América Móvil, S.A.B. de C.V. (AMX) Q1 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the America Movil First Quarter Conference Call and Webcast. My name is Stefanie, and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. [Operator Instructions] I would now like to turn the conference over to your host for today, Ms. Daniela Lecuona, Investor Relations Officer. Please proceed.

Thank you. Good morning everyone. Thank you for joining us this morning to discuss our first results. We have on the line, Mr. Daniel Hajj, Chief Executive Officer; Mr. Carlos García Moreno, Chief Financial Officer; Mr. Oscar Von Hauske, Chief Operating Officer; and also Mr. Carlos Robles, Chief Financial Officer of Telmex. Daniel

Yes, good morning and welcome to America Movil first quarter of 2016 financial and operating results. Carlos is going to make summary of the results, Carlos? Carlos García Moreno: Thank you, Daniel. Good morning everyone. The first quarter marked the worst beginning of the year for capital markets in general, and for emerging markets in particular, with renewed concerns about the sustainability of growth in China impacting commodity prices across the board. Oil prices were under severe pressure reaching in mid-February their lowest level in at least 12 years. The Mexican peso depreciated sharply in the first two months of the quarter, dragged down by oil prices. Currency volatility in Mexico and other countries was very high throughout the quarter, making it difficult to manage the sale of dollar-based products such as handsets. In spite of these economic activity was rather stable throughout the region, with the major exception being Brazil. In March, fixed line RGUs reached 81 million, up 3.8% from a year before, while wireless subscribers were down 2%, to 284 million. During the quarter, we added 759,000 postpaid subs with Brazil and Mexico accounting for just over 200,000 postpaid net adds each month, and Colombia 69,000. Our contract base was up 6.2% year-on-year. Our prepaid subscriber base declined 4.1% year-on-year, following disconnection of 2.4 million clients in the first quarter, including 908,000 in Brazil, 700,000 in Colombia. On the fixed line platform, fixed broadband access lines led the way, increasing 9.3% from the prior year, with both PayTV and voice accesses expanding between 1% and 2% year-on-year. Our revenues totaled MXN223 billion, in the first quarter 1.4% more than the year before, with service revenues increasing 0.3% in Mexican peso terms, and declining 1.1% at constant exchange rates. Fixed broadband and PayTV revenues were the main drivers of revenue growth, increasing 7.9% and 5.9% year-on-year. Our mobile data revenues decelerated particularly in Mexico and Brazil. Mobile voice revenues were impacted by sharp reductions in interconnection rate in Peru, Colombia, Brazil, and Chile. They average about 30% overall, and also by stronger competition in some markets, especially Mexico. Central America continued to outperform all regions, posting 5.9% service revenue growth at constant exchange rate followed by the South American block. EBIDTA came in at MXN52 billion, down 9.6% from the year earlier quarter in peso terms and 8.8% at constant exchange rate. It was equivalent to 37.7% of total revenues. Operating profits fell 25% in peso terms, reflecting both the EBIDTA reduction and a 10% increase in deprecation/amortization charges, an increase that for the most part reflected the amortization of goodwill basically, intangible assets related to the acquisition of our stake in Telekom Austria. Our comprehensive financing costs amounted to MXN21 million, 14.5% less than the year before, the net interest payments of MXN6.9 billion, whereas our foreign exchange losses totaled MXN1.8 billion, other financial expenses reached MXN12 billion. We obtained a net profit of MXN4.8 billion in the quarter, equivalent to seven peso cents per share, and $0.08 per ADR. Our debt totaled MXN577 billion in March, down from MXN582 billion in December. It was equivalent to two times last month EBIDTA. In flow terms, our net debt was reduced by MXN14 billion with gross debt falling by MXN23 billion. Our capital expenditures, which included MXN3.6 billion in spectrum purchases, most of them in Mexico amounted to MXN26 billion, and shareholder distributions, mostly share buybacks, to MXN2.8 billion in the quarter. With that, I would like to give the call back to Daniel, so that we can begin the Q&A session. Thank you.

Thank you, Carlos. We are going to start with the Q&A.

[Operator Instructions] And your first question comes from the line of Daniel Federle from Credit Suisse. You may proceed.

