América Móvil, S.A.B. de C.V. (AMX) Q4 2019 Earnings Report, Transcript and Summary

Good morning. My name is Lindsey, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil Fourth Quarter 2019 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Now, I will turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.

Thank you. Good morning, everyone. Thanks for joining us to discuss our fourth quarter financial and operating results. We have today on the line Mr. Daniel Hajj, CEO; Mr. Carlos García Moreno, CFO; and Mr. Oscar Von Hauske, COO.

Thanks, Daniela. Welcome, everyone. Carlos is going to make a summary of the fourth quarter results. Carlos García Moreno: Thank you, Daniel. Good morning, everyone. With the U.S. long-term interest rates stabilizing in the fourth quarter, after a sharp decline that began in February and with the stock market reaching all-time highs on the back of sustained economic momentum and the FED reduction in interest rates, the year ended on an improving note in the U.S. economic front. In this context, coupled with weak, but improving levels of economic activity in Latin America’s larger countries, the currencies in the region generally strengthened or were stable throughout the quarter with another exception of the Chilean peso that depreciated as a result of the social unrest in last November. We added 1.9 million mobile postpaid subscribers with Brazil leading the way with 1.2 million, followed by Mexico with 242,000 and Colombia. On the fixed-line platform, we gained 181,000 broadband accesses, roughly one third of which came from Central America, with Argentina contributing 37,000 and Peru 30,000. This accomplished our goal of going on the fixed-line side, and they are making good inroads. Mobile postpaid and fixed-broadband continued to be the main drivers of access growth at 8.1% and 4.2%, respectively, with mobile overtaking fixed-broadband for the first time in several quarters. Mobile prepaid and PayTV accesses declined 2.3% and 2.8%, respectively, while fixed post accesses were down 2.2% from a year before. Our fourth quarter revenues totaled MXN263 billion, including other revenues, MXN2.6 billion derived from the restructuring of certain amounts owed under equipment lease agreements in Mexico. In Mexican peso terms, our revenues were flat year-on-year, reflecting the depreciation of our currency, the Mexican peso, that appreciated 11% against the Brazilian real, 10% versus the Colombian peso, 14% versus the Chilean peso, 6% versus the euro and 3% versus the dollar. At constant exchange rates, service revenues actually accelerated to a pace of 3.2% year-on-year from 2.5% the prior quarter, and excluding Argentina in these numbers because of the hyperinflationary accounting that they have, which is different from everybody else, with continued strong performance in the mobile platform and improving trends on the fixed one. Three of our top four operations posted positive revenue growth on both fixed and mobile platforms. A year ago, only one did. On the IFRS 16, our EBITDA came in at 11 – at MXN81.7 billion in the fourth quarter, corresponding to 31.1% EBITDA margin. At constant exchange rates, our organic EBITDA was up to 7.6%, adjusting for extraordinary items in Mexico, also in Brazil, reflecting greater operating leverage. Mobile service revenues kept picking up with their annual rate of growth hitting 5.7% from 4.6% in the third quarter, whereas our fixed revenue were practically flat year-on-year, marking their best showing in 2019 as fixed-broadband growth roughly made up for revenue losses in voice and PayTV. On the mobile platform, our Brazilian operations posted a 15.6% increase, aided by continued market share gains in the postpaid segment. In fact, mobile postpaid revenues soared 21%. In the Dominican Republic, mobile service revenues were up 8.9%; in Colombia, 8.5%; in Mexico, 7.6% and in our European operations 5.7%. Save for Mexico, all the countries mentioned before posted their best performances in more than a year, if not, ever. As for fixed-service revenue growth, it reached nearly 14% in Paraguay, 8.5% in Colombia, 7.8% in Ecuador, and 4% in Peru. Postpaid mobile services became our most dynamic business segment, with growth accelerating to nearly 8% from 5.8% the prior quarter, overtaking fixed broadband services, at 7.1%. Mobile prepaid services and corporate networks followed with revenue growth of 3.8% and 1.3%, respectively. We observed double-digit EBITDA growth in several countries, Peru, 22%; Central America 17% nearly 18%; the U.S. 16%, Colombia, 14.5%, and Mexico organic, 5.9% with Brazil expanding nearly 5% after the above-mentioned adjustment. The EBITDA margins increased approximately one percentage point in each of Mexico, Telekom Austria, Argentina, the U.S. and Colombia, with Central America and Peru presenting margin increases of four to five percentage points. In Mexico, Brazil and Colombia, we continue to observe very strong mobile service revenue growth and somewhat improving trends on the fixed line segment, with good advances in EBITDA in spite of strong seasonality typically in the last quarter. We obtained a MXN44.6 billion operating profit that, after factoring in MXN8 billion in comprehensive financing costs, helped bring about a MXN21 billion net profit in the period, a 63.4% increase from the year-earlier quarter. Our net profit was equivalent to MXN0.32 per share or $0.33 per ADR. Including capitalized obligations, our net debt ended the year at MXN677 billion which is MXN7.2 billion lower than at the end of 2018. Under the prior accounting methodology, IAS17, which excludes capitalized obligation from the debt and substracts the lease payments from our EBITDA, our net debt to EBITDA ratio stood at 1.96 times. In cash flow terms, we increased our net debt by MXN16 billion in 2019. Shareholder distributions for the year totaled MXN22.9 billion, mostly by way of dividends, while acquisitions came in at MXN25 billion, principally having to do with Nextel Brazil. In addition, we reduced pension obligations by MXN20 billion, mainly in Telmex. With that, I would like to give the floor back to Daniel, and I think Daniel will begin the Q&A session. Thank you very much.

