Tim SA (TIMB) 2009 Q4 法說會逐字稿

Good morning and welcome to all of you today, including those watching us via the web, connecting with the phone, to our Telecom Italia colleagues on the Group's Internet and to the journalists.

We have a very busy agenda today, so I will be short, stick to the essentials and leave time for the discussion on the Group's strategic and operational guidelines for the next year, which are certainly waiting with a lot of attention.

So Telecom Italia's Sparkle issue, on which Franco will update you soon, gives me the chance to reiterate our way of doing business which I think is very important.

Telecom Italia is a company with a strong commitment to the best standards of governance and ethical behavior; dedicated to its customers, providing continuous improvement in services and products, open to a constructive dialog with the regulator and with the objective of developing an effective and efficient market.

Our decision to postpone the approval of the 2009 results meets our desire to operate with a maximum of assurance and transparency in the interests of all our shareholders.

Telecom Italia has the will, and the energy and determination to exit from the Sparkle issue strengthened by the knowledge that anything negative, which might have possibly occurred in the past, will never recur in the future.

2009 has been a difficult year for everyone. The Group, however, has responded to the complex macroeconomic situation by implementing a thorough internal and external transformation. Our focus has been and will continue to be on our customers, on innovation, efficiency and therefore, on the recovery of the financial stringency.

Important progresses have also been made during this year on the direction of an open fair dialog with institutions and the relevant authorities in the countries in which we operate.

In this framework, we have achieved an important improvement in terms of reputation, and demonstrated by all our research and measurements. In particular, our corporate image is recovering posting plus 15 percentage compared with December 2007, but let me be more specific for a few seconds.

We want to deliver a top quality service through a better interaction with our customers. For this reason, we have completed during 2009 our customer centric organization to be closer to our clients and to better address different segment needs.

Innovation, we are investing significant resources into innovation. Telecom Italia's expenditure in R&D for 2009 was over EUR800 million, equal to 3.1% of sales and improving from the 2008 figure, 2.3% on sales.

According to the most recent R&D scoreboard of the European Commission in 2008, we reached the second position among the European TLC operators and we are at the top of the ranking among the Italian enterprises.

In [earning] our business, we are also making the most out of the industrial relationship with Telefonica, and this is the key relationship with Telefonica; increasing the value of both of our companies, developing all possible synergies, always in compliance with the rules and limitations set forth by the authorities.

We confirm, in this respect, the overall synergies target of EUR1.3 billion for the 2008 and 2010 period, an extension of the synergy plans until 2012 has been already agreed between Telefonica and us. And during this period, 2010/20102, we expect to deliver even more value than in the previous 2008/2010 period.

Finally, the recovery in efficiency, combined with selectivity in CapEx allows us to look to the future with confidence thanks to a solid free cash flow generation. We confirm our attention both to our bondholders with a plan to reduce the Telecom Italia debt, and to our shareholders, with a proposed dividend to EUR0.05 ordinary shares and EUR0.061, as you've seen, for savings shares in line with last year.

Thank you your attention for now and I leave now Franco that will tell you more about our vision of the business in a greater detail. Thank you.

Thank you very much Gabriele. There is a small change in program, because our CFO, Andrea Mangoni did not feel well last night and he will not be able to be with us today, but fortunately now he is feeling much better. And I will take his role during the presentation and then Mr. [D'Angeles], the Group Controller will join me during the Q&A session, so everything will be covered, but excuse myself for this small change in program.

But anyway, good morning everybody and thank you for attending Telecom Italia's 2009 results and strategic plan update meeting. I am sorry for having you here, but I think it's a good way to see how we work effectively to reduce cost. It's a good location. It's a little bit distant from the city center, but it allows us to do the same thing without spending too much money. Therefore, I thank all of you for taking the trouble to join us here and to coming down to Rozzano.

First of all, as you know, we postponed the approval of the fiscal year results and the plan update, as Mr. Galateri has already mentioned, due to the Sparkle issue. We made the decision and I assure you, it was not a very easy decision because, as you have heard from our Chairman, we felt we needed the additional time to assure ourselves, our Board members, our auditors and the market that our accounts totally represent our financial position.

And I would like to elaborate a little bit on what has happened and update you on the most recent events related to the Sparkle issue. On February 23, Telecom Italia Sparkle was served a court order concerning alleged VAT fraud by suppliers operating in the premium telecommunication services business in the years 2005/2007.

In the order, the public prosecutors asked the judge to appoint an administrator pursuant to Law 231 for our subsidiary. For those of you that are not familiar with Italian law, Law 231 triggers liabilities for companies who fail to adopt an effective compliance infrastructure methodology capable of preventing a number of key violations by the managers or by the staff.

The public prosecutors' decision on this ground was expected after the March 2 hearing. That was postponed to April 7. The Board of Directors of Sparkle decided to postpone the approval of the fiscal year 2009 results and as a consequence, Telecom Italia resolved to delay its decision on the Group's financial statement.

On April 2, the public prosecutor waived the requested filed by the preliminary hearing judge for the appointment of an administrator. The judge cancelled the court hearing, deeming that the measures implemented by the Sparkle Board of Directors were fully appropriate.

More specifically, the following decisions and the following actions were taken by Sparkle. First, employees involved in the investigation were immediately suspended. However, it has to be reminded that both the CEO and the Chairman of Sparkle at the time of the alleged VAT fraud had already left the Company.

Independent consultants that is Deloitte and the law firm, Cleary Gottlieb were appointed to perform a thorough accounting investigation on Sparkle's accounts. An independent expert, [Professor Fero Luzzi] was instructed to carry out, among others, a thorough review of Sparkle's compliance processes and procedures for the purpose of Law 231. Professor Fero Luzzi's preliminary conclusion is very comforting as he has found that Sparkle's compliance infrastructure is adequate to prevent violations relevant under Law 231.

Approximately EUR298 million were seized by the public prosecutor to cover alleged VAT liability and a first demand guarantee worth approximately EUR198 million has been issued to the prosecutor's office and the tax administration. Such amount is to be paid only in the event of Sparkle's liability is finally [a certain].

A round of discussion began with Italian tax authority immediately to reach a settlement agreement on the matter. Later on I will show you in greater detail the impact that this has had on our accounts. Yet, I can already anticipate to you that the impact on the 2009 profit and loss account is negligible as those facts occurred in the years 2005, 2006 and 2007.

Having said that, the Board of Directors yesterday approved Telecom Italia's 2009 fiscal year results and the 2010/2012 strategic plan update, which I will be sharing with you today.

