Telecom Argentina SA (TEO) 2016 Q1 法說會逐字稿

Good day, everyone, and welcome to the Telecom Argentina TEO first quarter 2016 earnings conference call.

Today's call is being recorded.

Participating on today's call, we have Ms. Elisabetta Ripa, Chief Executive Officer; Mr. Adrian Calaza, Chief Financial Officer; Mr. Pedro Insussarry, Head of Finance; and Ms. Solange Barthe Dennin, Manager of Investor Relations.

At this time, I'll turn the call over to Mr. Pedro Insussarry. Please go ahead, sir.

Good morning to everybody. On behalf of Telecom Argentina, I would like to thank you for participating at this conference call. As Erica, our moderator, just mentioned, the purpose of this call is to share with you the results of the first quarter of 2016, ended last March 31.

We'd like to remind all those that have not received our press release or our presentation that they 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/investors.

Additionally, this conference call and slide presentation is being broadcasted through the webcast feature available in such section and can also be replayed through this same channel.

Before we continue with the conference call, I would like to go over some Safe Harbor information and other details of the call, as we usually do in this type of events.

We would like to clarify that during the conference call and Q&A session we may produce certain forward-looking statements about Telecom future performance, plans, strategies, and targets. Such statements are subject to uncertainties 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 demand for telecom products and services; and the effects of more general factors, such as changes in general market or economic conditions, in legislation, or in regulation.

Our press release dated May 9, 2016, a copy of which has been included in the Form 6-K report furnished to the SEC, describes certain factors that may affect any forward-looking statement we may produce during the session.

Furthermore, we urge the audience of this conference call to read the disclaimer clause contained in slide 1 of the presentation.

The agenda for today's conference call, as seen in slide 2, is, first, to go over the general market overview; followed by the discussion of the business highlights; and then, we'll go over a review of our financial figures. Finally, we'll end the call with a Q&A session, as is customary in our quarterly conference calls with the financial community.

Having gone through these procedural matters, I will now go over a brief macro description as an overview of the environment in which we operate. Please refer to slide 3, where we included a snapshot of the Argentine macroeconomic situation.

In the first quarter 2016 and after closing 2015 with a fragile performance, the Argentine economy activity was strongly influenced by reforms and measures that were taken by the new administration, with the objective of adjusting imbalances in both fiscal and external fronts and gradually guiding the economy into new long-run growth paths.

In particular, these adjustments have affected the macroeconomic context; [that is,] price inflation, exchange rates, and interest rates at higher levels than those observed during the past quarters, but at the same time, bringing some calm into the external sector and FX markets.

With a lifting of restrictions to access the FX market, the multiple exchange rate system was unified into a floating rate regime, with the central bank executing a managed scheme with the aim of avoiding market overshooting. Depreciation of the peso continued during the first quarter, with important levels of volatility, reaching a rate of close to ARS16 to the dollar, but normalizing at levels between ARS14 and ARS15 at the end of the quarter.

In particular, the central bank took actions on the exchange rate through monetary policy, where a general tightening was observed, with low levels of direct intervention in the exchange market.

In addition and in the context of negotiations with the holdouts that sought to put an end to Argentina's default situation, an agreement with foreign investment banks was reached during January 2016 to provide financing through a repo loan of $5 billion, strengthening the international reserves. In addition, the final settlement with holdouts, through an historical issuance in the international markets of $16.5 billion, generated a strong confidence effect, paving the way for future external financing for Argentina.

Regarding inflation, the CPI for March 2016, measured by private consultants, showed an acceleration, reaching 32.8% on the year-on-year comparison. This rise in inflation levels was generally expected and can be explained because of the strong depreciation of the peso, important increases in electricity tariffs, and general relative price adjustments that impacted, particularly, in food prices. Furthermore, a second round of tariff adjustments was arranged and determined to take place during April, affecting transport, gas, and water, with the purpose of alleviating a bloated fiscal budget through the reductions in subsidies.