Thank you, Carlos. We can start with the Q&A, please.

[Operator Instructions] Our first question comes from the line of Rodrigo Villanueva with Bank of America. Your line is now open.

Thank you. Good morning, Daniel, Carlos, Oscar and Daniela. My first question is related to Brazil. I was wondering if you could please elaborate on the strong wireless service revenue growth of 16%. What is behind this, particularly considering that the one team are growing only low to mid single digits. And the second question is regarding Mexico. Could you please share with us your thoughts on Telefonica's decision to turn Telefonica's decision to turn into an MVNO? And how would you expect this to impact the competitive environment? Thank you.

Well, first in Brazil. Good morning, Rodrigo. In Brazil, what we have been doing in the network has been very good for our wireless subscribers. The growth of the wireless that we have been having, we have been investing for the last two, three years, very, very, very high investments in coverage, quality, capacity and that's been very good I mean I think it's one of the things that our subscribers, customers wants at this that our subscribers customers wants at this stage. Other thing is we have a very good distribution network. We have been growing our distributors, our customer care centers, our stores. So all the distribution has been growing in Brazil. And the third one that is very important, we have been doing bundles all around. So we have been bundled fixed wireless broadband, and that's what is giving us the growth in the wireless market. So I think it was very good. The last quarter, I think, we have almost 50% of the gross adds – of the net adds in Brazil in postpaid so for us has been very good. In the future, I think it's also very important to notice that the Nextel purchase that we have is going to bring us all the good things that is…

Ladies and gentlemen, this is the operator. I apologize, that there will be a slight delay in today's call. Please hold in the conference will resume momentarily. Thank you for your patience. Thank you. And we are now back in the main conference.

