Grupo Televisa SAB (TV) 2009 Q2 法說會逐字稿

Good morning, everyone. And welcome to Grupo Televisa second quarter 2009 conference call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso De Angoitia, Executive Vice President of Grupo Televisa. Please go ahead, sir.

Thank you, Melissa. Good morning. We're pleased that you have joined us for this discussion of Grupo Televisa's second quarter 2009 results. With me today are Jose Baston, President of Television and Content, and Salvi Folch, our Chief Financial Officer. I will take you through the highlights of our financial results for the quarter. Then Pepe will discuss the operating results of our television segment. After that, we'll be happy to take your questions.

Despite the difficult economic environment and the influenza epidemic, the second quarter of 2009 set yet another record in terms of net sales and operating segment income for the second quarter. Our consolidated revenue increased 10.2% during the quarter to MXN12.7 billion. And our operating segment income grew by 7.9% to MXN5.5 billion.

In our television broadcasting business, revenue reached MXN5.3 billion. As Pepe will share with you, this was the result of our successful programming offering and our resilient client base. Operating segment income reached MXN2.7 billion, in line with the second quarter of last year. And the margin was 50.9%, only 30 basis points lower than the margin reported in the second quarter of last year. In spite of the expected decline in margins due to the peso depreciation, we have been able to sustain margins.

We continue to benefit from the cost-cutting plan that we implemented beginning in the fourth quarter of 2008. Our pay television networks business has continued to grow in terms of both subscribers and the number of channels per subscriber. Total revenue generating units or RGUs grew by 3.6 million to 170 million. In addition, this business has benefited from our foreign-currency-denominated revenue base and the resulting translation gain. Operating segment income reached MXN463 million. And the margin was 66%.

Our programming exports business also continued to benefit from the favorable translation effect on foreign-currency-denominated sales. Revenue grew by 11.8% to MXN639 million. Operating segment income reached MXN294 million. And the margin was 46%. We achieved these results despite the weak advertising environment in the United States, which is reflected in an estimate decline in Univision's royalties of 8.6% from the same quarter of last year to $36 million.

In our publishing business, revenue is down 8.4% from the last year due to the constricted advertising budgets of many of our clients. This has as much to do with the recession as with structural change in the industry as a whole. To withstand a slowdown in advertising budgets from this media, we have continued to streamline the operations of this business segment while at the same time protecting the value of our brand.

We remain the leading publisher in 18 of the 20 markets in which we operate. And we believe the strength of our brands will allow us to recapture some of the business lost once the economic environment improves. As a result our operating segment income reached MXN132 million. The aggressive rationalization plan we implemented at the beginning of the year has allowed us to achieve an operating segment income margin of 15.5% in the second quarter. We believe this margin is remarkable when compared to the rest of the publishing industry.

During the quarter, Sky revenue reached MXN2.4 billion, and increase of 7.5%. Sky's total subscriber base reached 1.8 million by the end of the quarter after the addition of 9,000 new subscribers. The strength of Sky's product offering and exclusive content enabled it to withstand the difficult economic environment. To address the potential of the lower-income segment of the market, we have recently launched New Sky, a lower-priced offering.

Operating segment income grew by 1% to MXN1.1 billion. And the margin was 46.7%. As in the first quarter, the decline in margin for last year is attributable primarily to the negative translation effect on foreign-currency-denominated programming expenses.

Total revenue in our cable and telecom business grew by 55%. Excluding Cablemas, which was consolidated on June 1, 2008, revenue grew 11% to MXN1.2 billion. This figure includes Bestel revenue, which reached MXN446 million.

During the second quarter, we launched Yo in a combined effort among the three cable investments and Megacable. [Yo], which consists of a competitive-priced, triple-play offering, is intended to reach a segment of the population with limited purchasing power. This is the first time that our cable offering was launched on a national level. So far, this initiative has raised significant interest, not only for Yo, but for the various packages offered by the participating cable companies.

Cablevision grew its video, broadband, and telephony RGUs by 7%, 27%, and 293%, respectively. During the quarter, Cablevision completed a rights offering for MXN3.7 billion. The offering was subscribed by all of its shareholders. The additional capital will allow the Company to further upgrade its networks and infrastructure and the expansion of home staff from 1.8 million today to 2.4 million by 2011.