As for the economic activity, almost no growth was observed as compared to the year ago, and the shocks in nominal variables are starting to take its toll on the overall activity as it's registering a poor performance level.

Important decreases in output have been registered in sectors like construction and agricultural which, in turn, were the two most dynamic sectors during the past year. The industrial production index showed a slowdown in comparison to the first quarter 2015 levels, with certain improvements in specific manufacturing industries, along with food and beverages sectors, but with strong declines in corn and steel production.

Household consumption that is important for our sector is expected to drop in the first months of the year as certain overstocking was registered during the last months of 2015, particularly in durable goods. Moreover, some worsening of household income situation was observed while consumer confidence dropped sharply during the first quarter 2016.

In addition, fiscal accounts continued in a delicate situation, and the national authorities have begun to undertake certain measures in order to reduce the growth in public expenditures, such as the aforesaid reductions in subsidies. It is expected that the fiscal deficit, currently at important levels, should gradually decrease during 2016 and during the following years.

Notwithstanding the challenging macroeconomic context, Telecom Argentina has managed to match revenues growth with inflation levels.

[As] general concerns for 2016, we can imagine the evolution of inflation, the evolution of the levels of activity, the collective bargaining agreement processes, and the performance of the fiscal situation are going to be the main issues for the Argentine economy.

Having gone through this introduction of the macro environment, let me pass the call to Elisabetta Ripa, who will go over the business highlights. Elisabetta?

Thank you, Pedro, and good morning to everyone.

Let's [repair] to slide 5, where we summarize some achievements we have reached during the first quarter of this year. Going to our business, our commercial strategy continues to have a strong focus towards value segments, while we have continued to stimulate the use of data and internet, reporting good results in this sense.

In the first quarter, we have achieved an increase of more than 400,000 adds in the postpaid segment, representing an annual growth of 7%.

[A notorious] growth in handset sales was registered, increasing quantity by 37% when compared to first quarter 2015, and at the same time assuring positive profitability margin. Our LTE smartphone sellout continued to rise, reaching 75%, and that will be an excellent platform for continued growth in data traffic in the future.

Continuing with our data-centric strategy, we can highlight the quick adoption of our customers of the new pricing plans that have intensified during the first quarter. In this sense, clients with the new modality already represent 33% of the postpaid segment, showing a very good market reception of our value proposition.

Moreover, as we successfully continue with the rollout of our 4G network, we cannot miss an important progress in the deployment activities, such as in the number of 4G sites installed, while at the same time network KPI continues to improve.

More than the 2.5 million subscribers are enjoying now 4G services, while data consumption continued to be very strong. Data usage grew by 55%, resulting in a growth of browsing ARPU of 65%.

Furthermore, it is also worth mentioning that Nucleo, Paraguay was the first operator to launch 4G in the country, back in December 2015, and we are [collecting] very good results in these first three months in terms of customers.

Moving on to the fixed broadband segment, we continue expanding our customer base, registering a 2% increase, while the participation of high-speed connection continued to grow, reaching now 28% of our customers, that compared with the 19% of a year ago is showing a relevant growth in terms of mix. In this case, ARPU grew by 39% versus last year.

It is important to highlight that during this quarter, some adjustments in the fixed voice monthly fee prices were implemented, just in the business segment.

As far as financials are concerned, the growth trend of service revenue registered important improvement, achieving levels that were in line with inflation and outperforming the market. Service revenue growth reached 31%, mainly driven by the growth in mobile internet and fixed broadband in Argentina, which increased by 85% and 43%, respectively.

In a challenging economic scenario, we were able to increase EBITDA by 29% year over year, reaching a 27% margin for the first quarter.

We would like to emphasize that there will be a significant improvement in the dividend payment for this year, as the payout ratio was increased to 59% and the dividend per share will be ARS2.06.

