Telecom Argentina SA (TEO) 2020 Q1 法說會逐字稿

Good morning. On behalf of Telecom Argentina, I would like to thank everybody for participating on this conference call. The participants on today's conference call are Roberto Nóbile, Chief Executive Officer; Gabriel Blasi, Chief Financial Officer; Fernando Balmaceda, Director of Investor Relations; and myself, Solange Barthe Dennin, Manager of Investor Relations.

The purpose of this call is to share with you the results of our first Q ending March 31, 2020. If you have not received our press release or presentation, you can call our Investor Relations office to request the documents or download them from the Investor Relations section of our website located at www.telecom.com.ar. The conference call and presentation is being broadcasted and can also be replayed through our investor website at institutional.telecom.com.

I would like to go over some safe harbor information and other details of the call. We would like to clarify that during the conference call and Q&A session, we will mention some forward-looking statements on Telecom's financial performance, plan, strategies and objectives. Such statements are subject to uncertainties that could cause Telecom's actual results and operations to differ materially. Such uncertainties include, but are not limited to, the expect of ongoing industry and economic regulation, possible changes in the demand for Telecom's products and services, the effect of potential changes in general market and/or economic conditions, and legislation and the impact of the outbreak of COVID-19 on the global economy and specifically on the economies of the countries in which we operate as well as our operations and financial performance.

Our press release dated May 14, 2020, a copy of which was included in the Form 6-K and sent to the SEC, describes certain factors that may affect any forward-looking statements that could be mentioned during this call. The company has reflected the effects of the inflation adjustment adopted by the Resolution 777/18 of the Comisión Nacional de Valores, CNV. We've established that the expression will be applied to the annual financial statements for intermediate and special periods ended as of and including December 31, 2019.

Accordingly, the reported figures concerning the FY '19 included the effect of the adoption of inflationary accounting in accordance with IAS 29.

In this presentation, we will also include figures in historical values, which are easier to understand. Our press release is complemented by our earning presentation. The audience should read the disclaimer contained on Slide 1 and 2 of the presentation. The agenda for today's conference call is explained on Slide 3 and includes our written and financial highlights. We will end the call with a Q&A session.

Now let me pass the call to Gabriel Blasi, our CFO, who will start with the presentation.

Good morning, everybody. Thank you, Solange. Moving to Slide 4. It shows an outlook of the company figures for the first quarter 2020. In the first 3 months of the year, Telecom's revenues totaled $974 million. Revenues measured in constant pesos decreased 4.5% year-to-year and 0.7% compared to last quarter. EBITDA totaled $342 million, implying a 35.1% EBITDA margin, growing in contact -- constant pesos, sorry, 2.5% year-over-year and 15.9% compared to last quarter.

Our mobile subscribers in Argentina amounted for 18.8 million, reducing 245,000 total clients when compared to the fourth quarter 2019, basically on prepaid subs due to seasonality at the beginning of the quarantine period that we will discuss later. On the other hand, we added 34,000 postpaid subscribers during the same period. Broadband and Pay TV clients also experienced slight reductions totaling around 4.1 million and 3.5 million, respectively. Fixed voice subscribers without considering IP telephone lines amounting to 3.1 million. Thanks to our successful commercial strategy focused on the bundling and upselling of our products, we currently have 1.7 million of convergent unique customers with 41% of our broadband customers having a mobile bundle.

Moving to Slide 5 shows the evolution of our service revenues. Service revenues totaled almost ARS 59.6 billion, decreasing 3.3% in real terms versus first quarter 2019, in a period where inflation reached to 48.3% year-over-year. The share of communication services in the national CPI is approximately 2.8%. Our revenue breakdown as of March 2020 keeps the same percentage share as before except for equipment sales, which were strongly impacted by a reduction in the consumption of durable goods but still with a positive margin. Mobile revenues, 37%; broadband revenues, 22%; Pay TV revenues, 21%; fixed telephony and data, 15%; equipment sales, 5%. Our main drivers of growth are explained on Slide 6.