Cablemas, on the other side, grew its video, broadband, and telephony RGUs by 9%, 11%, and 42%, respectively. Similarly, our 50% interest in TDI, which is the cable company that operates in Monterrey, which we currently account for under the equity method, also benefited from the success of TDI's triple-play offering. TDI's experienced growth in video, broadband, and telephony RGUs of 11%, 17%, and 129%, respectively, during the second quarter.

In the aggregate, the number of Cablevision, Cablemas, and TDI RGUs reached over 2.5 million. And operating segment income for our cable and telecom business reached MXN754 million, an increase of 67.5%.

Our gaming business posted a second consecutive quarter of positive operating segment income with more than 7,000 bingo machines in 26 bingo parlors throughout the country. We expect this trend to continue as we open more locations and our most recently opened sites continue to build traffic.

As scheduled, after approval by our shareholders, the dividend of MXN1.75 per CPO proposed by our Board of Directors was paid on May 29th. The total amount of dividend was approximately MXN5.2 billion, the largest dividend ever paid by Televisa. And the dividend yield was approximately 4%.

We continue to believe that maintaining a solid balance sheet in this environment is of paramount importance. Our total cash position, including temporary investments, reached over MXN35 billion, two-thirds of which is denominated in foreign currency and exceeded our total debt by MXN789 million.

Finally, the expectations for the Mexican economy have worsened since our last earnings call. In spite of this, we are maintaining our broadcasting revenue guidance of flat nominal growth and our modestly optimistic growth expectations for our other businesses. We believe this is proof of the value of our ongoing diversification in terms of market, currencies, and business segments, a trend that we'll seek to continue. The second half of the year will by no means be easy. But we believe we'll stand out again. Thanks for your attention. I will now turn the call over to Pepe.

Thank you, Alfonso. Good morning, everyone. And thank you for joining us. We are pleased with our results for the second quarter. As a result of the consistency in the delivery of our high ratings, we continue to maintain our position as a leader in our industry.

During the quarter, we delivered audience share levels above 70%. And we are 13 of the top 15 programs in Mexico. Our performance continues to benefit from our flagship Channel 2, which again produced excellent audience results, especially in weekday primetime. Average weekday primetime audience share from Channel 2 was 71.7% during the quarter.

The 9.00 p.m. slot on Channel 2 once again produced outstanding ratings and audience shares. Our 9.00 p.m. novella Manana es Para Siempre achieved an average audience share of 44.1% during the quarter. The three-hour final episode of this telenovella, which aired on Sunday afternoon, achieved an audience share of nearly 55%.

In a new twist on the popular reality show format, this quarter, we launched a reality show called [Asma Reve]. The program, which features comedians, is appropriate for all ages and brings together all family members. We believe that this show in addition to meeting our commercial objectives has been extremely successful in raising the general mood of our audience, an important goal in this environment. Asma Reve airs during the important Sunday evening time slot and has garnered an average audience share of 31.9% since it started in April 19.

In our pay TV networks business, our work to expand our portfolio of channels and enhance the quality of our content is ongoing. In August, we will launch TDN, the Televisa Deportes Network. 100% of the content of this new channel will be sports programming. Borne of excellent teamwork by Televisa Networks and Televisa Deportes, TDN will be offered in Mexico, Central America, and the Caribbean.

With TDN, we finally bring sports to the portfolio of Televisa's pay TV channels. Sports is one of the most important genres, both in terms of ratings and in terms of commercial opportunities. In line with our ongoing objectives to provide ever more choices for our customers, we are producing new content and giving them access to new and innovative opportunities to commercialize their brands. We are also seeking additional ways to give our customers more opportunities for product integration.

For example, Televisa's in-house produced series follow a different business model in which they are first sold to pay TV networks, then broadcast over-the-air television. Accordingly, in-house production of series allows us to expand margins as a result of the careful exploitation of this content via multiple platforms and on a limited amount of runs in all of the platforms.

With our programming exports, we have continued to seek out alliances in high-potential countries. We have been able to expand our productions beyond our borders thanks to our expertise as the leading producers of telenovellas in the world.

The consistency of our success was made evident with the production in China of the third season of La Fea mas Bella and the first season of Las Tontas No Van al Cielo and with the upcoming production of [La Firmas Veya] in Brazil. We will continue to work with good local producers to bring the highest-quality content possible to audiences in high-potential markets. Thank you for your attention. And now we will be happy to take your questions.