Now let's look a little bit closer at our full year results. I'll be very brief because, first of all, we had already a conference call and 2009 is already well behind us, and I want to quickly move to the strategic plan update and the progress made in the first months of the year. You will find a full set of 2009 data, including the preliminary results, in the backup of this presentation.

In confirming the preliminary organic data presented on February 25, let me focus a little bit on free cash flow generation and financial debt reduction, which were not covered during that presentation and which remain the two pillars of our strategy.

In 2009 we improved our free cash flow generation by 12% year-on-year reaching EUR6.3 billion and we reduced our debt by EUR577 million, getting to an adjusted net debt of EUR33.9 billion at the end of 2009.

Based on these results and the positive outlook, the Board of Directors decided to propose to the Annual General Meeting distribution of a dividend per share of EUR0.05 for ordinary shareholders and EUR0.061 to our saving shareholders for a total amount of approximately EUR1 billion.

More in detail, we increased our operating free cash flow by approximately EUR700 million in 2009. The combined effect of increased cash generation and remix of the top line led us to improve the percentage of revenues turned into cash, bringing it to 23.2% while committing to a total CapEx of over EUR4.5 billion at the Group level.

During 2009, we succeeded in our goal of EBITDA stabilization both in organic and in reported terms. A reduction in interest expenses and a wide financial management allowed us to generate EUR3.3 billion of income before taxes, up by over 15% compared to last year.

Net income was EUR1.6 billion and was impacted mainly by significantly higher taxes compared to 2008, when we benefited from the tax realignment of fiscal and statutory values of depreciable assets, and the goodwill impairment related to the sale of HanseNet.

On December 31, 2009, adjusted net financial position reached EUR33,949 million down by EUR577 million from the year-end 2008. The overall plan when compared to last year's is affected exclusively by non-operating dynamics such as higher cash taxes, while operating dynamics are indeed improving as shown by the profit before taxes.

More in detail, tax payments accounted for EUR2.3 billion due to the extraordinary cash outflow resulting from the payment of the 2008 taxes and the taxes advance for 2009.

As anticipated in my introduction, all facts related to the Sparkle issue refer to the years 2005, 2006 and 2007. In order to provide you with a correct picture of the accounts in those years, in compliance with the International Accounting Standards, namely the IAS8, the 2005, 2006 and 2007 financial statements were restated.

Revenues and related direct costs booked from the business considered anomalies were subtracted in each year, while the commercial margins made, the VAT amount deducted and the associated legal sanctions and financial charges were booked to a specific provision based on a risk evaluation.

Indeed, we booked a provision for every fiscal year for a total maximum amount of EUR507 million as of December 31, 2009 impacting [per] quarter every fiscal year. Equity of each year has been reduced accordingly. As detailed in the slide, for the year 2008 and 2009, the only P&L impact is related to the financial charges worth EUR10 million each year.

Now let me turn to the business outlook in the future. The macroeconomic outlook for the years 2010 and 2012, shows a modest recovery of GDP in developed countries, while the growth of emerging markets continues to be driven by China and India.

In terms of the TLC market outlook, the main trends of the past few years are confirmed. In the telecom sector, mobile broadband continues to be the new growth area, followed by fixed broadband.

Looking at the domestic market, after the fall of 2009, a recovery of the Italian economy is expected in the next three years, not enough however to bring GDP in line with the 2009 figures. Inflation will stay under control, while unemployment will remain high.

Brazilian economy confirms its strong growth, with its telecommunication industry also growing in all segments, except the Fixed Line business as a consequence of fixed to mobile substitution, with a forecasted boom in the Mobile Broadband business as we should see in more detail in a little while.

This is a completely different scenario, when compared to one of our last meeting in 2008, when we presented our strategic plan. Nevertheless, we stick to the path outlined at the time, mainly improving cash flow generation and strengthening our balance sheet. We focused on core markets, namely Italy and Brazil, as you remember from the [longer] presentation; on capital discipline; on cost reductions. All of which are under our direct control.

Despite the difficult situation, in 2009 we met the goals we gave ourselves last year. To recap, the best performance was achieved in Wireline, where the number of our lines and market share losses have been progressively decreasing. Conversely, improvements in the Mobile business have been slower, in light of the very radical yet necessary transformation the business is undergoing. A complete change of the business model was needed, and we introduced it both in Italy and in Brazil.

Telecom Italia moved from a push to a pull marketing approach, mainly through the following measures; a more transparent and competitive service portfolio; focus on services, rather than handsets; and effectiveness of the distribution network through the addition of new sales channels; and a big change of the existing incentives mechanisms.

The goal was to move from an attitude of benign neglect of the competition to a vigorous attempt to broaden the community of loyal and satisfied customers. We are already enjoying substantial results of the turnaround in Brazil, and we are more than confident that the same will happen in the domestic Mobile business, as shown by the first progress of this year. Mr. Patuano will give you more details on this a little bit later on.

Given our presence in two core markets that are at very different stages, in terms of both economic and telecommunications development, it is clear that a differentiated approach is needed in order to successfully compete in the two arenas. Let me expand a little bit on this.

As far as the mature markets are concerned, to address the significant challenges facing the industry in the next few years, telcos must engage in a deep transformation, leveraging efficiency and customer satisfaction, to protect the value of connectivity, as well as to reinforce free cash flow generation.

Protecting the value of connectivity requires being able to offer customers a superior quality of experience, in a timely manner and at competitive price. This implies the development of a new operating model, based on an all IP, ultra broadband, integrated, flexible and open network, leading to a dramatic reduction of costs per megabit per second; a completely redesigned IT architecture, capable of competitively delivering a complete new layer of services to our customers; and end-to-end approach to customer operations.

At the same time, telcos will have to develop more advanced applications and platform services, leveraging on their core competencies, to position themselves as value-added intelligent gateway between end users and operators of convergent markets; thus producing new revenue streams. Mr. Cicchetti, again, will further elaborate a little bit later on this, this morning.

Brazil is a country characterized by solid GDP growth, public finance stability, improving level of social inclusion, and fast digital development. The TLC market is large; around BRL100 billion, considering mobile, fixed and broadband, and growing, especially in the mobile voice component, through the fixed mobile substitution, and in the mobile and fixed [asset] business through internal penetration.

