted, targeted range price, and the prepaid subscribers grew by 6.9% to 15.5 million. Mobile data traffic increased by 25.1% and amounted to 329 petabytes. This growth was bolstered by an 8.9% increase in mobile broadband subscribers to 11.7 million, which now comprises of 63.2% of total subscribers. We continue seeing robust growth in our non-connectivity services, with revenue increasing by 20%, with a significant contributor of this being our airtime advance product. If I look at Openserve, the Openserve overall revenue declined to, by low single digits, as the accelerated decline in fixed voice revenue continued as expected.
Fixed line NGN revenue increased by 10.6%, underpinned by growth in broadband, carrier services, and enterprise services, which increased 21.5%, 6.3%, and 3.3% respectively. The NGN portfolio now comprises 73.7% of total revenue. The continued increase in demand for connectivity and consumption reflected on the fixed line data traffic of increase of 13.3% to 512 petabytes. Openserve's connect-led strategy, coupled with the smart deployment of our fibre infrastructure, enabled growth in its fibre connectivity base by 9.9% connections, which includes broadband and other value-added services such as VoIP, intercom, and security.
The homes passed grew by 24.4% to 1.1 million homes, with Openserve surpassing the 500,000 mark of the number of homes connected with fiber, rising it by 24.2%. 515,000 homes connected, while maintaining the leading connectivity rate of 46.5%. Despite the sustained load shedding levels, Openserve continues to be able to maintain its core network at an availability of 99.9%. The deployment of battery primary backup solutions yielded a cost avoidance of more than ZAR 27 million in diesel costs. Looking at BCX, BCX recorded low single digit revenue growth, mainly driven by the double-digit growth in the IT business.
The IT revenue growth was attributable to the software and hardware business, which continues to show excellent performance due to the fulfilling of order backlogs and the easing off of the global chip shortage, as well as successful new business deployment initiatives. The business also benefited from a strengthened cloud offerings and solutions brought about by DotCom acquisition, whereas IT services declined by 3.4%. Swiftnet, Swiftnet recorded marginal revenue growth. The revenue growth was underpinned by escalations, new tenancies, customer 5G rollouts, and existing tenant upgrades. Revenue from other customers increased by 11%, while a reduction in revenue from termination by MNO and Openserve decommission declined by 20.6%. Following the successful Power-as-a-Service testing in the prior financial year, Swiftnet is nearing implementation of the first phase of this rollout.
I will now hand over to Dirk to talk you through the revenue and EBITDA performance on a group and BU level. Dirk, over to you.
Thank you, Serame, and good afternoon, everybody. Good morning to those in the west. If you look at the impact of what Serame has just covered on revenue and EBITDA, group revenue grew by 3.8% to ZAR 10.7 billion, mainly driven by the satisfactory growth in the new generation technologies. Having said that, group EBITDA rate of decline decelerated, decreasing by 4.2% to ZAR 2.2 billion, with the EBITDA margin contracting by 1.7 percentage points to 21%. Mostly affected by legacy revenue decline, together with higher direct costs and operating costs. The benefit emanating from the staff restructuring was partly negated by additional spend in diesel due to load shedding still in the quarter, and then a slight increase in direct costs as a result of product mix.
We also witnessed an increase in impairment of receivables, specifically the provision for impairment, increased ECLs in our BCX business and our mobile segments. If we unpack the revenue per business unit, Telkom Consumer saw a 1.8% increase in revenue to ZAR 6.4 billion, driven largely by mobile revenue advanced by 5.2%, reaching ZAR 5.4 billion, with a significant contribution to this growth coming from mobile service revenue, which increased 6.5% to ZAR 4.6 billion. The surge in mobile data traffic that was bolstered by an increase in mobile broadband subscribers, resulted in the mobile data revenue increasing by 9.9%.
