Telecom Argentina SA (TEO) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen. Thank you for your patience. We'd like to welcome you to the Telecom Argentina fourth quarter and fiscal year 2007 earnings conference call.

As a reminder today's call is being recorded. Participating on today's call, we have Carlos Felices, Chief Executive Officer, Valerio Cavallo, Chief Financial Officer, Pablo Caride, Finance Director, and Pedro Insussarry, Investor Relations Manager. At this time, I'd like to turn the conference over to Mr. Felices. Please go ahead.

Okay. Good morning, everybody, and thank you for participating in this conference call. I am Carlos Felices. Actually, I am not the Chief Executive Officer. I am the Chairman of the Board of Telecom Argentina. And here with us, we have Marco Patuano, which is our Chief Operating Officer; [Guillermo Ouli], our Chief Corporate Officer; Valerio Cavallo, our Chief Financial Officer; Pedro Insussarry, our Finance Director; and Solange Barthe Dennin, our Manager of Investor Relation Division.

The purpose of this call is to share with you the consolidated results of Telecom Argentina corresponding to the fourth quarter and fiscal year ended December 31st, 2007.

The agenda for today's call as seen in slide two is first to go over a general market overview. Then we will go through some business highlights. After that, we will go over some specifics of the financial evolution of the company. And we will end the call with a Q&A session.

Before we start, as an introduction to this conference call, I would like to go over some points that I would like to remark. As you were able to see in the press release distributed on Friday, the Telecom Group has shown an important expansion in terms of revenues, profitability, and operations.

We were able to achieve a strong consolidated revenues increase, mainly fueled by the growth of our cellular and broadband business, both that have developed in a very intensive and competitive environment.

We would like to note that this increase in revenues not only resulted in a growth of our operation profit before depreciation and amortization, but also in a recovery of our OPBDA margins of almost 300 basis points, from 31% to 34%, as we were able to achieve higher levels of profitability in the cellular business. Finally, this environment of higher revenues and improved profitability has contributed to report a significant increase in our net income.

During the last quarter, we continued serving our customers with the most advanced technological solutions for their demand for telecommunication services. Regarding wire line business, Telecom launched for the first time in the country the SMS service as the first step of several innovations to be offered to our residential clients. In addition, we also have introduced the video call product, becoming the first operator in South America to provide a service that integrates voice and video for the mass market.

In connection with the SMS segment, Telecom renewed its portfolio of services with integrated solutions that combined fixed and mobile telephony, data transmissions, and internet. Thus strengthening its position as integrated provider of telecommunication solutions.

Regarding wireless business, Personal continued expansion of its 3G network. In anticipation for the summer season, the company introduced the services in the main Argentine tourist cities, adding them to the existing coverage available in Buenos Aires, Cordoba, and Rosario.

In terms of products and services, further agreements to include exclusive mobile content to the media WAP portal were executed. Also, the development of innovative value-added services, such as full track downloads, full mp3, and immediate message, together with MSN, were introduced.

After this introduction, I would like to pass the call to Marco, Valerio, and Pedro, who will go into the specifics of the results that we have announced last Friday. Before the Q&A session, I will close our presentation with some final results. Please, Pedro, go ahead.

Okay. Thank you. Before we continue with the conference call, we'd like to clarify that during the conference call and Q&A sessions we may produce certain forward-looking statements about Telecom's future performance, plans, strategies, and targets. Such statements are subject to uncertainties that could cause Telecom's acutal 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 demand for telecom products and services, and the effect of marginal factors, such as changes in general market or economic conditions in legislation or in regulation.

Our press release dated March 7, 2008, a copy of which will be included in the Form 6-K report furnished to the SEC describes certain factors that may affect any forward-looking statements that we may produce during the session. Furthermore, we urge the audience of this conference call to read the disclaimer clause contained in slide one of the presentation.

As usual, we'd like to remind you that for all those that have not received our press release or our presentation, you can call our office or download them from the Investor Relations section of our website at www.telecom.com.ar. Additionally, this conference call is being broadcasted through the webcast feature available in that section and can be also replayed through the same feature.

Having done these clarifications, let me pass the call to Marco Patuano.

Hello, everybody. My name is Marco Patuano. I'm the Chief Operating Officer of Telecom Argentina. Year 2007, as most of you know, has seen very good macroeconomic evolution for the Argentinean country. All the key indicators, like the real GDP, the trade and fiscal balance, and the unemployment rate have been under control, showing significant growth in terms of GDP, and closing the year with the lowest unemployment rate of the last years.

