Good morning, everyone, and welcome to Entel fourth quarter and full year 2025 earnings conference call. I'm Paula Raventós, Investor Relations Officer, and I'm joining today with Marcelo Bermúdez, Entel CFO. Please note that this event is being recorded and that all participants will be in listen mode during the company's presentation. At the end of the presentation, we will open a question and answers session. I would like to start regarding the main highlights of the year 2025. We delivered a strong performance in 2025, posting 9.7% increase in revenues and 5.9% increase in consolidated EBITDA, despite operating in a highly competitive and dynamic environment in Chile and Peru. Our ability to anticipate market shift and move decisively has allowed us to sustain a differentiated, customer-centric value proposition, supported by a disciplined and responsible financial management.
In Chile, we maintain our position as the undisputed leader across all major mobile metrics. That included market share, revenue share, ARPU, network quality, NPS, and brand power. Despite another challenging year for the industry and regulatory changes, Entel delivered positive results in Chile. In Peru, despite a challenging regulatory and competitive environment, Entel Perú delivered solid performance in 2025. Leading in network quality and NPS, we consolidate our position as the second largest mobile operator in the market. Other highlights during this year, Entel officially launched the commercial Starlink direct-to-cell service in Chile and Peru, the only two countries in Latin America and the fifth worldwide to activate this technology, supported by a network of more than 650 satellites extending coverage. Another highlight is that Entel Perú signed a wholesale agreement with WIN, gaining access to Peru's largest fiber network.
This transaction enables us to offer broadband services to an initial footprint of 3.1 million home passes, significantly accelerating our increase in fiber to the home. Another highlight is that the board of directors at Entel officially appointed Carlos Hurtado as the company's new director, replacing Andrés Echeverría, an industrial civil engineer that holds an MBA from Oxford and with more than 25 years of track record in the global finance and investment sector. Another highlight also is that Moody's affirmed our long-term issuer rating. The outlook was changed to stable from negative. Moody's mentioned in their report that this rating reflects Entel's strong market leadership, resilient operational performance, disciplined financial management, and enhanced liquidity position. Also, Fitch Ratings affirmed our rating as an investment grade in BBB-, as a robust business model.
Another highlight is that, during 2025, we strengthened our financial position through the execution of a comprehensive financial plan. This process includes debt payments and amortizations, along with securing new sources of financing that allow us to shorten our average duration and in 5.2 years and reduce our rate. Regarding our highlights in ESG advances, during 2025, I would like to highlight that Entel secured its position among the 10 best performing companies in the telecommunications service industry in the S&P Global Corporate Sustainability Assessment, CSA. We achieved a total score of 82 out of 100, driven by a robust performance in social dimension and also in corporate governance. That underscored the consistent progress in overall sustainability, despite the challenging benchmark for the tenth year.
Other highlights regarding ESG is that Entel was recognized as the top telecommunications company in Chile, ranking seventh in the Merco Empresas Chile 2025 Reputation Index. By climbing two positions, we reaffirmed our leadership and maintain our presence among the top 10 most reputable businesses in the country. Entel also was awarded the Iniciativa Mayor 2025 prize by Sello Mayor for its dedication to improving the customer experience for the elderly segment project to become one of the first in Chile's population. The award specifically recognition impactful initiatives such as the senior citizen plan, aimed for enhancing inclusion for this important segment. Also, they award another award regarding Excelencia Energética for the Reutiliza Chile initiative, while the Energía Circular impacted in a collective of more than 300 disused cell phones in less than two months.
Regarding with the macroeconomic environment where we operate, the economies where we operate have a slow growth. The telco industry also are with modest growth in general, both in Chile and Peru. Chile and Peru continue to see inflation normalization, but the adjustment has been smoother and more stable in Peru, while Chile has experienced sharper swings over the past few years. Overall, we operate in an industry with modest growth, environment of stabilization inflation, moderate GDP recovery, and continued Forex volatility. Now, regarding our performance in our activity, despite competition, we continue to growth in postpaid, mobile, and fiber during 2025.