Revenue in Openserve declined marginally, 2.7% to ZAR 3.1 billion, as the revenue growth from NGN was offset by a 29% decline in fixed voice legacy revenue. BCX saw revenue rise by 2.9% to ZAR 3.5 billion. The IT business revenue increased by 17.5% to ZAR 2.1 billion, due to hardware and software business growing by 62.9%. Converged Communications revenue declined by 12.8% to ZAR 1.4 billion, as they are reaching the back end of the legacy decline. Revenue from Swiftnet increased marginally, 1.2% up to ZAR 326 million, with revenue from other customers increasing by 11% to ZAR 249 million.
If we then look at the EBITDAs of the different business units, Telkom Consumer EBITDA increased by 10.8% to reach ZAR 931 million of solid revenue growth and a prudent cost containment result. The mobile EBITDA, however, declined by 5.6% to ZAR 1.1 billion, marking the end of double-digit declines, attributable to an increase in provisioning for bad debts as consumers continued to take strain, and the ECLs increased in line with the growth of accounts receivable. Load shedding costs amounting to ZAR 54 million also impacted mobile's profitability. In Openserve, the EBITDA was impacted by an increase of ZAR 88 million in diesel spend, resulting in EBITDA margin of 28%, a reduction of 1.9 percentage points, with EBITDA declining to ZAR 876 million .
BCX EBITDA declined by 38.2% to ZAR 275 million, as overall profitability continues to unfavorably be impacted by revenue product mix, which was skewed towards lower margin product business for the quarter, as well as significantly higher impairments of receivables, plus slow collections, particularly in the public sector. This was partially offset by cost savings, largely employee expenses and third-party costs, as the BCX continues to drive efficiencies. Swiftnet EBITDA increased by 1.7% to ZAR 234 million, in line with the marginal revenue growth, and the EBITDA and Swiftnet remains strong at 71.8%, translating to a 0.4 percentage point improvement. Serame will now take you through an update on corporate actions to realize value, regulatory matters, the SIU judgment, and the structure of the commercial collaboration with Broadband Infraco, as well as Sentech. Thanks, Serame.
Thank you, Dirk. Just on the commercial actions to realize value, we have received offers to acquire Swiftnet and is entirely during the last quarter of FY 2023. We are currently engaged in discussions with two bidders for the disposal of 100% of Swiftnet, we hope to be making this announcement, well, shortly. We have encouraged by the incredible interest shown in Openserve for our market sounding exercise earlier this year. As we position ourselves as an infrastructure business at its core, once this transition has been concluded, Telkom will consider its further options to realize value, including in relation to the expressions of interest received for Openserve. We are also continuing investigating the introduction of a strategic equity partner for BCX, to enhance scale, growth, and capabilities in various growth areas, including cloud services, cybersecurity, healthcare. Work on this is ongoing.
In terms of the regulatory matters, the Minister of Communications and Digital Technologies confirmed that the final analog television switch-off date in the frequency bands above 694 MHz is 31 July , 2023. If this is successfully implemented, the sub-1 GHz spectrum obtained in the auction in March 2022 will become available nationally from the 1st of August , 2023. The outstanding ZAR 1 billion then, that is, for the payment of the spectrum will have to be settled. We are also equally preparing comprehensive response to the Electronic Communication Amendment Bill, which deals with several critical issues such as spectrum trading and sharing, roaming, MVNOs, passive infrastructure, and facilities access and competition.
In terms of the SIU judgment, the High Court handed down a judgment setting aside the proclamation that gave the Special Investigating Unit, SIU, authority to investigate various matters, including Telkom's contracting for work, for network and advisory services, and the disposal of former Telkom facilities. The proclamation was declared unconstitutional, invalid, and of no force or effect, and the respondents were ordered to pay Telkom's legal costs. We also want to set clarity on the media issues that talks to the Broadband Infraco and Sentech collaborations. What I need to say clearly to the audience is that these are based purely on commercial agreements. They'll be predicated on commercial agreements, where we will utilize our current assets base, like fiber and data centers, to offer our services to these entities. We actually do have commercial agreements with these entities.