Okay, good morning. Thank you very much for taking my question. My first question is related to the deceleration in the top line and EBITDA in Mexico. I would like to understand. If you could help us to quantify how much was the impact of the calendar effect and how much is increasing competition and the more competitive or attractive plans you implemented in the quarter which was the reason for the deceleration? And the second question is related to CapEx. I see that the CapEx in the first quarter declined 26% year over year is U.S. dollar terms and this is an indication of lower CapEx in this year. Thank you very much.

Well, good morning. The first question in Mexico on the EBIDTA; as everybody knows, we have been having new competitors since maybe one-and-a-half, two years ago. They have been making -- there are things, and I think, fourth quarter of last year starts with big promotions, and still we have these first quarter big promotions there. And what we're deciding is to follow the competition. The competition has been strong. And I think the good news there is that when we get closer to the prices and the competition and the promotions things, our distribution network, our plans, Telcel, our dealers, our customer care centers, and our capacity and quality are so good that people is reacting very good. So what we decide is to defend our customers, to do what we need to do in terms of pricing, and well, that's hitting us in the EBIDTA. The other good thing is that minutes of use are growing a lot, the EBIDTA volumes are also growing a lot, and that means that people that are staying with us are using more and more of the phone. So those are the things that are happening. I think eventually things are going to be a little bit rationale in the future, but today the promotions that are in the market are very aggressive. So the other thing that hit us in Mexico is the Telesites. We used to have Telesites inside America Movil. Today, with the spin-off, we are paying rent there. So it’s more or less 1.5% to 2% of the EBIDTA, what we are paying to -- in Mexico, in Mexico, what we are paying to Telesites. So, percentage points, so that’s more or less what is hitting us now. We are growing good in postpaid, and well, the market is reacting good on the Telcel brand. On the CapEx, the second question is on the CapEx, the CapEx is -- well, we said that we are going to invest a little bit less than last year, and it's what you are seeing this first quarter. Number portability also in Mexico, number portability is -- decreases at the end of last quarter, it's starting to increase in February and March. So while the competition is tough in promotions, but the market is reacting good.

Okay, just a quick follow-up on the first question. So the calendar effects with the Easter holidays in March represented a very minor effect. That's correct? Carlos García Moreno: No, it is not correct. Particularly in Mexico, it's very strong. It’s practically two, three business days that are taken off, and all the weekend there's much less usage. So, no, the calendar effect in terms of Easter holidays are very strong in certain markets, but more importantly in Mexico, and the -- if you look at Easter holidays that they were in April last year, in this year they were in March. So they were captured 100% in here [ph]. I don’t want to give you an estimate of exactly what’s the impact, but it is a very important impact, and you can see it, historically in our reports when there's been difference in terms of when the Easter holiday takes place, those are very significant change. But other than that, it's what Daniel said, I think that we need to look at distribution of revenues. On the fixed line platform, where you don’t really see the seasonal effect, you see an improvement of revenue. They have been recovering, I would say, to the middle of last year, they have been trending up, and I would -- the trend continues, they should be on a positive path year-on-year probably next quarter. So, on the fixed line side, we did not see this kind of seasonal effect. On the mobile side, you do have the seasonal effects. And as I said, I think there is a big history of evidence of when this happens, how it’s affecting the revenues, but then the other thing is what Daniel said, I mean it is the case that we have had a lot of competition, promotions in place, that began towards the end of last year, that have been in place also all of the first full quarter and they have had an impact, yes, in terms of driving MOUs up. For instance, MOUs, Daniel was mentioning, we are up, they reached -- you have seen in the report 319 minutes. That’s I believe the record. I don’t think, we have ever had -- I think the record before was something around 250. So we are seeing very significant increases in usage that have been driven by the promotions that we have put in place.

And your next question comes from the line of Richard Dineen from UBS. You may proceed.

Thank you very much, good morning everyone. Thanks for taking the question. Just two questions, if I may? Firstly, if you could perhaps compare and contrast your competitive strategy in Mexico and Peru mobile, given that you're facing a similar situation with new competitors in both markets? In Peru, you've been pretty aggressive with discounts and subsidies to try and defend share, which has obviously impacted the margins quite significantly over the last several quarters. But in Mexico, I'm just wondering, does it make sense for you to defend share less aggressively, given that you have potentially a lot more value at stake there? And plus, losing share in Mexico arguably helps you in the eyes of the regulator. So just wondering how you think about that, kind of philosophically, market share versus margin in these two markets? And then, secondly, just if you could give us a quick update on fixed line local loop unbundling in Mexico, which seems to be the only major regulatory measure missing from that market? Just wondering what stage is that discussion at just a discussion without the prior written consent of about pricing at the moment? Or, are there other things that might need to be resolved which might take some time? I guess, anything on the kind of road map over the next few quarters would be fantastic. Thank you very much.

