Telecom Argentina SA (TEO) 2007 Q3 法說會逐字稿

Good day, everyone, and welcome to the Telecom Argentina third quarter 2007 earnings conference call. Today's call is being recorded.

Participating on today's call we have Valerio Cavallo, Chief Financial Officer, and Pedro Insussarry, Financial Planning and Investor Relations Manager. At this time, I'll turn the call over to Mr. Valerio Cavallo. Please go ahead, sir.

Good morning. I would like to thank you, everybody, for participating on this conference call. As an introduction, I would like to go over some highlights of the quarter.

As you are able to see in the press release distributed yesterday, during the nine-month period ended September 30, 2007, Telecom Group continued to expand its operations, revenues, and profitability. We were able to achieve a strong consolidated revenue expansion, mainly fueled by the increase of our cellular service, despite operating in a very competitive environment, and by the growth of our internet business, as our ADSL connections continue to increase at an impressive pace, confirming the preference of our customers for our portfolio of services. We would like to note that this revenue increase not only has resulted in the growth of our operating profit before depreciation and amortization but also the recovery of our margins of almost 200 basis points from 33% to 35%, as we were able to achieve a higher level of profitability in the cellular business. Finally, the environment of higher revenues and the improved profitability levels has contributed to the quarter significant increase in net income.

During the last quarter, we continued to unfold our objective of serving our customers with the most advanced technological solutions for their demand for telecommunication services. In particular, Personal launched 3G services in Buenos Aires and has extended the coverage to other important cities of Argentina, like Cordoba and Rosario. Meanwhile, Telecom Argentina has introduced the highest ADSL speed in the market by launching the [20 megabyte product] and has recently launched the SMS service in the fixed-line service as a first step to a wide variety of new telecommunications services that we plan to introduce in the near future.

After this introduction, I would like to pass the call to Pedro Insussarry, who will go into the specifics of the results that we have announced yesterday. Before the Q&A session, I will close our presentation with some final remarks.

Thank you. Before we continue with the conference call, we'd like to clarify that during the conference call and Q&A session, we may produce certain forward-looking statements about Telecom's future performance, plans, strategies, and targets. Such statements are subject to uncertainty that could cause Telecom actual results and operations to differ materially. Such uncertainties include, but are not limited to, the effects of public emergency law and complementary regulation; the effects of ongoing industry and economic regulation; possible changes in the demand for Telecom products and services; and the effects more general factors, such as changes in general market or economic conditions, in legislation, or in regulation. Our press release dated November 8, 2007, a copy of which will be included in our Form 6-K report furnished to the SEC describes certain factors that may affect any forward-looking statements that we may produce during this session. Furthermore, we ask the audience of this conference call to read the disclaimer clause contained in slide 1 of the presentation.

As usual, we would like to remind you-- For all those who have not received our press release nor our presentation, you can call our office or download them from the investor relations section of our Website at www.telecom.ar. Additionally, this conference call is being broadcasted through the Webcast feature available in said section and can also be replayed through this same feature.

Going to today's agenda of the conference call, as seen in slide 2, it is to go over the general overview of the business of the Telecom Group. Following, we'll provide some data on the performance of our fixed-line operations, including the internet and data transmission businesses. And, finally, we will review the evolution of our cellular business.

Going to slide 3 of the presentation, we're summarizing the most relevant issues of the market and the regulatory environment. The Argentine economy maintains its strong GDP expansion, while CPI inflation remains the most important issue on the agenda of the newly elected authorities.

The cellular market reached a penetration of over 90%. Personal continues to work under its main strategic definition - innovation, technology, quality, and customer care. Furthermore, Personal continues to develop its CapEx plans, aimed at the strengthening our network facilities, such as the launch and expansion of its 3G services. The fixed-line business continued to benefit from the strong demand for broadband services, while the traditional voice business shows single-digit growth.

In terms of the competitive landscape, no major changes took place during the recent quarters.

