América Móvil, S.A.B. de C.V. (AMX) Q2 2020 Earnings Report, Transcript and Summary

Good morning. My name is Mariana, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil Second Quarter 2020 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.

Good morning everyone. Thank you for joining us today to discuss América Móvil second quarter 2020 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.

Thank you, Daniela. Thank you everyone for being in the second quarter 2020 financial and operating report and Carlos García Moreno is going to make a summary of the results. Thank you. Carlos García Moreno: Thank you, Daniel. Good morning, everyone. Well, toward the end of the first quarter, the financial markets were in disarray, the dollar number in the U.S. collapsed, threatening to work the economic contractions stemming from lockdown measures and that controlling the spread of the COVID-19 virus. In general, we have announced a huge monetary quantitative expansion program. This decisive action not only stabilized the financial markets, allowing for new issuance of securities throughout the second quarter and quelled the excess demand for U.S. dollars that had resulted in its depreciations since then substantially the Latin American currency began to recover with the notable exception of the Brazilin real, which declined an additional 4.3% as to the dollar. Our revenue rate, in the Mexican peso, the Columbian peso and Chilean peso, all of which have dropped sharply in the first quarter and [indiscernible] possibly in the second quarter in which practically all our region of operation was on the lockdown. The containment measures adopted throughout our region of operation currently [indiscernible] partly on account of closures of shops and trade centers and partly because they general hotel and mobility of population and hence the, altogether, we lost slightly more than 5 million as compared to quarter segment with most operations to-date [indiscernible] restrictions of Columbia and telecom market and the disconnection between [indiscernible] Columbia -- more in -- These connections were more important in Mexico 1.7 million, Peru 1 million and Ecuador and Guatemala at approximately 450,000 each. In contrast, on the Seating segment, we gained 450,000 new Probank clients with every operation porting and increasing clients, except for Telekom Austria. There were, however, [indiscernible] services, particularly in Brazil, which accounted for 190,000 [indiscernible] disconnections [indiscernible] million wireless subscribers and 81 million fixed line RGUs. It is of note that our Colombia operation [indiscernible] during the quarter. Our second quarter revenue totaled MXN252 million, up slightly from a year earlier quarter 0.7% revenue probably 37% [indiscernible] Mexican peso terms. On a constant for most part of the depreciation of our reporting currency versus the dollar and the euro over the year which was approximately 15%. Based on performing the U.S. and Puerto Rico [indiscernible] reductions in the equipment sales as a result of the confinement restrictions, also because of our no restricted conditions for carpeting in most operations. At constant exchange rates, excluding Argentina, given its higher inflationary accounting methodology service revenues were up 0.8%. [indiscernible] of the mobile platform breaking 2.3% from those coming from 7%. The deceleration in service revenue growth 5% in the first quarter to resulted from the direct [indiscernible] division and settlement the product. Our 2.3% mobile service revenue growth slowed down sharply from the 8.4%. Brazil and Columbia will increase it 8.8% and a 12.8%, respectively. On the fixed-line platform, the impact of COVID was more limited with the phase of decline of revenues going from minus 0.7% in the first quarter to minus 1.7% in the second quarter. In Columbia, fixed-line revenues actually accelerated to 9.9% up from 9.5% despite the quarter. Deceleration in mobile service revenue growth more practically identical in prepaid and postpaid with revenues offsetting an improving trend as confinement restrictions began to be listed. In prepaid, revenue were affected by the lockdown measures of slide charges as most shops were older shopped, including our own customer care centers. The impact on revenues [indiscernible]. In postpaid, [indiscernible] lower power pants in anticipation of the economic difficulty of regulatory phase. In various cases as more [indiscernible] crises that have to close under the containment restrictions soft continued to service all with fixed cost, ability of data services. We try to stay close to our clients and help them find plus better suited for them given the economic difficulties that many were undergoing that doesn't state [indiscernible]. In percentage points, the decline in portal growth rates was steepest in Ecuador and Panama. Equipment sales [indiscernible] early in the crisis, bottoming in metrologic canine chart but climbing back rapidly during the remainder of the quarter. Fixed broadband services continue to lead the way within the group with revenues increasing 7.3%, very much in line with the pace seen the prior two quarters. With only one exception, all our operations posted fixed-broadband revenue increases in the quarter. Our less mature fixed-line operations, including those in Ecuador, Peru, Argentina and Costa Rica all performed well, with the pace of growth picking up speed. Second quarter EBITDA totaled MXN82.6 billion, up 5.9% in Mexican peso terms with the EBITDA margin climbing 1.7 percentage points to 32.9%. At constant exchange rates, it increased 3.3%, reflecting in part the impact of a new commercial agreement reached by Tracfone in the U.S. by grow about reductions in network costs to be applied from January 1st. Our operating profit jumped 10.5% to MXN40.9 billion and helped bring about a net profit of MXN20 billion in the second quarter, after allowing for financing costs of MXN11 billion, which were 6.3% lower than in the year-earlier quarter. Our net profit, equivalent to MXN0.30 per share and $0.26 per ADR, was up 40% on the second quarter of last year. At the end of June, our net debt totaled MXN765 billion, up from MXN677 billion at the close of 2019, which reflects among other things an increase in the values of dollar and euro denominated debts vis-à-vis the Mexican peso. It stood at 1.89 times EBITDA under our prior methodology of EBITDA. In cash flow terms our net debt came down by MXN8.3 billion in the six months to June. In addition to the above, our cash flow allowed us to cover capital expenditures in the amount of MXN63 billion and to devote MXN6.2 billion to fund labor-related obligations. In Mexico, service revenues came down 2.1% mostly on account of mobile service revenues that fell from 10% growth pace in the first quarter, minus 2.5% in the second quarter with fixed line service revenue showing a very slight decline quarter-over-quarter. In Brazil, postpaid revenues proved to be very resilient, observing an 11.8% increase on yearly quarter, although down from the reason of the first quarter, you have nonetheless quite a remarkable pace. Fixed load and revenues stayed on trend, presenting practically same type of growth in the first and second quarters. All the above something that will bring about an outstanding jump in EBITDA, which were up 10.7% year-on-year with EBITDA margin reaching 40%, if we decide to have in Brazil. Finally North in Colombia, it was the only operation to roll it up and no different lines. And innovation is managed to present an increase in revenues on both the mobile and fixed-line platforms at 12.8% and 9.9%, respectively. With this, thank you very much for listening to the call. And I'll get back to Daniel Hajj.