In Chile, the total mobile customer reached 10 million customers at the end of 2025, with net additions of 6.3% explained in addition in voice and IoT, due to the increasing commercial activity through different sales channels and the commitment to offer the best network quality and customer experience, which has generate a 40% share of net postpaid voice growth in the industry, despite this high competitive and new portability regulations that came into effect during 2025. In prepaid, meanwhile, we have a decrease of 31% due to mainly a database cleanup performed during the current period, and also explained by a regulation that came into effect that requires identity verification through biometrics face recognition. While fixed services in Chile grew 5.9% due to the expansion of fiber to the home and OTT TV.
We are growing in fiber in the home in a competitive market by implementing commercial strategies to attract convergent customers, which has allowed us to improve churn. While in Peru, in mobile customer revenues, we reached 10 million customers. Postpaid customer base expanded 11%. The growth is a result of an effective sales management with a new channel mix focused on in-person sales and supported by onboarding models that ensure greater customer retention. Prepaid customer base decreased 12%, mainly to the base cleanup also, and the decline in wholesale channels restricted by regulation, along with a positive migration of customer to postpaid. I will now turn the call to Marcelo Bermúdez, who will continue with more details of our results. Please go ahead, Marcelo.
Thank you, Paula. Good morning, everyone. Paula just mentioned in mobile, both in Chile and Peru, a significant growth in postpaid, also in fixed, relevant growth in Chile, mainly due to convergent customers, the commercial strategies, and also a better performance in terms of bad debt and collectibles. So you can see that is positively impacting our top line. We grew 9.7% in revenue on a consolidated basis during the year, which is very significant, as a proof of our successful strategy in terms of capturing growth in the market. As I mentioned, for the year, with more than 7% growth in mobile services, which is very good news.
And just noting that, handset revenue coming from the sale of handsets and accessories, plus the revenue stream coming from interest related to the finance of those handsets, has really make a difference during the year, growing more than 14%. That is a very profitable business segment for the company. We have been implementing successful strategies to grow healthy in that segment, so that is really supporting our revenue base. And on top of that, we can also see clearly that the fixed strategy, mainly the growth we deployed in Chile, allow us to grow more than 6% during the year. And also, a relevant growth in other services, mainly related to wholesale, which is also improving the top line.
Same, same, when you see the quarter, compared on a yearly, year-to-year basis, you still see handsets and postpaid growing significantly, so we're very proud of that. And, for on the right-hand side, just to note that, in terms of share on revenues, and also in EBITDA margin, Peru is growing. Just remember that last year, Peru accounted for 30, 32, 33% of revenues. Now, it's already at 35, just supporting the growth of the group as a whole, and not much significant changes in the share for each country of B2C to B2B. B2B is still very small in Peru, 18% compared to 35% in Chile.
We expect to grow in that market in Peru, but still the whole of B2C is very relevant, especially in Peru, with 82%, and in Chile, given the growth of fixed, mobile is decreasing a little bit, but B2C is also very relevant for the whole share of our revenues in Chile. That hasn't changed in the margin because of the growth in fixed in Chile. We expect to grow, as I mentioned, in Peru, more in the B2B side in the coming years. So good news for the whole picture and top line, and the issue now is just to try to understand what is going on, more look on an organic basis in EBITDA and EBITDA margin.
You can see on the left-hand side, on the top of the chart, there we put three boxes, gray boxes, with a mobile margin from 2023, 2024, and 2025. That is only considering mobile, which is basically mobile service revenue, plus handsets revenues are considered. So we put aside everything that is related to fixed and digital business. So you can see that if we just look at, on a consolidated basis, the mobile business, EBITDA margins kind of have...
It was very stable in, during 2023 and 2024, with a slight decrease in 2025, which is mainly explained by the impact of the agreement we made with SERNAC, which is the local customer service, and is related to the price adjustment, that roughly it's a figure around $10 million that we have to consider as impacting revenues for the year. This is a one-off impact that affected 2025, and that is roughly 0.3 percentage point that are impacting these mobile margins. So if you put that aside, you would say that in the last three years, mobile margins on a consolidated have remained kind of stable.