Going to slide 4, we can see that the Telecom Group delivered 24% net revenue growth, mainly fueled by the cellular telephony that grew by 37%, data and internet by 19%, and fixed telephony by 5%. In addition, a 30% growth rate was registered in terms of operating profit before depreciation and amortization, reaching almost ARS2.3 billion.

In terms of its margins, the Company registered a 35% margin in the nine-month period compared to 33% registered one year ago.

Net income for the nine-month period reached ARS614 million, which compares to ARS164 million registered the previous year, showing a positive trend, even after considering the extraordinary gain related to the Publicom transaction that accounted for ARS102 million of earnings. The Group continues to improve its financial position, showing healthy ratios of debt to OPBDA, or operating profit before depreciation, and operating profit before depreciation to net interest.

Finally, our net financial debt decreased by approximately ARS1.3 billion, or 33%, since September 2006, mainly due to the strong cash flow generation of the Group.

Going to slide 5, we're showing the very positive trend of our consolidated revenues. The Telecom Group is rapidly transitioning toward the Company operating with a higher participation of competitive and deregulated services. Particularly, as of the nine-month period, the mobile business accounted for 63% of our consolidated revenues and 60% of our OPBDA.

Going to slide 6, we can see that CapEx figures for the three quarters of 2007 reached an amount of ARS981 million, or the equivalent of $316 million. In terms of the different companies, 56% (inaudible) to Telecom Argentina, 39% to Telecom Personal, and 5% to Nucleo. Total CapEx represented approximately 15% of net consolidated revenues.

The main CapEx projects in the fixed-line business include incremental ADSL coverage and bandwidth; the expansion of the next-generation network; new connections; a general technological upgrade, mainly in IT; and the maintenance of the network. Regarding the cellular business in Argentina, we continue expanding our network in the south in order to deal with the increased volume of traffic generated by new customers, increasing capacity in the (inaudible) and northern region of the country, as well as upgrading the network in IP support infrastructure, while offering the most innovative, value-added services.

Going to slide 8, we can see the main items of the income statement of Telecom Argentina on an unconsolidated basis. In the nine-month period ended September 2007, revenues grew by ARS261 million, or 10%, as compared to the same period of 2006, totaling ARS2.8 billion. The most dynamic segments were internet and interconnection revenues coming from the cellular industry.

Regarding costs, OpEx rose by ARS228 million, or 18%, due to the general price increases affecting the overall cost structure. Despite pressures on the cost side of the business, Telecom managed to marginally increase its operating profit before depreciation and amortization in nominal terms, by 3% to ARS1.2 billion.

In slide 9, we note that the fixed-lines and service continues to increase at the rate of approximately 3%. This growth is the consequence of intense commercial activity, as well as the positive macroeconomic scenario. Even in the context of our wireless market approaching maturity in terms of penetration, Telecom still finds opportunities to expand its fixed-line operations. Total traffic volume remains basically flat, while no modifications have been implemented in terms of regulated tariffs. For the nine-month period of 2007, the average revenue per fixed-line customer, including only voice-related services, remained stable at ARS39 per month.

In slide 10, we can see the evolution of the internet business. Total ADSL customers were 677,000, reaching a penetration of approximately 16% of total lines in service. Telecom recently launched our next 20 megabyte product, thus confirming its leadership in this fast-growing business. Total ISP customers increased due to the rapid growth of ADSL connections. Broadband average revenue per user reached ARS54 per month. The decline in price evidenced in the recent quarters is basically due to the different plans introduced by Telecom to promote the service.

With respect to the cellular business, in slide 12, you can see the unconsolidated income statement for Telecom Personal, including only the operation in Argentina. Total revenues grew by ARS1.1 billion, or 38%, to approximately ARS3.8 billion. This increase is basically due to higher service revenues that grew 43%, while handset sales grew by 9%.