(Operator Instructions)

Your first question comes from Gustavo Oliveira with Citigroup.

Two questions on the broadcast business and one on the Sky -- on the broadcast business, the Mexican media and press has reported some strain in the relationship with IBOPE and that you might even consider not using their ratings going forward. Do you think there could be some pricing -- some changes in your pricing strategy as a result of these things and whether if you could provide some update on the relationship with IBOPE?

The second question on the broadcast or maybe on the pay TV business is whether on your new sports channel when you think that you would be able to break even on that chance. And my third question on Sky is actually whether you see some competitive pressures affecting your margins or if the margin declines are essentially derived from the forex rate.

Okay. Starting with the IBOPE question, as you were probably informed, a former executive of IBOPE is now an executive at TV Azteca, which is as you know our main competitor in the broadcast business. Now Azteca has named this individual as a representative in the IBOPE committees. And we believe that this individual is in possession of proprietary information. This is a strong enough reason for us to question the integrity of their ratings. It is also a big concern for many of our clients.

And we have already asked for a replacement of 100% of the sample, which means that they have to change 2,300 people meters with the participation, of course, of a supervision with the advertisers, broadcasting companies. And also, we are asking for an independent third party to be involved.

We are -- in the meantime, we will sell advertising based on the rating points that we have delivered in each time slot of the first quarter. We will freeze those ratings. And we will be offering our clients an average of those ratings, which are basically in the same average that we have had for the last almost three years. So that is the -- what is going on with IBOPE as we speak.

Okay. Thank you.

And, hi, Gustavo. As to the question you had in respect to the sports channel that we're going to launch, we expect it break even in the full year of 2011, at the end of that year. And of course, it helps our pay television networks offering by including this sports channel, which will have games -- soccer games -- on an exclusive basis. So we believe that it's going to be a strong channel. And so we expect it to break even at the end of 2011.

And as to Sky and its margins, as we have shared with you in the last quarter, we believe that the margins will be in the mid-40s as a result of lower-priced programming packages. So we are feeling competitive pressures at this audience. And also and most importantly, the economic environment in Mexico is not helping the pace of growth of that business. But we continue to be very optimistic about the prospects of the business.

We always welcome competition. It makes us better. Sky has 1.8 million subscribers. And we believe that that company has a very well-established brand in the market, both in Mexico and Central America. We have exclusive sports and entertainment content, which is very important to differentiate Sky from other platforms. And so that's why customers are willing to pay a premium. So this has allowed Sky to be one of the highest-margin DPH operations globally.

And even maintaining the margin in the mid-40s, I think it's going to be one of the highest margins. So we're very optimistic about this company. And of course, it's being affected mostly by the economic conditions.

Do you think you can sustain those margins and still grow your net additions because there was a substantial deceleration in net additions this quarter.

Yes, we believe that, as I was saying, as a result of the sports and entertainment content that we have and other differentiating factors, like very high-quality service, we will be able to pick up additional subscribers in the quarters to come. And we will be able to maintain our margins in the mid-40s.

Okay. And the last follow up on the sports channel -- do you see an impact on your pay TV networks margin substantially from the 66%? It could drop to 60%. What would be the impact until the sport channels break even?

I don't think it's going to be material.

Okay. Thank you.

Your next question comes from Gordon Lee with UBS.

Hi. Good morning. I have a couple questions. First, on the broadcasting side, I was wondering if you could comment on what you're seeing in the spot market and how you expect the spot market to react. And I ask that in the context of the fact that you've maintained your guidance on the TV broadcasting throughout the year despite the fact that during the course of the year macro conditions or macro expectations have deteriorated significantly.

And obviously, part of that I guess can be explained by the upfront. But there's a meaningful portion that comes from the spot market. So I was wondering if you could I guess comment on what you think's driving the resilience overall and what you're seeing in the spot market and what's expected there.

And I guess a similar question on the pay TV businesses, on Sky and cable, and if you consider the severity of the macro in the quarter plus the fact that you had significantly increased competition during the quarter, it looks like the numbers actually are pretty stable. And I was wondering whether you noticed where there was some sort of effect from the increased competition in the second quarter or whether really that's something that we have to look at more towards the second half of the year. Thank you.