As a result of the good economic moment, the Argentina telecommunication market overall grew 21% year on year. And Telecom overperformed the overall market, showing a growth of 23% 2007 versus 2006. It is particularly interesting, given a look to before entering into the single business lines, given a look to the fixed-mobile substitution in the Argentina market.

As you can see on page five of the presentation that has been distributed, the overall market is showing a growth extremely important. But this growth is not penalizing too much the fixed communications, so the fixed traffic, in terms of minutes of communication. In 2007 and 2006, the fixed lines have lost only 0.2% versus a significant growth that has been shown on the mobile market.

So we can say overall that 2007 has been really very satisfactory in terms of results of the operation. We will give some highlights of the different lines of business. And we start from the fixed lines.

Telecom Argentina and the fixed line market has reached two very important targets. First of all, we maintain a positive growth in terms of lines that incremented another 3% despite the impressive dynamic of the cellular market. In particular, this growth is very important because Telecom increased its presence in the small-medium enterprise segment.

The second achievement is the growth of the fixed line ARPU that moved ARS1 up, almost 2.5% increase. This is the result, as Carlos Felices said before, of several innovations, both in terms of new products and services and in terms of new offerings.

Particularly I'd like to underline the launch, as Carlos said, of the video call, the SMS, but especially the flat and semi-flat packets that determine an increase in the usage of our customers.

In the broadband market, the performance of Telecom has been really extremely good. The market in the last 12 months grew 60%. And Telecom Argentina overperformed the market, growing 71%, almost triplicating the number of customers we had in 2005.

As a result of this excellent performance, our nationwide market share reached 31% with an increase of 7% in two years. Even if it is important to remember that the nationwide market share is a key indicator in our case, since Telecom owns the [last mile] only in the north region. Worth mention also the important for we've made in the brand repositioning where Arnet has been recognized as the top of mind between the ISPs.

Moving to the mobile business, the mobile market grew another 28% year on year. And Telecom Personal kept its market share in terms of customer base. As per tradition, our focus is main on value. So I can say that we have been quite successful also in 2007 since we incremented our revenue share, topping 31%.

This result has been reached keeping strong focus on the quality of the new additions where we have been able to keep the contribution of the post-paid customers on the same level of 2006. On the other side, we strongly worked on the stimulation of [vas] consumption that at the end of 2007 are contributing for 27% of the total service revenues. ARPU increased almost 5%, keeping Telecom Personal well above its local peers almost 17% in terms of ARPU.

Also, our organization has been reduced during 2007. We have focused on four -- creating four business units, three sale business units and one business unit that is the integrated network, fixed and mobile, in order to achieve important synergies. The commercial business units are fixed line and small-medium enterprise, large accounts, and the mobile sector.

Last, on page 12, you can see the evolution of the capital expenditure. Year 2007, we increased once more our investments, reaching ARS1.4 billion that are almost split half and half between fixed and mobile. It is important to say that the ARS800 million that we have been investing in the fixed are also an important infrastructure in terms of transport and core infrastructures that serve also the mobile services.

I will leave to Valerio Cavallo, our Chief Financial Officer, in order to present the financial results.

Thank you. The (inaudible - background noise) that Marco has just highlighted have resulted in excellent results for the company and have allowed us to achieve outstanding improvement in the level of profitability of our business, while maintaining a high level of cash flow generation.

In slide 14, we can see the evolution of revenues and operating profit before depreciation and amortization for the last three years. In terms of our turnover, we have been able to achieve a growth of 23% in fiscal year 2007. It was fueled primarily by the expansion of the mobile business that grew by 34% and now counts for 64% of our consolidated revenues.

This expansion and the evolution of our costs that we will describe in a further slide have allowed us to increase our operating profit before depreciation and amortization by 34% and improve our margin from 31% in 2006 to 34% in 2007.

The expansion of our OPBDA and lower incidence of depreciation charges on revenues have resulted in an improvement of our operating profit and margin, as seen in slide 15.

Operating profit grew by 83% in the last year with expansion of 600 basis points in the margin. This has also resulted in a very impressive improvement of our return on net invested capital that has soared from 15% to 29% and a significant expansion of our reported net income that reached ARS884 million. It's important to mention that these results include the sale of our stake in Publicom that accounts for ARS102 million.