Well, lot of questions. Let me start with the first, I think it’s totally different what is happening in Peru than what is happening in Mexico it’s not the same market, its different competitors, it’s different what is happening in Peru, what is hitting us a lot is the interconnection rates, the interconnection rates, they reduce a lot and its around 60% of the reduction is in interconnection rates, it’s being in Peru still subsidies are high, I think they should - the more reasonable in the future but today it’s subsidies are high. In Mexico we have not been so aggressive in subsidies. In Mexico, we are more aggressive on rates and promotions and this promotions have some time, I don’t know exactly what is the - when they are going to be more reasonable. The promotions but in terms of subsidies, we have been more careful, we are losing a little bit of market share in Mexico on the prepaid. We are in a very good position in postpaid, in postpaid, we are maintaining or gaining a little bit market share. So it’s totally different, so a different competition here, we have AT&T and Telefonica. In Peru, we have Entel that it's a new entrant in the market and we have also Telefonica. So we cannot compare different strategies, different markets. So it’s different, the other question about the unbundling on Telmex.

Basically on December of last year, IFETEL issued the final conditions for their unbundling include the tariff and at this moment, we are speaking with a different interested operators to be able to implement the unbundling in Mexico and well it is difficult to envision or to see what the effect of the unbundling would be, but just as we have been doing, what we are doing is, we are further increasing the speed and the quality of our product and therefore within that we are in a good position to face this new competition environment.

And just to finalize on Mexico it makes sense to, we are losing some customers in prepaid, but their promotion was too aggressive. So we had to do something in the market, that’s what we decide I think long-term is good and as I said eventually, things are going to be more rationale in terms of promotion. So, we are going to be aggressive in postpaid and we have a very good network, we have a good quality on the network, good coverage, good distribution, customer care center, it’s a lot of good branding. So as we get closer in the promotions people is reacting on favor on Telcel. So that’s a very good news for us. In the other sites, well they are using, people is using lot more data, lot more minutes and I think, it’s also very good for the Mexican market.

And your next question comes from the line of Michel Morin from Morgan Stanley. You may proceed.

Yes, good morning. Thank you. I just wanted to see if you can elaborate a little bit more on the statement you made in your prepared remarks and also in the earnings release around the impact of the FX volatility, in terms of your ability to manage the business. Was that reflected in some of the cost pressures that we saw? Was there a material or visible impact on margins in some markets? And then, the second thing is around your leverage. It's ticked back up to about two times net debt to EBITDA. And I'm wondering if you can update us a little bit on how you're thinking about your leverage levels and also whether or not you're seeing any pressure from rating agencies to bring that down a little bit faster? Thank you.

As Carlos said, at the beginning of the call, there was a lot of volatility during the first quarter of this year also the fourth quarter of last year, first quarter of this year and in terms of the operation, yes it hit us a lot because you have to pay handsets, handsets are in dollar, you have to pay software, you have to pay some operation expenses are in dollar terms. So it’s very difficult when you have a deal date to pay something and what the rate this, lets say Brazil or the peso, the real, the peso or the Colombian peso. So well change you a lot, it’s difficult to watch all those things and that’s why it hits you a little bit because, lets say the dollar and the peso gets the quarter from 17.20 to 18.90 and then goes down to 18 and then to 17.60. Well, in those dates you have to do something. So it’s difficult and then you have to manage that and it’s going to hit you always in your results. So that’s what is happening and it’s depending on the country, it hit you the depending on the exchange rate and the volatility. So that - there is a lot of things that are denominated in dollars and you have to pay in dollars and Carlos can talk a little bit about the. Carlos García Moreno: Clearly, the increase in the ratio, Michel is basically the result of the declining in ARPU for the last 12 months, because of the reduction that we had in this quarter is in my prepared remarks, at the beginning, I mentioned that in terms of flow we had actually reduced gross debt by MXN 23.7 peso and net debt by approximately MXN 1.4 billion. So there is a lot of noise with the FX volatility as we have pointed out. So probably does not allow you to see all of this -- the reduction in net debt in terms of pesos was approximately MXN 4 billion, but in flow terms was approximately MXN 14 billion. So I expect that throughout the year as we continue to reduce our debt which is what we have said, there was a delay in the year, that we will maintain the leverage ratio between the ratio that is 1 to…