Operating costs increased by ARS573 million, or 24%. Higher expenses are based on higher network access costs, labor costs, and taxes, while commercial expenses grew at a rate below the average cost structure, benefiting from the lower costs associated to inferior levels of gross additions and to the fact that the migration process from TDMA to GSM is in its final phase.

Furthermore, Telecom Personal in Argentina delivered a 114% increase in its OPBDA to ARS904 million in the first nine months of the current fiscal year. It is important to highlight that OPBDA represented approximately 24% of revenues, up from 15% one year ago. Telecom Personal confirms the expectations of a strong recovery in terms of profitability margins. Despite the growth phase in the cellular business in Argentina, both in terms of CapEx and commercial activities, Telecom Personal managed to generate important levels of cash flow, therefore improving its financial position. Finally, net income for Personal amounted to ARS260 million in the period, up from ARS44 million registered one year ago.

We can see in slide 13 positive evolution of the subscriber base in Argentina. As of September 2007, customers of Telecom Personal increased by 2.5 million, or 32%, year over year. GSM subscribers represented 96% of the subscriber base by the end of the quarter.

Telecom Personal continues to work towards the consolidation of its market position in the northern and Buenos Aires regions and to gain market share in the southern region. Moreover, despite the high penetration of the cellular service, we continue to gain postpaid customers by focusing on specific market segments, such as the small and medium-sized enterprises.

Going to slide 14, we can note that, even considering the mentioned trend in subscriber growth, Telecom Personal succeeded in its objectives of maintaining ARPU stability. Finally, as an example of the incremental participation of value-added services, outgoing SMS traffic increased by 65% when compared with the nine-month period of 2006.

Going to slide 15, we can see the evolution of the gross additions and subscriber acquisition and retention costs. It is important to highlight that SAC and SRC costs continue to decline as a percentage of revenues, allowing an improvement in the OPBDA margins. In particular, the process of migrating TDMA customers to GSM is almost completed, with a consequent savings. Gross additions amounted to approximately 1.2 million, or 17% less than those registered in the same period the previous fiscal year. In terms of disconnections, as of third quarter of 2007, Personal started to apply a more restrictive disconnection policy that, in turn, will permit to implement focused retention actions and concentrate in retaining customers as an added value to the Company.

Finally, we see in slide 16 that our subsidiary Nucleo, which operates in Paraguay, showed an increase in revenues, nominated in pesos, of 21%, while maintaining a healthy level of OPBDA margin of 37% in a very competitive market and even in the context of a very strong subscriber growth of 58%. Nucleo operations continue to deliver healthy levels of cash flow that permit it the payments of dividends to its shareholders.

In having concluded with the presentation, let me pass the call back to Valerio Cavallo for final remarks.

Thanks. As a conclusion of what we have been discussing during this conference call, you can see that our operations continue to evolve very positively, with sustained revenue growth, healthy cash flow generation, and a consolidated market position. In particular, we have achieved a vigorous operating profit before depreciation and amortization margin recovery in the wireless business and maintained our operating profit before depreciation and amortization, in nominal terms, in the fixed-line business. These results are in line with our objectives of expanding our cellular business, increasing our market share, and strengthening our technological leadership. It's important to mention that, according to our estimates, Telecom Personal has achieved a revenue growth above the average of the market, thanks to its brand positioning and the ARPU performance that, in turn, has resulted in an increase of our revenue share of the Argentine market.

With regard to the internet business, we have explained we continue to upgrade our fixed-line customers to new ADSL product, improving our broadband portfolio, with excellent results in terms of new subscribers and market share evolution.

Looking into the future, our expectations are that are cellular margins will continue to improve, and we expect to save costs in the scenario where the penetration in Argentina reaches maturity. (Inaudible) profitability in the last quarter of the year will eventually be impacted by seasonal factors related to the increase in commercial and marketing activities in the wireless business.

In terms of our fixed-line sector, our goal is to maintain operating profit before depreciation and amortization in nominal terms, leveraging the revenue growth opportunities coming from our broadband operations that should offset inflationary and wage-related pressures in our corporate structure.

