América Móvil, S.A.B. de C.V. (AMX) Q2 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the América Móvil Second Quarter Earnings Conference Call and Webcast. My name is Alex, and I'll be your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Daniela Lecuona, Investor Relations Officer. Please proceed.

Good morning everyone. Thank you for joining us today to discuss our second quarter results conference call. We have on the line, Mr. Daniel Hajj, our CEO; Mr. Carlos García Moreno, Chief Financial Officer; Mr. Oscar Von Hauske, Chief Operating Officer; and also Mr. Carlos Robles Miaja, Chief Financial Officer of Telmex. I'm going to pass on the call to Daniel.

Good morning. Welcome to América Móvil second quarter of 2015 financial and operating results. Carlos is going to make us a summary of the second quarter results. Carlos García Moreno: Thank you, Daniel. Good morning everyone. Well, of course to start on the second quarter, the U.S. economy seemed to have hit a soft patch subsequent economic data points which haven't been short-lived. The Fed continues to affirm that they expect 13% increase in U.S. to take place in 2015 with market expectations centering in the September month. Against this back drop, we are seeing a mixed bag of economic indicators throughout Latin America. With Mexico's economy appearing to be regaining momentum retail sales has exceeded expectations. Brazil is continuing to hold deeper into negative territory. Colombia a similar blow to the economy from the drop in our process and the rest of the region experiencing relatively stable decelerating economic growth. We ended June with 367 million access lines, 1.4% more than a year before. This includes 288 million wireless subscribers, 34 million landline and 22 million broadband accesses and 24.5 million PayTV units. Our wireless subscriber base goes to 0.8% year-on-year, while our fixed RGUs increased to 3.7% for important increases in Colombia and in the Central America, Caribbean block. Our wireless subscriber base ended June with 288 million plans after net disconnections of 850,000 subs in the quarter including 739,000 in Brazil, 582,000 in Mexico, 464,000 in Colombia and 208,000 in Argentina. On the other hand, Mexico contributed with 589,000 net gains, the Central America, Caribbean block with 448 new tops and Chile with 151,000 net additions. Our wireless postpaid base grew 5% in annual terms reaching a total of 60 million subscribers. We added 608,000 contract lines in the quarter of which 293,000 came from Mexico. On the fixed line platform broadband access increased 5.2%, PayTV access is 3.6% and voice access is 4.8% year-over-year. Triple play packages represent nearly 2/3 of the net additions of RGUs on the fixed line platform. América Móvil consolidated revenues totaled Mex$222 billion in second quarter bringing to Mex$440 billion a realistic number through June. EBITDA of Mex$58.3 billion and that's Mex$136.3 billion through June was down 5% year-on-year as the EBITDA margin declined from 32.6% to 31.1%. As constant exchange rates, average revenues were slightly down in the period minus 0.5%, while EBITDA came down by 3.1%. Mobile data revenues continue to be the main engine of revenue growth with 9% followed by PayTV at 8% and fixed data revenues at 7% both revenues were down in both platforms. Average revenues continue to shrink in Central America and the Caribbean they might tend a stable growth rate, in the South American block this are solid though declining expansion. In Europe, they are trending up and in Mexico, we were always kept coming down but seems to be stabilizing. Our operating profits reached Mex$36 billion and we're up 2.2% from the relative quarter. Depreciation and amortization charges were down 11.9% year-on-year or the prior year Telekom Austria has registered an impairment -- investment of €340 million. Our comprehensive financing costs Mex$11 billion were down 24% from the year before. Our net profit totaled Mex$14 billion and was onto Mex$0.21 per share. In the first half of the year capital expenditures Mex$70.9 billion and our share buybacks Mex$23 billion while net debt was up Mex$6.8 billion. Reclassification in May of our investment in KPN, long-term investment valued at cost to an available for sale last year valued at cost. As such the shares are now included in the cash and security backing with a current cost of Mex$39.5 billion which were deducted from gross debt to come up with the net debt for the year. It must be noted that at the end of June, the carrying cost is lower than the market value of the shares which was Mex$51.4 billion. Our net debt to EBITDA ratio stood at 1.77x EBITDA at the end of year. Thank you. And with this I would want to pass the floor back to Daniel. And also we can open to Q&A session. Daniel?