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

[Operator Instructions] Your first question comes from Walter Piecyk with LightShed. Your line is open.

Thanks. Just a question on the, obviously, a very strong performance of margins of TracFone in the United States, you've talked about a re-pricing going back to January. So, I assume that the margin would benefit from some ketchup from the first quarter. So, when we think about Q3, but you don't have that kind of a benefit of the first quarter, what should the margins look like in that U.S. business? Can you talk a little bit more about kind of which carriers gave you that benefit? Or is it across the board based on the competition that's in the market?

Well, I think we have a very strong quarter in TracFone, not only in the carrier cost, I think we have also a very strong performance in sales, in net apps. I think we have more than 100 -- 200,000 net apps in the quarter. So, I think with all the -- what the U.S. is giving our prepaid the market is growing good, and we have a very good quarter. There we have discussions and revisions with our cost carriers for the cost of service and we have a reduction in the cost of the service and we have been negotiating that through all these year at the beginning of this year and starting from 1st of January. So, we finish in the second quarter but starting first quarter, so I think you're going to see some -- also benefits in third and fourth quarter as you are saying also. So, we're working with all of them, reviewing with all of them, and well that's mainly what I can say.

So, Daniel, did the margin -- was the margin helps from some ketchup credits from kind of backdating the pricing from the first quarter? Or is that really the new margin that you're going to operate at this 15%?