As you can see from our performance in service revenue growth, we have been able to continue reducing the gap in inflation and real ARPU figures, which currently are around 5% below inflation while being able to keep steady our customer base. However, postpaid, mobile, broadband and our IP video platform called Flow are the main pillars of our business.

In the first quarter of 2020, postpaid subscribers accounted for 41% of the total customer base. The company has registered a positive subscriber inflow in this quarter reflecting our efforts to optimize the quality and capacity of our mobile network. As mentioned before, this segment has been growing steadily mainly due to our convergent offers to cable TV and Internet subscribers that were not mobile clients of the company before, showing a net result of 32,000 customers coming from our competition.

Mobile Internet usage has also increased with an average of more than 3.8 gigabytes per user per month. In addition, there has been an important growth in broadband speeds. 52% of total subs have speeds between 50 and 300 megabytes compared to 13% by the end of last year. On the other hand, our prepaid subs were down 2% due to seasonality when compared to the last quarter of 2019 and were also affected by the quarantine period. Our product Flow has delivered solid results. We have more than 1 million Flow boxes inside homes, thus advancing towards the objective of network digitalization. We keep on increasing the speed and capacity of our broadband customer base, leveraging on our strong FTTH network.

Now let me pass the call to Roberto Nóbile, our CEO, who will go over the following section.

Thank you, Gabriel, and hello to everyone. In Slide 7, we are describing a series of actions that we have taken due to COVID-19 in our processes and corporate governance. We have adopted the home office system for the majority of our staff. Telecom decided to implement the home office system before the local government imposed a mandatory lockdown. And in less than a week, more than 10,000 people were working from their homes. Telecom (inaudible) its employees in advance, and this was well received by all our workforce.

We have granted more than 10,000 notebooks to our employees. We are using Webex Teams and Microsoft Teams to connect amongst us with more than 3,000 simultaneous users online. We have reorganized the way our technical people work in terms of home visits and interventions on public roads in order to minimize the exposure of our technical staff, taking extreme sanitary measures to avoid spreading the virus.

Our call centers continue working under the home office system, attending more than 7,500 calls at the same time and more than 200,000 daily calls. All our main transformation programs such as SAP S/4, which we internally called 4UP; CRM, provisioning, billing, and collection for mobile and Quadplay-denominated fund, those programs are still in construction. The fund program is still in construction with Salesforce, Vlocity, IBM and Bluewolf, and all of them are moving forward normally. 4UP is going live at the beginning of July. And the third migration wave of more than 1.5 million mobile subs will be taking place by the end of this month in the fund program.

Regarding the company's corporate governance, Telecom's crisis committee was in place before the COVID-19 fully impacted Argentina. After COVID-19, the frequency of the committee's meetings was increased and medical specialists were integrated to the group.

We continued on Slide 8 with the main actions we have taken regarding customers and investors. COVID-19 accelerated the process of converting telecom into a pure digital company in a very short time frame. We have implemented several digital payment alternatives that were not in place prior to COVID-19, and we have also allowed our customers to solve their technical problems on a digital basis. Moreover, in order to guarantee our business continuity, we have reinforced our networks and systems to guarantee the performance and quality of all our services. All -- for example, all our network operation center is monitored and handled from home.

We have normally continued with our Investor Relations activity. We have done several digital meetings with shareholders and debt holders. Since international flights have been suspended, we will continue to do so. In addition, we will participate in any phone calls or virtual meetings arranged by financial institutions. On April 28, we have done our first shareholders' meeting on a virtual basis, including and inviting all shareholders to participate which has proved to be a success.

Moving to Slide 9. We present here some regulatory demand and solidarity actions we have taken in the context of the COVID-19. On March 1, 2020, Telecom increased its prices on an average of 10% to all the products. Due to COVID-19 and after a constructive dialogue with the government, we agreed to put on hold the increase of prices affecting the most vulnerable customers, reducing our basic fixed phone and prepaid mobile prices. We also agreed not to increase any of our prices during the months of April, May and June. Additionally, the Executive Power issued Decree No. 311/2020 on March 24, which determined for a certain group of clients defined therein, the temporary suspension of the interruption in case of nonpayment of fixed and mobile telephony, Internet and cable TV services, among others.