But given that we are expanding in fixed, also, we are still trying to grow profitably in digital business, what really those two main areas are dragging our margin, our EBITDA margin down. But we know, and we have expressed that in previous meeting, that is something that we expect to be transitory. We expect already in 2020. This is two-year impacts, 2026 and 2027, growing in continue to grow in Chile with fiber. We will also start growing at the very end of 2026 in Peru, with the recent agreement with WIN in Peru.
So we will have until the middle of 2028, if you consider Peru, of growth in fixed, which is CapEx involved with the last mile connections and other interconnections that we have to include in as part of the investment needed to grow in that business. Plus the initial, because of the scale, negative impact in EBITDA of that growth period. We will expect that in Chile the negative drag of EBITDA will end by the end of 2027, but we still have Peru. So as a whole, we're expecting the normalized situation in middle of 2028, which means a positive EBITDA and still more than absorbing any CapEx related to the growth in fiber. Digital is a different story.
We're trying to improve the return in the next two years, also for the digital area. So we expect that just giving it some level of guidance in that way, we expect that not only in CapEx but also in EBITDA margin, we expect to have a normalized year by 2028. So we have two years, two and a half years of intensive CapEx and dragging of the EBITDA margin because of the growth in those two business, which we believe, especially fiber, are strategic to support also our growth and position in the mobile market. And when we consider not only the...
Even the standalone return on fixed is still positive, but we believe that also is, if we add the impact on lower churn, for example, mobile is very positive. So we will see that in the coming future, but it's worth noting that at least the mobile top line is growing, and also the margin, if we could take out the impact of SERNAC, is still almost in the same level of 2023. The good thing about the SERNAC agreement is that leaves us with a very clear view of how the coming price adjustment will occur. The processes that were needed to be fixed in the margin were, I mean, marginally, the way we deployed those price increases were already adjusted.
So we expect that if it's needed in the future, we'll have a clean and process of price adjustment without any issues. So we'll say that's kind of a good news because the future, in terms of price adjustment, will be shouldn't have any impact, such as the one we already saw in 2025. So that's related to EBITDA and EBITDA margin. I wanted to spend a little time on that area because I think it's relevant to understand why the margins, the red line you see, are going down in the year and the quarter, what you should expect, and what is the time for the leveling up those margins and going back to the normal, I would say.
And going also back to the right-hand side, which is also very relevant news about the net income impact. We, if you remember, we published a it was, I think, in November, we did the transaction, it was published that an explanation of the size of the impact. Basically, the net profit, although it was a good year and a good quarter, is impacted positively by the deferred taxes related to the transfer of shares that within the group, within Entel legal entities of the Chilean umbrella, I would say. And that generated deferred taxes that are accounted for as a whole, during the year, actually during the third quarter, fourth quarter.
So that if we take out those impacts, and that is depicted in the chart, our normal net profit after taxes line, instead of CLP 191 thousand million, would have been 108. Which is worth noting, the same figure as the net profit of the year 2024, also adjusted by extraordinary items. So if you just put the organic, I would say, we posted almost the same figure as last year, taking extraordinary items, and it's still a little bit higher than 2023. And for the quarter, if we consider just the organic net profit of the quarter, it's CLP 11 thousand million, which is below the last year figure, which was CLP 32 thousand million.
But as a whole, the year was very positive and in line with the last year. I know the question will come, so I'll answer right away. We expect normally the dividend distribution is, although we keep our dividend policy of up to 80% of the last year in net income, which is. I'm talking about the year 2025 net income. But normally the policy, and I'm sure the what will be sold by the shareholders' meeting at some point, will consider that the recurrent profits should be taken into account for the dividend distribution. So you shouldn't expect a very significant growth or triple in terms of dividends.
We should keep normals in terms of the size of the cash flow, similar to other years. That should be the normal situation, because putting aside the extraordinary item, we are kind of in a normal situation compared to 2024. So, just I want to clear that up because, that could be misleading. Anyways, the shareholders' meeting should decide that, but it's hopefully what should be considered in even in that meeting to be held in April. So just a quick review of the top line and EBITDA, and EBITDA margin separated by Chile and Peru. Where we see still growth in terms of revenues in Chile, I mentioned mainly related to mobile service and mainly related to postpaid, which is where we're growing in Chile, also where we're growing in Peru.