Alex?

Okay. Alex, we're ready to take the first question.

Okay. [Operator Instructions] Your first question comes from the line of Amir Rozwadowski with Barclays. Please proceed.

Thank you very much for taking the questions. I was wondering if we might be able to discuss some of the new initiatives that you folks announced yesterday, specifically sort of the offering in which there will be an elimination of roaming fees with traveling to the U.S. I was wondering how we should think about the potential impact if this was a significant revenue generation tool for you folks or do we think that this probably helps to grow the customer base, would love to hear your thoughts around that.

Well, I think that what we announced yesterday was, is a very good plan is that we're eliminating the borders between Mexico and U.S. in the telecoms, no long distance to U.S. and no roaming when you are there. We have income. We have some revenues coming from those segments. But I think what we're charging for that is the Mex$0.50 is a very low charge, what I think its going to be so interesting for the people that we're going to have a lot of people joining to this plan. And I think its going to be good at the end of the day not immediately because not that every border is going to subscribe immediately the ones that not subscribe are going to stay the way they are. So I don't feel that we're going to – maybe in the future we can add revenue depending on the amount of people that we have on the subscription.

Thank you very much. Should we expect a near-term impact to revenue associated with? I'm just trying to assess sort of how much revenue do you folks have been earning from roaming fees that were traveling abroad?

I don't have the number exactly here. But, I think at the beginning maybe we can have impact both in the medium and long-term. I don't think we're going to have an impact; maybe we're going to have an increase on revenue. In the other side, it's going to be very important to have this plan because make us very competitive in the market. So people I think the elasticity they are going to use more minutes, more data in the U.S. and they are going to have more minutes and more here the border of Mexico a lot of people traveling to the U.S. So there will be a lot of people using more and more these types of services. Remember we have in Mexico the best network, so I think people will join this new plan.

Thank you very much. And then if I may just one follow up on the investment side. There is a commitment for you folks to have an additional 6 billion of investment over the next few years sort of regionally. How should we think about this relative to sort of strategic initiatives for upgrading your networks, where do you expect sort of that investment to flow through and what type of returns do you expect? And then I guess lastly any update on the Telesites spin-off would be most helpful. Thank you very much.

On the announcement yesterday about the 6 billon, I think the 6 billion are for three years in Mexico. And I think it's more or less what we have been investing in the last years in Mexico. So we have been investing 10 billion in the last five years, I think we're going to invest 6 billion in the next three years, so it's more or less the same, it's going to be on capacity, on more LTE, on data, more fiber, well, that's more or less the strategy that we have been having for the last years and it's what we think we're going to do in the next three years. On the Telesites, Carlos can talk a little bit about all the process of Telesites. Carlos García Moreno: On the Telesites, the spin-off we expected to take place in August or September, but certainly in the third quarter. And we are basically just awaiting some regulatory approvals, I think basically everything is set – the shareholder approval is also already obtained some couple of months ago. So I think everything is ready to go in terms of the actual spin-off for América Móvil. Remember that the spin-off of the tower company itself or the operating tower company already took place back in January. So the tower company obviously makes [indiscernible] has been in business since early January. They are the one that have been conducting all of the maintenance and the construction of the towers as a specific separate entity.

Thank you very much for taking the questions.

Thank you. Carlos García Moreno: Thank you, Amir.

Your next question comes from the line of Ric Prentiss with Raymond James. Please proceed.

Yes. Good morning. Thanks for taking the question. One follow-up call or question on the No Borders offer. In the document last night, it talks about leading the integration of the U.S. and the Mexican marketplaces. Will TracFone will be able to offer any similar type of products on the U.S. side?

Yes. We are going to do this in Mexico and shortly we are going to announce some programs in TracFone that will allow that people from TracFone will roam also in Mexico. So there is going to be new plans that we are going to announce in -- maybe a couple of months.