Please, turn now to slide 6, where we can see the trends in revenues that had a strong performance with a solid growth platform for the future. At a first glance, we can verify that actual revenue mix shows that the participation of handset sales had risen, in line with our strategy of pushing to incremental 4G penetration, always safeguarding the positive margin contribution from handset sales, while services, that represent the drivers of growth, such as broadband and fixed data and mobile internet, have been increasing significantly versus one year ago.

In particular, our retail fixed voice increased by 31%, mainly due to price adjustments in the corporate segment as we mentioned, [while] retail mobile revenues increased by 26%. We'll go into some details on this in the following slide.

So, let's move now to slide 7 to review the performance in the fixed broadband and ICT services. It is notable that ultra broadband access continued to increase, having 54% of new adds comparing with last year at this time.

Total subscriber base continued growing, at a stable pace of 2% year on year, while maintaining very low levels of churn. It is encouraging to see that ultra broadband connections represent now 28% of the total customer base, as an evidence of the effectiveness of our upselling action to higher speeds.

Additionally, ARPU has increased by 39%, to almost ARS249 per month, as a consequence of our bundled offer, upselling actions, and price adjustments. Meanwhile, ICT services have grown mainly as a consequences of the variation of the exchange rate in the contracts that are set in dollars.

Let's move now to slide 8, where we describe the performance of the voice fixed-line business. Here, we can note that the line in services continued to show a stable trend, combined with a steady market share.

During August 2015 and February 2016, I remind you that we have started to implement certain monthly fee adjustments to business customers. Residential tariffs will be increasing during the month of May 2016 -- so, basically, now -- and it is worth mentioning that even after this adjustment monthly fees still remain below regional LatAm peers, leaving the room and the space for further improvement.

This explains the ARBU increase that grew by 34% year on year, to almost ARS81 per month.

Let's move now to slide 9, where we can see that we continued to capture growth in value in the mobile business as we advance towards data monetization in line with the action taken to increase 4G penetration. Thanks to our focus towards value services and segments, we have been able to increase the participation of postpaid subscribers, leading during first quarter 2016 the postpaid market in terms of flow share.

As a matter of fact, we can say that the migration towards that data-centric plans is accelerating, as more than 2 million subscribers are actually adopting our value proposition.

Browsing revenues have significantly increased. [In this sense,] the incremental usage of 55% is contributing a strong expansion of 65% in the browsing ARPU. Meanwhile, the growth of 13% in unique users is an additional evidence of the incremental demand of data usage in this country.

Thanks to this increase, our browsing revenues now represent 34% of our total mobile service mix, up from 23% [verified] last year.

Now, let's turn to slide 10, where we have included some milestones in data on our 4G rollout. As the deployment of personal 4G LTE network carries on, coverage expands throughout the country. 4G high speed are now available in more than 400 locations in 21 provinces, and 70% of total population in capital cities can use 4G services now.

During this first year of operation, basically, penetration of 4G has grown significantly among our customer base, and we have sufficient room to continue expanding the service. And this is really a good news, I think, considering that 4G users registers high level of consumption on data, more than double that non-4G data users. So, we have still room for improvement.

On slide 11, we share some information about the consolidation CapEx [program]. During the first quarter of 2016, we have invested approximately ARS1.9 billion, equivalent to 15% of consolidated revenues, and more than doubling the amount invested on the same period of last year.

In conjunction with the 4G deployment, we are modernizing a significant portion of our network with state-of-the-art integrated technology. We can see that the evolution of total new mobile sites, new 4G sites, and areas with ultra broadband has registered important level of growth this quarter.

Summarizing some of our main strategic goals, we continue to concentrate our efforts in network development in order to capture data growth. We've try to built a competitive network that allows enhanced customer experience, focusing on the migration of 2G, 3G clients to 4G. In addition, we have undertaken ambitious projects such as the implementation of the first virtualized core network in LatAm.

Well, having gone through the main results on the business highlights, now I will pass the call to Adrian Calaza, our CFO, who will go over our financial performance.