Commercial strategies are oriented to high-value customers, backed by, and we will see that later, a CapEx intensity, specifically in the areas where we get those mainly those customers, but all we're defending the rest of the market segmentation, in every country, Chile, Peru, is the same strategy. And also growing in handsets in Peru and Chile, which is very positive. That I mentioned already, that we believe that growth is pretty healthy in terms of we are expanding our sales of handset and financing in both countries to existing customers. Maybe we have some tailwind because of the normal and regular changes in new iPhones and Samsungs and new models that come with higher price tags.
So those higher, high-value handsets also imply that we are backing and financing the regular change. Christmas season is always relevant in both countries. This year was very good also in both countries, so that is helping to sustain the revenues and the EBITDA as a whole. And I already mentioned the growth, specifically in fixed in Chile. And same story in terms of margins, some decrease in EBITDA and EBITDA after leases in Chile, mainly explained by the expansion in fiber. And it's also worth noting that January, actually, this January 2026 in Chile, already started the implementation of the price increase that was communicated at the end of last year. So we should expect that impact to be accounted for during 2026.
So, that's good news also to try to expect to support the EBITDA margins in Chile while we grow marginally in terms of postpaid during the year. And also we will have the impact of further growth in fixed in Chile. So that will drag a little bit the EBITDA margin, but assure some more EBITDA generation during the year. And in Peru, very good news. It's really growing, not only in terms of revenue, but you can see that we have been able to sustain the EBITDA margin above 25%, almost 26%, with a growth of 7% year-on-year on the EBITDA, and same in the quarter, which is very positive.
It's worth noting the growth in the last quarter, we believe that the going or the momentum we had in the last quarter will help us to grow in Peru during the next year. The year 2025 in Peru was a very strong competition from retail that was growing. Claro is always, always very competitive. Peru is a very competitive market, and we need to have very dynamic commercial strategies, so we expect that the next year will be a much positive year, but you never know in Peru. So we try to keep up in that very competitive market. Same in Chile. And that level of competition is also always translated to our share in mobile services and compared to the market share.
It's very relevant that when service share, service revenue share in mobile accounts for our market share, but reflects the pricing difference, and the pricing trend we have compared to ourselves and compared to the competition. So we have been able to sustain and grow in our share, related to the whole revenues of the industry. The rest of the players have mainly sustained their position, one of them decreasing a little bit. But we have been able to really keep our gap with the rest of the industry. In Chile, it's almost 19 percentage point. In Peru, we are below the market leader, but still at a much lower gap, which is still a significant difference, but it can be reached at some point. It's 15 percentage point.
But if you compare to the market share, which does not account for pricing difference, even in that case, the gap we have with the rest of the industry in Chile is almost 10 percentage points, and in Peru, we are much closer from the leader. It's almost seven points. So we need to tackle that in Peru, specifically, try to capture more pricing, more revenue of good quality, and try to narrow the gap with the leader in Peru. So in Chile, we're keeping the gap in both measures, and in Peru, we have to work on pricing, so try to narrow the gap in revenue share. And this is also reflected in the port out.
Still very we have the lowest port out compared to the rest of the industry, which is the blue line, 0.79, third quarter. Although it, our gap against the industry narrow a little bit during the year 2025, that was mainly related to the portability and biometric regulation changes, and so we expect that that should really during 2026 convert to the levels we saw in 2024. But that, that's the picture we have as of now, which is still very low port out, but with some narrow, narrowing compared to the rest of the industry. But in Peru, very different market in terms of...
There are also some regulations in issues like the anti-spam law, but still our port out gap is very close to the market, and it's different than in Chile, which is a really much more aggressive in terms of competition. So it's very hard to really get figures too different to the one we've seen, and we're trying to keep that. In terms of ARPU, Chile growing, sustaining the higher ARPU in the industry, 27% almost gap compared to the rest of the players. For the fourth quarter, 25, you see that we already are anticipating above CLP 10,000, this is Chilean pesos. Some growth compared to the last to the end of the year, but still very positive.