Sorry, Rodrigo I think, we have a bad connection. So what we've been saying about Brazil is with the Nextel purchase, they authorized the Nextel company, and we're going to have more frequency. And we have a new program of investments using these frequencies that is going to allow us to have a very good – better capacity, more quality, and we are going to have the best – I think we're having the best network in Brazil at this stage. And for the next two years, we're going to improve that, Rodrigo. In Mexico, it's different in Mexico when Telefonica decided to sell their assets in Latin America. What they do in Mexico is – my understanding is they are going to stay with the 26 more important cities in Mexico, and they are going to give the rest by – to be like an MVNO. Well, that's what they have been doing. You know that the market in Mexico is very competitive and prices are low. So we have been having low prices for the last three years, very competitive pricing in Mexico. And that's what is – we're having today. We're investing in Mexico a lot. We're investing not only in the network, we're investing in the digital transformation. So we're making our companies more digital everywhere in the customer centers, in the sales, in the IP. So we are moving to that. And I think it's going to give us a very good advantage in Mexico for the next years, Rodrigo.

Understood. Thank you very much. Daniel.

Thank you.

Our next question comes from Marcelo Santos with JPMorgan. Your line is open.

Hi, good morning. Thanks for taking the question. Actually two questions, the first on the Mexican wireline I think for the first quarter in several years, we have seen positive year-over-year evolution. We also saw you're building out more fiber. So could you please comment on the outlook for this line? We think we already crossed a limit where broadband is going to continue driving growth and if that should continue going forward. And the second question is regarding the – if you could discuss the CapEx outlook for 2020 and the following years, please.

Well, in Mexico in the fixed line in Mexico, I think Oscar can tell us a little bit more about that, but we have been investing for the last two years, very heavily in improving our fiber and improving our broadband and I think it's we are getting better subscribers, and it's what makes – it is what is making us a growth in the broadband here in Mexico. But Oscar can tell us a little bit.

Yes. As you say, we've been investing in fiber in some of the cities. We've been improving the – an increase in the bandwidth of our customers. We launched a new set of products. One of them, as well, has included Netflix in the offering of the broadband. So I think the reception of these bonds and the increase of bandwidth has been well received in the market. We are changing as well, as Daniel mentioned, all the system to really do a digital transformation to be more productive in the installation and the repair of the customer. So we are really focused on that market to improve revenues and, of course, cost and efficiency within these products. And also in the corporate market, that's another one. In enterprise, we don't see this market only as a connectivity business. So we are getting into solution, bringing some verticals to the market has been very well received as well. Cloud services, we've been getting that market with cloud services for the small business and for enterprise as well.

And your – thank you, Oscar. And your other question about CapEx, I think there's not going to be any big changes in CapEx for the next years, given that we're going to do 5G in some countries. We're going to try. We just launched, in Austria, our 5G network last, I think, two weeks ago. Very good presentation, a very good launch. And we're going to do that all around Latin America in the second half of the year, depending where we have a spectrum, where we have a – where – how we are going to advance putting the things that we need to launch 5G. So – but I think we can have some countries, at the end of the year also, in Latin America. So that's good. And I think our target is $8.5 billion on CapEx, and we don't think that we are going to change that.

Perfect. Thank you very much for the answers.

Thanks.

Your next question comes from the line of Andres Coello from Scotiabank. Your line is open.

Yes, thank you for taking my question. I was wondering if you could give us some color on your potential interest on the assets that Telefonica may potentially divest in Hispanic America due to some advantages in Central America? And I was wondering if you could be interested also in the other countries. And my second question is on TracFone. As you know, yesterday or on Monday, a court in the United States approved the merger between T-Mobile and Sprint, and I was wondering how that could impact TracFone's operations and also whether in the – you could be interested in exploring the options for Tracfone in case Verizon or AT&T want to keep that that scale advantage over the new T-Mobile. Thanks.

Yes. I think it's – as we do last year, we purchased Guatemala and Salvador, makes a lot of sense for us. In-market consolidation was important and allow us to buy these two companies. And we are open to see the rest of Latin America. As always, we want to see, depending on the country, depending on the – how the performance that we have in each country and the consolidation and the synergies that we have, we can be interested in looking for the other assets, I think, as América Móvil is always open to see these opportunities. On TracFone, well, interesting, the authorization was yesterday. It takes long to have this authorization. I think it's good for the American market. And in TracFone, we're open to see. I think it's where we're going to have another carrier for us with more capacity spectrum. And I think for us, it's good for TracFone. It's good to have all of this consolidation in the market. So we are open, as always. And what I think with this carrier, with more capacity, I think it's important, and it's good for us to have. We have T-Mobile as an important carrier as Verizon as AT&T. So for us, it's good.