Thank you. That's very helpful. And has there been any conversation with the rating agencies? Is there any pressure as from their perspective? Carlos García Moreno: We have stable rating today by S&P and by Fitch. We have a negative outlook by Moody’s again probably at the same time Mexico was put on close watch as well. So there could be something there that again I don’t think there is anything immediate, we have today, the best credit ratings in the telecom sector, I probably say that in the world, I don’t know about Japan, but out of Japan I think that we have best grade rating of any telecom company in the sector and we intend to hold on to them.

And your next question comes from the line of Amir Rozwadowski from Barclays. You may proceed.

Thank you very much and good morning.

Good morning. Carlos García Moreno: Good morning.

I was wondering if we could talk about the reverse side of some of the increased competition in Mexico? If we think about some of the pricing declines that have occurred from a regional perspective and some of the increased competition, do you believe this puts you in a better position to benefit from easing asymmetric regulations, going forward? And then, a second question, with your CapEx down, which is a theme that you had mentioned in your analysts update late last year, I suspect that the expectations is improving cash flow conversion. And with that, how should we think about the priorities for cash at this level? Is it to focus on some of the debt? Is it potential increased return to shareholders? How should we think about your strategy, going forward? Thank you very much. Carlos García Moreno: On the second one, which is a little bit related to what Michel had asked, the intention - our intention is to reduce debt, net debt by MXN3 billion to MXN4 billion EBIDTA, that’s the intention and that means that some of the savings that we will have in the year. On the CapEx side, we will be utilized mostly for debt reduction, okay, so that would be priority for this year as opposed paying an extraordinary dividend that we did last year.

And the first question, we are in the process, where IFETEL is reviewing all the acting metrics what happened the last two years. We don’t know what they are going to decide, I think, in my personal that there is effective competition in the market, the competition means that we don’t -- they should see that, we are not putting prices in the market. So when you have competition, you don’t decide the prices in the market. So what is happening, what you could see the last eight months, there is much more aggressiveness in the market. We don’t decide that, we don’t decide, what the market is going to do and that means that there is effective competition in the market. So still we don’t know, what IFETEL is going to decide. But I hope they are going to be more relaxed regulations in the future for America Movil, that does not mean, we are going to be be out of being a preponderant player, but it means that there should be more relaxed regulation for Telcel and Telmex.

Thank you very much. And one follow-up, if I may; switching gears a bit, how do you think about your opportunities for a TV license at this juncture?

Well, we in Telmex we ask for the to renew the concession and we don’t know what they are going to decide, still they are reviewing that and let's see what does, IFETEL is going to decide that now.

And your next question comes from the line of Andre Baggio of JPMorgan. You may proceed.

Hi, good morning. Two years ago, AMX tried to get out of the preponderance by trying to divest some assets. And we now see an opportunity that we have a very aggressive competitor; that is probably AT&T. But we are seeing that America Movil is trying to fight back, like trying to follow the price discounts or more aggressive campaigns that we see from competition. So why not simply giving up market share that would expedite America Movil getting out of the preponderance status?

Well, it’s a very complicated question, because it does, you need to defend your customer, you need to be also a competitor in the market and well we don’t know even if - America Movil doesn’t have any offer of selling customers at this time. So there is the -- at this stage what we want to do is, we want to defend our market and I think as we are saying is very good for all the customers. So they are consuming more data, they are consuming more minute and I think that’s very good realization for the customers for the future. So we are as I am saying, we are losing market share in the prepaid business and well I think we are going to lose market share in the next year, of course AT&T and Telefonica are aggressive and they are going to get more customers. But in the other site, the market in Mexico is also going to grow, still the penetration in Mexico is low and I think we are going to have a more growth in the market in Mexico. So that’s what we are the strategy for Mexican market.

And do you see any signs of change in this competitive position? Or, should we just expect the market to get more and more competitive over time?