And in Peru, actually, given the even lower inflation, the competitive dynamics, the pressure in ARPU is very strong, so it's very hard to see any changes in ARPU, and you see very flat lines in the last several quarters. And for the fourth quarter, we just put the picture. We are a little bit above the end of the third quarter, with 6.3, which is some increase, and we expect to keep that in the future... And finally, in terms of the market, just to note that in Chile, we have this picture just for Chile, mobile data is really growing. That is, that's also very important.
You see Entel, the share of Entel, for every quarter is expanding, although the whole industry in terms of this is measured in petabytes per month, is growing. Entel is capturing a higher share of that, of that growth. This is worth noting because of the, of, of the CapEx intensity we'll review in the next slide. But before, just to note that the trend in Chile and Peru of our network is measured by the CEQ Index, which is the measure, basically, the, the quality of the network. We are growing. We're growing even faster than the rest of the industry in Chile.
We are really almost in the same spot compared to the rest of the industry in Peru, but keeping a good momentum with a very strong network and with points of presence, almost 8,000 in Chile, almost 6,000 in Peru and growing, specifically in Peru. Not only covered, but also with the quality of the network in certain specific areas. And we always put the spectrum disclosure, which is a very strong position in the spectrum, which assures our growth in the future. CapEx, this is also very relevant. This is total CapEx for 2024, 2025, and 2023.
We know that in 2025, even in 2024, we already were able to reduce by the end of the year, a little bit, the CapEx intensity, specifically in mobile, we because of the competitive dynamics that already showed at the end of 2024, exacerbated in 2025, we were able to post a 15.1% of revenues CapEx in total. You can see the, how the, how much Chile have really lowered the, the mobile CapEx and total CapEx is significant compared to 2023. We are almost in the tail, in the last part of the 4G/5G implementation in Chile, so that we should expect that to go down. While we are growing in Peru, in mobile, we increased already in 2024.
We increased a little bit less in 2025, but we expect 2026 will be more aggressive in Peru, in mobile. On top of that, we have still in Peru and Chile to grow in fiber. So in total, if you see the 15.1% CapEx to revenues in 2025, we have mentioned that we should expect during the period 2026 and 2027, in the range of 2-3 percentage points on top of that. So, we should be, I guess, in the range of 18-18 point something for a two-year period, going down and converging by the year 2028, into the range of 16.5 in that area, which, at the most, 17.
But will be really a two-year spike to the range of a little bit more than 18%, 18.5%, then going down to 16.5%. So I would use that as a guide for any cash flow projection, etcetera. Mm-hmm? Cash flow for the year, you can see the beginning cash of 174 thousand million pesos, ending with 249 thousand million pesos cash. Basically, a stronger EBITDA. We have some room compared to 2024 because we have some lower CapEx, positive working capital, even though we grew in enhanced financing, which typically requires additional working capital, very stable leases, IFRS 16.
So in terms of financing was basically neutral, but we have some more net financial cost compared to last year. Just so you know that those CLP 128 billion pesos of financial costs include CLP 44 billion pesos of the hedge of our exposure in Peru. So if you take that out, we still grew a little bit in net financial cost, but mainly because of our some lower investment base and interest income related from coming from that investment sources. So I would say in terms of the financial cost of interest expense, it's actually very similar to the previous year and actually lower because of the lower rate of refinancing. So pretty stable cash flow.
This is before, for sure, any other consideration, but still, we ended the year with a strong cash position, which also combined with the refinancing we did of the maturities we have in 2025, and we prepaid some of the 2026 bond. It allow us to really post a very strong net debt at the end of the year, very stable compared to the end of 2024. Our gross debt actually decreased at a certain extent, and with a net financial debt plus IFRS 16 to EBITDA ratio of 2.47, which is a little bit lower than the end of 2024. So this is good news.