Hi, Gordon. As to your first question, the spot market is, of course, been tough. Especially, we believe that it's going to get tougher during the second half of the year. We're very proud of what we have accomplished in the first quarters. And this has only been possible thanks to the hard work of the advertising and sales team.

We face many challenges. As you know, during the second quarter, we had an unfavorable comparison due to the Easter holiday falling in April as opposed to March as it happened last year. Then we also had the influenza epidemic, where most agencies were closed for about ten days. And some of the advertisers decided not to advertise during that influenza epidemic episode. And also, we're facing -- and most importantly -- a very difficult economic environment.

So that's why we have decided not to change the guidance that we gave at the beginning of the year, in spite of the good results during the first and second quarters on the broadcasting side of the business. The expectations of the Mexican economy, as you have seen, have worsened significantly I would say since we gave our guidance of flat revenue growth for television broadcasting.

So based on the upfront deposits as of the end of the second quarter, we still need to bring about MXN2 billion in spot advertising revenue in order to meet our guidance. So that's why considering the economic environment and talking to the sales force and being tougher than we believe it was going to be, being conservative, as I was saying, we're maintaining our guidance of flat revenue growth on television broadcasting.

And as to the pay television platforms, Sky and the cable companies, you're right in the sense that their numbers have been stable, even in this economic environment and even facing new competition. And we believe that it's going to remain stable throughout this year -- I mean, in the second half of the year. That's what we're seeing.

Perfect. Thanks. If I could just follow up on the first question, I guess. Is maybe another way of saying the same thing is that when you originally came out with the guidance it was -- you were low-balling it?

The question is -- obviously, with the upfront result that you saw, you were expecting the spot market to be weaker anyway at the beginning of the year. Since then, the macro has deteriorated significantly. But you're keeping your guidance. So is the spot market less difficult than you thought originally? Or were you just being extra prudent at the beginning of the year with the guidance?

No, when we established the guidance, our expectation for the Mexican economy was that it was going to fall about 3%. Now all the experts are saying that that is going to be between 8% and 9% -- I mean, a decline of GDP. So of course, the expectations are much different than when we established the guidance.

But considering that the sales force, the advertising sales team has made a tremendous effort and the results of the first half of the year have been in my opinion extraordinary, that's why since we have to bring MXN2 billion of spot advertising during the second half of the year and it's going to be really tough, we're saying -- we're sticking to our guidance. And that's why we're saying flat revenue for the year.

Perfect. That's very clear. Congratulations.

So macroeconomic expectations have deteriorated substantially. I mean, from a decline of 3% of GDP to a decline of 8% to 9% of GDP, that's huge.

Yes, no, I agree. But congratulations because that's definitely impressive. Thanks.

Thank you, Gordon.

Your next question comes from [Pablo Riverol] with Credit Suisse.

Hi. Good morning. My question is regarding government purchases of air time. How significant were these in the first half of the year associated to the midterm elections?

Pablo, I'm sorry. I couldn't hear you. I couldn't hear the question.

Sure. So we had a midterm election earlier this month. And I was wondering how important were government purchases of air time during the first half of the year.

Yes, well, as a result of the recent electoral reform, neither [EPA], which is the federal electoral body, nor the political parties were allowed to buy advertising on television. They got -- as a result of that constitutional reform, they got the advertising for free. So there was no impact of midterm elections in our numbers. It affected us in the sense that we had to give thousands of minutes for free to the political parties and to EPA.

Okay. So EPA does not purchase additional minutes during this period.

I'm sorry, Pablo. I can't hear you.

Okay. So EPA does not purchase additional air time during these periods?

No, EPA receives -- as part of the constitutional reform -- receives those minutes free to advertise its campaigns to get people to vote, et cetera. And the political parties also get those minutes for free.

Understood. Thanks.

Your next question comes from Paul Steep with Scotia Capital.

Morning. Maybe you could just talk a little bit about the investment priorities or how you're looking to sort of push out capital. I know you can't talk a whole lot about the wireless auctions coming up, but just how you're going to think about allocating the capital within the Company over the coming year, especially given the potential of entering that market. And then just a quick follow up just confirming that you're still sort of in that MXN500 million range still for the year for CapEx. Thanks.