Great. And then in Brazil, you mentioned that you had lost 112,000 PayTV on the DTH. Can you talk a little bit about the triple play strategy in Brazil and how videos fitting into that?

Yes. As you mentioned we are disconnecting the satellite TV platform. As you see given the economic as low slowdown certainly seeing a low end [Audio Gap] we have been decreasing a little bit the figures on triple play or around 70% of our net adds goes to triple play offer in the market. So we will state that we will continue to grow on the triple play and double play offer into through Net Serviços. I think we have a very great product in broadband and as well in PayTV offering with a triple play in Net Serviços.

Okay. Thank you.

Your next question comes from the line of Vera Rossi with Goldman Sachs. Please proceed.

Thank you. Talking about Brazil, what are the reasons for the slowdown in revenue growth this quarter, is higher competition or is the macro environment? And the second question is, are you seeing weakness on prepaid ARPUs as well? Thank you.

I think Vera that economic slowdown in Brazil is hitting everybody. I think there is going to be more competition because of that or citing the real issue is that as economic slowdown in Q2. Revenues in the prepaid is hitting some sales for the new TV customers and that's more or less what is happening in Brazil. Carlos García Moreno: But Vera, it isn't really off the mark because if you look at the numbers, first quarter we were growing 5% of this revenues and second quarter we are growing 4% of this revenues. And remember that in our case, we are also carrying the reduction with the connection rate. But, when you adjust for that and look at net revenues actually net revenues are doing better than number we are showing here because the expenditures aforementioned were faster and these revenues that we had on the connection. But anyway, just looking at gross revenues, we are going from 4% this quarter to 5% -- I mean from 5% first quarter to 4% in the second one. And if you look at the exception of voice that came down just a bit more in the second quarter and the first. Mobile data is actually better. We were 134% in the second quarter against 30% in the first quarter. Fixed broadband is looking similar; it's about 11% in both quarters. And PayTV is slightly low from 9% to 8%. So I think all throughout, I don't really see as you point out like anything that is a marked slowdown something that we should consider.

And other, just other comment in all the segment – that speaks is, its fixed broadband and TV we're gaining market share in Brazil. So I think that's something more related to the economic situation.

Okay. Just one additional question about Brazil, the improvement in EBITDA margins that we saw of 200 basis points on a year-over-year basis this new level of like 27.5%, is this the new level we should be considering or thinking going forward?

What we're working for – and Vera and that's our budget which deal we can sustain that for the next quarters and we hope we can do it. It's going to depend a lot more on economic situation. It's going to depend also on how aggressive will be the market in the next month in the future, but we are aiming to maintain that 27%.

Okay. Thank you.

Thank you. Your next question comes from the line of Rodrigo Villanueva with Merrill Lynch. Please proceed.

Thank you. Good morning Daniel and Carlos. I have a couple of questions. The first one is related to wireless data revenue growth in Mexico. We saw a considerable slowdown to 2.9% year-on-year, I was wondering what is behind this and if you are already implementing any measure to try to accelerate wireless data growth that will be my first question?

Well, the wireless data, we have been growing a little bit less this month that this quarter than last quarter. People is using more we are growing in volume, but the thing here is that we're being more aggressive in the market that we're adopting all our plans to the reality of the market and I think data is a very important product for us and we want to be competitive there. So volumes are going higher, prices are going lower and that's really the reason why you are seeing a slowdown in the revenue of data. What I feel is like it's going to be like the voice is that you need to give better prices, people are starting to use more and then you are going to see the increase on the revenue again. So that's what we're looking. We have been adding promotions new plans in the market with more data as that to adapt on to just of what we are seeing here in the market.

Understood Daniel, very clear. And my second question is related to Telesites, Carlos mentioned it has been operating a separate entity since January. So I just wanted to ask you if management team for that company has already been assigned by the Board or when shall we expect to hear more on this respect?