Moreover, as seen in slide 16 and 17, the expansion of our OPBDA and the controlled level of CapEx have allowed us to generate ARS1.6 billion of operating cash flow. This resulted in a significant reduction of our net debt from ARS3.5 billion in 2006 to less than ARS2.1 billion in 2007.

It's important to mention that despite the significant increase in CapEx that reached ARS2.7 billion in the last two years, we have succeeded to improve our cash flow that has allowed to reduce our debt.

As seen in slide 17, our net debt has declined to less than half of what we had in 2005. This has allowed us to reduce our net debt to operating profit before depreciation and amortization ratio from 2.3 to 0.7 times and lowered the incidence of interest and revenues, excluding the effect of foreign exchange, from 4% in 2006 to 3% in 2007.

Going into the specifics of each business, in slide 18, we can see evolution of our fixed line revenues. Notwithstanding that our tariffs have been frozen at a [pre-crisis] level, we have been able to expand our revenues coming from third parties by 8% to ARS3.3 billion, who are the drivers of the data and internet and interconnection traffic that grew by 20% and 17% respectively.

As Marco explained earlier, the growth in our ADSL connections have allowed us to significantly expand our internet business, while the traffic generated by third-party mobile operatosr have contributed with a higher interconnection revenue.

We would like to point out the positive performance of our revenues coming from monthly fees and voice-related services as a consequence of the expansion of our customer base and interaction of new services. In addition, the evolution of public telephony revenues is related to the impact of the substitution effect of the mobile service trend that we see that we continue during the following quarters.

In slide 19, we can analyze the unconsolidated income statement of Telecom Argentina and the detail of the evolution of our operating costs. The increase of labor cost of 12% was a result of wage increases that was partially counter-affected by higher productivity as customers and the revenues of our employees have increased.

Meanwhile, the increase of 25% in advertising was a result of the commercial actions to promote new services and pricing plans together with the effort to expand our broadband service, mentioned previously by Marco.

Despite inflationary pressures on the cost side of the business, we were able to marginally increase the operating profit before depreciation and amortization in nominal terms by 3% to ARS1.7 billion limiting in the decreasing margin profitability that currently represents a healthy 44%. The reduction of the incidence of depreciation charges has allowed an improvement of our operating profit of 24% and its respective margin from 20% to 22%.

With respect to the mobile business, in slide 20, we can appreciate the evolution of our revenues. As a result of the expansion of subscribers, the increase of traffic and the usage of value-added services, revenues increased by 39% while handset sales increased by 9%. In addition, the revenues generated by Nucleo increased by 22%, as we have experienced a significant subscriber growth in this operation.

In slide 21, we can analyze the unconsolidated income statement for Telecom Personal and Nucleo. In the case of Telecom Personal, total revenues grew by ARS1.4 billion, or 35%, to (inaudible) ARS5.4 billion.

Operating costs increased by ARS676 million, or 20%. Higher expenses are related to the evolution of our revenues and are based on higher network access cost, labor cost, customer care [associated] to new value-added services, information technology, and taxes.

Meanwhile, commercial expenses grew at the rate below the overall cost structure as subscriber acquisition and retention costs has remained stable since 2006. This trend is associated to the reduction in subsidies, while subsidies in the prepaid segment have been eliminated and to the fact that the migration process from TDMA to GSM is in the final phase.

Therefore, Personal in Argentina delivered a 132% increase in operating profit before depreciation and amortization to ARS1.2 billion during fiscal year 2007. It's very important to highlight that the operating profit before depreciation and amortization represented approximately 23% of revenues after almost 13% one year ago.

This result was achieved both by efficiency recovery on the [SAC] margin that improved the 3% on net revenues and the lower subscriber acquisition and retention costs that count for 7% of the aforesaid profitability improvement. In this sense, Telecom Personal confirms the strong recovery in margins registered [in the quarter].

Finally, net income for Personal climbed to ARS370 million in the year 2007, up from ARS62 million registered one year ago. As a consequence of this result, as stated in the press release, the Board of Directors of Telecom Personal has proposed to its shareholders in Telecom Argentina a cash dividend of ARS220 million.

It's important to underline that this cash dividend will be paid with internal cash flow generation. Moreover, Telecom Personal was able to reduce during 2007 its net debt from ARS1 billion to ARS612 million.