In terms of CapEx, we will continue investing in the latest available technologies, such as the announced investments in an information highway in the fixed-line business and the introduction of the most innovative services in the cellular business, such as the already-mentioned 3G services. Overall CapEx will continue in the vicinity of 15% of net revenues.

Our main expectations for 2008, if the macro environment remains supportive, include strong revenue growth with some deceleration when compared to 2007; sustaining our consolidated operating profit before depreciation and amortization margins; and some increases in CapEx, mainly allocated to the fixed-line network.

Now, having concluded the presentation, we are more than pleased to answer any questions you may have. Thank you.

(OPERATOR INSTRUCTIONS). We'll take our first question from Miguel Garcia with Deutsche Bank.

My question is regarding the wireless churn, which has been growing every quarter this year. Is this because of the high percentage of prepaid subscribers, or it's a policy that you're implementing that is disconnecting more postpaid subscribers maybe?

And, also, I wanted to inquire about the aggressiveness of Telefonica in the wireless market. We understand, in other markets, they've been increasing their aggressiveness, especially in the postpaid segment. I wanted to know what has been their strategy this past quarter.

And, lastly, in terms of CapEx, it looked a little high this past quarter. Is it marking a trend, or you are maintaining your guidance for this year?

Okay, Miguel, I'll take your three questions. Regarding the wireless churn, although the high growth of the wireless market is also, I would say-- also has an impact on the level of churn, one of the most distinctive factors that we've seen in the quarter is that we changed the disconnection policy of our prepaid customers. The new policy is basically we look into a period of eight months where the customer has to recharge. And, on a trailing four-month average, the customer has to generate at least ARS0.5 of ARPU. If the customer doesn't comply with these two conditions, the customer is basically disconnected. When we talk about ARPU, obviously, that's both incoming and outgoing traffic. That has contributed to-- At least, it helps some cleanup of our customer base and to focus, as what we mentioned during the speech-- to focus on the valuable customers. And, basically, what we had done during the quarter is to disconnect customers that do not comply with these two rules. In addition, we've also accelerated the migration of TDMA to GSM. This also contributed to additional disconnections.

Going to your second question, I would say the competitive status of the market hasn't changed. It continues to be a very, very competitive market coming from our two main competitors, basically [CTI] and Movistar. In the case of Movistar, Movistar, approximately three to four months ago, launched what they call [spoken in Spanish]. It's basically a plan that offers (inaudible) discounts of 50%, basically, of the tariff. And we've also launched similar plans. And, again, the market continues to be very competitive, despite that we're already at the level of over 90% penetration.

Finally, regarding CapEx, we are within our budget. We've always mentioned that our CapEx would be in the vicinity of 15%. We continue with a budget of approximately [$440 million] of CapEx this year, predominantly coming from our being allocated to the wireless business. And next year, obviously, the nominal amount of CapEx will increase, slightly above $500 million. But it will be within, again, the vicinity of 15%, as what Valerio mentioned in his final remarks.

Just to clarify, the disconnection policy for prepaid subscribers is that they have to generate ARS0.5 of ARPU, in average, within four months.

Exactly.

Every month during the last four months.

In every month.

Every month.

It's a monthly ARPU.

It's at least. And just a remark; I believe it's important. It's okay that there is a relatively high churn. What is important to take into account is that the effect on the revenues doesn't decrease because, in fact, the churn is focused in the customers of a very low ARPU. So we don't suffer, as the results demonstrate, any effect on the growth of the Company.

Yes, of course. Now, can you give us an update of your guidance for net subscribers or net adds for the year, or yearend subscribers in Argentina?

We believe that, at the end of the year, it will be around 10.6 million customers.

Okay. Thank you.

We'll take our next question from Ruth Mazzoni with Standard New York Securities.