In the case of fixed or mobile telephony, Internet and cable TV services, companies will have to maintain a reduced service for a period of 180 calendar days and must inform the ENACOM the prices established for the reduced services. We're working to comply with the regulation and to provide said minimum services to our customers. This regulation would be in place until May 30 but could be postponed.

In addition, we took a series of actions of high social value in the context of the health emergency such as we are providing connectivity to 16 outpatient hospitals around the country and also to the government COVID-19 central hub located in Tecnópolis. We have increased the capacity of the telephone lines that are dedicated to receive calls related to COVID-19. In addition, we have also given connectivity free of charge to portable medical equipments donated by Unitec Blue Company.

We have granted 0 rating mobile data when accessing any content used in national and province educational sites as well as in the platform Seguimos Educando from the Ministry of Education. We're doing the same with Red Cross, other organizations and many hospitals and health centers around the country. An important number of our employees are working in a program that takes care of the elderly called Mayores Cuidados from the city of Buenos Aires as volunteers. We have also helped fundraising for Seamos Uno, a social program that supplies food to the lower-income population in the great Buenos Aires area. We are offering educational programs in our own website, www.nuestrolugar.com.ar, while our product Flow has more educational and entertainment content for all families. We have opened the OTT/IP video platform to all Cablevisión subs no matter the product they have. During the first month of quarantine in agreement with Fox, we freed up the access to Fox's premium content to all video subs.

In Slide 10, we can see some metrics regarding the evolution of data traffic due to COVID-19. The aggregated traffic of the network grew almost 50% in just 1 week after the quarantine was initiated. The company keeps on increasing capacity of the network according to customer demands. Cell capacity normally increases 40% to 50% per year and is usually deployed 1 year in advance. Thanks to our previous investments, the network could outperform the quarantine peak.

Traffic from our international connections grew more than 50%. We have been able to expand all our international Internet gateways by 40%. This represents approximately 20% of the content that our customers consume. And 80% of the data consumed by the households comes from servers that are hosted in our data centers. In these data centers, we have the contents of our video streaming platform Flow, together with the Netflix, Facebook and Google YouTube caching program -- platforms, which traffic has increased more than 45%.

In the broadband distribution network to homes, download traffic increased by 50% while upload, what we call upstream, traffic grew by 75% with peaks of 230.

Regarding mobile services network, voice traffic grew 50% mainly due to higher number of calls with a longer average duration. Data traffic grew by 20% on average, while in certain areas, mobile networks faced higher demand according to the poor quality of the household's broadband connection.

In Slide 11, we continue with the breakdown of traffic by service. Customers are making intensive use of connectivity. We have registered peaks of usage in apps related to videoconferences, social networks and entertainment. We can highlight that video calls and conference grew as a tool for working from home and recreational usage such as to connect with family and friends. WhatsApp has shown an outstanding increase. Voice calls through the mobile network are experiencing a higher usage and average duration per call. And leisure/entertainment content like video games, social networks and streaming, are rising at a very high speed.

I will now pass the call to Gabriel Blasi, who will go over our financial performance.

Thank you, Roberto. We will go over the impact that the business trends just described by Roberto generated in our financials. Turning to Slide 12. We have some remarks regarding the evolution of inflation. As of March 2020, the year-over-year increase in inflation has been 48.3%, while during the 3 first months of the year has been 7.8%. Regulated prices have increased 77.9% year-over-year and 5.2% during first quarter 2020, thus generating a decrease in the general inflation index. The breakdown that we are including shows that the most important weight, the index comes from food and beverages, transport and clothing, among other items. Furthermore, the share of communication services in the CPI amounts to approximately 2.8% being very low.