In this market, TIM is the only operator capable of pursuing an aggressive fixed to mobile substitution strategy, acting as a pure mobile challenger. This year, TIM Brasil is entering a growth phase, by seizing the huge opportunities offered by the Brazilian market, related to the fixed to mobile substitution and the development of the broadband through distinctive market positioning.

In particular, the plan for TIM Brasil is based on three development pillars. The first is increasing penetration, second is increasing usage, and third is data development.

The integration of Intelig sets the ground for expansion in the world of data and convergent services, through its fiber optic infrastructure. With its innovative proposition, its improved quality of service and its great capabilities, TIM Brasil will deliver high single-digit growth in service revenues in the next three years, while assuring EBITDA stability at the Group level for 2010. Mr. Luca Luciana will guide you through the KPIs of our strategy in Brazil in a little while.

Our strategy will deliver sound free cash flow generation at Group level. This remains our key priority, and will be achieved through a combination of a rebound in the revenues and continuing cost efficiencies; a selective approach to capital expenditure, strictly focused on business driven projects, as we will see later on, will allow us to generate a cumulative operating cash flow of EUR21 billion for the 2010/2012 period, and reach the target of 26% for the operating free cash flow to revenues ratio in 2012.

An effective management of working capital, as well as financial charges, will allow us to generate a cumulative free cash flow before dividends of around EUR10.5 billion for the period; also taking in consideration the full Sparkle burden.

Cash flow will be used to continue our debt reduction and to remunerate our shareholders. More specifically, we confirm our 2011 goal of reducing debt by EUR5 billion, and target a net debt of less than EUR28 billion in 2012. This will give us the flexibility to propose a growing dividend policy starting from next year.

Now, let me give a closer look at the domestic business. To perform the transformation journey, our strategic priorities for the domestic markets are reaffirmed. We must reverse the revenue trends; rationalize cash costs; reach excellence in customer satisfaction; enhance regulatory dialog.

The traditional paradigm one network, one service is over. Internet protocol has already transformed network architectures and business models. We see three definite challenges.

The most important one is to protect our core revenues and margins in voice and broadband. Here, we will compete with traditional operators and innovative players, by providing communication and enriched connectivity to consumers and businesses.

The second is related to the new network based services. I'm referring to the services like content distribution and cloud computing. In this area we will try to attract service providers to use network intelligence, in order to reach and serve their customers.

Finally, we need to improve our capabilities in managing low cost, no touch networks, and become a very efficient [BID] carrier. Our future depends on an effective combination of those business areas. We will invest both in terms of know-how and financial resources to win these challenges, as Mr. Cicchetti will explain to you a little bit later on.

In other words, we have to protect the access and voice market to consolidate our leadership in the growing broadband market, and to cooperate with other relevant players in the application and platforms arena.

Let's now focus on the transformation of the business towards a leaner organization; a process that we have been showing to be quite successful in achieving.

You already know my vision; implement a leaner organization is a must for any [candid] operator, to test -- to lock in its customers, while delivering services at lower cost. I will never stop repeating that there will be always ground for cutting costs in an incumbent telecom operator. And I'm saying this, even though we feel we are one of the most efficient telcos operators among the traditional big telcos in Europe.

In order to achieve this target, being, as I said, one of the most efficient telcos, I think that this is not enough. We have to become first-in-class in each and every layer of the business process; efficiency in IT solutions; customer care; service provisioning must be pursued; competing in terms of cost structure with the leaders in each business layer.

On this specific topic, we are progressing towards a lean organization, reaching the expected results in our headcount reduction plan. In less than two years. As you know, we have reduced our domestic workforce by 10%, and further reduction will come.

But I must stress that what we are doing is preparing ourselves for competing. And we are already achieving this. We are competing in a very -- in a completely different arena from what the telcos are experiencing. We want to be leaner and leaner because we want to transfer the benefit of this increased productivity, increased efficiency, to our customers, to our shareholders, and to all our stakeholders that benefit from the growth and prosperity of Telecom Italia.

We are making significant strides ahead on cash cost efficiencies, with a further EUR0.7 billion in 2012, added to the EUR2 billion for the 2009/2011 program. This plan, mainly on OpEx, will allow us to reach our target of around 65% of cash costs on revenues in 2012, with much of this already apparent in 2010.

Our goal in 2010 is to generate approximately EUR1 billion worth of cash cost efficiencies, accounting for 53% of the total plan, which is, as you may call it, a definitely front-loaded plan. We don't want to say that we will achieve the targets later on. We have already achieved the targets. We will be achieving the targets in 2010, and we will continue our work in becoming the most efficient company in this world of traditional telecommunication companies.

Moving to the so-called driven items -- the volume driven items, our objective of reversing the revenues trend will be fuelled by approximately EUR1.2 billion worth of spending. These investments are partially financed through the reduction of interconnection costs, also stemming from the gradual reduction of the symmetry in interconnection rates that will definitely disappear by July 2010 for the Fixed business, and by July 2012 for the Mobile business.

Domestic CapEx at EUR3.5 billion in 2009 will gradually decrease to approximately EUR3 billion in three years. Such decrease will come mainly from lower costs of equipment and IT, and service platforms.

In IT, savings will come from architectural streamlining and suppliers' consolidation. In service platforms, developments will increasingly be concentrated on over-the-top overlaid platforms, which are much less capital intensive than platforms developed within the traditional network intelligence.

In Wireline access, CapEx in VDSL and SDX platforms will grow. While in wireless, investments will mainly support the Mobile Broadband business growth. Mr. Cicchetti will elaborate, again, on this, while providing details on the evolution of our access and core networks, and on IT platforms.

Looking at commercial CapEx, one of the key levers for spreading our commercial proposition and recovering market share is, by all means, represented by the full implementation of our sales network reorientation program, both in terms of size and point-of-sales mix.

We will reinvest handset subsidy savings in the expansion and restyling of our points-of-sale; making them more and more appealing, with an innovative layout, in order to increase and improve our acquisition ability. We are not cutting costs when it comes to the marketing effort. We will be increasing substantially our marketing effort, through the realization of the savings that we will achieve through our plan.

In our strategic vision, customer satisfaction is a key factor for growth, competitiveness and customer loyalty. Therefore, our task is to provide a highly competitive, value driven and well recognizable customer experience.

We plan a further push to improve our blend values, and simplify our portfolio offerings, with no-frill tariffs and clear convenience advantages. On technical quality, we will leverage and pass on investment in capacity and coverage, delivering a distinctive customer experience in the Mobile and in the Fixed business.