I was wondering-- Could you please comment on what's going on with Telefonica and America Mobile and the competition - exactly where we stand with what it is that the government is going to do? I'm a little confused by who's decided that they need to investigate the situation.

Ruth, can you repeat your question, maybe clarifying your interest or concern?

Okay. Originally, it was that-- If I'm correct about this, it was the antimonopoly commission that was going to be looking into the Telefonica acquisition of the shares in Telecom Italia. And then, subsequently, it seemed as though the executive was actually going to be investigating that. And then there have been stories that Telmex, America Mobile, or CTI wants some sort of confirmation that Telefonica isn't violating the rules. So I wonder - what's the next step? Who is investigating the matter now, and which are the rules that they are investigating?

As already known, the change in the control of Olimpia, the company that owns 18% of the equity of Telecom Italia, was analyzed in Telecom Argentina, particularly regarding the effect on the antitrust (inaudible) de Defensa de la Competencia. And different opinions were raised within the board, and the different opinions were informed to the CNV, the Comision Nacional de Valores in Buenos Aires and to the [SEC]. Taking into account this different opinion and the acting by itself, the Comision Nacional de Defensa de la Competencia started (inaudible) with the objective of determining if the operation in Italy has an impact on the competition in the Argentine market as far as the regulatory rules are concerned.

Which regulatory rules? The telecom regulation rules? Is that--? Or the antimonopoly rules?

Both.

Both. Okay. And who's investigating it, then?

The antitrust commission, Ruth.

Okay.

So the Comision Nacional de Defensa de la Competencia issued a solution establishing a mechanism of verification control and monitoring in Telecom Argentina during two months and defined that [two officials of the Valores] would act in order to protect the public interest of the market regarding the competition and the customers. Finally, on October 25, Telefonica issued a press release, declaring that Telefonica (inaudible) [Generali, Intesa Sanpaolo, Mediobanca] [bought] the forward capital of Olimpia through an Italian company denominated [Telco] that holds a percent - a 23.6% stake in the equity of Telecom Italia with voting rights. So the indirect presence of Telefonica in the ownership structure of Telecom Argentina generated different opinions in the board of directors in Telecom Argentina. And, between these different opinions, there is one that points out that Telefonica will have substantial indirect influence in Telecom Argentina. And the opinion points out that this presence implies a violation to the current (inaudible) in telecommunication framework.

Yesterday, the board of Telecom Argentina decided to take the following measures - to send a communication to the Comision Nacional de Defensa de la Competencia in order to clarify that Telecom Argentina doesn't have any intervention in the operation. And, taking into account that Telecom Argentina is a public company with an important percentage of its shares trading in Bolsa de Comercio de Buenos Aires and the New York Stock Exchange, Telecom Argentina will request to the Comision Nacional de la Competencia that, in case it decided to take some measures with regard to the operation, in no case this measure should affect Telecom Argentina, taking into account that Telecom Argentina doesn't have any role in the operation. And similar communications will be sent to the Secretaria de Comunicaciones-- the Comision Nacional de Comunicaciones-- with the same objective.

I thought that you had already done that. I thought that that had been sort of announced and reiterated in June or May. That doesn't really seem like news.

What I was mentioning is the decision that yesterday the board of Telecom Argentina decided to adopt. And the last measure that our board decided to take is to send a communication to Telefonica Espana and to Telefonica Argentina in order to point out that, if Telecom Argentina was ever to suffer any kind of damage resulting from this operation, Telecom Argentina could decide to start any necessary legal action in order to be fully restored.

And who would determine that some harm had been done?

Well, basically, that decision will be something that the board would have to take.

It will depend on the eventual possible decision that the authorities in Argentina could take.

Okay. And when do you expect the authorities--? I guess maybe I'm correct, then, that it's going to be the antitrust commission and the telecom regulators that-- both of them are going to have to issue decisions. Right?

Yes.

Okay. And what do you think the timing of that is?

We don't know.

Any day.