Yes. As Carlos said we have been working as a separate company since January this company has people who is working with. So this team would go out when we have the spin-off these people would go with the company. And well, at the end of the day, I don't know if the new Board or the new people will change some of the management or us or the people both the base and the people who is working today I think they would be out. There is a team working in Telesites at this moment and that would be a spin-off with the company.

Got it. Thank you.

Your next question comes from the line of Kevin Smithen with Macquirie. Please proceed.

Some discussion of a potential capital increase at Telekom Austria, can you discuss what you think the capital requirements there are there and what your commitment would be and then expansion opportunities for you at Telekom Austria into Eastern Europe, Central Europe, what's out there that's interesting and what's the timing likely to be on transaction in Europe?

Well, I mean we on the total capital increase at the end of last year were 1 billion. Europe the capital increase was meant to stabilize the company finances, the company has since been rectified the investment they made on their negative outlooks. So they are now steady. This company has sufficient entity today I think to manage its day to-day operations adequately. I don't think that it would need more capital. But, I think the question now would be is there any kind of an expansion, would they be able to do it on their own? I think there is nothing that is being considered at this point but also the questions around Telekom Austria. The finances are perfectly well they are today for the expansion – organic expansion as well and exceed the footprint.

Just to be clear, there is no current plans for a right offering to Telekom Austria and there is no short-term M&A plan, so unless something changes on the expansion front there won't be a rights offering?

Yes, exactly.

Okay. Thank you.

Thank you.

Your next question comes from the line of Andrei Sabah with Credit Suisse. Please proceed. Mr. Sabah, please proceed.

Take the next question Alex, please. Carlos García Moreno: The next question please.

The next question is from the line of Alejandro Gallostra with BBVA. Please proceed.

Hi. Good morning, Carlos and Daniel. Thank you. Thank you for the call. My question is related to the satellite you recently launched, how much did it cost and how this will impact your CapEx and if you will eventually be able to use it in Mexico to offer a PayTV services eventually may be?

Well, this we will launch the satellite I think was -- day before yesterday it was very successful launch. This satellite is going to help us to give more HD channels for all our satellite business that we have all around Latin America so that's the purpose of this satellite to give – to have more capacity to have maybe we can use it also in the data services in Latin American both the reason the purpose of this is to give more HD channels or more channels more capacity to our TV business.

That would also cover Mexico, I guess eventually in future once you get the authorization for PayTV?

I think the satellite covers all Latin America including Mexico and part of the U.S. So that's the orbit that we have. And yes, if we could have in the future a license or a permission to do that we can use the satellite.

Okay. That's great. And then second if I may, the numbers in Colombia have been perhaps a bit discouraging in the past few quarters but only driven by the ability to changes. I was wondering if you could perhaps explain what is going on there and then give us your view about the outlook over the next – for the next few quarters. And if you – do you think that this type of regulation could eventually be applied in Mexico or not and if this could have a similar impact in Mexico??

What is happening in Colombia is that people is starting to change a little bit to renew their – there is no contract, no more contracts in Colombia and they renew them with a lower ARPU they are being careful to renew in the postpaid side to renew reducing the rent of the plan. So it's what we're looking that is happening in Colombia. In the prepaid side we're starting to see better revenues there. So the other important thing in Colombia is a very competitive market. So we have been reducing prices giving more data, giving more minutes, so that's all over all what is happening in Colombia. But I think that next quarter we're still going to see a little bit of that, but I'm sure that in the next year everything is going to stabilize and we are going to starting to grow faster on data than then decreasing that we are having on voice today. We are having decrease on voice and data revenues are not growing at the pace that we want. And I think in the next year we are going to see less decrease on voice and higher increases on data and that will give us -- that will stabilize more the market. Carlos García Moreno: Further to what Daniel is saying in Colombia, the only thing that came down was both revenues on the mobile side. All other business segments voice and fixed and data mobile and fixed and PayTV all of them are growing very well. In fact data revenues are accelerating and they are now between two platforms together they are growing approximately 15% a bit more than 15%. PayTV is also accelerating. It is growing 17% year-on-year. So I think once we this stabilization of voice revenues in mobile you are going to see the underlying growth that we are having in all the business manifest itself.