We were able to keep and sustain our investment grade with all our rating agencies, so we believe that in terms of the financial, so we pose a very strong position. We feel comfortable with the refinancing we performed during the year, which leave us a very healthy room in the next two years. The next amortization that we have to worry about is 2028. We have time to do that, expecting very strong and good market conditions when we decide to do that. So this is very good news, I think, for our balance sheet and liquidity. And to finalize, just to repeat some of the things we already mentioned, both countries, Chile and Peru, you know, are, with four players, strongly competitive.
We face competition, and we have to be quick. We have to be really responsible and try to focus as our commercial strategy, where we can take the most significant return on that, maintain our EBITDA stable, but try to grow in the market segment where we see some room and good return. Also, growing in fixed in Peru and Chile, just to support the mobile business. We have to take advantage of the strong and better network we have built with the CapEx that we have performed during the last many years. Try to monetize that. In Peru, we have trying to do that. We have to advance on that. In Chile, we are already comfortable with the ARPU.
We are growing in ARPU, so we will continue, hopefully, to capture the more value in that area related to the top line. And fiber, as I mentioned, grow very significantly, trying to make it healthy, fast and healthy, in the market segments that really provide value for the company. I already mentioned the investment grade and the CapEx intensity. As I mentioned, two years of 2-3 percentage point at the most of spike, and then converging back to in the range of 16.5% for 2028. So that's a summary. I think it was a very good year, very challenging in both markets, in Chile, Peru. Significant changes in the players, in the market strategies.
We, as I mentioned, we have been trying to be very agile, anticipate the changes, and adjust our position and commercial strategies and financial strategies in that line, and I think we have been successful. So that's it from my part. Thank you.
Okay, thank you so much, Marcelo. Now, we are going to move into the questions that you may have. Please send us through the chat, and we will start answering. We have one question from Andrés Coello regarding the new direct-to-cell service with Starlink: Can you share some statistics regarding how many Entel customers have used the direct-to-cell service, and also how much you are charging for the service?
We have the figures. We have very recent figures, and I think that we need more time, Andrés.
Mm-hmm.
For example, we were analyzing, and this is out of the oven-
Mm
... figures related to we just have some relevant events in Chile related to wildfires in the south, and it's very relevant, the growth and the usage that we saw in those areas that are affected by the wildfire, while the regular connectivity was not working in certain areas. So, we have the statistic. We cannot share the, share them right now. At some time in the future, we might share that, for sure, but it's really, it's, we are in the first weeks of really capturing the data, trying to really deploy and make the service available for our customers. We are in the initial frictions that every handsets it has, is really connected or recognized by the networks.
There are so many challenges, given the differences between the operating system of the different handsets and how we connect that, those to our system to have the sat mode connected. So we, that's, it's, is working, it's advancing. Our customers are using the services, but it still need more work, so to have a really stabilized and full access to every customer in the coming few months, I would say.
Mm.
So at some point in time, we'll share those statistics. And in terms of pricing-
Mm
... we're not charging directly for, but we're monetizing that, and we also have the statistic in terms of the lower churn and higher... and capturing high-value customers that normally wouldn't be our customers if we didn't have the direct-to-cell service. So we are following those numbers... and we can also tie the monetization of the direct-to-cell service that in the case, as I mentioned, that customer that we know that are preferring us because of that, and the lower churn also can be measured. So, but we cannot provide figures at this point, but let me tell you in summary, that is very successful.
Very important for emergency cases like wildfires-
Yeah, for sure. I'm just talking about Chile.
Yeah.
And, I think in Peru, because of the lower depth of connectivity in remote areas, will be also a very relevant differentiator to our competition in Peru. And that differentiation will definitely imply a higher market capture of customers in those areas. But we will see that, I would say, during the first half of the year. We need to stabilize the operation of the system, and we will provide to the market for sure those figures as soon as possible.
Thank you, Marcelo. We have another question from Lívia: "On Chile mobile margin in the fourth quarter, a good reference for 2026. What element should be considered to think about the year? Can you talk about how are you seeing competition in this market?