Regulation will provide an important support to our plan. In the next three years, in retail markets, we aim at further reducing exempt regulation and achieving greater symmetry between TI and [the others].

In the wholesale markets, we are looking for a continuous reduction of the gap between Italian LLU rates and European average, through the implementation of the [BU] long ranging trends and cost model, as well as the symmetric fixed termination charges between Telecom Italia and the alternative operators.

With reference to the next generation access network, we expect a regulatory approach deeply different from the one applied to legacy networks, with either symmetrical or no obligations where no bottlenecks exist. In any case, NGAN wholesale access prices should include a proper risk premium, and take into account the various levels of competition in different geographical areas.

Now, I'll give the floor to Mr. Patuano, who will guide you through the key pillars of our Domestic operations in the next three years, and will show you the progress made in the first months of the year. After that, Mr. Cicchetti will focus on network and IT evolution and related CapEx. Mr. Luciani will then set out our strategy in Brazil. I will come back to the stage to talk about the financial highlights. And as I said, we will be joined by Mr. D'Angeles, our Group Controller, for the Q&A. And I'll be back at the end, to wrap up and to share with you our targets.

Thank you for your attention. Thank you very much.

Yes good morning it's -- I'm sorry. Okay. It's Carola Bardelli from Deutsche Bank; I had a couple of questions if I may. So the first one is about dividends, so you mentioned increasing dividends, maybe you could give us your assumptions included in the business plan for the last year dividend and maybe year-by-year if possible?

Disposals instead were not mentioned, so I just wanted to confirm that, for example, [Cubo] is no longer going to be disposed, [Sofora] probably is unlikely to be disposed either and I wanted to know what's happening on Argentina?

And also going back to dividend maybe the usual question; does it make sense to pay more than a 7% dividend to the savings considering that the cost of debt is below 4% post tax, so maybe you can give us your latest thoughts on the subject?

And finally, on Mobile if we could have an idea of the underlying assumptions in terms of traffic growth as I saw March growing already in Mobile, so traffic growth in 2010 and on the other side the average revenue per minute decline that you are [importing] in your estimate?

And very final question, what handset sales decline you're considering in 2010, because I saw of the revenue decline a good part is still the handsets? Thank you.

Mrs. Bardelli, as usual the questions are very, very to the point. On dividends first of all, I said that we will be -- we are thinking about a growing dividend policy in the long-term given the free cash flow generation that I presented. I think that this dividend policy is fully justified.

I must say, of course, that I think that given the confidence that we have in the plan we could have thought even of increasing the dividend policy this year. Unfortunately, we had the problem that we discussed at the beginning of my presentation and we decided safely not to increase dividends this year.

But I think we will want to give a stable growing dividend over the year. I think that this policy is fully justified and we are very confident that we'll be reaching exactly the targets that we define.

On disposals I think that last year we mentioned a plan that indicated EUR2 billion to EUR3 billion of disposal over the period. The 2009 was not the best year for selling assets and I think that the only sale that we achieved last year, HanseNet, was in a fairly good condition given the market situation.

I think that things will improve longer-term. We may consider something else in order to achieve the plan that we declared. By the way, the plan ended in 2011 so there are still two years before achieving the end of that plan.

On Argentina the process for the disposal of Argentina is underway despite all the vagaries that we have seen in the country and despite all the drama that we have also seen concerning this disposal, but the process is in place. And we think that we will be reaching a conclusion for this process clearly soon.

On savings I do not have -- I mean my recent thinking looks very much as my old thinking. I think that there is not much that we can do about this. It's not our priority to think about a conversion of saving shares. I reckon that the problems you mentioned are fair and -- but I think that the benefit that this would have is really minimal and, therefore, it's not our priority to concentrate on this for the time being. Although, long-term I think that it is safe to think and I think it's fair to think that a consolidation of the capital structure.

On the last two questions I would ask Marco Patuano to answer, first on Mobile and then on handsets; thank you Mrs. Bardelli.

Yes, the total outgoing traffic -- let me focus on the outgoing, I suppose that was the scope of your question. The total outgoing traffic was about 93 minutes per customer in 2009 average. It will move up to 114 minutes/115 minutes, so this is an increase of about, let me say, 20% average.

The price; the price will go down, of course it was -- I'm referring to the price of the outgoing traffic, from a blended average of EUR0.12 to a blended average of EUR0.104/EUR0.105.

In terms of handset, which was the last part of your question; it is -- I think that the lady has something else, (inaudible) microphone. Handset the difference is approximately EUR180 million/EUR200 million in 2010 for a volume of approximately 300,000 or 400,000 pieces. That's Italy. If you want Brazil figures I'll leave to Luca.

We're just integrating. We will report something like 50% reduction in terms of handset sales in the first half of the year and then roughly 40% in the second part of the year in terms of revenue from handsets. Obviously on the other side we report a better DDA, because handsets actually in Brazil are very heavy.

Good morning, Mathieu Robilliard, Exane BNP Paribas. A few questions, first on Brazil -- I'm here. On Brazil you talked about an acceleration of revenue growth in Q1 and for 2010. Now, my understanding from the slide is that it's essentially linked to the inclusion of Intelig. So my question was what would be the growth in service revenue growth -- sorry, in pure mobile excluding for that? And it seems that there is an acceleration actually on pure mobile in 2011/'12 in your slides, so [I] also wanted to understand what explains that?

Second in terms of 3G coverage again in Brazil, how would you benchmark yourself versus Claro and [Vivo], it seems your coverage is probably a bit lower, so I'm trying to understand how you could reconcile that with what you guide for in terms of CapEx, which is declining CapEx?

Third question on Brazil, do you feel you have any disadvantage by not being part of a large regional player in Latin America in one way or the other?

And finally, just coming back to the dividend is there any metric that is going to be very important, crucial, to determine the dividend policy. Is it EBITDA, is it net income or is it a combination of all these metrics? Thank you.

Number one, when we refer to service revenue growth we basically have the same figure on TIM standalone and the consolidated one, because of the size of Intelig is up to now -- let me say, is quite marginal on the total blending. So when we say we will report mid single digit growth in Q4 it is exactly the same at consolidated level, at TIM level.

When we do say that we do expect a faster growth during this year/next year it is the same at TIM level and consolidated roughly. Obviously, looking forward contribution of Intelig will be more important, but we start from, let me say, EUR13 billion compared to less than EUR1 billion, so that the blending effect is not so large.