In Slide 13, we can see that for the first quarter of 2020, consolidated revenues on nominal terms grew 44%, reaching almost ARS 61 billion. When analyzing said figure adjusted by inflation, revenues amounted to almost ARS 63 billion, showing a decrease of 5% in real terms. The company has been trying to offset the inflation impact on our revenues and costs and an inflation as of March 31, 2020, amounting to 48.3%. Service revenues showed a 46% nominal increase, while mobile revenues grew more than 58% when comparing first quarter 2019 with first quarter 2020. EBITDA increased by 53% year-on-year in nominal terms, thus generating an EBITDA margin of 35.8%. EBITDA margin in real terms was 35.1%. The company performed well in terms of cost controls. Operating costs before G&A increased almost 8% in real terms versus the first quarter of 2019.

In Slide 14, we show the company's EBITDA and the impact of the deferred components of revenues and costs. There was a positive evolution of handset costs. And operating costs were lower in real terms as well as, for instance, operating efficiencies were done in programming and content costs. Administration costs also registered a good performance.

On the other hand, fees for services, maintenance and materials including commercial cost, increased above inflation. Fees for services increased as a result of higher cost of call centers, surveillance and cleaning, while maintenance and material cost decreased mainly due to an optimization in the consumption of materials, the final result being a 240 basis points increase in EBITDA in real terms when compared to first quarter 2020.

Let's move to Slide 15 where we can see that the company's operating income totaled almost ARS 5.8 billion. The EBIT decrease in constant measuring units is explained by an increase in D&A and disposal and impairment of these assets, which increased almost 10% in real terms year-on-year mainly due to an increase in D&A in real terms, operating margins reached 9% of consolidated revenues while in historical figures, the same margin has increased to 22% from 19% in first quarter 2019. Net income in first quarter 2020 increasing more than ARS 2.6 billion mainly reflecting the reduction in operating costs and a positive income from FX gains in the next financial results.

Now I'll pass the call to Fernando Balmaceda, our IR Director.

Okay. Thank you, Gabriel, so much. In Slide 17, you can see our cash flow generation when comparing the first quarter 2020 with the first quarter 2019. During the first quarter 2020, the operating free cash flow amounted to approximately $81 million. We had an additional working capital requirement due to salaries paid in advance and payments to vendors made in advance, thus explaining the reduction in our free cash flow when compared with the first quarter 2019.

Turning to Slide 18, we show our key figures for the last 12 months as of the quarter 2020 in constant measuring unit. Company's revenues amounted to more than ARS 222 billion (sic) [ARS 252 billion] while EBITDA amounted to almost ARS 84 billion. EBITDA margin was 33.1%. Gross debt amounted to ARS 171 billion as of March 2020. The company has been able to generate an important amount of cash and equivalents, having a net debt of ARS 134 billion and showing almost no variation in real peso terms when compared with December of 2019. Our net debt-to-EBITDA ratio was 1.6x.

Slide 19 shows the breakdown of our financial debt. Total outstanding debt as of March 2020 amounted to $2.6 billion. The company financing strategy has been to absorb their liquidity in pesos that we currently have in the local market. Despite tenors of between 30 to 90 days, interest rates have been decreased and makes sense for us to cancel dollar-denominated debt with peso debt.

Finally, in Slide 20, we summarize the latest financing transactions that took place during the first quarter of the year. In March, the company entered into the following transactions: One, a peso-denominated bilateral loan with Banco Macro for an amount equivalent to $62 million, which matures in September 2021. Two, a new disbursement from Finnvera credit facility, which amounted to $10.5 million and a new series of Nucleo notes, which was issued in guaranties, for $15.4 million equivalent, which matures in March 2025. In the first quarter of 2020, new overdrafts in pesos were closed for a total amount of $144 million equivalent.

Having concluded with the presentation and before going to the Q&A session, let me pass the call to Solange for a final remark.

Thank you, Fernando. With this, now we are more than pleased to answer any questions you may have. (Operator Instructions) We have a question from Rodrigo Villanueva from Merrill Lynch.

(technical difficulty)

Rodrigo, we can't hear you.

If not, we can follow with the following question, and we proceed again with you, okay? Okay. Here, we have some questions from Marcelo Santos from JPMorgan.

We have 2 questions. Would you please discuss the drivers behind the efficiency gains on personnel? Second, could you please provide more details on tariff increases executed during the quarter and the second quarter outlook. I repeat again. The second is would you provide more details on tariff increases executed during the quarter and the second quarter outlook?