Thank you. Very clear.

Thank you.

Your next question comes from the line of Juan Pablo Alba with Credit Suisse. Your line is now open.

Hello, good morning. Thank you very much. My question is just if you could elaborate a little bit more in the competitive environment in Colombia and what's behind the bigger – the acceleration in mobile service revenues? That's my question. Thank you.

I think we have a very good quarter in Colombia. Not a very good quarter, I think we have a very good year in Colombia. And in Colombia, we have been doing very good in postpaid. So since the beginning of the year, we have been doing good in postpaid. And through the year, we have been improving in prepaid, and we have been improving also in broadband and in TV. So all overall, we have a very good – we grow our EBITDA 14.5% in the quarter. So it was a very good growth and starting to grow. The prepaid was the only segment where we have been not growing and starting to grow in the fourth quarter. So important, as we said in Brazil and Mexico, we have been doing a lot of investments in the network, a lot of investments in the digital transformation, customer care centers in – also in the commercial side. So we're focusing a lot on the operations, and it's giving us very good results. We're also giving combos. So it's important, the combos that we're doing in that. So we are offering our wireless services to all of our – the broadband and fixed and TV paid customers and vice versa, we're giving to our postpaid customers. We're also offering a good combo for the broad – fixed-broadband and TV services.

Enterprise.

And Oscar can talk a little bit. We're doing also very good on the enterprise in Colombia. But can you explain a little bit more Oscar?

Yes. As we mentioned, in Mexico, we are doing in all AMX, trying to move just from connectivity and enterprise to value-added services. And particularly, in Colombia, we will win in a very large projects with a full integrated proposition that not only include the network, includes security, cloud services, backup, individual LTE networks for the customer. So it's a bundle, a range of products that brings more revenues above the connectivity. And in Colombia, we will win in very large projects as well.

And other thing that I have not mentioned that we have a big project costing – cutting cost in all the operations that we have through Latin America. So cutting costs has been one of the priorities that we have been doing and it's giving us good results. So we have been very specific in each of the things that we are spending and each of the things that we're doing. So that has a revenue, coming revenue, with all the investments that we're having. So cutting cost has been something important for América Móvil through 2019, and we need to do it through this year also.

Thank you very much.

Your next question comes from Carlos Legarreta with GBM. Your line is open.

Hi, thank you. Good morning. In terms of profitability, I think, you have mentioned you expect improvements in Mexico and Brazil of around 100 to 200 basis points per year. Is that something we can continue to expect into 2020?

Well, yes. It's what we're expecting and what we want to have in this year. So we want to still expand our profitability through all our subsidiaries in America.

Okay, thank you.

Welcome.

And so you said, also regarding the CapEx level for the year around MXN8.5 billion. That does exclude any spectrum acquisitions, right? So we could see some higher level due to that.

Yes, yes. It's MXN8.5 plus 5%, less 5% including some spectrum depending I don't know specifically if in Brazil they are going to auction the spectrum this year. But all overall, the rest of the countries, I don't expect to have big amount of spendings in the spectrum side.

That's helpful. Thank you.

Thank you.

Our next question comes from Carlos Sequeira with BTG Pactual. Your line is open.

Hi, good morning. So I have two questions please. One AMX EUR3 billion in bonds due now in May 2020. And my understanding is that these bonds can be paid or partially paid using the 16% of stake AMX has in KPN. My question is do you plan to use these shares to retire or partially retire these bonds? And my second question is on – it's a follow-up question on broadband in Mexico. Can you help us with the number of FTTH homes passed in Mexico and also the number of FTTH clients you have today, please. Thank you.