No, we're catching what we have in the -- let's say, we have around $130 million that we put from these in the second quarter and a $65 million from first quarter, $65 million from second quarter. So, that's more or less, those are the numbers. And I think we're going to have more or less the same in the third and in the fourth quarter.

Your next question comes from the line of Rodrigo Villanueva. Your line is open.

I have three questions, if I may. The first one is, if you could please elaborate a little bit more on the potential alternative to create value from your towers. Would you be considering the spin-off as you did with tele sites [indiscernible] or transactions? And also, are you considering to do this with the vast majority of the 60,000 towers you currently own and then I can ask the follow-on questions. Thank you.

On the towers, Rodrigo, the only thing I can say and the only thing that we have today is, we have, we own 60,000 towers in Latin America and in Europe. And we are analyzing the different alternatives to give value to the shareholders as we said, and to reduce our debt. So, we don't know, if there's going to be spin-off or we're going to sell them. We still does not know exactly if there's going to be in all the countries or only in some of the country. So, we are analyzing where today analyzing what is the best thing to do for all these assets and to give value to our shareholders of these 60,000 towers that we have. Nothing, I don't -- it's not because I don't want to say anything else, it's because we still don't have anything. We are really, really analyzing different alternatives number.

The second question is related to Huawei. We have some tariff countries around the world including Brazil, continuing to stop using Huawei equipment for tag networks. This increased pressure from the U.S. Government. Do you think this could be extended to all LATAM markets? And could you please share with us any potential strategic alternatives that could reduce the negative implications for AMX from a potential Huawei ban in LATAM?

Well, we are not hearing anything today, still until today, we are not hearing anything about ban Huawei in the rest of Latin American countries. We have hearing something in Brazil, but nothing formal, okay, so, still hearing some news, but nothing formal from the government. So that's the only place where we're hearing something. They are talking about 5G. So, still we haven't had and we haven't taken a decision in 5G. So, all 4G, 3G there's nothing, as I said, everything is okay. So, still we don't know what to do. There's another vendors there. There's Samsung also, Nokia, Ericson, so still a lot of competition. So, there is ban on Huawei. We still have other vendors that we can use. So, I think Huawei are excellent technology, but still we don't know, if there's going to be something in the other LATAM countries now.

Understood. Thank you very much.

Sorry. In Austria, where you see Nokia? So, I don't think there's a problem there. So, in Europe, in 5G, the only country where we already because we're making testings and we're doing something in 5G, but the only decision that we already take is Nokia in Austria. So, there's no problem over there.

Understood. Thank you very much. And the final on is regarding operating performance in Columbia. As Carlos mentioned, it was pretty strong, particularly considering the COVID crises. And I was wondering if this has to do with telephone and lack of volume in Brazil and LATAM and Brazil, and you would expect the competitive environment to change now in Columbia considering that Northern partners acquired the operations of Avantel. Thank you very much.

Well, I think we have been doing big improvements in Columbia through the last two years. Columbia has been improved, not only in one segment. We're improving in postpaid. We're improving in prepaid, in corporates costumers, in peaks, in broadband, in TV. It's the only country where we grow in TV also. So, we have been improving a lot through the last a year, two years, maybe two years starting to work very far, and the last year we have been improving. We changed a lot our organization. We have been investing good over there. So, I don't think it's only one thing. I think we're making a lot. We do know that, we have the option in the beginning of the year. We're doing some frequencies and we're going to have a new competitor that is warm and, well with new competitors, maybe it's going to change a little bit, it's going to be more competition in the prepaid and postpaid in the mobile site. I'm sure it's going to be a more competition but I think we're prepared, we have a very good brand, we have a good distribution, we have a very quality capacity so we are prepared to compete in Colombia.

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

My first question is related to the mobile business. You mention deceleration in mobile revenue growth, there was similar in both the prepaid and postpaid segments. However with respect to them to behave differently with postpaid, must probably being more defensive, so perhaps if you could give us a further explanation of why it was the case and your opinion or maybe provide as with additional breakdown? And my second question is related to the broadband operations, which has proven to be very revealing this quarter, but the performance has been quite different among countries. Perhaps you could explain the differences in the performance of the growth and operations in Mexico and Brazil for example?