Well, I think we are at a very competitive pricing right now, I think much longer than in a lot of countries than U.S. so we are at a much lower price on what my competitor is having in there market. So I don’t know and I am not one, who is deciding at which state we are going to go, we are deciding to compete, that’s what we are doing. But if you are asking me, if the market today, the market today is really competitive there is a very low pricing today, much lower than what you see in the United States. Carlos García Moreno: I think, Andre, that is interest interesting to look at how the structure of subscribers of America Movil Mexico is changing we have been losing share in prepaid, we are continuing to gain I think in postpaid. The quality of subscriber is improving, overall. I think that the quality of the network is a key element. We have seen that as we move our prices closer to the competition without even having to match them, this immediately attracts more people back to our network. An indicator of this is that in February and March we had the highest numbers ever of porting on the number portability. And that is basically what we have seen already in other markets, including in Europe, that the main driver of your competitiveness vis-à-vis is operators is the quality of service. We have the best quality of service. We have the best data speed of any network. We have the best coverage. And that's not going to change anytime in the future. So we expect that we will be able to hold onto this competitive advantage and that that should continue to allow us to gain in growth in the segments of the market that we are more interested in and in this regard, now if you look at our plans for CapEx, this year, it’s basically in the case of Mexico basically meant to allow us, much great capacity to allow again to process much more greater volumes of data, so that we can continue to service the high-volume clients the way that we want. So I think that's how you should look that. We have an installed infrastructure in Mexico that is a key element of competitiveness going forward and we tend to maintain transparency in it.

And your next question comes from the line of Carlos Legarreta with GBM. You may proceed.

Thank you for taking question. I notice in Brazil there's a substantial contraction in operating profitability. I was wondering if you could comment on that, because that seems to be mostly explained by depreciation charges. That's the first question. Thank you.

Let’s talk a little bit about Brazil, I think in Brazil. Well we now, what’s happening in the economy, it's been bad debt increasing a little bit, more little bit careful on what we are doing. But overall, we are gaining market share in most of our markets in the PayTV we are doing well, in the broadband we are doing well, also in the fixed, in the -- I think corporate customer, we are doing well. So we are investing and we are preparing when Brazil recovers, we are well prepared to, to take more market there. So that’s what is happening in Brazil, it’s a special condition. The economies are not doing so well and what we want to do is to be a little cautious on what is happening, we are seeing that the bad debt is increasing a little bit of our DTH cost to segment C and D are disconnecting. So what we want is to be more cautious on all over offers that we are gaining. So that is happening right now in Brazil. But overall, the company has a very good strategy, we have fixed, we have mobile, we are doing also cloud, we are doing applications, we are doing more on the cloud business in the corporate side. So we are well prepared in Brazil.

Thank you, Daniel. I am very aware of the integrated offering that you guys have in Brazil, but I don't think that explains the actual decrease in the operating profit. I mean, EBITDA is increasing by 1.2%, whereas operating profit is declining by more than 60% year over year. So, I don't know if there is a specific reason for that that you can.

I don’t know, Daniela can tell you, I don’t have it, why the deprecation is specifically growing in Brazil, I don’t know Oscar, if you have the number exactly. But if not Daniela can give you exactly what the reason, why is the reason, why the deprecation is growing there in Brazil a little bit faster now.

And your next question comes from the line of Walter Piecyk… Carlos García Moreno: One question, just to go back to prior question we have now the answer, we changed the policy for depreciating the set-up boxes in Brazil, it used to be for five years. So we have moved forward to three years, because that’s more consistent with that type of hardware and obviously it’s more reflective of the real value of the hardware, that we are buying. So it depreciated more rapidly, that’s the reason.

Thank you, Carlos

And your next question comes from the line of Walter Piecyk from BTIG. You may proceed.

Great thank you. This is a question for Carlos. Carlos, the leverage, obviously because of the movement in EBITDA, is up. I see that your share repurchase is obviously a lot lower than it was back in early 2015. Just curious, just given the trajectory of EBITDA, does it make sense to perhaps suspend the share repurchase program at this time?

I think that we can continue with a -- it obviously will depend on the pricing. We have overall we had a liner share buyback, so very often the share buyback plan is sensitive to the kind of pricing that we see in the market. So I would say that, yes we do have some amount earmarked for share buybacks this year. And in principal we will continue with that. At what pace will depend on what prices we see in the market.

Understood. Also, Verizon was talking very positively about TracFone as a good prepaid channel for them. I know you use a number of different operators, have you been shifting and you have the ability to shift your traffic between operators. Have you been shifting a significant amount of traffic to Verizon and away from the other US operators?