The second question is regarding the 3G network. If you look at the number of Node B that we do have at the end of 2009 it was roughly 3,000 compared to more than 5,000 than the incumbent [in Vivo] and Claro is quite similar.

Just in the first quarter we will turn on -- switch on something like 2,000 Node B. It means that up to now our coverage in terms of city is in the range of 50 cities compared to more than 500 of Vivo and something like 400 of Claro. Obviously, one thing is if you cover San Paolo, another thing is if you cover marginal city, so that is not the apple and apple.

Our forecast is to touch 50% urban population in the short run; 75% in mid-term. It means that overall we will install something like 6,000 antennas more reaching more than 1,000 cities in 2012; so that is a very fast roll-out exercise.

It is important to note that the price per antenna, the price per Node B is dramatically falling, so that for some aspect B, a [smart follower] presents some advantages from a capital expenditure standpoint than the front runner.

On top of its quality, what makes the difference? We will upgrade the network up to 40 megabit per second in down link and 2.8 -- sorry, in downlink and 2.18 megabit uplink in many cities starting from San Paolo in June/July, so that we do think that the same solid approach we followed on the 2G network will be a repeat on the 3G.

The other question was relevant to the few presence in other Latin American countries. My perspective is quite different -- quite different. If you compare GDP just of San Paolo state it is larger than the Argentina GDP. So that Brazil is by far the larger country in Brazil, the scale and the advantage of this scale you can reach in Brazil is much more relevant in the rest of Argentina or Latin America. So that obviously a larger presence could be better from a footprint standpoint, but if you look at the revenues, cost and return Brazil is by far the most attractive market in the area.

Thank you Luca. Please.

Hello yes, Justin Funnell at Credit Suisse. Just again on the dividend, I guess if you hit your plan there's going to be some excess cash flow to hit the target targets and increase the dividends. If we look at the downside case where the EBITDA targets missed a bit, are you going to be flexible on the debt reduction targets and, therefore, allow for a dividend increase? Or is it crucial that you hit those debt reduction targets first and foremost?

Secondly competition in domestic Mobile, you've made some big moves in pricing. It obviously made sense, but your competitors may react. Are you seeing any competitive reaction yet in the market?

And then thirdly could you explain in a little bit more detail how you plan to get handset sales down further in 2010? There was also some big changes in '09. Where are the further savings coming from in 2010 please?

On the debt target I think that, I mentioned the fact that in terms of restatement of our debt indicators compared to other companies in Europe we are much better off. And if we compare on the basis of what the rating agencies say in terms of debt we are not in the position that appears when you look at the raw figures where we appear in a much higher debt to EBITDA ratio.

Therefore, I think that what we really think is that our debt has to go down long-term. We are not -- I don't think we are -- nothing longer so rigid in terms of what we think is the absolute value that we have to reach, because we are confident that we'll be reaching that value.

At the same time we want to have a growing dividend policy but again the growing dividend policy must be with respect to our overall target, consistent and stable long-term. And of course, in order to sustain a consistent and stable long-term increase in the dividend policy means that we have year after year to reach the targets in terms of debt.

So it will be an overall consistent framework that we will be adopting and we will be -- we are very confident that we'll be reaching the targets that we have indicated.

On the second question I'll ask Marco to answer.

Well first of all, let me start from a slightly different perspective. At the end of 2008 our price premium was approximately 30% over border and in the region of 40%/45% versus wind. At the end of 2009 we are still price premium versus border and we are still price premium versus wind.

What happened, if you remember, just afterwards our price increase [was indeed] a very similar move; they increased prices, but they reinvested the price increase quite soon. So at the end of 2008 the price even after the price increase was approximately the same level it was before the price increase.

So what is happening now is that we are reducing, we are closing a little bit the gap. We are still price premium, but we are closing the gap. So what we did was not working on a price per minute, because if we stay on the price per minute war we stimulate our competitors in reacting in order to keep the same gap between our prices and their prices. So what we did was to work on a totally different concept, which is working on a very large on net community, TIM for two, TIM for all, team for all included fix termination and large bundle of minutes.

The first reaction we saw was price promotions basically from Vodafone, intended to defend the customer base. It was a self-recharge, those mechanisms that increase the value of the top-ups, which is a quite defensive move. So we didn't see any aggressive reaction exactly for the reason I explained to you. We didn't phase on the same battlefield, which was the price per minute -- price per minute.

Wind, let me say they didn't change very much their strategy. They are still on the same path they were working on starting from long time ago. They are very consistent.

Handsets, first of all once again in the recent past our participation to the overall volume of sales in the Italian market was much more than proportional compared to our market share; so we were selling almost 50%/60% more than -- our market share on handset was 50%/60% higher than our market share on SIM cards. So the first cut was just to reshape. And the demonstration was that the space that have been left by TIM was not occupied by other operators. It was the free market, so the handset manufacturer who started selling directly their phones, especially Nokia in Italy.

Now what's going on? Well, what is going on is that what we want to push is smart phones, not necessarily 3G smartphones, there are also 2G smartphones, but smartphones. It's quite interesting that the average price of those smartphones is going down. So now you can find good handsets in the area of EUR150 or $200, even less than $200.

Also, because there is a large interest to develop low price smartphones dedicated to emerging markets and especially dedicated to Brazil. There is a special focus onto Brazil and the reason is the development of the broadband. So the handset cost is going down.

We are not interested in selling huge quantity of low-end handsets. We are interested in selling those handsets, which are enablers for new services. Of course, our partners are free to buy further terminals if they want from the free market, so no problems.

Okay, next question? I have a question there.

Stefano Lustig, Equita SIM. I've a couple of questions for Mr. Patuano. The first one, you gave evidence of improvement at the Mobile, with stabilization of customer base calling and some growth in the outgoing traffic trend.

If I look at your slide number six, it seems that for Q1 the domestic revenue trend can be minus 10%/minus 9% more or less with a target of minus 4%/minus 5% for the end of the year. The question is if you are forecasting Mobile to have positive top line trend, some time between Q3 and Q4, and this is the first question?

The second question is on handset and dealer network, because of the new policy with the handset, I wonder if you have an estimate, an idea of the reduction in sales turnover by your average dealer. And what changes did you introduce for the dealer network in terms of remuneration package to maintain their loyalty too?

Okay. Top line, you're right, Q1 will be somewhere below 10%. It will be a high one-digit rate for the Mobile. I'm anxiously waiting for the figures coming from the Group Controller. But let me say that consumer is in line with our expectations. Business -- small, medium enterprise very interesting in the dynamics and top line is continuing to perform well, I would say, in the first quarter.