Okay. That's great. Thank you, Carlos. Do you think that since you provided CapEx guidance for Mexico because you could do the same for Colombia and Brazil for the next three years maybe? Carlos García Moreno: No. I don't have it here. And I don't know if you could talk to the Daniela and let's see, but I don't think we are having that number for the next year.

Okay. Great. Thank you very much. Carlos García Moreno: Thank you.

Thank you.

The next question comes from the line of Richard Dienen with UBS. Please proceed.

Thank you. Hi. Good morning everyone. Thanks for taking the question. Can you perhaps give us some more detail on Ecuador? It looks like that's been a tough market for a couple of quarters. You have the disconnect this quarter, but the release also mentions some aggressive air time promotions and higher subscriber acquisition costs. I guess, we think of Ecuador really is a two player market with Telefónica. So perhaps we don't expect to see such aggressive competition. So maybe if you can just help us understand what was going on in that market that would be really helpful. Thank you very much.

You could see Ecuador is we are being more at – in our policy churn we are being more at streak on accounting customers and that's what we are looking. We are putting LTE, so we think that data is going to grow in the next year. And of course Ecuador has two – it's not that two player market. There is a new third player who has already LTE and is gaining data. So it's not a two player market, it's a three player market. And I feel comfortable that in the future, you are going to see more growth in the data and reducing the minutes of – decreasing minutes of use. So that's what you are seeing in our overall include – talking a little bit Peru. You could see that the market has been very aggressive also we have been reducing our EBITDA because we want to be also aggressive in the subscriber acquisition that we are having there. And in Ecuador also we are having a decrease on the interconnection rate. So those are the two things that are keeping us in Peru. So Peru is a market very competitive and we have that interconnection as the rate decreasing. Ecuador, I feel that we are going to stabilize in the next – also in the next month. Next year, I will see much better growth on data. We are going to have all our LTE platform working. So the growth is going to be better. So these two countries I think next year we will see much better results than what we are seeing today.

Thank you, Daniel. That's really helpful. Thanks for also the background on Peru. So I guess, I will take away from Ecuador that this is really more driven by the new entrant rather than Telefónica. This is more sort of anticipating a new player in the market wanting to retain customers and be more competitive, if that's the right way to think about this?

Yes. It's a new entrant that already has LTEs that is giving a lot of data to the customers and it's putting a lot of – some pressure to the prices, so that's more or less what we are seeing in Ecuador being a more streak in all our policy, our churn policy that's what we are seeing in Ecuador now.

Okay, terrific. Many thanks indeed. Thanks. Carlos García Moreno: Thank you.

Your next question comes from the line of Carlos Legarreta with GBM. Please proceed.

Thank you for taking the question. Just getting back to Brazil, but if I may on the more corporate side. I know you are restructuring the company under the Claro let’s say corporate umbrella. And I don't know if you can talk about how that it's going to help going forward and if there are any specific plans to rebrand the Net or Embratel or something like that [indiscernible]. Thank you.

We are still working on with the three brands. It's Embratel is more in the corporate side. Net has a very good brand on the TV, net broadband and fixed. And Claro as we are doing in the wireless, we are not thinking to rebrand anything at this moment.

Okay. Thank you. And just a brief follow-up, if I may. I guess this is will be answered by Oscar. In terms of the plans that you guys are offering across South America basically the social networks and messaging apps that do not consume data. I'm just a little worried that these be detrimental for your revenues going forward. How much – I mean if you could explain what the strategy behind this. Is this a short-term offering in order to attract clients or to retain customers and is it going to change in the future, I mean that will also be helpful. Thank you.

There are promotions that we are giving in Latin America and promotions are given in some markets because of the competition that we have in some markets. So that knowledge you could see that in Brazil. We are not the only one who are giving social networks as a promotion. So I don't think they are going in forever, but at this moment the market and the conditions of the market and we want to be competitive in the market. So that's the reason why we are doing that.

Sounds good. Thank you.