Well, at least during the two-month period that started approximately two weeks ago, if I'm not mistaken. During a two-month period, the observers will be looking into certain documentation and will be present at the company. So, at least, my guess is during these two months something will happen. Nothing will happen. Basically, the antitrust commission will continue looking into the case.

Okay.

We'll take our next question from Lars Konrad with Merrill Lynch.

I have a follow-on question from the question asked previously regarding the wireless subscriber base. By the end of this year, you mentioned that you expected to reach 10.6 billion. The question is - what is your expectation for yearend 2008? That's my first question.

And the second question would be regarding your ARPU in third quarter. ARPU grew by ARS2 compared to last quarter. My question would be - what could we expect in terms of ARPU trends in the next quarters? Thank you.

Okay, in terms of our expectations of subs for Argentina, we're expecting, in a market that will be, well, above the 100% penetration-- We're expecting that we will reach approximately 12 million subs by the end of 2008. And, in terms of ARPU evolution, we're expecting that ARPU should increase around 4%, on average, 2007 compared to our average 2008.

Okay. Thank you.

We'll take our next question from Rizwan Ali with Deutsche Bank.

My question is regarding the margin for the wireless business. You said that Nucleo had a 37% EBITDA margin with reasonably high competition. Why can't Telecom Personal have a similar margin going forward? That's first.

The second thing is that, when you talk about penetration being higher than 100%-- In other markets, such as Russia, we've seen that happen, but that was primarily because of dual SIM card usage. So are you expecting dual SIM card usage in Argentina as well? And, also, would you consider at some point just selling SIM cards as opposed to handsets as well?

Okay, Rizwan, with respect to Nucleo's margins and the comparison between the Paraguayan market and the Argentine market, basically, what we see in the Paraguayan market is that the subscriber-acquisition costs are much lower than what you see in Argentina. And, basically, competition is focused more on the pricing of products more than on the capturing of fresh market. And, as we've mentioned in previous conference calls, our expectation that, in the time period of approximately two years, we should be in the vicinity of what Nucleo has as an EBITDA margin today. That's basically in a phase where subscriber-acquisition cost doesn't have the weight that you have today and where you're in a much more mature phase of the market.

With respect to the dual SIM cards and the fact-- As a matter of fact, today, we sell SIM cards separately. We sell SIM cards, and we sell handsets with SIM cards. So that's a fact today. And, in terms of expectation and market strategy, yes, you'll have a situation where you'll have dual SIM cards in a market. Obviously, our approach will be to focus on usage and incremental usage and incremental value-added services. And we understand that that's going to be the main driver of growth once the market starts to mature and when you start to see slower growth rates than what you have today. It's important to mention that value-added services is also a very important differentiator, vis-a-vis, your competitors, especially following the strategy that Telecom Personal did since this tremendous growth phase started back approximately three to four years ago. And it's also a very good way to retain customers. So, basically, our focus will be to work on this new phase of the market, where retention will be the main issue and where the subs growth will be slower.

Just a related question. For 3G, at some point is the government thinking of selling the 1.9G spectrum? And the second thing is that your 3G CapEx-- Do you find that 3G equipment is pretty much selling at the same level as 2.5G, which means that 3G's related CapEx is not going to be a whole lot higher than what you already have?

In terms of the frequencies, the government-- back in 1999, they sold the 1900 frequencies to the operators. So those are frequencies that are already in the hands of the operators. And Telefonica is in the process of returning those licenses to-- after the telecommunication regulator imposed to Telefonica at the time of their merger with BellSouth.

With respect to 3G, we understand that 3G is a natural technological evolution to what we have today in our network. And, as we've mentioned before, there's no significant project that will imply a significant CapEx amount for the Company. Basically, it's part of normal technological evolution, and that will allow us to grow in terms of value-added services going forward.

Thanks.

Our next question comes from [Rajneesh Jhawar] with JP Morgan.