Okay. Well, regarding efficiencies, they are not only efficiencies as of personnel but really the biggest part only, but all the efficiencies are more related to the company as a whole. Of course, this might be appreciated differently in different products, but it's part of the process of change that we have been starting the last 2 years by the very significant investment in systems. As part of that, remember that the company has almost completely deployed our central finance system. We are now in the following 2 months establishing the S/4 HANA for the whole company. We have also already deployed success factor for the management of personnel. Also, we have deployed Ariba, another facility related to the different effects of expenses or general expenses of the company. This is, remember, because of the SAP universe and the different applications. All that is allowing us to transform the process to more digital. We continue with that reengineering.

Second aspect which is relevant in terms of cost impact is that, if you might recall, on the operational side, it's very relevant the impact on the devaluation on the cost of the sites. As having the foreign exchange rate with a minor movement, this has helped in terms of keeping those costs more controlled.

Also, it's important to address a process of discussion with a programming related to the COVID situation that is going to impact in the near future, allowing to reduce that burden until the situation normalize. But most of the savings are related to the general operation of the company as part of the implementation of the different synergies that the company was devoted to establish.

Okay. This is Roberto. Just to add on what Gabriel was mentioning, we were already planning a difficult year for this year. So all the areas, all the directions we're already putting in place programs to cut off additional expenses. So this was part of our plan for this year, and we started right in January doing so. And we have been very, very careful on all the OpEx and also the CapEx as you have seen in the latest numbers for the quarter.

Going to the question #2, details on tariffs increase and second quarter outlook. The price increase was done in March 1. We -- as I mentioned, it was around 10% for -- it was 17% on mobile services and then 10% for all the fixed services, either video or broadband. Talking and dialoguing with the government especially after COVID-19 was initiated. We agree upon putting on hold the price increase for prepaid and also for fixed telephony. Those were the 2 products that we consider that were hitting or were harming or could harm vulnerable sectors of the society. And so we agree with the government and with the rest of the industry to put on hold those price increases, and that's it. The outlook for the second quarter will be no price increase because we have also agreed that during this emergency crisis, we will not increase price. That's the answer.

Okay. So we go to the following participants. So we have some question from Rodrigo Villanueva.

What he said: We have seen significant voice and data traffic increase across countries including Argentina. Have you been able to monetize it? Would you expect these traffic trends to continue once the COVID lockdowns are lifted? Then the...

(inaudible)

It's okay. No, no, this is from Rodrigo. These are the other ones from Rodrigo.

Okay. It's very difficult to monetize data traffic increase. Our products are built up on flat fees for data traffic. So that is something we cannot do. On the prepaid, we've seen that the quarantine has lowered the prepaid data consumption because people are locked down in their homes and they are not using their mobile services during the lockdown. So we will -- we see a lower data traffic on the prepaid side. And on the mobile, it's only 20% increase, and that's already included in the product itself. So we cannot do any data -- collect any data revenue out of it.

So the following questions we have received is from Santiago Petri.

What he wrote is: Could you please clarify your U.S. dollar debt maturities for 2020 and 2021? Is it domestic U.S. dollar debt or international domicile debt? Do you have any issues accessing U.S. dollar to service your debt? Would a sovereign default challenge your debt maturities in U.S. dollars?

Okay. Thank you, Santiago, for the question. Well, let's -- there are several details on it. The total debt of the company, as you may recall, is in the range of $2.6 billion. Most of the dollar debt is dollars outside Argentina, meaning we don't have a local debt in U.S. dollars at the moment. From the last part of last year up to now, the company -- the new debt of the company has been done over pesos. At present, about 12% of our total outstanding debt is nominated in pesos.

Regarding the ability to go to the market and buy the dollars necessary to repay our debt, we have no problem at all. We have been doing this for almost -- because we have several rollovers related to investments, acquisitions, to the continuing commercial obligations that the company has, the roaming, et cetera. And we haven't had any type of problem accessing the foreign exchange market to comply with our obligations.