These agreements will benefit the goals of both entities in advancing connectivity in the country. We will also support to advance government policy objectives, together with achievement of our own corporate ambitions. These partnerships will not require any capital injection, nor are there any discussions of any merger with these parties. I'd like to state again, these are collaborations based on sound commercial principles. We've come to the conclusion of the call. I'll now hand over to the operator for Q&A. Thank you.
Thank you very much, sir. Ladies and gentlemen, as we are going to be conducting a question and answer session, if you'd like to ask a question, please press star and then one on your telephone keypad or the keypad on your screen. A confirmation tone will indicate that your line is in the question queue. You may press star two to exit the question queue. Just a reminder, if you'd like to ask a question, you're welcome to press star and then one. Our first question comes from Madi Singh of HSBC.
Yes. Hi, can you hear me okay?
Yeah, we can hear you, Madi.
Thank you. Just two quick questions. First question is on the corporate action plans. I think, you know, the previous target was to announce, you know, the winners actually a bit earlier. If you could talk about, you know, why there's a bit of delay in announcing the, you know, winners for the fixed network, you know, side of things. Secondly, on BCX, you are saying that you're going to explore options around that as well. Would you consider exiting it completely as well, or at this point you are only thinking about a minority stake, you know, for that? Thank you.
Thank you, Madi. You know, I think with the towers transaction, we are in the last throes. As one appreciates this process, part of the delay has been bidders requesting extensions to do more detailed evaluation of these entities, which we feel is important and prudent to do. We have given the bidders extension because it's quite a massive portfolio for them to evaluate. We, I feel quite confident that we are close to that. In BCX, the process has started, as I've indicated. We would obviously be shaped by what type of partnerships come through.
We are open to even a point where Telkom has a minority stake in that entity, if it gives us the right scale and capability, but it's early times for that. I hope I've covered you there, Madi.
Yes. Thank you very much. A very quick question on the operational performance as well. On the legacy fixed business, in your view, how many more periods do you think before the impact of the decline in this segment would be very minimal for the group performance?
Madi, it differs by the various segments. I'll say overall, between 18 and 24 months. Some entities have exited much faster. If you see, for instance, BCX is coming out. As I highlighted in consumer, it now only accounts for 4.8% of the revenue. I'd say conservatively, if I average across the entire group, between 18 to 24 months, some BUs will drop off sooner in that period, timeline that I've given you.
That sounds very interesting. Thank you very much, sir.
Thank you, Madi.
Thank you. The next question comes from Nadim Mohamed of SBG Securities.
Good afternoon, Serame and team. Just three quick ones from my side, if I may. Firstly on mobile data. You know, we saw that traffic was up 35% year-on-year, revenue was also up about 10% year-on-year. What are the differences between prepaid and postpaid? Are you seeing more demand or consumption due to load shedding? Secondly, just on airtime advance, I see that it's increased to 33% of recharges. Just would like to understand, you know, how quickly that has scaled up over the last year and what kind of default rates you're seeing there. Lastly, I'm intrigued by the concept of positioning Telkom as an InfraCo at its core.
I'd just like to understand what exactly you mean by that in terms of your strategic direction. Does this mean things like prioritizing open access, you know, longer term contracts with a lower risk profile? Just like to understand exactly what the sort of long-term view is there. Thank you.
Thank you, Nadim. That was actually four, not three . I'll tell you what, I'll start with the last one. When we talk of an InfraCo, Nadim , you say, okay, when we sat down and did our strategy session, we said, "Okay, who are we? What exactly lies in Telkom, and what is our core strength?" Our core strength has been infrastructure, okay? Underpinned by 170,000 km of fiber. If you take that a step further, you then have, what, 10 other data centers, of which thre of them are Tier 4. That's the strength that we've built as Telkom over the past. It's for us to say: How do we focus on that?