Your next question comes from the line of Walter Piecyk with BTIG. Please proceed.

Thanks. Hi, Daniel. Before you ultimately spin-off Telesites, can you start to negotiate secondary tenants for those sites again prior to the spin-off obviously AT&T looks like they are going to invest a lot of money into the market. I'm just curious where you are going to start those negotiations now?

The tower company obviously [indiscernible] that is the company that exists since January. They signed a master lease agreement with Telcel and so Telcel have been paying them the rent for the various sites under this umbrella agreement. And this agreement was basically approved by the regulator because it is meant to be the same agreement that all operators can subscribe. I think it is for the regulator to announce what agreements have been signed and what have not been signed. As you know there was a requirement on América Móvil having been found to be so called preponderant to make sure that is infrastructure – basic infrastructure can be shared. So the way we are doing so is basically by providing this agreement to other parties. And again, I'm sorry to say that I think it would be [indiscernible] to specify exactly who – quite other operators have already subscribed or having interest in the process.

Okay. Thank you. That's helpful. Carlos, as part of that that kind of spin-off and that it sounds like it's obviously the regulators are involved. When it's a separate company and everything in Telcel thinks about their network plans over the next three years. Is there an expectation that Telcel will be looking at other – when they are looking to add cell sites as you grow with capacity and build out your LTE, will you be using other tower assets in the market or will your growth continue to be internal and only using these Telesites that are getting spun out.

For one thing the team that is in that spin-off is the team or the operating team is the one that was previously been involved, so they are very experienced people both in – maintain tower by – in particular in constructing towers. Telcel had over the years built roughly 15,000 towers, okay. So they will have this advantage of being experienced team that can get things done and obviously, they will be an option for Telcel to work with. It indicates however that Telcel in the past as already worked with other tele companies because they obviously they need to optimize and there is really no point in building something you have already some other tower available. So it will be for Telcel to optimize the overall spending. But, certainly to the extent that they need to refine construction of towers certainly Telesites will be an option that can get and going for them.

Thank you. That is helpful. I mean just one question on Brazil. Can you just give us a – just a big picture view on your thoughts in the market. I know there has been some questions about it earlier. But, specifically TIM Brazil has been investing more in the network there and to try and return to growth. Telefónica has obviously already invested. Where – I know you don't exclude this separately, but can you give us a sense of kind of where your capital investment is in Brazil this year compared to prior years. And whether consolidation is effectively off the table at this point and whether that's still is a potential option? Thank you. Carlos García Moreno: Well, if you just break down CapEx as we have been saying through the conference call. Data growth has been picking up in all the platforms mobile, fixed or wireless. So we've been operating the network. We have been doing integration across the different networks that we have. As you know we acquired Net Serviços, Claro Embratel, so we are inventing the network in order to bring some savings in the overall data. We are doing as well, we reduce the construction and compasses in Net Serviços last year we did like 2.5 million. We are expected to do less than 1 million this year. So when this valuable CapEx that goes to triple play connections modernization of the mobile network getting to 4G and fiber to the radio stations. But, I think we are in the same path we did last year operating the network valuable CapEx goes, these are revenue driven CapEx and mainly this goes to that kind of investment.

Thanks. And then just any thoughts on consolidation there? Thanks. Carlos García Moreno: What about the consolidation in Brazil?

Consolidation we are not talking about consolidation right now we are having all this – right now I would feel we have a very good platform and unless there is something clear that where we can be interested in. We are not doing nothing at this moment, no.

Okay. Thank you. Carlos García Moreno: Thanks.

Your next question comes from the line of Jonathan Dann with Royal Bank of Canada. Please proceed.