Thank you, Elisabetta. Please turn to slide 13, where you can see the evolution of consolidated revenues and EBITDA.

During the first quarter of 2016, consolidated revenues reached almost ARS12.5 billion, with a 40% year-on-year growth that outperformed the market, including a strong performance of handset sales, with quantities increasing by 37%.

In turn, service revenues grew at a pace of 31%, thanks to the strong performance of internet services, both mobile and fixed broadband, together with corporate ICT services. In fact, it's interesting to see that when we look at the quarterly performance of service revenues coming from the operations in Argentina, we can note that there has been an acceleration of growth since the first quarter of 2015, reaching levels of 30% in this first quarter of 2016.

EBITDA showed a solid evolution year on year, growing by 29%, representing 27% of total revenues. We must note that this performance has been achieved despite the margin compression due to the significant increase in handset volumes.

Please refer to slide 14, where we show the evolution of EBITDA with a breakdown of the behavior of the different components. In line with the actions taken during the past quarters, we continue with our disciplined cost management and continued search for efficiency in our operations.

This can be seen by the fact that an important number of our cost lines are contributing positively to the margin. Despite increased cost of handsets and labor-related expenses, we have obtained relative savings in marketing and sales costs, fiscal services, maintenance and materials, and taxes.

Please, let's move to slide 15 and review the performance of our operating income that reached almost ARS2.0 billion, with a 19% increase year on year. EBIT was mainly affected by the 44% growth in depreciation and amortization, due not only to the important network deployment of the past quarters but also to the acquisition of the 4G spectrum.

Operating margins amounted to 16% of consolidated revenues.

Meanwhile, net income attributable to Telecom Argentina reached ARS0.9 billion, falling by 10%, affected mainly by higher financial losses as a consequences of a change in our net financial position and FX results, as we will see in the following slide.

Please turn to slide 16, where we show the evolution of our net income. Despite we have been able to expand EBITDA by almost ARS0.8 billion, as we mentioned, the increase in depreciation and amortizations and results on disposals and write-down of PP&E of more than ARS0.4 billion impacted the growth of our operating income.

In addition, net financial results were negative by almost ARS0.5 billion, due to the further depreciation of the FX rate occurring in the first months, coupled with the rise in interest rates and a significant change in our net financial position after the payment of the spectrum and dividends.

All this impacted the evolution of our bottom line, even though reaching ARS935 million, or 7% of our total revenues.

Regarding our financial position, as you can see in slide 17, Telecom Argentina Group continues to report a solid operating free cash flow generation, that reached approximately ARS1.3 billion in the last 12 months. Operating free cash flow generation was influenced by the increasing CapEx, in line with our aggressive deployment plan, and by the evolution of working capital. However, cash flow generation was positively affected by lower tax payments due to tax shield.

[All this,] after paying the equivalent of ARS2.3 billion for spectrum in June 2015 and dividends of approximately ARS800 million, we have registered a net debt position of almost ARS3.3 billion, most of it in local currency.

It is worth noting that during the month of April of 2016, the Board of Directors decided to distribute ARS0.7 billion in cash dividends, which will be made available to shareholders as of May 13, 2016. In addition, they decided to withdraw and distribute in the month of August 2016 the amount of ARS1.3 billion as a second payment of cash dividends.

Considering this total dividend payment of ARS2.0 billion for this year, it will be equivalent to 59%, and dividend per share will [result in] ARS2.06, or ARS10.3 per ADR.

Being finished with the presentation, we are more than pleased to answer any questions you may have. Thank you very much.

(Operator Instructions) Rodrigo Villanueva, Merrill Lynch.

My first question is related to salaries. You mention in the release that you paid an extraordinary bonus in the first quarter of 2016. I was wondering if you could give us the amount of this bonus? And if you will be paying more regarding bonuses in any of the next few quarters?