Somebody might ask the question and say, "Okay, but then why would you sell towers?" Once again, it's about saying: Where can we lead and lead successfully? We've got 2,900 commercially active towers. The towers market is 221,000. You are not going to lead in that. If we have to split ZAR 1 of CapEx, where is our best bet? Our best bet certainly sits in the InfraCo. When you look at in the mobile business, in that InfraCo, it means that once you start connecting the homes, you then start offering your fixed mobile conversions, where you can actually not just come in with data, but you can come in with data and offer customers three of four mobile services with that. That's how we look at, at the InfraCo.
In terms of, the mobile data and the prepaid and postpaid growth and, and, and airtime allowance, I have invited Hasnain into the call. Maybe, Hasnain, you want to shed some color there? Nadim, you know Hasnain, right?
Yes.
Afternoon, everyone. Thanks, Nadim. Just to clarify the question around prepaid, postpaid, the growth has been sort of equally spread across the two. The one hasn't overindexed over the other. Obviously, subscriber volume is on the prepaid, just pushing more data volume through that segment. As a percentage growth, it's roughly the same. In terms of load shedding, obviously load shedding is spread across the country at different times. When you look at it cumulatively over a month, we've not seen actually data consumption gone down. We've seen slight increases as the load shedding kicks in, but then it normalizes once load shed, load shedding is gone within a particular area. If you look at it across nationally and across a sustained period of about 30 days, we've not seen data consumption go down.
In fact, we've seen it actually gone up within the footprint we currently have. There hasn't really been an impact. Obviously, we've introduced more value, compelling proposition from a data perspective, which pushed us through, but it's not, it's not impacted us significantly apart from the upside on the network. The question will be asked, if once load shedding subsides, can we see even more throughput on the network? Echo, time will tell, basically, once we stay sustainably below stage four or lower. Above four, it becomes hard to keep the availability up, but if you stay sustainably below four, we should see data consumption continue to grow as well. In terms of the second question around airtime: Airtime advances now account for about 30% of our prepaid business.
We are comfortable from a risk management perspective, even though we have contracted for the risk, that we do not carry the risk around default. The default service is actually quite low, it is reasonably slow. Where we can actually manage the default, we have not seen big black holes, and that was always the concern when once you step into this line of business. The customer behaviors indicated actually a good predication to actually settle almost immediately within the time frames we, we forecasted. Thirty percent is probably where we are at, we are comfortable. We might stretch it maybe another five-10 percentage points, but we will take it. We will be very conservative around this airtime lending business, because it has the potential to go wrong very quickly.
We the way we've managed to date is very conservative, and it's grown actually very nicely for us. I hope I answered, Nadim.
Excellent. Thank you so much. I appreciate that.
You're welcome.
Thank you. Ladies and gentlemen, just a reminder, if you'd like to ask a question, you will put a star and then one to place yourself in the question queue. The next question comes from Nomandla Duma of PSG Asset Management.
Hi, guys. Can you hear me?
You good, Nomandla?
Oh, yes. Can you please indicate the total cost savings that Telkom basically got from the restructuring? It's just not clear from the numbers.
Yeah, the, the, Nomandla, the cost saving from the numbers, I think I said at the year end. The group cost saving estimated at roughly ZAR 1 billion per annum on an annualized basis. In the first quarter, people only started exiting towards the end of the quarter. We only started seeing the benefits towards the end of this quarter. I wouldn't call it significant. You know, we won't even have the full annualized benefit of ZAR 1 billion for the full year. Yeah, I can probably look at the number, but the number will, will not be significant for quarter one. It will only really start coming through quarters two through to four, with full annualized benefits in 2025. I mean, people were...
Although we provided for the cost in March 2023, remember, people only exited, well, most of them towards May, June this year.