Yes, I think prepaid and postpaid are different markets and they are behaving different. If you compare let's say Mexico and Brazil, I think Mexico we have more than 50% of our service revenue in prepaid and 40% on postpaid, so that's why we have been more heats in the revenue because at the beginning April and May prepaid the people, we have a lot of stores close. We are in Mexico, when all around Latin America people were knocked out of their houses. So it was different. It's very difficult to sell over there. And in a lot of countries in April, we get some packages to help people with this pandemic. So let's say an example in Mexico, we give a package called AMIGO CONTIGO that we give free calls for 15 days for free. And there is around the 28 million packages that we do in April. So, well that's what it's happening and April, May and in June starts to grow a little bit to recuperate in the prepaid side. Different in Brazil, in Brazil only 20%, 25% of our revenues are prepaid and the rest are postpaid. Then what is happening in postpaid, postpaid is different, people is starting to reduce their plants. If they have 500 special plan they want to go to a 400 special plans or reduce their gigs or they are taking, we've been careful with their money. So, we are seeing some reductions on the rent of their plan. So in the other side, what you are going to see is that, you are going to have a lot, bad debt in the prospect. So there's going to be people, who are going to stay without a job and maybe they are going to cancel and not paying you some of the bills. So that's more or less how we feel is going to be okay for prepaid and postpaid all through Latin America. In the broadband, I think all around was doing good; Telmex too good here 64,000 in the three months, Brazil 100,000 broadband subscribers, Colombia we also do very good. All overall, we have been growing our net as of broadband. But Oscar, if you can talk a little bit more on the broadband side, please.

Given the pandemic and pushing the people work from home, their requirements of bandwidth in the homes have been increasingly very much, so the people in the home is doing taking classes and working from home and a lot of streaming video and gaming. So that, I think that pushed the product and that's what Daniel mentioned, we are getting these net ads. And not only net ads, our customers are asking for more bandwidth in all the countries.

Your next question comes from the line Marcelo Santos from JP Morgan. Your line is open.

I have two. The first, could you please provide some view on how things evolved during the quarter? You've mentioned a little bit in April and May prepaid was lower. Could you expand a bit and talk how prepaid, postpaid evolved and how things ended in June just sort of, could get a feeling of how the trends should shape up for the third quarter? It's the first question. The second question would be regarding your appetite for M&A. So, whatever you would -- good color you could provide that we have some assets on sale, especially in Brazil. So what you could provide some update and that could be very good? Thank you.

Well, in prepaid and postpaid, I think what you -- let's talk especially in prepaid. As I said, people are staying home in April and May. So, the reduction in sales of the prepaid cards were higher than what we're seeing in June and July. So, as the economies are open and starting to be more open and we have more stores and then the retailers are open, we're seeing that prepaid is starting to grow a little bit from what we have seen in April and May. So that's all overall in Latin America. Still, some countries are opening faster than the other ones or the ones are opening and then returning to close a little bit. So still, we are a little bit uncertain of what, when we're going to have all the economy open, totally open as we used to have at the beginning of the year. So, it's different in all. In the post paid side, as I said, people is reducing their ARPU trying to take care about their money, their rent so they don't want to pay if they don't use it, they are staying at home. So, maybe they use more the Wi-Fi and that makes them feel that that they don't need X amount of gigs that they have in their plan. So, that's why they are reducing a little bit. But I think all overall everything is going return as what we used to have at the beginning of the year, it is going to take a little bit of time, take time also for the economies to recover to open, but I think everything is going return. On M&A, well, if you're talking about Oi in Brazil, we are aware and we're interested in the assets. So for us, it will be a good fit. We do Nextel, I think in Nextel, we have all the synergies done, I think through the -- mostly of the synergies done, I think at the end of the year we're going to have almost all of the synergies done, except for the towers that we need to reduce some towers that we already have, extra towers that we already have. But all the rest of the synergies, we have been doing very good, the frequencies that we get our very good also help us to have more capacity. And if we can do with Oi to have more customers and capacity also will be good. So, we are interested and we are going to participate in the Oi auction for the mobile side.