If I may, can you discuss the timeframe when you would be able to pay some dividends? And shed some clarity on when you would be able to reconstitute your returned earnings and if that is likely at the end of 2008? Or are we talking of 2009?

The Company currently has an approximate deficit of close to ARS1 billion in returned earnings that, according to the Argentine corporate law, must be reverted or absorbed before any dividend is to be issued. Together with that, we had a little reserve, approximately ARS400 million that was used in order to comply with certain limitations that we had in the Argentine corporate law. So that legal reserve was absorbed in order to reduce the accumulated debt that we had at one time [in the] returned earnings.

In addition, there are several limitations, including in the terms of the visions of the Telecom Argentina notes that do not permit the absorption of losses - this deficit that I mentioned before. So, unless-- As long as we have these current terms and conditions, we don't expect to pay any dividends in the near term. And, answering your second question, according to our estimations, we should be reverting this loss that I mentioned before by the end of 2008.

All right. Thank you very much.

Our next question comes from [Dennis Cartisian] with Santander.

Congratulations on your results. I'd like to follow up a little bit on Ruth's question regarding the antitrust issues. You may not feel entirely comfortable speculating on an answer to this question. But my main concern and, I think, in the back of the minds of a lot of bondholders' eyes, the question as to whether or not this whole process could end up with a leverage buyout by the Argentine local shareholders of the foreign shareholding as it now stands. Is that, do you think, a possible outcome of this process? Thanks.

Dennis, well, you guessed our minds. That's basically-- Again, I understand that certain investors are, I would say, drawing several alternatives and possibilities in this situation. I would say the Company doesn't want to comment on speculation or possibilities. Our responsibility is to inform about the facts of the situation, as what Valerio has mentioned previously. And any questions regarding potential M&A transactions or impacts on Telecom Argentina referred to the shareholders-- I would kindly request that you divert those questions to the interest parties.

In a way, it's clear that the objective of our board is to defend the interest of Telecom Argentina and go along performing interesting and satisfactory results as we are generating now.

Very good, sir. Thank you very much.

And our next question comes from [Daniel Sensal] with Lehman Brothers.

Do you still plan to refinance the restructure debt in the first quarter of '08?

I'll basically repeat what we've mentioned in previous calls. If you look at Telecom Argentina's debt structure, the structure is very comfortable in terms of maturities. It's a very convenient debt in terms of costs for the Company. And, for the time being, we don't have the urge to take a decision right now. And, in terms of any potential timing of the refinancing in the case we take that decision, that will depend on where the market is. And, obviously, this will be something that management will consult to its shareholders. So, answering your question, it could be. But we'll see where we are and where the market is and always taking into consideration what are the current terms and conditions of the debt.

Thanks.

(OPERATOR INSTRUCTIONS). We have an additional question from Rajneesh Jhawar with JP Morgan.

Hi. Just an additional question. Would you be willing to share with us the broadband ARPU that you have right now and what kind of margins you are getting in that segment?

If you go to page 10 of the presentation, you'll see that, in the third quarter, we had an ARPU of ARS54 for our broadband-- average ARPU for the broadband connections. And, in terms of margins, we can tell you a wide variety of margins. It's very difficult to be-- In other words, it's very difficult to be objective on that number because it depends on how you allocate indirect costs of the service and understanding that a lot of the infrastructure and the costs that are associated to the traditional fixed-line network. So it depends on what is your activity base costing and what are your criteria in terms of [situational] costs.

If you're talking of just the incremental margins - incremental costs and incremental revenues - would you be able to give an indication on that?

We really would-- The Company doesn't want to actually give, I would say, numbers that could take to a wrong conclusion.

Okay. Thanks.

There are no further questions at this time. For closing remarks, I would like to turn the call over to Valerio Cavallo.

Once again, thank you for participating on our conference call. And please feel free to call our investor relations department for any additional questions. Thank you.

This will conclude today's conference call. We appreciate your participation. You may now disconnect.