Finally, Nucleo, which operates in Paraguay, showed an increase in revenues denominated in pesos of 22%, while maintaining a healthy level of OPBDA that increased by 16% with a margin of 37%. We must note that Nucleo also operates in a very competitive market with a share of 38% and has achieved a very strong subscriber growth of 40%. Nucleo operations continued to deliver healthy levels of cash flow, permitting the payments of dividends to its shareholders.

And having concluded with the presentation, let me pass the call back to Carlos Felices for final remarks.

Thank you, Valerio. As a conclusion of what we have been discussing during the conference call, you might be able to verify that during 2007 we have a very positive evolution in the Telecom Group with sustained revenue growth, sustained profitability and healthy level of cash flow generation and [concentrated] margin pressures.

The distinctive factors that have lined the strategy that we have implemented some time ago, we know that according to our estimates Telecom Personal continues to achieve revenue growth above the average of the market, thanks to its brand positioning and outperformance, but in turn has result in an increase of our revenue share of the Argentine market.

These positive results show that we have achieved the goals that we have set for the year and that our operating and financial strength will allow us to continue performing as one of the leading companies in the dynamic telecommunications market.

With respect to the future, our expectations are that our margins in the mobile segment will continue to improve. And we expect to gain efficiency in our costs in a scenario where the penetration in Argentina reaches maturity.

In terms of our fixed-line business, our goal is to maintain OPBDA in nominal terms, leveraging in the revenue growth opportunity coming from our growth and operations that should offset inflationary pressures and wage-related pressures in our cost structure.

In terms of CapEx, we will continue investing in the latest available technologies, such as the announced investment in information highway, in the fixed-line business and the introduction of the most innovative service in the cellular business, such as the recent launch of 3G services.

Overall CapEx will continue in the vicinity of over 15% to 17% of net revenues. Our main expectations for 2008 is the economic environment remains supportive, include strong revenue growth with some [deceleration] when compared with 2007, sustain our consolidated OPBDA margin, and some increases in CapEx.

Having concluded our presentations, we are more than pleased to answer any questions that you might have. Thank you very much.

(OPERATOR INSTRUCTIONS) Our first question comes from [Ruth Missoni] with Standard.

Yes, hello, gentlemen. I wonder, can you refresh my memory on what the covenant is limiting the payment of dividends and whether or not it doesn't apply because of the level of leverage that has now been achieved. And do you still -- are you still subject to a cash flow sweep?

Then the other question would be what would you think would be an appropriate amount of leverage for Telecom from Argentina? And by when do you sort of expect to be at that level of leverage?

Hello?

Yes, give us a second.

Okay.

Ruth, I'll take your first question. There's no covenant with respect to dividend distribution. The company can distribute dividends according to terms and conditions of the debt. Okay? I'm talking about Telecom Argentina debt.

But doesn't it have to go to the cash flow sweep first? Wouldn't it all get swept?

That's right. We can pay dividends. There's no restriction. We can reserve 29% of what we call the excess cash in order to pay dividends.

Okay.

Okay? But the problem is not this appropriation of excess cash. It's basically the situation that the company cannot pay dividends as it has approximately ARS700 million of negative return earnings. And so we don't revert this negative balance. According to the Argentinean corporate law, we cannot pay dividends. Okay? So that's the restriction. Okay?

Okay.

Well, you ask about the correct leverage, the level of leverage that we think we should have. As Pedro mentioned, we have negative earnings that don't allow us to start to pay dividends at this point. And I think what you will be seeing in the year 2008, we'll start to review our position about our pending debt and hopefully depending on the results of the year we'll visit the idea of paying dividends in the future; means that the commitment of the company is to be able to manage its finance in a market that we recognize that is a very difficult market; means that we have to be very careful to have enough flexibility how to go to the market at reasonable rates; means that we will not change substantially the trend of reducing leverage that we have showing in 2008.

Probably in 2009, the situation could be different. And then we will come to the market with our view and our position.

Okay. Thank you very much.

Our next question comes from Rizwan Ali with Deutsche Bank.

Yes, good morning. My question is regarding your ability to improve margins. I mean, it's pretty obvious. I mean, Nucleo has much higher margins than Telecom Personal. And given that inflation in Argentina is in double digits, do you think that'll allow you to still continue to increase significantly your margins of overall business? And if that is the case, what is a reasonable number for this year or more longer term going forward?

We believe that we have reached in 2007 a very healthy profitability at operating profit before depreciation and amortization. We believe that in 2008 our expectation would be to substantially maintain this profitability. And as you said before, looking towards the future, the profitability of our group will depend on the macroeconomic scenario, particularly if the government will be able to maintain under control the principle variables. And in 2008, it will be very important to see how successful they will be on the inflation controls.