Yes, we paid during the month of March a bonus. I would not call any more extraordinary, because this is the second time that Telecom Argentina paid the bonus. Also last year it was paid.

This year, we introduced a very important change, is my vision, because it was not referred to what is here in the market called a Christmas bonus, but it is a bonus that has been assured to the employees as an anticipation of the salary increase that will occur during this year 2016, with reference to the inflation.

The total amount that we paid in terms of our cash out was roughly ARS110 million. That, of course, is net of the social contribution. So, if we add this, it's around ARS150 million that has been [referred] to all the employees; so, the ones that are in the agreements of the unions and also to the ones that are out of these agreements.

Understood. Thank you very much. So, just to have it clear, we should expect a similar amount every first quarter, going forward?

No, I don't think so. No. We don't think so.

We hope not.

We hope that the inflation rate will be under control. But on top of that, in the discussion with the unions there will be the definition of a different time schedule and with an agreement that will be also [referred] with reference to the first part of the next year. But I think that that was basically due to the fact inflation was accelerating in the first quarter 2016.

Understood. And my second question is related to CapEx. We saw CapEx [totals] of 15% during the first quarter. However, I had the impression that for the full year you were budgeting around 22% of revenues. I just want to confirm that this is still the case?

Traditionally, the first quarter is always very -- it's a little bit softer than the others, due to the fact that of course we have to start with a new plan, with a new budget. And also, there are some cyclical, let's say, activities that during the summer is not so easy to perform here in Argentina. Due also to the fact that it was a very rainy summer here.

And yes, it will improve and will be pretty much in line in terms of weight on revenues with last year, not considering of course the frequencies.

Okay. And my final question is related to the dividend. I just want to make sure that this 59% is not a new dividend payout ratio policy? Just want to confirm the ARS1.3 billion that you are paying additional should be considered as an extraordinary dividend, right?

Telecom Argentina has never declared a dividend policy. So, you could not consider this as a policy.

Understood. Elisabetta and Adrian, I want to thank you very much and to wish you all the best in your new endeavors. It's been a pleasure to work with you.

Thank you so much. Also, for us. Thank you.

Thank you, Rodrigo.

Michel Morin, Morgan Stanley.

I just wanted to understand a little bit more on the update, if you can update us on the situation with respect to the change of control? Because the tender offer has not yet occurred, because we're still pending, I think, some authorizations. But on the other hand, control seems to have really been transferred at this point. So, if you can update us on kind of what is still missing for Fintech to essentially assume full control and for the tender offer to be executed or launched?

And then, secondly, going back to your slides 9 and 10, you provided some interesting statistics around data usage, and I just wanted to make sure that I'm looking at this correctly. So, first, on your MBOU, what is the denominator that you're using there? Is it total subscribers? Or, only your data subs?

And then, similarly, when you look at your data usage per user, on slide 10, being up 2.6 times when a subscriber goes to 4G, what would that be on a per-user basis? Because I worry that sometimes we're comparing the early adopters versus the rest of the subscriber base. So, if you were actually to look at a specific subscriber, how much does their consumption actually increase when they adopt 4G?

Okay. Let's try to go step by step and try to answer to all your questions. Otherwise, I'll have to repeating them.

Concerning the tender offer, of course this is referring to the controlling shareholders. Any question, you have to direct to them.

In terms of authorization and approval, they are still pending, as far as we know, basically, on publicly available information. The change of control really occurred, I think. So, all of the directors and the board member have been changed. And with basically the exit or the change of the management tomorrow, I think it will be definitely completed.

Moving to the operational question. If I got correctly, you asked about the MBOU. The base is refer to data users. So, it's only refer to the ones that are navigating and doing browsing.

And in terms of consumption for the 4G users, as always when you start with a new services or with a new technology, the first or the early adopters are the heavy users. That's for sure. With 2.5 million customers, I would not consider anymore the early users only, because the market is definitely well penetrated, well above the benchmark or the international benchmark.