Thanks, Dirk. If I may, just something, just look at the Openserve numbers. It's almost a one-to-one decline if you look at the top line to the EBITDA. How are you guys managing that? Just looking at how incredible the next generation sales grew, but it, it looks like the EBITDA is actually under pressure. Can you give a bit of guidance on what's, what's the, what's the strategy for Openserve?
I think if you look at Openserve, what's important is the margin. You're right that the, the decline revenue, EBITDA, almost one to one . Remember, that's where bulk of the legacy sits. I think that Openserve, inclusive of the legacy decline, is maintaining their margin. I think they went from 29% to 28%, quarter-on-quarter. If you compare it to Q4 of last year, they've improved their margins, and they've improved their margins on the back of, of cost savings. Twofold, in Openserve, their, their legacy revenue decline will still, for at least the first 3 quarters, be more than the NGN revenue growth. Because of efficiencies and cost, cost savings, we do believe that their margin will start picking up as from probably, perhaps Q2, probably Q3.
For the full year, their EBITDA in absolute numbers should start picking up, more than the, more than the 1% that you've just seen. For us, if their margins are getting back to the 29% and 30% where they were, we believe that is, is a good business with annuity revenue at margins of 30%. That's a long way to say, the strategy there is simple. It's still driving the growth in NGN revenue on all thee l evels. In other words, your backhaul fiber, your fiber to the, to the business, as well as your fiber to the home. Linked to that is your cost efficiencies to make sure your margin comes back into line, and specifically with cost focus on which costs can be saved and taken out as you migrate off your legacy systems.
Cool, thanks.
If I may know, and if I may, Nomanda, remember that this is something that we are actively and aggressively managing, to migrate to NGN, both on the BCX side and the consumer side. It's a continued access, thus the 18.4 migration that we're talking of.
If I may ask the last question to Serame, and specifically, thanks so much for the clarification on the partnership with the government. Just given the fact that they're a related party transaction, will there be, like, transparency for the other shareholders, just on whatever partnership that you're saying? Because you, you, you're very upfront to tell us that it will be under commercial terms. Will there be clarity on that part if we look at your numbers?
Absolutely.
If we look on your financials going forward?
If you look at currently, even with the current commercial agreements that we have, they all go through SITA in the government process. They all follow the same equal procurement process. What government has said is that, where we can be commercially active to help execute government's ambition, so there's no favors, there's no mergers, there's no Telkom merging with InfraCo. No, none of that. It's commercial conversations on commercial terms. Simple example, government had intended to build data centers. We said to them: "Why are you building data centers when we've got data centers? You can come and lease space in our data centers at the same commercial agreements that everybody else gets charged on." That's the principle.
I think, Nomanda, in terms of transparency, we already. As Serame has said, we've already got contracts with most of those entities, and we are already doing business with them, and that business is disclosed on the annual financial statement as related party transactions.
Yeah. Yes, yes, yes.
One could expect those, one could expect those numbers just to increase. I think the, the transparency will have to be there. That's IFRS request required, and certainly we will comply with it.
I guess from a financial perspective, it's not additional deployment of CapEx, it's more monetizing Telkom's existing infrastructure base.
Yeah.
'Cause I think that was what was unclear to us.
Yeah
When we were actually reading the Minister's articles, that it wasn't clear if it potentially changes the guidance numbers, say, for the CapEx that Dirk has guided for.
It will not change the CapEx envelope. You, I think most of you got used to me talking about the CapEx envelope. It won't necessarily change the size of the CapEx envelope. It might influence which growth areas you do spend that CapEx on, and you might reprioritize slightly. You know, as long as it makes commercial sense, whether, whether it's existing coverage or planned coverage, it would've been part of our original CapEx plan in any case.
Maybe if, if I may, just to, not to overindulge, but give you an example, Nomanda, I had a meeting this morning with the Premier of the Gauteng province. They have built fiber. They have their own fiber, but they've not been able to connect homes. He said to me, he said: "How can you help us connect homes, and what are the commercial terms for us to connect those homes?" In the homes that they've passed, it's obviously in our current CapEx plans. In the homes that are not in our CapEx plans, it will be a commercial agreement to say: "We will help you connect these homes because you don't know how to connect homes. We know how to connect homes." Does that make it clear?