Okay. On the bond, the – what you're referring to, bonds that have effectively warrant attached. It's a call option on KPN stock. The call option today is very much out of the money. So it is unlikely that the – our option will be exercised. It's highly unlikely. So that means that if the option is not exercised then it's just like a regular bond, and like any regular bond, it will be paid at maturity. So that's what I can tell on the bond. As for the other question?

For the other question, in Mexico, I think – I don't have the data, specific data here. But what – we have a lot of fiber in Mexico, and we're putting more fiber this year and next year. So we have a good project – good projects to put more fiber all around. And the last mile, it's easy for us to put – it's easy – not easy. It's – so if we have the house, past households, so we are going to merge to – we have that advantage to move and give the last mile to our customers. So we are prepared in the fixed-line. We're investing in Telmex. We are investing to give, as Oscar said, more fiber, more broadband and to – more bandwidth to all our customers. And we're going to give specific services, as Oscar said, Netflix and others, we're going to bundle those services. We have more than 300,000 kilometers of urban fiber in Mexico. So…

Okay, thank you very much.

Thank you.

Our next question comes from Gilberto Garcia with Barclays. Your line is now open.

Hi, good morning. Thank you for the call. My question is on the fine that was imposed on you by the Mexican regulator. I understand there might be a limit to what you can say given that this is an ongoing legal process, but can you give us some color on how do you view the prospects of a quick resolution and how this impacts your plan for eventually offering PayTV in Mexico? Thank you.

Well, on the fine on Mexico, I think, IFT imposed a fine on our subsidiary, Telenor, for an alleged breach of obligations related to the ability for third parties of data regarding its infrastructure. And what we can say is we will challenge the fine due to the lack of due process. And it's really really, totally disproportionate to validate this breach. So it doesn't make any sense, this fine. So that's – we're going to allege this one. Okay?

And given that the law requires that you comply with all the measures to get a PayTV license, is it fair to assume that this is likely to delay that process?

No, I don’t think so. I don’t think so.

Okay, understood. Thank you very much.

Thank you.

Your next question comes from the line of Vitor Tomita with Goldman Sachs. Your line is open.

Hi, good morning all. And congratulations on the results. So two quick questions on our side. First, following up on Rodrigo's question on the Brazilian mobile space, could you give us some color on the integration process for Nextel Brazil and on whether this has already affected the revenue and EBITDA in Brazil this quarter to some extent? And a second question on our side also related to Brazil is whether you could give us an updated view on how you are viewing potential consolidation in Brazil involving OE? Thank you.

Well on Nextel, Nextel was authorized at the end of last year, and I think we are starting the process of integrating the company. So have very good subscribers, especially in Sao Paulo and Rio. We have good frequencies. And in the network side, we are going to start the consolidation of all the networks. So we're going to choose which is the best part of the networks, and we are going to make all the synergies and consolidate that. So it's going to take us maybe six months to one year to see the results. But we have a program, a specific program, and we are ready to start to make all the synergies and the consolidation in Nextel. In OE, I think we are open to see the OE assets, and we are in that process, involved in that process. And of course, we are interested in checking and being inside the process of the sale of the – I think what they are selling right now with the mobile assets or the mobile subscribers or the mobile company of OE, and we are open, and we are inside that process.

Perfect, very clear. Thank you.

Thanks Vitor.

Your next question comes from Walter Piecyk with LightShed. Your line is open.

Thanks. Carlos, can you talk about thoughts on share repurchase for 2020 now that you've exited the year this way? And then also, Daniel, can you talk about the U.S. market a little bit? Obviously, there was a big change given the approval of the transaction. Boost, who is a very highly rated prepaid operator is now going it change your strategy? Are you– do you still have an interest in staying in the market with Tracfone? And just general thoughts there, have you had any discussions with Dish in terms of maybe selling or partnering selling or partnering or attempting to use the MVNO that they have secured from T-Mobile? Thanks.