Your next question comes from the line of Diego Aragao with Goldman Sachs. Your line is open.

I guess the first question is still regarding your performance in Brazil. Can you walk us through the main pillars for such a strong performance in mobile, I mean, if we would compound this growth such as like, the postpaid to increase in terms of quickly recharge. That's a great boundary to them. How do you see on your growth would be compounded? This is my first question? Thank you.

Can you repeat it because I don't hear you very well? Can you please talk a little bit louder, please?

Yes. Can you hear me? Well?

Yes, a little bit better. Yes.

Okay, yes. So, I was wondering, if you can walk us through the main pillars for your performance in the Brazilian market, particular to mobile business? If you can compound the growth, such as like the postpaid leads in terms of like the prepaid recharge, upgrades and downgrades to plans and compound how your year-on-year growth works up in this quarter?

Yes, I think in Brazil, we're doing great. I think we have our great platform. I can not only talk about the mobile. I think our mobile platform is great. We have been increasing capacity, doing more coverage. Speed is very important in Brazil and we're moving also on doing a lot of things in the network to give a very good speed 4G and 4.5G. So, we're investing, and we're doing very good in Brazil. Also in the fixed platform, we have also a great platform. We have 30 million households passed, a lot of broadband, PayTV, great platform of PayTV. And also, we have very good management in place and good strategies for that. So, all overall, we are doing good. And in this quarter, we also reduced and not only in Brazil, in all America Mobile, we have been increasing efforts to reduce the cost and expenses. So, I think that's something that we have been doing very well and help us to gain market share. Let's say, in Brazil in postpaid in the first quarter, I think their revenues were growing 15% year-over-year. So, it was an excellent first quarter. I think second quarter is still very good growing. I think it's around 8%. I don't remember exactly what, only in the...

11.8%.

Sorry?

11.8%.

11.8%. So, it's still working and doing very good. We're making our bundles with the fix broadband and TV. So, we have a good platform and we're investing there and we're managing very well our company, and that give us also good frequencies to give more capacity and the speed to the customer. So, all overall, I don't think there's only one thing. I think all overall, we are doing very good.

Okay. Thank you, Daniel. And I guess my second question is related to your margins, if I can just follow-up on this. When I look to the region, there are like several, let's say moving parts that lead me to believe that margins have some room to expand. For instance, you mentioned easing competition in some of the markets, right, industry consolidation even like the rising of infrastructure players in LATAM. And lastly but not least, let's say digitalization trend. So, I would you like to hear from you, how do you see these trends impacting American Movil? And how well do you expect to benefit in terms of margins going forward? Thank you.

I think, Carlos wants to answer or do you want me? Carlos García Moreno: That's a good study and...

I can tell you a little bit about the margins. I think the margins grow in terms of percentage all around Latin America, because two things. First, we have less, the service revenue was mainly growing and the equipment revenue was reducing a lot. So, that's why the margins grow. Especially, let's say in Maxico, the margins growth because equipment revenues were down. The other important thing is that we're, as I said, reducing and making big efforts to reduce cost and expenses very important. We're moving a lot more to the digital, our network, our sales. We're trying to do everything digital. So, we're working very hard on IT on that and it also going to reduce the expenses. And well, as you said, in Latin America, well, we're seeing a new competitor Colombia, but then in Brazil, maybe if Oi going to be sold then sell, then there's going to be less competitors in Brazil. So, all over all is moving in some directions in one form in other directions in other country. But all overall I think our marching can go the way we have been having the margins growing a little bit and growing our EBITDA also. But I don't know Carlos, if you want to say something else. Carlos García Moreno: No, Daniel, I think, I don't know anything more to add. I think it's important to note that, as I said, there were very significant efforts of reducing costs, so some of them are permanent, anything that has to do with digitalization, simplification, all of that is permanent. Already having being under more of a situation, but the ones that we are facing, it is more urgent, think about some cost reduction so we have been very positive from there. And with something are also can down negatively because of the consignment, marketing expenses on the like, everything that is more commercial related. Those are temporary reductions will also came down some time but we are seeing, as I said, if you look at the EBITDA margins, it increased particularly everywhere and best part we have to do also with the reduction in equipment revenue that we had impacted all markets, say for the U.S. and Puerto Rico.