I think Verizon at this stage has a good share of our traffic and yes if Verizon is giving us more competitive offer of course we can move more traffic to Verizon but it’s going to depend on the offers that we receive and that’s what we have been doing for the last two or three years. Verizon has been very aggressive and that’s why they have been growing with us in the last five years. So they have a big share of our market and I hope we have in the future, very good offers from them and we can increase the market, but that’s the business and that’s what we think there. Depending on the offer is going to depend on with whom we can go, it’s not only Verizon, it’s also T-Mobile, it’s also AT&T we have business with them and that’s more or less that you have been seeing in the last three, four years.

[Operator Instructions] And your next question comes from the line of Gregorio Tomassi from Itau BBA. Please proceed.

Yes good morning thanks for taking the call. I have actually two questions. The first one is on the local loop unbundling in Mexico. I want to go back a little bit there. I understand there are any rules that allow you not to unbundle for a certain period of time the fiber that you have deployed in some accesses, the fiber accesses that you have deployed. Is that in place? What's the time window? And basically, I think it was two years, but is in place and have you and what percentage of your access network actually would fall into the category that would not be forced to be unbundled? That's the first question. And the second question is about again the depreciation charges. Can you give us a refresh us a guidance in terms of percentage of revenues where should depreciation and amortization on a consolidated basis converge?

Gregorio, speaking about the local loop unbundling, yes, the measures that IFETEL established two years ago regarding the unbundling, they specified that there was a period of two years for new development of fiber. And basically, this is one of the conditions that is defined in the measures that were established on December of last year. Regarding the number, I don't have the numbers right now. But basically, there's a portion of those that would be exempt from the unbundling at this moment for two years. Carlos García Moreno: Deprecation and amortization charges, what I would expect them to be similar to what we have in this quarter. They had been always around 113% of total revenues. I would say that, what is being reflected in this quarter, that’s a bit higher than it was before on account of what was just discussed in Brazil, that we are accelerating the deprecation of the set-top boxes. But on the other hand, while we are now doing, which we did not have in the first quarter of last year was the amortization of goodwill intangible assets associated with our consolidation of Telekom Austria. Okay that leads to this amortization that has increased the line item of depreciation and amortization charges. So the comparison year-on-year was high, because in the first quarter of last year amortization of goodwill was not taking place but this should normalize for purposes of year-on-year comparison that should normalize next quarter. But in terms of percentage of revenues I think that we will expect to continue to be close to 114% of revenues.

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

Thanks.

And your next question comes from the line of Rick Prentiss from Raymond James. Please proceed.

Thank you, good morning thanks for taking my question. A couple, if I could? One on Telesites. You mentioned it was about 1.5% to 2% of your EBITDA in first quarter. I think it was also about 1.5% in fourth quarter. So this really is a year-over-year difference, I guess, not a quarter-over-quarter difference for Telesites impact? Is that correct?

That’s correct and 1.5 and 2% it’s on the Telcel results, I was saying not on the Mexican results. So I have to check exactly what is the percentage of all the Mexican results, because I was giving you only on the wireless side. So Daniela can give you exactly the number on the Mexico. Carlos García Moreno: And it’s also year-over-year, not quarter-over-quarter as you are saying.

Exactly. Good, thank you. To piggyback and on Walt's question earlier, obviously Verizon made a nice mention of you, but the results in the U.S. were very tough in the first quarter. Can you talk a little bit about the competitive environment in the U.S. usually, first quarter is a good quarter, with the income tax season. But how do you view the competitive dynamics in the U.S. please?

What we are seeing in TracFone is lot of competition in the prepaid side and I think also the U.S. market is really competitive and what’s happening around MVNO. So we have to be as the market is changing faster the rates than we have to negotiate new offers with our carriers. So that’s why it has been more costly for us because there is a time, where you need to give a new promotion and then you have to negotiate with all the carriers and new rate and that’s more or less what has happened for the last six months, eight months and that’s really. We are really happy as you said, Verizon has mentioned in our prepaid business. We have a big market, a big size of our market with them and we are really to happy, to with that mention.

At this time, there are no further questions in queue. I will now like to turn the call back to Daniel Hajj for final remarks. Please proceed.

Just to thank you everybody for being in the call, and thank you, good morning. Carlos García Moreno: Thank you.

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