Hi, there. I had two questions. And the first one, could you just go back to the Brazil TV growth because if I look at the change in revenue generating units then I guess you added 138 wireline, 144 broadband. But then if you – then the missing numbers are 112 and you said that you disconnected satellite TV. Does that mean that you are not growing cable TV customers? So you are just the actual sort of original net TV base is not growing, or is it just the way RGUs are calculated. Carlos García Moreno: You are totally right. I mean on satellite TV as we mentioned before we have some disconnection in the low end of the market. And in cable and in PayTV given this slowdown in economies the net adds has been reducing through the quarters. And you are totally right. But, if you look at the revenues we have been focused on operating the PayTV offering and in our revenues we are growing in the Net Serviços revenues 14%. So it's a combination, but you are totally right, I mean when you look at the net adds in cable has been decreasing through the quarters given the slowdown in economy in Brazil.

Can I ask a follow-on question, I mean with the exception of – in most countries you have cable, fiber and mobile, I mean do you see yourself pushing triple play, quad play in more countries outside of Brazil and as part of that? How many fiber homes connected or passed do you actually have in Mexico now?

Well, the triple play offering that you see in Brazil, we are doing in all the countries that we have cable operation. I'm talking about Colombia, Chile, Peru and the path of growth triple play is pretty similar to Brazil. I mean from the net adds -- around 50% of the net adds goes to – with a triple play offering total in Brazil. In Brazil combination of all of that, yes. So we are offering the same products in all cable operation even in the countries like Central America, Dominican Republic and Puerto Rico. There are telco companies as well we are offering triple play in those locations. So we have the same product offering like in Brazil.

And to add something in Oscar's comment is that we are expecting to in all these countries to also offer the fourth play. So we are trying to offer them mobile where we have a house – where we have the fixed, where we have the broadband, where we have the TV and we don't the wireless. We are offering also wireless there. So where in all – most of the countries where we have fixed we are offering triple and quadruple play.

And do you have an update on your domestic Mexican fiber – like how many fiber homes passed or customers with sort of high-speed broadband or any sort of measure?

We are making a lot of investments to give more spill to all our customers and we are in that process and mainly some of the investments that we said yesterday in Mexico about the 6 billion are related to give more data and give more broadband and more speed to all our customers through Mexico in the fixed and in the wireless in both platforms. The numbers I don't have the numbers here. But, we are moving in that direction.

Can I – sorry to hog the call. Have you guys, I know you bought in the international cable, but have you thought about an international tracking stock. It occurs to me that if you had sort of AMX International it would be a 8x or 9x EBITDA tracking stock similar to Liberty LatAm?

We haven't think on that. So it – Carlos García Moreno: We need to think of it. Good idea.

Okay. Thank you.

Thank you very much.

Thank you. Carlos García Moreno: Thank you.

Your next question –

I think what Daniel was mentioning, I think in Mexico what we have been doing with, we are mixing different kind of technology, one is one of them is fiber, what we are getting close to the fiber to the customer using new technologies of copper like VDSL or vectoring. So what we have been doing is to adapt our network to this bandwidth need in the marketplace. So we feel we are doing the right operating of the network to be competitive in the marketplace given the speeds of the market is asking for. So but we are doing a combination of technologies copper and fiber.

Your next question comes from the line of [Guilme Maricel] [ph]with Morgan Stanley. Please proceed.

Hi. Good morning guys. Actually is Diego Aragao here. Thanks for taking my question. So the first question on Mexico, can you explain a little bit more about your CapEx for the next three years. I guess it's the $6 billion implies like a decrease from $7 billion we have previously, so if you don't mind just explain things.

I don't know where we have the – or when we said the $7 billion, but the actual CapEx that we review and that's what we review in the last couple of months are $6 billion, I don't know if that's because we are having a better pricing on the infrastructure or something [eligible] we are not decreasing anything in Mexico. We are still on what we have been projecting for the next year. This is what we said yesterday that we are going to do.

Okay. Perfect. So the second question if I may, it's regarding Peru. You mentioned the 6 – I guess the [63%] [ph] go to MTRs, so can you help us to quantify the impact on revenue and also on expenses? Thank you.

I think on revenue we are doing well as in all the other countries the prices has been going down, the volumes has been going out, price stay up. And we have been very competitive in the market in Peru. The reason of the decrease of the EBITDA is that that we have been reducing prices very fast. We have been giving more subsidies. We have been growing on the cost base side. And also the interconnection rate hit us at some point of EBITDA. Well, that's more or less what is happening on Peru. What I think as the next year I think we can stabilize all these things because I'm sure that we are going to grow faster on data and being reducing less on minutes that it is what is happened today.