Yes, that's, that's very clear to me, Serame. Just on that, is there any possibility for Telkom to be challenged in this space? Just, are you the natural partner for government, given your extensive infrastructure base in South Africa, or is it that it's possible that the other players actually come into the market, and they offer the government, their terms?
If you look at how it's being done, a lot of the fiber, for instance, that government has deployed has been DFA. It's all government under SITA. It's all on fair principles and absolute transparency.
Thanks. That's very clear, guys. Thank you.
Thank you. Ladies and gentlemen, just a final reminder, if you'd like to ask a question, you're welcome to press star and then one. The next question comes from Godwill Chahwahwa of Coronation Fund Managers.
Hi, guys. Thanks for the opportunity to ask questions. Couple of questions from my side. First one is on, on your network availability, just given what's been happening on load shedding. Could you give us some color around where your network availability sits at the moment, and then just how that availability is impacted by your roaming arrangements? So whether you are having to rely more or less on your roaming partners, and maybe threading that through to the impact on your roaming costs and your mobile margin. Then the second question is around on the regulation side, the discussions around the mobile termination rates.
If you could just give some color in terms of your current position, in terms of your, whether you benefit from asymmetry or not, and what your thoughts are on possible impacts if it goes onto that cost-based model, that would be great. Thank you.
Thanks, Godwill. I mean, if you look at the network availability, it, it's actually on two sides. On Openserve, we've actually managed to keep our network availability to 99.9%, that's been an ongoing investment in that core infrastructure, because that's what runs the country, right? We have to make sure that we're there. On the mobile, obviously, because of the reliance on towers and batteries, et cetera, at various stages, you know, if you, if you go to a stage six, for example, your network availability drops to just over 71%, which obviously has an impact because it's simply a numbers game. You know, the, our position has 15,000 towers. Other guys have got, what, would I suggest, 18,000 odd towers.
Naturally, when one of our towers drops, they will have at least one of theirs, over. Therefore, we will see ourselves roaming higher on that. What we are doing is trying to make sure that because we've got the ability of that, we can make sure that in those spaces that we're seeing the gaps, we can try and pull. It does increase your roaming costs marginally, but the roaming cost compared to the traffic that you're seeing, are not the same comparative. W e're comfortable that the team is managing that perfectly. In terms of CTR costs, I mean, we, we, we are maintaining that.
CTR is, i t's always the interesting thing that the, the, the call termination rates is what actually grew the mobile industry. That we feel that that stance is, is still quite important, especially given the conditions that we are under, that the status of Telkom, Cell C, and the likes should be maintained. If you remove the asymmetry, the only benefit is going to be to the major players, and we doubt that they'll actually translate that to customers. That's the stance that we're taking, Godwill.
Great. Thanks. Thanks, sir.
Godwill, does that conclude your questions?
Yes, that's all from me. Thank you.
Lovely. Thank you very much. It appears we have no further questions in the question queue. I will now hand over back for closing remarks.
Thank you all for, for joining the call. I thought I'd might just wear my marketing hat and say, well, thank you for all joining us for the call. As you all are aware, the 2023 Netball World Cup kicked off last Friday in Cape Town International Convention Center, with the South African Netball team winning 61-50 in the first game, and also winning in the second game. Why do I say this? Telkom is an official premium partner of the Netball World Cup. We are committed to driving the development of netball in the country and have been a proud sponsor of the National Netball League, the first professional league actually created in the country, formed by netball.
I trust that you will all join us in supporting our national side, the marketing theme that, "We stand tall with the Frontiers," and Telkom will continue to do things big for netball. Thank you very much.
Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for joining us. You may now disconnect your line.