Yes, Paul, starting with your last question, we are thinking about MXN500 million for CapEx for this year. And as to the second question and as we have always said, our priority is to grow the business organically and also through acquisitions as we have been doing and as you have seen, most importantly on the cable side of the business and also the fiber optics network that we have acquired.

And if opportunities come up, we want to be in a position to take advantage of them. For that reason, I mean, we always have maintained that it's very important to keep a very strong balance sheet, a very strong cash position, which makes it especially important in this economic environment, where we believe that opportunities are going to come up.

If opportunities don't come up or don't materialize, as we have been doing in the previous years, we'll propose to the Board the return of additional capital to the shareholders. And we're going to do that through basically a repurchase of shares, which we have been doing, and/or the payment of dividends, as we have done recently. As I mentioned before, we paid the largest dividend in the history of Televisa this year.

Okay. And just actually -- sorry -- one other thing we haven't caught on at all was Spain, just maybe what's happening over there, the investment, and your outlook or how that situation might play out and whether or not you'd need to inject maybe more capital into your investments there. Thanks, guys.

Yes, well, there, Paul, in Spain, we believe that we will have very interesting opportunities. I don't know if you know. But the Spanish government passed a new law to permit the consolidation of the industry, of the television broadcasting industry. So [Inathena], our partner in La Sexta is in negotiations with Grupo Prisa, which is the largest media company in Spain, where a potential combination of La Sexta, our over-the-air channel, with Prisa's Channel 4.

And they're also negotiating -- they made public the possibility of combining other assets of Grupo Prisa and other assets of Inathena. So the negotiations are still underway. It looks like a very interesting opportunity for us to participate in the consolidation of that market. So I believe that in the second half of the year we'll see that opportunity can materialize. But it's looking good.

Okay. Thanks, guys.

Your next question comes from Larry Haverty with GAMCO.

Yes, hi. I understand that there may have been a change in the rules concerning the types of machines you can have in your gaming operation. Could you walk through what's happening there?

Yes, now as a result of some changes, we'll be able to install class III machines in our bingo parlors.

Well, it would seem to me that you'd do that in about an hour.

No, no, it's not as easy as it sounds. I mean, we have to substitute software. And we have to substitute some of the hardware. So it will evolve into being a class III machine business. But it will take some time. But we're working on that, of course.

So you have 7,000 of these terminals now?

That is correct.

So what kind of timeframe?

Well, I think we'll have about 1,000 in the next quarter. And then from there, it will evolve -- I don't have the specific calendar here. But we will work towards having most of them class III in the following quarters.

Now are you going to be buying them? Or are you going to be leasing them?

Well, we lease all of them today. And we might migrate into a system where we lease some and we buy some.

But you don't have to --

We're working on the --

You don't have to lease them by law.

No, no, no, we don't have to lease them. We can own them or lease them, whatever.

And what is your win per unit on -- per day on the current machines?

We haven't disclosed that because we believe that from the competition perspective it's not good for the Company to release those numbers.

Your next question comes from Mauricio Fernandez with Merrill Lynch.

Good morning, everyone. Quick question -- Alfonso, could you share with us how the spot and upfront sales were, if you want, on a year-on-year basis?

I'm sorry, Mauricio. Can you repeat the question?

Sure. Can you share with us what was the split between the broadcasting revenues, what was the split between spot and upfront and how they performed on a -- how was the growth on a year-on-year basis?

Yes, Mauricio, upfront revenue was 84.4% compared to 84.7% in the second quarter last year. And the balance was soft. So I mean, it's very similar to what happened last year.

Okay. One more question on the broadcasting margin -- part of the costs are in dollars. So how come that the margin has been -- you've been able to keep margins? Is it cost cutting on whatever is non-dollar denominated? Or is it renegotiating the contracts that are dollar denominated?

I think it has been a combination of both. Pepe has made an extraordinary effort in renegotiating dollar-term commitments and dollar-term contracts. And also, what's helping us is the cost-cutting plan that went into effect in the last quarter of last year.

Okay. And final question, if I may, is for the competition from Dish. It seems to be outselling product, what they have. So far, it hasn't been -- much affected Televisa's ability to grow in satellite or cable. How do you see that going into the second half and into 2010?