So the core of your question is when we do expect to cross from negative to positive. You said [probably] it's somewhere in the third quarter. Let me say yesterday, we were talking internally and it sounds like back to school, back to positive; it sounds something like this.

Dealer and handsets, that's a very interesting question because it's not obvious that a reduction in the volume of handsets ends with lower profitability for the dealer chain. Keep in mind then that when you push very hard on the volumes from time to time you discover that you bet on a specific handset and then it end with a stock that is very difficult to be sold and you have to cut prices.

Now very honestly, at the end of 2009 and the beginning of 2010, we had several dealers very worried about their P&L. So I personally started traveling together with Mr. Fabrizio Bona meeting them. We traveled all across Italy and we met all the majors, all the most relevant ones and we explained that the new portfolio is paying much more than our competitors; we are paying well above the market for new acquisitions.

So what we told them, you are a point of sale; you're not a point of caring or a point of retention. You are a point of sale; you have to sell. So it's very interesting that the average that I showed you is not very representative of what is happening. There are [partners] that are doubling their sales and this is absolutely true.

Now the ones who are changing their business model are already experiencing that this model pays. Just to give you an example, in January and February we paid more commissions in 2010 than in 2009, but those commissions are based on sales, which is good. They are not based on other activities, co-marketing or whatever you want they were doing. I don't want to say that they were not doing anything. We are asking them to sell.

Now, of course, every single month, we give to the dealer chain a specific topic on which they have an extra premium, MNP can be one or a predetermined threshold of sales and so on. So we are very much -- we're paying very much attention on our dealer chain, even if we are 100% sure that some of the dealers in our sales chain have to die.

Next question please?

Thank you, it's Guy Peddy from Macquarie. I'm just in a bit of a dilemma here please.

About what?

I'm in a bit of a dilemma here, because I'm just struggling to understand one of your messages. We're talking about a scenario where handset costs are coming down, infrastructure and CapEx efficiency's coming down, but all your peers benefit from that as well. So what is so special that Telecom Italia should be able to deliver better revenue growth, market share improvements, lower absolute capital intensity? And why shouldn't all your other peers get those same benefits? If they get those benefits, why through market activity won't those benefits just be eroded away?

Well, I think that we start from a situation where we had -- if you're talking about the domestic market, and then I make a comment on the international.

We started from a position where we had a much higher price premium than others and this higher price premium was justified by the fact that we had a higher quality in the network, higher coverage of the network and higher quantity of the network. And for a long period of time, we though that this was enough to justify a very high premium on our services. Then, of course, we realized that competitors went ahead in terms of network, network quality and we did not realize enough that the gap was widening in terms of the premium.

So what we decided to do, and given on my strong belief that in the benchmark against which we are competing is not the benchmark of the best in class in our sister telcos around the world, but it's a completely new paradigm of doing business in the telecommunications business. This is what is driving our relentless effort to drive down costs, because we think that the overall paradigm has changed.

We are not -- in the telecommunications business, there is a benchmarking exercise that each one of us does against the others, but what we are comparing when we benchmark ourselves against the others, we are comparing a different breed of animals compared to the new breed of animals that is showing up in the market. My aim is not to compete against our sister telcos, my aim is to compete against the over the top layers that will be providing services at a completely different kind of economics than the one we were used to.

So we have been driving down costs because of this. We are passing through this decrease in costs in terms of prices. This is bringing down prices, which is reducing the premium but, at the same time, enhances the premium we have on quality.

I think that in some time people will realize that we are not as expensive as we were before, but we have a much higher quality than the others. And this is true in the broadband network -- in the mobile broadband network where we have a complete coverage of the EDGE infrastructure. This has given us, which is not recognized yet, a much higher competitive advantage over everybody else.

When people will realize that with this dramatic growth in data traffic that we have, the capacity is not enough to satisfy consumers in other, in our competitors' network, and is enough to satisfy the need of our consumers in our network, because we have a complete EDGE network which covers the spots where we don't have the UMTS, then people will realize that the quality is much higher. This is the path that we are following and this is the path that we will be increasingly working on.

Justin Funnell again; just a couple more questions please. On your unbundling rates, you obviously had some good success 1.5 years ago increasing the wholesale prices in Italy. As I think we last discussed, you're seeing a potential change in the cost model at [AGCOM], just wondering what the latest stage of your discussions are and to what degree you're working on network efficiencies and moving to all IP could undermine your efforts to increase your wholesale prices?

Now secondly, on the fixed line, the line losses is very impressive, particularly on the business customer side. Do you think that's the economy picking up, or do you think it's problems at Fastweb relating to obviously the recent press? Yes, those are the main questions. Thank you.

On the wholesale fixed market, what is happening is that AGCOM is going to develop a new network cap mechanism for the wholesale access service to be applied for the period 2010 and 2012, which will be based on a bottom-up long run incremental cost. I think that the decision will be taken in the next few days and we are very confident that this will improve our competitive position.

As I said many times, we are suffering still from the fact that our unbundling of local loop fees are lower by a margin of 15% with respect to the average European price. So the average is around EUR10. Our ULL fee is EUR8.50 and we think it is fair in the long range -- in the long run to bring our fees to be comparable to the European market. Now this is a process that will take some time, but we are very confident that we are on the right track to achieve this.

I think that the -- on the regulatory, I would quote what was achieved in the retail market. As you said, it's been quite successful, because AGCOM has allowed us to launch bundle offers that strongly improved our competitiveness, the elimination of the price cap and the forthcoming adoption of a new procedure for the retail pricing test, which will be in place by May 2010, all this will give Telecom Italia along with the higher symmetry in the offerings a much higher commercial flexibility.

And on -- just to answer on the fixed line and on the reasons why we are being so successful in reducing the fixed line decline, what I would say, of course, is first of all that after a long period of excitement, of hype about competition, people realize that after all good all Telecom Italia is doing a good service and there are lots of people that prefer to come back to Telecom Italia.

And second, there was an -- how can I say? An asymmetry that was excessive with respect to what I would call normal competitive conditions, even considering a market position. Therefore, the changes that have been introduced in the symmetry in the last 18 months, I would say go in the direction of allowing us to compete more fairly with the others. But I'd like Marco to add something on this if he thinks it's --

Yes, thank you. You touched a very important point that the effectiveness of our win-back is much higher now that the timeframe for the activations is much shorter. I would say that looking backward there are several elements. I would say that what happened to Fastweb is, I would say, irrelevant or very little relevant.