Anyway, we don't believe in the long run that we will modify substantially our profitability because the improvement that we are expecting in the mobile sector will be partially at least offset in the fixed segment.

It's important to underline that our estimates are for an increase in our margins being at absolute value, taking into account that our estimates are for a substantially and good development in our revenues.

Thank you very much.

Moving on to our next question from Raymond James, we have [Alex Garcia].

Good morning, gentlemen. What I would like to know is do you all still see room for a debt exchange offer this year in order to eliminate all those restrictive covenants that you currently have? That's my first question.

We will consider the opportunity and the moment to see the refinancing of our debt. What we have seen is that in view of the growth of our services and the need for new services to come, we have to revise our level of investment. And probably, this will imply that we will renegotiate our debt because one of the limitations is the covenant limitation today our level of CapEx is that have to find the right opportunity and the right market to do a transaction with the debt of Telecom.

We have to remember, too, that we have a very favorable cost today and very favorable conditions for amortizing our debt; means that those are factors that we will include in our analysis. And certainly, we will go to the market when we find the conditions that we think are in relation with the level of debt that Telecom has and the cost that Telecom could pay and things like that.

Okay. Yes, thanks. And just a follow up, if you'll allow me, is basically because you guys have an upscaling in the cost of debt by the fourth Q if I'm correct. And what I'd like to know is more about your perception. Are you guys more optimistic with debt exchange offer today than you guys were in the, let's say, fourth Q of last year, 3Q last year? I'm just asking this because, well, the situation in the U.S. deteriorated a little bit. And Argentina has faced some inflation pressures. So are you guys -- do you believe that now with the information that we have it's more likely or less likely that you'll be able to do this debt exchange offer today than the market in I believe you guys were expecting in the 2007?

Let me tell you something. Obviously, what we have achieved in this year is a level of debt that gives us flexibility to go to the market and instrument a successful transaction. This is a very important base for our considerations, our restructuring, and our consideration of the moment to restructure.

Today, we have a flexibility that we didn't have in the past because of the amount of debt, because our business has been consolidated. And we think our businesses are growing in a substantial way as we show in 2007; means that it's a question of opportunity. I think if there is a window of opportunity, sadly, we will take advantage of that. But a factor that we pay a lot of attention is the question of flexibility.

Today, we don't have to go to the market mandatorily. And this is very important for us. If we have an opportunity that we identify as very favorable in terms of cost, in terms of tenure, or things like that, we will put a lot of value. And we will try to take advantage of that. More on that I cannot tell you because today the markets are not in the best moment to make a decision of this, like the one we are discussing.

Okay. Okay. Thank you. Congratulations on the results.

Thank you.

Moving on now, let's take a question from [Andrew Coehlo] with Merrill Lynch.

Hi. This is actually Mauricio Fernandes. Good morning, everyone. Just to understand the expectation, given that inflation is so high in Argentina, I understand that the idea is to keep profitability, meaning EBITDA margin on a consolidated base, actually up in 2008. If I'm not mistaken, that's what I understood. Just wanted to understand that there are conflicting inflation numbers reported in Argentina, one coming from the government, the other one unofficially coming from other sources in the range of 20% to 25%. I just wanted to understand which inflation rate you're using to project your revenue growth and EBITDA expectations.

And also, apologize if you've already mentioned it, but what kind of CapEx can we expect for 2008 and 2009 on a consolidated basis? Thank you.

Mauricio, Marco Patuano speaking. Hi. You remember me from Brazil. Of course, we use our specific inflation index. So let me say that the country inflation index doesn't represent necessarily the inflation that we can suffer in 2008 or 2009. Actually, we're using, depending for item to item, something between 15% and 20%. That is, I consider, reasonable for 2008 as our overall basket that is, again, you can easily imagine, that is wages and significant other items that are technical items.

And keep in mind that we purchase several things from abroad. So also, the dynamic of the U.S. dollar is an important component of our overall inflation index. So in the range of 15% to 20%.

As we told you before, moving to CapEx, the technical investment consolidated will stay around 16% of our revenues. So you can imagine something above the amount we would find this year. If we keep to technical CapEx for 2008, we are in the room of ARS1.7 billion and for 2009 something around ARS1.8 billion, ARS1.9 billion. I'm talking about Argentinean pesos, of course.