Yeah. Yeah, I would use the... Just consider that there were some extraordinary impacts in the fourth quarter, but I would say, just know that it does not include the price increase that is being performed in January 2026. So I would be a little bit more optimistic and not use exactly the same fourth quarter mobile margin. That's for one. And the second part of the question was? You post an answer in your ads.
What about competition?
Can you talk about how you are seeing competi-? Ah, yeah.
Yeah.
Competition in Chile, I would say that if you see the slide where I show the revenue share in Chile and the market share, you would see definitely Claro, and you know, all know that since they got the 5G spectrum, they have been, and that's very obvious, they have been growing and being aggressive commercially just to use the new spectrum and the quality that it implies. So I would say that they have been the drivers in terms of competition during the year. The rest of the players, I would say more cautious. And if you see the market share, you will see the only line that really goes up during the year is the red one, and... But it doesn't mean that that growth is captured in pricing.
So you have to then look at the same chart in the left-hand side, which is the revenue share. And the revenue share, most lines are really flat and Entel is growing. That is also very another way to look at it, at the value that is captured after all the growth in terms of customer. Because you can lose customer, depending on the type of customers, in time, you can do efforts, but... So I would say it was a competitive year for the industry, for sure, Claro, and the situation with other players is different. So, and in Peru, as I mentioned, is always very competitive, Bitel is growing. It's similar to the situation with Claro. They got this new 5G spectrum.
They have been very aggressive, although we have been able, in Peru, it's worth noting, to grow in postpaid in more high-value customer, but we haven't been very successful at keeping up. Actually, we're decreasing a little bit in prepaid. So prepaid is where we need to put more effort. It's gonna be hard. We're not very good at prepaid in Peru, but at least we're trying to be very good in postpaid, which is the more value is. Mm-hmm.
Thank you. There's another question regarding fiber. You posted an acceleration in Chile Fiber to the Home adds. Can you elaborate on what are the new commercial actions implementing during the quarter? What are you expecting in terms of adds to 2026?
Yeah, that's a very good question, and the main strategy that we're implementing and pushing is convergence. Convergence mean tackle the customers that already customers in mobile, that, or just with one line, two or three lines as a family, and go to those customers, since we already have the whole footprint of On-net through the country, specifically in the main areas, also high-value areas, so we need to capture and have a good commercial proposal for our convergent customers. That is very important because the positive impact in churn, in mobile, is relevant. That's where we expect to capture a significant chunk of the profit on the return from the fixed expansion. But also, it has to do in being competitive in terms of the rest of the competition.
You can see in the newspapers, TV, social media, every day, all the players are really being aggressive with the combos of fixed plus fiber plus TV, different channel offering. So it's a very competitive market. We need to be competitive in terms of pricing, but also focusing on, on the right customer. Also, be cautious and try to manage the discounts. Typically, this industry, this business segment works a lot with transitory, temporary discounts, and we're trying to avoid what we call the bill shock. The bill shock is basically when you sell a customer with a 50% discount, and if you reverse the discount in the month six, the bill shock is very significant, and customers tend to leave. And if they leave, we lose the CapEx of the home connection.
So we're trying to soften that, having a more manageable discount rate, but also apply that in a more longer term. So there is not a bill shock that really hammers our growth, and that our growth is healthy and it's not fake. Because you can grow, and then if you lose those customers, then after the month six, just lose the CapEx. We need to avoid that. So those are two of our main, being cautious also with the customer quality in terms of churn and collectibility.
Uncollectible, voluntary or involuntary, which is a part of the churn, is very important, so we need to avoid bringing a customer that won't pay, or just will leave, or that we need to force them to leave because they are not paying. So those are the three levers I would say we all... We have been successful. We're growing again, and growing with very good margins and very low still, we can improve, much lower churn rate than the last year.
Thanks. There's another question regarding tax effects. Could you explain a little more the tax income of, for the fourth quarter? This was because Entel had a tax loss in a company that didn't generate revenue, and when you transferred that loss to an operational company, now you can recognize the tax asset? Or if different, what's the reason why those tax assets weren't recognized before?