Regarding the impact of the default on this capacity, well, this is, of course, it's a very difficult statement in terms of Telecom. We think that, of course, if the country defaulted -- default completely without having, at the same time, a conversation regarding the evolution of the sovereign debt, this may harm the liquidity of Banco Central in the medium run if no solution is achieved. But as far as conversations move forward and a solution is moving ahead. It should not be a problem for any of Argentine corporates. If the situation worsens, of course, not specifically for Telecom but for all the corporates in Argentina for any other one who might need to access to the foreign exchange market. I -- have I cleared all the aspects?

Yes.

Okay. Thank you very much.

Then the following question we have is from Sam Epee-Bounya.

He said: How will Telecom Argentina address its near-term maturities?

Okay. Well, thank you for the questions, Sam. Regarding -- yes, I think that also was included in Santiago's question and I didn't address it.

Regarding our profile of maturities, yes, at present, we have about near $1 billion of maturities next year composed of $460 million of the 2021 notes. And the rest are several payments of different banking obligations. We have different ways to address this maturity. Number one, as you may recall, the company has a liquidity reserve that was established with the purpose of different liability management that we tried to do during the last part of last year. And of course, we have intentions to pursue that if the market help us to do so.

Second aspect, we have issued, and I think that we didn't mention that in the period, an additional $150 million plus from IDB and $75 million of a local bond was the first time that Telecom went to the local market. All that took place in this period, showing that there is room -- or even in this environment, there is too room and space for issuing local capital market and use those resources to replace other debt.

Specifically speaking of the maturity of next year, we have several directions to go with that. One, of course, we continue to talk with the banks. As I mentioned, we have already issued $150 million from IDB and Fernando has mentioned $25 million of a new loan that was granted in the period in U.S. dollar from abroad.

But specifically referring to the big maturity, the capital market maturity, we are working towards 3 different directions: One is -- and of course, we will be more than happy to have your feedback in this. We have seen a room for a transaction now. We have been requesting for a transaction similar to the one that (inaudible) has done. Second -- I will say the second direction that we are working is just a pure exchange of the 2021 for a new bond. And the other one is in a different type of structure.

We continue, of course, to tap our different sources of additional funding. But the message is, of course, with the recovery -- or the partial recovery that Argentine assets has suffered in the last week, we have already issued a result, and probably we are going to move forward in the next days with another local transaction very likely if the market is there.

Okay. We have another question from Georgia Jordan from S&P Global Market Intelligence.

Would you please comment a little on the Paraguay fixed service operations and how they performed in first Q 2020?

Sure. Paraguay has deployed 8,000 blocks on FTTH last year. And we are planning to increase -- to double that size this year. We have already more than 70,000 broadband customers on our FTTH brand-new network. And we are growing at the pace of almost 10,000 new customers every month. This COVID-19 has been a very important moment for us because it allowed us to move forward and keep on growing because our service is much better than the -- our competitors and we can offer more bandwidth that our competitors do.

So it's a huge opportunity, and we are running the operation at full capacity. We can -- we move from 6,000 new customer per month to 10,000, and we're operating at full capacity. We don't have more manpower to keep on growing. But we are -- keep on growing at that pace.

The following questions are from [Dave Wenawule from Barrings].

What are the current plan to repay the 2021? If the bond market is not open, what are the options? Then the following question is when do plan next price increase and by how much? And then why a decline in subscribers in most segment? Is this expected to continue because of the weak macro? Low-end subscribers, which will get free services, what percent of total...

Regarding the debt, I think that most of the options, I have already commented on the prior question. Just to recall, we may use our liquidity. We may use local funding, both banks and the local capital market funding and also international funding from other sources that we continue to work on in spite of the -- and in the case the capital market is not there.

Fortunately, and I'm very, very straightforward on this, the market has been -- even in this situation has been -- a transaction has been always suitable for us. As you may know, the main issue here is the cost. Our total cost of debt is 6%, and we make a significant effort to keep it very low. Regarding in...

Price increase, no, no. We are discussing with the government a freezing in price increases. Right now, we have already agreed upon April, May and June with no price increase. We are still discussing that. The government wants to extend this to postpone this period. And we're still in the -- in conversations.