Yes, as I mentioned before, we welcome competition. It's going to make us better. We believe that Sky is well positioned to face competition. Of course, it makes it more challenging. The offering that the cable companies are having, which is the triple-play offering, is different. I mean, it's a different market or different offering. But of course, competition will help us. And we'll have better companies. Of course, as I mentioned before, it's challenging. But we believe that we have both Sky and the cable companies are great, are doing great. So we believe we're going to be fine.

Okay. Thank you very much, Alfonso.

Thank you.

Your next question comes from Gregorio Tomassi with Santander.

Yes, hi. Good morning. I think the question that remains that I had in the list was about TV subscribers in Sky, Cablemas and Cablevision. There's a huge difference from what Cablevision reached to perform in net additions of TV subscribers in second quarter compared to what Sky and Cablemas did.

In Cablemas, I think the weakness of the economic conditions was felt harder. But I want to know from you if this is something specific to Cablemas or why the difference between the two companies, Cablevision and Cablemas. And what can we expect in the future? And second, a bit related to that question is you have launched an investment revamping plan for the network of Cablevision. Is there any possibility that Cablemas will follow suit in the next six months or so?

Yes, well, as to your last question, we're working with Cablemas on a plan for next year as to improvement of the networks and of offering, especially telephony in certain areas where they operate. And as to your first question, you're right in the sense that Cablevision, of course, grew more. And it all depends on the different markets. Cablevision, as we all know, operates in Mexico City and surrounding areas.

Cablemas operates in 40 cities of Mexico, midsized cities. And Sky is a national platform with a different offering and that has targeted more AD segment subscribers. So it all depends on the market in which those companies operate. And that's why you see the differences between growth of video, of broadband, and of telephony subscribers in each of those areas.

One follow-up question -- and regarding margins in the cable companies, whenever you launch products, like for example the Yo offering, you didn't have any products similar in Cablevision, for example. Or you launched the Sky Sports or the Sky Films bundles at lower price with reduced number of channels. Do they have a negative impact in margins? Or can we expect that reduced number of channels allow for margins to be sustained?

Yes, well, as I mentioned before in the case of Sky, as a result of lower-priced programming packages, there will be an effect on its margins and especially considering, of course, the devaluation of the peso also. So we believe that as a result of those to things, of the peso and of the lower-priced programming packages, margins will be in the mid-40s. And that's a sustainable margin going forward, even considering those lower-priced programming packages.

And as to the cable companies, they have different margins as a result of operating in different -- both markets and also segments. So we don't believe that the Yo offering will have a material effect on those companies.

Okay. Thank you very much.

(Operator Instructions)

Your next question comes from Vera Rossi with Morgan Stanley.

Thank you. My question is about the cable and the telecom business. What needs to happen for us to see an acceleration in the broadband subscriber growth aside from a more favorable macroeconomic environment?

And in terms of if I divide the number of broadband customers by pay TV customers, today, it's about 30% of your pay TV customers that have broadband. Where do you want to be in the next two or three years with this ratio? Thank you.

Hi, Vera. Yes, we have to invest more, like we're doing in the case of Cablevision, in order to upgrade our networks in order to be able to offer broadband to all the homes past. So aside from the economic -- from the macroeconomic conditions, we believe that -- and we will do that. Growth will depend on investment. And then as to broadband penetration, it's very difficult to be able to determine how much that is going to grow, especially in this economic environment.

Okay. Just a follow up on the first question -- in terms of the CapEx, what is the CapEx that you expect for the next two years for your cable business and if you think that's enough to increase this -- accelerate this broadband growth?

Yes, well, as to -- I can tell you this year we're going to invest $220 million on our cable and telco business. $145 million are going to Sky. So I mean, that is what we're going to -- what we're planning to invest in terms of CapEx this year.

Okay. And in terms of your cable companies, Cablemas and Cablevision, what is the percentage of the network that is bidirectional on both?

I don't have that information, the detail with me, Vera. But if you want, we can have a separate call. And I'll give you all that information.

Okay. Thanks a lot.

Thank you.

Ladies and gentlemen, we have reached the allotted amount of time for questions. I will turn it back to management for closing remarks.

Well, thank you very much for participating in this call. And please call us if you have any additional questions.

Thank you for participating in the Grupo Televisa second quarter 2009 conference call. Please disconnect at this time.