And one more thing that I want to add this also is going to depend a lot on the economies okay. Let's see how the economies all around Latin America are going to behave. And also, let's see how these pandemic is going to result for till the end of this year and the next one, so it's important that.

Your next question comes from the line of Fred Mendes with Bradesco. Your line is open.

I have two questions on pretty much the same line here. I just want to get a better understanding of these strong net adds for Telmex, especially on broadband, 63,000. Just other companies already reported results and then they had as well also price terms in the second Q. So my question here is that, the penetration of the service is increasing, so it's essential for me to be correct instead of more like gaining market share from other business like the size of the market is increasing? And then also, if you can give us a breakdown of the net ads, if it's most hard as FTPH or if you're still been able to gain clients, we've cover?

Oscar, do you want to answer that?

Yes, you're totally right, I mean, it has been increasing on penetration and we are getting net gains from fiber as you know and as well from copper. So, we sell half or half coming from fiber and coming from copper, or you are totally right, what we've seen in the market is as a penetration is increasing.

Perfect. And if you allow me just for follow up. I do understand, it close to 25% to 30% of your network today in Mexico, it is already FTTH. Just wondering, if you have, it will not be guidance, but just an estimate or if you plan continue to aggressively grow this network or it's now the main focus would be more toward the leverage in the Company instead of deploying capital starts FTTH?

Well, within the situation that we are leaving, we are focused really on migration of customers and improve the penetration of the net in the next month.

Your next question comes from the line of Maria Azevedo with Santander Bank. Your line is open.

My first question is a follow-up on the CapEx, you just comment. What is the CapEx strategy for 2020? And specifically in Brazil, do you see room to be a little bit more rational and cut spending this year, the 20% you mentioned on the first call? And the follow-up question would be on 5G. You launched the first initiative in Brazil. Do you think the 5G market appeal is going to be on consumer mobility? Is there room to charge a premium for 5G services? Or do you see it as a substitute of fixed wireless access for how it's going to be the 5G strategy for the Company?

On the CapEx, we have been reviewing that, I think we are going to reduce the CapEx from our forecast that we have for this year. Yes, we're going to reduce, still we don't know exactly how much we're going to reduce that, we're still reviewing and seeing how the traffic is going to behave. And also the sales, now because part of our CapEx, some CapEx related to the sales net adds new costumers. So also we're going to see how much that we're not cutting anything there. So, we're going to see, how much and how does that is going to behave. So still we don't know, we are a company that moves fast, and we're flexible. So, we're going to use and do what is necessary to do. But we think that we can reduce CapEx from the forecast that we have this year. So that's mainly, in 5G, I think, yes, we're doing something in Brazil. And 5G is going to work. It's a very good question. I hope we can mark up and sell a little bit more, the higher price the 5G and 4G and 3G, but it's also going to depend a lot on competition and what those and costumers and also 5G is going to not work for the fixed wireless assets. So that's what the intention is. And we're going to do that all around Latin America. So that's what we have.

Just as a quick follow-up. In terms of capital allocation priorities, would you also consider a potential network spin off and how do you see those network sharing deals happening in LATAM?

No, we're not considering a network spin off at this moment. We haven't considered anything there. And well, I think in some places makes sense to have a share network in other ones doesn't make sense, maybe in the rural area where there's going to be a small traffic, make a little bit of sense to make share networks in other places where the growth is, and then you will have to add the net capacity doesn't make sense for us, but we are not considering to spin off not any part of our network.