The real thing is that the economies is very difficult. It's going through difficult times. We don't know the extension of these crisis. If this -- if this is released by the end of June, we can probably see a possibility of recovering people going back to work and people starting to start receiving and collecting money, salaries so that it's -- we don't see right now a huge problem unless the crisis is extended. If the crisis goes for long, we will have more problems.

Today, we are collecting -- on April, we were able to collect 82% of the receivables. So actually, we have an impact in collections. For the most part, the impact was hit by the lockdown of the financial system, not only the banks but also the cash kiosks that will collect receivables for us. This has been resolved.

So now we are collecting that -- those receivables, but we are starting to face a new problem, which is that domestic households are running out of cash. So that's a new challenge that we have and something we are trying to tackle. The real thing is that we have and we will comply with the government decree. We will not cut services for people who won't be able to pay, but that service will be reduced to a minimum product. That minimum product will give the user the ability to connect, communicate and do some things but not -- will not be able to do everything that he used to do.

So we believe that depending on the extension of the crisis, we need to be close to our customers. It's much easier to recover a customer that is with us than need to spend a lot of money trying to recover a customer that has already left. So we will take a very close look at customer performance. And we really need to go through all these pandemic crisis.

So now we Alejandra Aranda.

Roberto, this is a question for you. You just talked about people seeing their income reduce significantly. Could you comment a little bit on the trends that we're seeing in terms of people looking to switch to cheaper products, cutting back on the expenditures that they make on premium products? Have you been seeing any of those things that could affect the second Q?

Thank you, Alejandra. No, we haven't seen anything like that. The good thing is that people are spending much less in a lot of things trying to keep their expenditures on food and our service. So that's the good thing. But depending on the extension of the crisis, that could be a problem, and we need to take a look at that. As of today, we don't see changes in our customer base from premium packages to low-end packages. We don't see that, but we are very, very aware and taking a close look at any change in their behavior.

Okay. And the second question that I have is in terms of broadband. I've noticed that in the past 2 quarters, there was a decline on the number of subscribers. Could you open the number a little bit and let me know if that was mostly on old clients coming from Arnet? Are those clients of Fibertel? Could you give us more clarity on that trend?

Yes. Remember that we have our HFC customers, HFC, cable modems, Fibertel and our old copper network, which is the ADSL technology and was the old Arnet, what we call fiber to light. Unfortunately, we are losing some customers on the copper network. The copper network is not overlapped necessarily to Fibertel. Where we are overlapped, we are transferring those customers to the preferred network. In this case, it's either HFC or FTTH. But where we have no overlap, we might lose customers because they are getting 3 megabytes per second service. So any competitor could take it away. We are seeing a reduction in ADSL technology and an increase in FTTH and HFC.

Okay. Can I ask a last question? I don't know if you said this because at one point, my connection was very bad. But could you remind me the amount of CapEx for this year? And how much that would probably decrease because of COVID?

Okay. We were expecting a CapEx for total year of $500 million. That was half the CapEx we did last year and less than we have from the previous year. So actually was a very restrictive CapEx because, as I mentioned before, we were expecting a difficult year. So everything was already there.

In February and the beginning of March, we were planning to increase our CapEx in $100 million, from $500 million to $600 million, and that was because the quarter was better than what we were expecting. That additional CapEx has been put on hold again. So our plan for this year, we are still keeping the $500 million CapEx. That's the -- that's not affecting the major programs, transformational programs that we are running, which has to be with IT, full management on the OSS platforms. I mean we are trying to keep all the transformation programs alive and doing the least that we can do on the other side.

There is a following question from Rodrigo Villanueva.

He said: The commitment with the government not to raise prices in second quarter currently include any type of potential benefit on the OpEx side?

And the second question that we have is it's already -- I believe that has just been covered because he says: Would you please share with us your CapEx target for 2020? So far this year, TEO has invested 16% of sales would be reasonable to assume for 2020, both in absolute and relative terms.

The CapEx, we have...

(foreign language) yes.