Macroeconomic, yes, it has an impact. We are definitely dominant when there are -- we are the first choice when a new enterprise starts operating. Since -- within the end of 2009 and the beginning of 2010, we saw several micro and enterprise, or shops, or new commercial activities starting again. We have a very, very high market share on the new services.

Second is the effect -- the positive effect of the quality. It's 100% true that our quality is improving, 360 degrees. We are improving in delivery. We are improving in the systems. We are improving and we launched a specific marketing campaign in which we said we are the only one who can repair your phone in 24 hours, and that's true. We are the only one who takes the legal compromise to repair every single fault in 24 hours, which is quite important if you are a business customer.

If I look to the future, there is something even more important in terms of reducing the portability or in order to increase our performance. From now on, every single migration has to be done with a specific code, a specific number, which identify the customer. Now this code, this number is totally proprietary of each customer, it has to be written on the bill. I think that the process will be much more fair and when the process is fair, we have just to benefit from it.

Next question please?

Yes, it's Tim Boddy from Goldman Sachs. A couple of questions, yet another question on Mobile; you talked about ARPU stabilizing as we go through the year. Could you just -- but being diluted initially, can you just explain more about how that process works and what the stabilization depends upon?

And secondly, in terms of savings, the Chairman mentioned that there's more savings to come from the initiative with Telefonica. Are they then included in the overall EUR2.7 billion or could they be incremental?

And lastly, there seems to be a gap between your expectation of rising EBITDA over time, less EUR12 billion of CapEx, obviously leaves you something more than EUR21 billion of operating free cash flow. Can you talk about restructuring charges or working capital outflows that could account for that difference?

And then last, what are the main risks you see to your plan?

On the first, I'd like Marco to answer and then I'll come back on the second and on the third.

Yes, thank you. When you launch such an aggressive communication campaign, it's normal that the first customer who optimizes the spending is your own customer. So, you have a phenomena of cannibalization on a portion of your customer base.

When our marketing people did the math for the break-even, the math says you are in a break-even situation if at least 30% of the customers are up-selling or new customers, otherwise you are cannibalizing.

At the very beginning, as I told you, it's normal that, if -- I use my wife as a good example. She's a TIM customer. She spends approximately [EUR100] per month, and she says with [EUR20] I can talk with less than -- with [EUR15] I can talk with you and with your mama, with all the TIM customers. So, she optimizes very much her spending. This is the reason why, at the beginning, there is an APRU dilution.

Now, what this started -- just afterwards, it starts a process in which the person talks with another person and says why don't you join the community? And it works. It works.

Now, there is another element, which is important. If you look to the average outgoing on net ARPU, it is EUR5.5 per customer. Now, if you imagine that the customer adopt a TIM for all proposition, it's EUR3 per week. So, it's not necessarily EUR14; so, EUR5 to EUR14.

So, when we started, the cannibalization was very high, because just -- I would say that in end of November/beginning of December, it was hard to stay calm. The percentage of up-selling customers was about less than 10%. Nowadays, approximately 54% of the customers are in a situation that are new customers or customers with an average spending below the one they will adopt from that moment on.

Of course, those customers are absolutely excited because the usage, when we talked before, 93 minutes per customer means three minutes a day. If I talk with my mother, I have to be silent for one week. And those customers move from three minutes a day to a normal usage, in which they can talk with their friends with no fear, and it works. When the customer activates the service, they stay with service. This is the most important signal we have. When they activate this service, they stay with it.

It is the same for Infinity. When they do activate Infinity, they like and they stay. You have to try. You understand there is no trick, and you will like.

On the other questions. On the savings with Telefonica, they are already included in the plan. But what is not included is the sharing of best practices concerning the top line. We have done a lot of sharing of best practices with respect to this. We have taken the best practices of Telefonica in relation with the small and medium sized business. The offering of [Intesa's percentage] is partly designed on the experiences of Telefonica. Vice versa, Telefonica has taken from us some experiences in the mobile broadband.

So, the sharing of best practices in the top line is not included. And I think it's giving us great ideas and suggestions, but it's difficult to insert these ideas and to quantify these ideas.

Restructuring charges; we will fully absorb the restructuring charges that are related to the new plans for efficiency. So, there will be no impact on this with respect to the figures that are already included in the plan.

And concerning your last question that is risks of the plan, I would say that, from -- if I list the four categories of risks, regulatory, I would say that we have been steadily improving our situation. And I don't see any risk for an inversion of the trend on a better regulation.

On the market, I would say that, given the general macroeconomic environment in Italy, which is, I think, better than in many other countries. But of course, it's still suffering, as every other country, from the consequences of the recession. I don't see any possible worsening of the situation. And, given the initiatives we have taken to regain competitiveness in the market, I don't see any negative impact on this.

On costs, I think that we have shown consistently in the last two years that we are able to attack costs. I think that we have more to do, and I don't see anything that will prevent us from doing this. We have been doing it always in an orderly way, negotiating with Trade Unions, in order to do the restructuring in a socially acceptable way. And we don't see any risk for a negative impact that will prevent us from going ahead on the cost restructuring.

On the fourth category of risks, the financial risks, I would say that here, there may be the opposite critique that one could move. We are playing it perhaps too much on the safe side, because we have -- as you have seen on the figures, we may be criticized for having an excessively high carrying cost because of liquidity, because we have a very liquid position.

But we think that, given -- from where we are coming, this is a cost, a premium that we have to pay, in order to play it on the very safe side. Longer term, I think we could be a little bit less conservative with respect to this. But I think that it's not yet the time for doing this.

So, all-in-all, I see, of course, that the risks are there. And looking, with the benefit of hindsight, in December 2008 when we presented the ambitious plan that we are realizing now, I would have not imagined that GDP in Italy and in many other countries would have fallen by 5%; the worst decline in 50 years.

So, I cannot forecast the future, but we have shown at the same time that, despite the very difficult period that we have been facing in 2009, we have been able to deliver not the revenue side, because the revenue side was affected mostly by the marketing policies that we did, but also from the macroeconomic impact. But we have been delivering on the targets that we have set.

And to be very clear on this, I consider that the aim of a listed company is to look at the bottom line, and not at the top line. The top line, I think, has been in fashion for a long period of time, starting from the new economy period, when there was a big hype about the multiples of the top line. I'm a rather old manager and I'm fairly conservative manager. I'm looking at the bottom line and the remuneration of shareholders. That's my key priority.