In terms of absolute value, of course the curve is always very distributed, but the average is in the region of 2.5 giga per customer. So, we are referring to basically this kind of consumption.

Did I get all the questions?

Just for your first question, Michel, about the tender offer, this is under the process of the local authority, the CNV. We are expecting some new [phases] in the process. Just remember that the tender offer was launched only for the local market. This is an important factor.

Right. I guess what is surprising is that the change in control has actually been completed and, yet, there's still some authorizations that have not been received. There's still an antitrust review of this transaction that has not yet been provided, I believe.

Yes, but --.

[The Company] is always faster than the local authorities. That's for sure. So, we have been [reactive], and we were prepared to this change of control due to the fact that the sales have been signed basically two years ago. So, yes, definitely the Company has been [really reactive].

And what firewalls exist in terms of the Board's and the management of the Company, considering that the new controlling shareholder is a significant shareholder in your major competitor?

I will not comment on that, due to the fact that it's something that is referring to our shareholders. So, I think you have to address this question directly to them.

Okay. All right. Thank you very much. And thank you also for everything over the years. And good luck.

It's been our pleasure, Michel.

Our pleasure. Thank you very much.

Fernando Suarez, Raymond James.

Just my first question is related to your mobile revenue growth. I'm worried that it's been -- that your ARPU is growing at 22% year over year while you are improving your service, you're improving your usage, and you're improving even your mix on postpaid/prepaid. So, that's my first question.

And my second question is I would like to ask you on an MVNO update. What this refers to you? What do you know up to now? How will this affect you?

Well, with reference to the first question, revenues perspective, going forward, I think that all the deep work that we performed last year in terms of pricing simplification and bundling penetration will safeguard the growth, going forward, for the mobile, due to the fact that basically all the increasing pricing, that will not affect in terms of elasticity or in terms of traffic reduction due to the fact that basically bundles protect us from this effect.

On top of that, the penetration of the smartphone and 4G smartphone will allow more and more customers to switch or to migrate portion of their activities on the mobile data, and this has been proved to be accretive for the Company.

The Company will benefit, going forward, from the monthly fixed-line fee increase. That will be the first time after probably 15-20 years. I cannot remember.

1997.

1997. So, quite a long time. And please remember that now that the exchange rate is basically freed, all the agreements with the business customers and the corporate customers that are US denominated will be updated immediately with a very limited [latency].

So, summarizing, I think that the Company has all the [connection] and the tools in order to, going forward, with an increase in terms of the top line that is in line with the results that has been performed so far.

The second point -- well, the [fee] has been published, I think, yesterday or the day before yesterday. So, we are -- the Company is reviewing and is evaluating all the different aspects in terms of legal and in terms of also for [constitutional] and economical consequences. It's a very articulated law, decree.

These [tariffs] I think that is introducing some really peculiar divisions that are slightly different from the industrial benchmark. And I'm referring to the fact that basically virtual operators here are going to be included or there will be also [accrued] in infrastructure operators in some areas or in some countries. This has not been allowed at the very beginning.

The second point is that exclusivity for the virtual operator is not mandatory, and I think also this will be a peculiar aspect.

Nevertheless, with my experience in Europe, [virtualization] has been very successful. And due to the penetration that we reach in Argentina and the fact that basically the data transformation that has been started, I would not expect an amazing impact of virtual operators to Telecom Argentina and Personal in the specific.

Please consider the one point it's really important. We still have to understand basically what it's going to mean and how it's going to be implemented. There will be some capacity constraints. And so, due to the fact that we are in the process of rolling out a network, the virtual operator will get eventually access to a limited portion of this capacity of the network.

Great. Thank you, both. And good luck. It was a pleasure to work with you.

Thank you very much. Also, for us.

Thank you very much.

(Operator Instructions) Soomit Data, New Street Research.