The third one. Rodrigo, the -- what we are discussing with the government will be released probably this week. So I will not make any comment on that. You will see it tomorrow probably.

So the following question is from Sam Epee-Bounya.

What he says: Sorry for the pronunciation. From your cash interest payment in first Q '20 and first Q '19, also in your presentation, there are 2 CapEx figures, ARS 8.7 billion, Page 17, and ARS 9,985 million on Page 16. What is the difference between the 2 CapEx figure?

I think that -- thank you for the question. I think that the difference is related to IFRS accounting.

That's right.

And regarding the confirm of the payment of the interest, yes, of course. If we have the legal ability to pay the company base.

Definitely more specific and really on the first question, the difference are the right-of-use that according to IFRS are the ones that are not considered, therefore, a CapEx in -- under IFRS.

Please, Solange, repeat the second part of the question. I don't know if I understood it properly.

Would you please confirm your cash interest payment in first Q '20 and first Q '19?

Okay. The amount, I will give it.

So we will continue and get back to you while we look for that figure. The follow-on question?

Basically, the way to calculate it, as Gabriel mentioned, we have a 60% per annum interest payments. So you can pro rata that during -- that number during the year. Our cost of debt, on average, is between 6% and 6.5%. Yes, the easy way to do it is to do the pro rata of the number in terms of our net debt or gross debt.

We will give you this today, the exact figure.

Then we have a following question from Marcelo Santos.

You mentioned that you were able to collect 82% of receivables from April. How did that look like in a normalized period such as last April?

I think that Roberto already mentioned, the -- to give you some color on this, during the first week of the quarantine, remember that Argentina has a very significant part of the economy that moves its cash. What I mean cash, I mean bank notes and the physical payment. So the first week of the quarantine with the people unable to go to these different payment sites or to get the physical cash, the amount of cash collected decreased very significantly.

Immediately, the company prepared a lot of measures, including we developed a microsite with the ability to fully pay those -- to fully pay with other means. Just to give you some color, we transferred -- we were able to transfer in 15 days, 1 million customers who historically paid always physically to digital payments. Part of that also was helped by the normalization in terms of different services and different possibilities during the quarantine were open and normalized between them, the banking services. The people who save also go to the bank requesting a prior time schedule to go. And all the effect that -- all those effects together make a significant reduction from that original situation.

At present, this is yesterday, the amount of life between the collection, depending on type of service, depending on the cycle might be lower up to a 5%. As Roberto mentioned, what you put on top of this, the effect of the delay because of trade issues, it might go up until allowed to figure, meaning 10%, 12%. We are looking at this very carefully and very detailed. It's difficult to give you a more precise outlook because we foresee some credit problems. Just to give you some color, 50% of our customers always pay after a claim from the company after they got in 30 days' delay. But as today, we cannot cut any service but bring them to a more reduced service.

There is no history to give you more color on this. But we think that the company -- although this is a problem that, of course, might affect because of the change in -- the change of payment of the whole economy might affect the whole economy as a whole, and it has been addressed by the government by pouring money in different aspects, we expect some increase in the working capital required to move forward. It's difficult to give you some precise figure on this. Probably by the end of 6 months, we will have the first 30 days. But still we need -- because of the lack of delinquency rates that generally have like 60 to 90 days, we still need at least a couple of months to have a deeper view or most precise view on this. But at the same time, we are doing -- generating all the adjustment in our processes to keep a strong track on this and to guarantee the best collection that we can with the limitations that we have explained.

We have a following question from Sam also, and he says: Can you confirm your current liquidity position? And how much of your cash is [outside]?

Well, I will say that we haven't varied that from the last position that we mentioned. It's already stated in our financial statements. I just will say that we have add to our historical cash position, I will say about near 100 additional equivalent dollars but in pesos locally, which are held locally in what is called (foreign language). This is short-term state of currency.

Well, unless we have another question? So we don't have more further questions. So what -- we will conclude this call. Please, if you have any further questions, please contact us. And we will be more happy to answer any doubts you might have, and have a nice day.

Thank you very much.

Thank you very much.

Bye.