I think in the U.S. market, with this authorization, T-Mobile and Sprint, I think we have a lot of options. And, yes, we're open to review the option. Now I think Boost going to Dish is a – and Dish is going to have a special, let's say, agreement with T-Mobile about pricing and reselling the network. I think it's interesting. I think we have also direct contact with – T-Mobile is our carrier, so we are doing – and we're the MVNO also of T T-Mobile, so it's also interesting. We have also Verizon, and we have also AT&T. So we're open. I think things are going to move in the U.S., and we are going to be very – concept in the end is very… Carlos García Moreno: [Indiscernible]

It's on top of what is going on. And that, for us, TracFone is a very important company. We're doing very well. We have a very good last year. And I think that give us opportunity to improve TracFone. And the repurchase, Carlos? Carlos García Moreno: Yes. On the – Walter, on the share buyback rollout, we've been consistently saying, the main target of América Móvil, which is 1.5 times net debt-to-EBITDA, we postpone a little bit reaching the target because of the acquisitions last year. But we expect that we will be – that it will be quickly in our reach. We will be very close to it by the end of this year. So we wouldn't begin to do any major distribution by way of share buybacks until after we have reached our priority, which is the leverage at 1.5 times net debt-to-EBITDA.

Understood, thank you very much. Carlos García Moreno: Thank you.

Thank you.

Thank you.

Your next question comes from the line of Rodrigo Villanueva with Bank of America. Your line is now open.

Yes. Thank you, Daniel, Carlos. Just another question regarding the U.S. operations. You mentioned in the release that you have seen declining cost on air time, and this is something that boosted EBITDA margin by around 100 basis points year-on-year. So basically my question is, if this is something that should be sustainable going forward? Thank you.

I think it's a little bit seasonal. At the end of the day what we do in TracFone is we do our budget. Specifically, we have a budget for this year, and we do it. I think with all of the things that are happening in the U.S., we have a good opportunity to reduce a little bit more the cost that we have, of course. It's going to be – as there are more competition, it's going to be more capacity in the network, so we can reduce that. In the other side, I don't know how – the prices are also going to be a little bit more competitive. I think so in the prepaid side, so. But all overall, I think it's a good opportunity, Rodrigo. We don't have nothing right now. I think what we see is good opportunities all around. I think for TracFone, it's good that this – I was going to say, this merger goes through, I think that gives us more opportunity to be in the market and to have better pricing to offer to our customers.

Understood, Daniel. Thank you very much.

Thank you.

Your next question comes from the line of Alejandro Gallostra with BBVA. Your line is now open.

Hi, good morning. Thanks for taking the call. My first question is regarding the MXN3.6 billion revenues, the revenues that you posted in Mexico regarding the equipment lease agreements. Just wondering if we should see more revenues of this kind in the future and also wondering what was the margin of these revenues in the quarter? And then also in – regarding margins, but in Brazil, just wondering about the field expansion of profitability in Brazil. Just wondering about the source of this expansion, if it should come mostly from digitalization or if it should also come from further integration of your platforms, meaning net services, collateral [indiscernible]. Thank you.

We couldn't hear your first question. Clearly, can you please repeat the question on Mexico.

Mexico. Yes. In Brazil, we, more or less, understand what you are asking. But in Mexico, I don't understand your question.

Sure. The question in Mexico was regarding the other revenues, MXN3.6 billion in other revenues that you posted in the quarter. Just wondering – it's regarding the revenues, regarding the equipment lease agreements, just wondering if we should see more revenues of this kind in the future and also wondering what was the margin of these revenues in the quarter? Carlos García Moreno: On the Mexico part, what I can tell you now, this is completely a one-off. It has something to do with, as I said, a restructuring of a specific agreement that have been almost defaulted on. And it's basically, what we are generating is a one-off booking of revenues that are generated, an account receivable. Okay. So you should not expect something like this going forward.