Now, I think we have one more question, but then we have to move to questions from your colleagues that are following us on the web. And so, I'm taking one more question from the floor and then I'll answer to the questions from the web. Please?

Torsten Achtmann, JPMorgan Cazenove. On your growth expectations for the domestic Mobile business in 2011 and 2012, can you give us some more detail of the split of that growth, so i.e. voice versus data, and market share gains or market improvement versus ARPU?

And secondly, on your slides, you've shown that you expect to fix broadband ARPU growth. So, if you can explain where you can see that coming from? Thank you.

Okay. First of all, as I told you before, the growth is driven mainly by a growth in the calling customer base. Because the voice ARPU is expected to remain flat over the period. So, the growth comes from -- one side is the growth of the calling customer base; on the other side, mobile broadband.

Mobile broadband is expected to grow significantly, both in terms of users and in terms of usage. As Mr. Cicchetti explained, we are forecasting a growth in terms of volumes of petabyte reaching 140 petabytes, which is a quite impressive figure. So, those two are the drivers of the growth.

The handsets will be not part of the game. So, they will be approximately irrelevant in terms of impact, in the sense that probably 2010 will be, I would say, the lowest -- 2011/2012 in the blended figures, it's not material, the contribution to the overall growth. So, it's a growth of service revenues.

Fixed broadband; fixed broadband, there are two drivers. One is we are moving more and more customers on that offer. Today, the percentage is high, but we want to lend in the region above 90%. So, this drives up the spending.

The other is, we can't continue selling just connectivity. The IPTV is one driver. It's quite demanding, in terms of network requirements. But what we launched in the beta phase, today we have launched the beta phase for what we call CuboVision. Cubovision is an over-the-top TV, which aggregates traditional media, media on demand, and Internet guided access on the TV set.

We do believe this tool is much less demanding, in terms of network architecture, because it's not in a multi-casting or uni-casting. It's not -- it doesn't work in a streaming session. It's a download and play. So, it's much less demanding on the network for Mr. Cicchetti's development and spending.

So, what we do is, we want to deliver to the customer, if the customer has a good network, we add onto the traditional access, on the broadband access, we try to sell IPTV. If the network is not enough performing, or if the customer already has a satellite TV, we add on top to the traditional access these over-the-top TV or over-the-top media gateway, which is particularly interesting.

The beta is expected to end the beginning of June. Our innovation team is working hard in order to deliver it before the soccer world championships we're waiting for.

Thank you, Marco. I think I will take now questions from the web, because we are running late and I think you are hungry. So, please from the web, we have a few questions.

The first question from the web from Ottavio Adorisio, Societe Generale. The previous targets indicated in 2008, 2011 revenue growth of more than 2% show a comparison to the fiscal year 2009 revenue reduction of 5.6%, and a guided negative growth of 2%/3% for fiscal year 2010. What are the data points that would give investors confidence that new revenue targets are achievable and not too ambitious?

Let me -- well, I mentioned already that 2009 was, of course, the worst year since the post-war period.

But I think that there are other important things that you have to consider, when comparing the two figures. First of all -- and which is something to take into consideration, the previous plan was based upon also the dynamic of revenues of HanseNet. Taking out HanseNet, this would have taken off 1 percentage point in the growth of revenues over the previous plan. So, it would be 1% less without -- it is 1% less, purely for the effect of the deconsolidation of HanseNet.

And, of course, there are other problems, but I think we have covered many of the explanations during the presentation of Marco Patuano.

And also in Brazil, more or less the same thing happened. We had a strategy that was coming from the years 2006/2007 that pursued in 2008. We changed completely the strategy and, of course, the management. And what we have been achieving in 2009, although we suffered quite a lot at the beginning of 2009 for the first three quarters, is a complete turnaround of the situation in Brazil.

After three years of pain, now we are seeing the gains and are doing -- I think the management -- all the management, Luca Luciani is doing an excellent job; the whole management in Brazil is doing an excellent job, and we are seeing the results.

The same is happening in Italy. Again, we suffered the pain and, in a sense, we inflicted also the pain ourselves, because we were over confident when we increased prices in the middle of 2008. Now, we are seeing customers coming back, usage increasing and all the right things in the right place, to achieve the results that we are expecting.

Next question from the web?

A question from [Eduardo Soares] on TIM Brasil. In your plan, you mentioned MoU will increase up to 180 minutes per user. Can you elaborate on current network quality and investments required to achieve that level?

Luca?

Definitely. Number one, we are exiting from the promo market. So, that there is a substantial difference between, for example, the 130 minute jump that Vivo reported in the fourth quarter with the ARPU dilution, compared to the 99 minutes that TIM reported with ARPU accretion. It's because, as mentioned, we do only sell tariff plan, not promo. It means that the traffic climb is much more gradual.

When we, in June, launch the promo -- similar promo to what Vivo is doing now, we reported double the traffic in a very sharp curve. The contrary, Infinity, for example, because of the long distance inclusion, has a much more flat profile, it means that, for example, the peak hour is no more at six o'clock p.m. but is 10 p.m., when consumer used to have fixed to fixed long distance calls; the same during the weekend. So that's number one, we do have much more efficiency from a traffic profile.

Number two, we definitely are investing behind the 2G capacity. This is quite different from the rest of the operators in Brazil. In our plan, we are putting something like 50,000 [tariffs] on air in the next three years. It means roughly doubling the capacity of the network that we have nowadays. It's exactly what we did in 2009. And it means that net/net, we are able to combine a much more prudent traffic profile increase with more safety network reliability.

Our promise to the customer is that, by mid of 2010 we will be in the condition to offer the best quality of service and the best reliability and the voice to the Brazilian market. Thank you.

Next question from the web?

This is the last question from the web from [Thandie] Mercier, BNP Paribas. Are there any discussions going on on a potential acceleration of synergies with Telefonica?

Could you update us on the potential capital tie-up?

If a merger happens, what would happen to the savings shares?

Well, the answer is very simple. We are happy as we are. We have very good personal relations with Telefonica, very good business relations. Of course not in South America where we are competitors. We are two distinct companies. And I think that for the -- this -- the present state, there is no reason for thinking that it will evolve differently in the short to medium-term. In the long term we are all dead, so I don't know.

And on the synergy I think I have already answered. Thank you very much.

Another question from the web? No more questions? Wait a second; no more questions from the web. So thank you very much, thanks for attending this conference and have a good lunch. Thank you.