Okay. And just one more question, if I may regarding the DTH receiver deal, I guess we saw some disconnections recently. Can you explain the main reasons for those disconnection on the PayTV side? Thank you.

I think Oscar already said that. But, I'm glad to comment on the DTH, I think the DTH are the customers who are more sensitive to the economic slowdown so that's really why you are seeing that – are the low end customers the customers that we are having more on the outside of the countries on the rural area. And I think that's the reason why you are seeing a reduction on the DTH in Brazil.

Okay. Thank you.

Thank you.

Your next question comes from the line of Valder Nogueira with Santander. Please proceed.

Good morning guys. Two questions. First, we have been seeing currently a change in the mix between voice and data especially on new mobile offers through all along America. You got a target that you guys intend to reach or what is the balance that you guys believe you can achieve on the percentage that you get some voice and percentage that you get from data. I ask that because that's very important to determine what is your real profitability in each of these units. Is that a target – there has been significant changes in this mix towards data, is there a target that you work with? That's the first question. Carlos García Moreno: There is no target to what we are working on. I think the increase on data depends a lot on moving 2G subscribers to 3G and 3G subscribers to 4G and that's the reason people is starting to use more and more when they have 3G and when they have 4G they use more and more data. So that's the reason people and young people start to use more data and chat more than talking more. So those are things that are going all around the world. I think we our best – the highest gone through where we have is around 50:50 voice and data it's where we are 50 on the revenues on voice and 50 on the revenues on data. So there is no target. We don't have any target. So we are going to do more applications, mobile working, ecommerce, the advertising, so we are going to add more and more revenue as our customers move from 2G to 3G and to LTE. So that's the reason no target. So we are moving as the market is moving know.

That's clear enough. And the second question back on some questions regarding Telesites. You have this master agreement that is submitted to the regulator regarding the prices that Telcel pays to Telesites. How do they differ from the existing prices in the market either on existing tower capacity or building huge capacity?

The prices besides – this is a very well-established market in Mexico. There is at least a market with roughly some 15000 towers on buyer operators most importantly American towers. They work with all the operator, Mexico, Telcel. So the market prices where towers are very well established they depend among other things on location certain regions where they would be more expensive. It will depend also on the nature of the tower not all of them can support this equipment. So we cannot get into much into the details. Only to say that those are fairly large markets, number of players already there, well-established prices and all of those have been basically seen and acknowledged by the regulator.

Okay. Thank you, Carlos.

Thank you.

Thank you.

And we have time for one additional question. Your final question comes from the line of Martin Lara with Actinver Securities. Please proceed.

Hey, good morning, Daniel and Carlos. I have one question on Mexico. Where can you see the EBITDA margin going forward, do you think that we could see some improvement in the next few quarters?

We are not giving any detail on items on the EBITDA but what I can say in Mexico is that – that it is becoming more competition. We are going to compete. We want to invest. We want to have the best network today customers are choosing us. And we are going to follow that path. So that's more or less the strategy on Mexico. Carlos García Moreno: One thing Martin that is important to consider is, Mexico, the telecom sector is going to see much more investment in the next few years than it saw in the past particularly from the competitors. So you are going to see more lively market. It is going to be more energized. You are going to see a lot of growth. And that bodes well eventually for margins. So I don't know how we are going to pace ourselves in that regard. But, certainly the market has a very bright perspective in the medium-term.

Okay. Thank you. I have another question. Could you please give us an update on the video license in Mexico, what are your plans there?

We still doesn't have anything to comment on that respect at this moment, no. Nothing new.

Okay. Thank you very much.

Thank you. And thank you everybody for being in the call.

And there are no further questions in queue. I would now like to turn the call over to Mr. Hajj for final remarks.

Okay. Just say thanks to everybody for being in the call. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.