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

I'm sorry to go back to the U.S. please. And I just want to understand this new agreement was it or perhaps a result of -- or basically perhaps a consequence of the M&A between T-Mobile and Sprint or what was the origin of this?

Well, I don't think it's related to something that's special. I think this reduction in cost is related to the market in the U.S. and that our carriers want us to be more, to be more aggressive sometimes in the market to have better plans and to react faster to do that. So, that's mainly what we have. Maybe I don't know if T-Mobile and the Sprint merger will help us to do this. I don't know, but it wasn't related to that, okay. We have been discussing these and we discuss these every year. So, every year, we have been discussing new plans, new rates and that's something that happens these times.

And if I maybe, a follow-up then perhaps for Oscar. Just the broadband additions of 64,000 don't seem to be a great number given that the past quarter, you guys have more than a 100,000 and Televisa reported over 250,000 quarterly additions. Do you think maybe there's a difference in the term policy that could explain this, such large difference between the numbers between you guys and the competent like competition?

Yes, we changed a little bit the policy of our on-collection in order to leverage network, so you are right.

Your next question comes from the line of Ernesto Gonzalez with Morgan Stanley. Your line is open.

Just one follow-up on the margin expansion. I don't want if you can give us some color on what is the percentage that comes from lower equipment sales? How much comes from cost savings and on cost savings. How much could we expect these structural and how much from temporary items?

Yes, I don't have it here. I think what we have been having is good negotiations on CapEx. We have been having also reduction on cost of let's say sales reduction of cost of marketing, reduction of cost of all over all, all the cost and expenses related to the operations. We have increased our costs in the bad debt so and we been having more on collectibles than what we used to have, so what I don't have country-by-country. But as I said, we have a very good effort on reducing costs. So, I don't know if that's clear, but I don't have it specifically for country and how much per segment. I don't have it here.

Your next question comes from the line of Valentin Mendoza with Banorte. Your line is open. Valentín Mendoza: I have a couple of them regarding your Mexican operations. The first one has to do, if you could give us an update on the launching of 5G. We've seen some headline that you're ready to launch in Brazil, but I just wanted to know what are plans up-to-date for Mexico? And then I have a follow up if I may.

I think in Mexico, 5G is going to be delay. I think we're going to have some testings, maybe testing at the end of the year, but we're not going to have 5G this year. I think that we're going to have 5G until next year. All our network is working excellent and giving with all these lockdown and I'm seeing a lots of people using broadband, wireless broadband in their home is working excellent. So, I think 5G is going to be moving to next year. We're going to have some testings at the end of this year, but we're going to move 5G until the next year in Mexico.

Thank you very much. My follow up you has to do with your thoughts. If you could share your thoughts regarding the entrance Chile and Mexico with the very strategy you mentioned also that, you've seen some customers to achieve some lower cost plans? And I was wondering if you're planning to address this with probably some plans with all-inclusive like the idea of when they get lunch or what's your thought on this side?

Well, I think, we have two MVNOs. Well, it's more competition in the market, but we have two MVNOs that you know about. We have been having 6 MVNOs for the last two years. So, there's another two that are coming in this quarter, but we already have like 6 or 7 MVNOs there. It's more competition of course, but I think we have the best network. If they're entering with Altan I think still Altan doesn't have the coverage that you for a mobile service. Maybe they have a good service in their home. But when you go out and move then I don't think that's the best service. So, we have also very competitive plans. We have a MXN199 plan, unlimited voice, unlimited data -- sorry, unlimited voice, unlimited social networks, SMS unlimited and with some data. So, we are also competitive and of course more competition then we're having more competition, but I think we're prepared to compete.

Due to time constraints, this was the last question. I will now turn the call back over to Mr. Daniel Hajj for final remarks.

I'd just to thank everyone for being in the call. Thank you.

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