Yeah, well, to explain this very simply, the origin of that deferred taxes is that you are bringing, I would say, or bringing to life a loss, an actual loss we have, and it was a relevant loss that we have in our business in Peru, in Entel Perú. That, since it was in two different countries, and given that the investment in Peru was mainly allocated in Entel S.A. Entel S.A. was the original investor in that company, and the situation here is the following: If you keep the situation as it is, you cannot use in Chile the losses you already had in the previous years in with your investment in Peru.
And if you go and see, Peru has posted its historical loss and also has a deferred tax that is accounting for those historical losses. But those losses could not be used in Chile because where the shares of Entel Perú were allocated in Chile.
So what happened at the, when this transaction that was made at market prices, basically, because there's a regulation that oversees that those transactions are made, and it's very, we're very cautious on that, having the right valuations and opinions from many areas, legal, tax, et cetera, several different, and all converges to the same idea, that we could. I mean, if the idea behind this was just to put an order, I would say, is to the actual way we perform business. Just to remember that the last many quarters, I was explaining why one quarter we have volatility in the tax line because the exchange rate, dollar, peso, went up or down, and that was impacting the value of our investment in Peru.
When quarter was up, we're losing, down, we're gaining in terms of taxes. Though, that volatility was not actually part of our business. It was just accounting, and it put volatility, and that's not the way we really manage our business. So what we did, we transferred the shares of Entel Perú to Entel Internacional, which is the entity which really is made for holding our international holdings. So that transfer, made at market price, what it makes in terms of tax- or tax-wise, is really rebirth the loss, the value of the loss we had in our investment in Perú and allow us to use that loss for future tax payments in Chile. So that's why it is, that's why it is accounted as a deferred tax.
The impact of that, accounting-wise, we recognize in the year that is generated, again, in the tax line, and in the reality, what should happen in the coming years is that we have a tax credit that will reduce, hopefully, our tax payments in the coming years, if any profit is generated, that we can be deducted with this deferred tax. The idea here is that normally it is valued, and we have projection that that deferred tax will be used, so we need to have profits to be used, and that was already part of the review that the auditors performed during the audit process of 2025.
So I don't know if I explained myself, but that's mainly the reason. It's just that we put order in the way we have allocated our investments just to make the organizational structure talk to the actual business and, well, how we perform our businesses. And that had an impact in the tax line and because of that, because it really makes it worth or noticeable a loss that now we can use. As any loss that you can use if you are in Chile, you have a loss one year, you can use that as a credit for coming years. This is the same, but it was not possible because of where those shares were located. It was not possible to use that, and this transaction just allows us to make use of that. That's the simple explanation.
Thank you, Marcelo.
It's not simple.
There's another question: "Congratulations for the results. We have been seeing numerous headlines around competition and consolidation in Chile. What are your expectations for consolidation in Chile in 2026? How do you expect the market to be impacted by a potential consolidation?
The answer is we don't know. We don't know, and there are still 4 players in both markets, in Peru and Chile, different ownership, every player really investing, improving their network. So what we are focusing really on the business as usual, trying to be leaders on that. You know that things in the headlines, but until anything is completed, I cannot comment on anything because really there's not clarity on what's gonna happen.
For sure, we have been really been very outspoken in, in the need or the benefits of having a more, stable profitability and, and ability to invest for in the long run, and that is, really captured, with the going from 4 to 3 players, which is experience that we have seen in different countries around the world. So there's nothing I can comment on that, for now.
Okay, and another question: some news regarding the Article 14 under discussion that would allow a partial spectrum migration from the mixed to mobile. How much CapEx could that imply?
Yeah, we are advancing on that, so we're kind of positive. That's not really very significant in terms of CapEx, because really you just reuse what we have. We might do some investment, but it's not very significant. I think we expect to have positive news pretty soon. That's the only thing I could comment on that.
Okay. Thank you, Marcelo. I think we are finishing our conference call. Thank you so much for everyone to be connected today. We can speak soon. If you have any other questions, please contact me, and thank you so much. Have a nice day.
Thank you.
Bye-bye.