It's Soomit, from New Street Research. Just a couple of points of clarification, going to slide 8 of the presentation and talking about the fixed-line price increases. First of all, on the business side, what was the -- you may have mentioned this before; apologies -- but what was the split percentage-wise in terms of the increases in August of 2015 and February 2016? I guess I'm just trying to understand how much kind of incrementally flowed through into the Q1 numbers, because the fixed revenue trends are very good there.

And then, secondly, in terms of the residential tariff increase, how much of that will be kind of fully applied in May? Should we expect more residential customers to be switched overnight on the 1st of May? Just kind of a slightly greater degree of granularity there?

And then, away from the detail and a bit more conceptual, what are your thoughts on further price increases, either business or residential, in the coming months or maybe looking a little bit further out?

Well, monthly fee increase for the corporate customer and for the business customer has been now from ARS27 to ARS77 in last year. And then, it was from ARS77 to ARS95 now in February. I'm referring to business and corporate customers that are not within auction or a tender offer definition.

For the residential, the monthly fee increase was from ARS13 to ARS38. I'm always referring without VAT. And it's going to be addressed basically to the 99% of the customer base, due to the fact that only exclusion is referred to the retired -- basically to the retired people that have been already declared as pertaining to a specific category. And the numbers is very limited, and the documentation that they have to present is very articulated. So, I will not expect a huge amount of customers that will be considered in this reduced amount of monthly fee application that, by the way, just for completing the answer, will be reduced by 50% for the ones that have [the] requirement to be applied on.

Going forward, you know that during the second half of the year, there will be a request from the government to slow down the price increase. Still, I think that inflation updates will be allowed.

And please consider that even after the increase of the monthly fee for the residential customers, we announced that the fee, the monthly fee, will be roughly [$2.5] per month. That is significantly below the industry benchmark and also the Latin America benchmark, so that I would expect a further improvement to that (inaudible), considering that the new regulations, the new law, now is allowing Telecom Argentina -- and by the way, also Telefonica -- to up the monthly fee for the fixed business to the inflation rate. So, it will be definitely possible to have a second round.

That's it, basically. Partially has been already performed. Some improvements will be added until second quarter. And some other improvement will occur in second part of the year.

Okay. That's very clear. And all the best, going forward, as well. Thank you.

Thank you.

Thank you.

(Operator Instructions) [Jose Kow, CPCG].

Just one quick question. I just wanted to know if you think there will be any substitution between fixed and mobile services now that you started to increase prices, at least going forward, because I think prices are still relatively cheap. Any thoughts?

Good question. I think that considering the level of the monthly fee that is today and will be in the next future is still so low, that a substitution from the mobile, in my view, will not be relevant.

If I look at the results of the elasticity for the business segments after the first increase of the monthly fee, definitely it was very limited; negligible, I would say. If I consider the numbers of calls that we received from the residential customers after informing them about the monthly fee increase, again I would consider disconnection very, very limited.

Mobile substitution of course is a trend worldwide. So, also in a certain moment Argentina will be affected, but not, in my view, at the level of the monthly fee that we have now and not at the monthly fee level that will occur when the country will be aligned with the Latin American benchmark.

Thank you very much, and good luck with everything. Best.

At this time, we have no further questions. So, I'd like to turn it back over to our speakers for any closing remarks.

Well, thank you very much for participating to our quarterly conference call. As you know and as we shared, we will leave as of tomorrow, and I will hand over my duty as CEO to German Vidal.

And I would like to thank you all for the support and all the useful insight and comments that we have always received and wish you goodbye and good luck to all of you. Thank you so much.

Just a last thing. Also following Elisabetta's comments, I'm also leaving the Company. I'm leaving the position of CFO tomorrow, the 11th of May, and my position will be covered by Mr. [Ignacio Moran] effective May 12.

So, thank you a lot to everyone for your support to Telecom Argentina and hope to see you again. Thank you very much.

We'd like to thank everybody for their participation on today's conference call. Please feel free to disconnect at any time.