And on Brazil, well, we have been working in all the synergies. I think we have another one that is Nextel, and we're working on that. But what I can tell you that, at least, we're going to have 100 basis points of increase in margin in Brazil, like we hope so, and depends a lot on how does the market behave. But our budget, our strategy, is to increase our core margin at least 100 basis points. So that's what we have. And in the commercial side, as you see, we're doing very good in the cost cutting. Also, we are putting a lot of pressure to the cost-cutting side. And on the digitalization of the company, we're also doing very good. So all overall, I think Brazil has the momentum today, and we think we can still have that momentum for the – for all this year.

Thank you Daniel and Carlos. Can you give us an idea of what was the margin of these other revenues in Mexico, how the MXN2.6 billion one to be EBITDA? Carlos García Moreno: [Indiscernible] revenue margin.

Okay. See, I don't – the margin of the MXN6 billion, we don't have it right now. But if you could talk to Daniela, we can give it to you. I don't think it's a high margin. It's not going to be a high margin. Thanks.

Thank you

Your next question comes from Sara Maldonado with Santander [ph]. Your line is open.

Sure. Just on the general cost-cutting program that you are mentioning, what's the amount in dollars or margin basis points expected for 2020? And the second one the other thing that you said the positive investment in Mexico. What is – for example, the year-on-year growth that you are expecting for Mexico's CapEx? Not the breakdown, just the year-on-year growth.

I don't think – in the mobile side going to be more or less the same CapEx that we had last year in Mexico, we're not going to grow that. In the fixed side, I think we're going to make more fiber-to-the-home and more home passes. And last, in Mexico, in the other side, in the wireless, we're going to go to more rural areas. So we're going to have more coverage. We're going to try to give more coverage to more population in Mexico. So that's one of the big strategies that we are having in mobile. But it's inside all overall, the CapEx that we have. So the rural coverage plus the virtualization of the network plus more fiber plus by a little bit of 5G, all overall, leasing side, the CapEx that we have for this year. Plus, all the fiber that we have in Telmex. So that's what we have for this year.

Sure. And the amount for the cost-cutting program? Carlos García Moreno: Well, I don't have the amount for this year still. We are working on that, but we don't have any specific amount of what it's going to be, and we don't disclose that also. So we don't have it, and we don't disclose that.

Great, very useful.

Our next question comes from Valentin Mendoza with Banorte. Your line is open.

Hi, good morning to everyone. And thank you for taking my questions. I have a couple if I may. The First one has to do with having a confirmation that both Mexico and Brazil are being considered for launching 5G during the second half of this year year. As you mentioned, you've been doing in some countries in LatAm. And the second question has to do with the CapEx allocation towards having 5G launch in this global for the year. Thank you.

In Mexico, yes, I think we're going to launch in the end of this year. In Brazil, we still don't know because there's going to be the auctions spectrum. We don't know exactly when is the spectrum. But in Brazil, we're working and – on all the network, the virtualization and to prepare the network, so when we have spectrum, we could be ready to launch. Not a big launch, but to launch 5G. We've got 4.5G in Mexico and in Brazil, and it's working very good. We have very good speeds. So we are okay with that. And the CapEx allocation, well, we never give allocation on CapEx in each country. What we can say is that we're going to spend MXN8.5 billion this year, and I think that's more or less what we have.

Okay, thank you very much.

And that amount is going to give us for fiber in Mexico, fiber in Colombia, fiber in Brazil, well fiber all around because we're doing also fiber in Central America, Austria. We're doing fiber in Austria also a lot. And we are also virtualizing the network, digital – transforming the – digital transformation that we have, capacity, more coverage actually in wireless. So it covers everything, more in some countries than in other ones, depending what we need more in each country. But that's something that will make the decisions that we're making here.

That was crystal clear. Thank you very much.

Thank you.

There are no further questions at this time. I will turn the call over to Mr Daniel Hajj for final remarks.

Well, thank you everyone for being in the call. And thank you Carlos, Oscar and Daniela. Thank you very much.

This concludes today's conference call. You may now disconnect.