Sure. Thanks a lot, Marco. Just one thing to understand -- so the blended cost base or cost inflation is somewhere between 15% and 20%. Obviously, revenues should be growing more than that. So is this coming from -- probably not because of subscriber growth, given the maturity of the Argentine market. But also, I assume that this is coming from higher ARPU. Is this -- clearly, we saw an increase in MOUs in the fourth quarter, which comes as a seasonal effect. But my question is whether in 2008 the ARPU -- will you still see MOUs expanding? Or this is basically raising tariffs to cope with inflation in the wireless business in 2008? Thank you.

If we stay to the wireless business, it's the sum of the two or the three effects, let me say, because the fact that market is mature doesn't mean that the market has finished its growth. So we still expect growth for 2008 at the end. If you'll give a look to the more mature European market, penetration above 100% is quite normal. So we expect significant customer base increase also in 2008.

Of course, there will be a tariff rebalance in the mobile. We cannot simply let the inflation erode the prices in real terms. So we will reaccommodate the prices. And yes, we still are expecting a growth in terms of usage. What we are still working on is value-added services. We are -- today, we have almost 50% of our customer base with handsets that allow new innovative services. But we are selling -- almost 90% of handsets we are selling are allowing the customers to new innovative services. So the value-added services that nowadays are basically SMSs, we expect in 2008 and 2009 to have an evolution onto, let me say, content and HTTP services.

Okay. Thank you very much.

You're very welcome.

(OPERATOR INSTRUCTIONS) And next, we're at Miguel Garcia with Deutsche Bank.

Hi. Thank you. The first question is regarding your lines in service growth. You continue showing actually a solid growth in lines in service, while you've seen in the rest of Latin America decreases or stable numbers. And also, it's interesting when you see Telefonica is also maintaining its number of lines in service or is decreasing them. So I wanted to understand why in an environment where you don't see, where you don't expect any increase in targets you would continue growing your lines in service in the fixed-line business, which probably is causing some or churning some CapEx.

And the other question was on the wireless side. What's the real penetration in Argentina considering the double counting of SIM cards? Or at least in your case, how many of your subscribers you consider to have another phone from another operator that are being double counted? Thank you.

Marco again. Well, why we are growing -- two good reasons. First of all, we are focusing much more on small-medium enterprises and professionals. So let me say that it is important to say that the new -- we're experiencing growth not necessarily very far away from the urban centers. We are having good growth also in places in which new connections are not very expensive.

Second, it is obvious that we are growing also in the inner part of the country, in which distance between the switching center and the customer can be significantly higher than in the urban area. In this case, it is important to say that in 2007, we have been allowed to use the GSM infrastructure in order to provide fixed services in rural areas.

Of course, in rural areas, we have no problems of congestion in the usage of the GSM network. And it decreases dramatically the cost per new subscriber. So the CapEx is absolutely under control in terms of payback of this new customer. This is extremely important because the interior part of the country still has room for growth. And it is something that we have to keep under attention.

Last, in terms of new lines, it is important to say that almost 70% of the new lines, 60-something, are asking for new lines and broadband at the same time. So let me say that the broadband mania is helping us to grow in the north.

Wireless -- it's difficult to say how many fake customers are there in the market. It's a matter of fact that we have 17% higher ARPU than the average of our competitors. So that means that our customer base from one side is high value. On the other side, we have a clean one. So we have a very strict policy of churn. And when the customer is not making traffic incoming or outgoing, and after the contract period, we just cancel him.

So if your question is -- is there in your customer base also marginal customers, yes, there are. I personally consider that at least 2.53 million customers are double counted. But this is my personal, very personal, estimation. So take it as it is.

Okay. And what do you expect, based on that, to be, including double counting, what do you expect in terms of penetration for the end of this year and next year?

We are working on 105 if I remember well. I'm just checking. Yes, 105. That's without any double counting cleaning.

Okay.

So let me say the official figures.

Nominal penetration.

Nominal penetration.

Okay. Do you have estimate for the end of '09?

110.

Okay. Thank you.

You're welcome.

We have no further questions in our queue. Mr. Felices, I'll turn the conference back over to you for additional or closing remarks.

Okay. I would like to once again thank you for participating on our conference call. And please feel free to call our Investor Relation Department for any additional questions that you may have. Good day for everybody. Thank you very much.

That does conclude today's conference call. Thank you for your participation. And have a good day.