Q4 2021 Tim SA Earnings Call
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Now I'll turn the conference over to Mr. Pietro Labriola CEO of Telecom Italia for his message of greeting afterwards, I will turn the conference over to Mr. Albert <unk> CEO of Tennessee and to MS. Camilla <unk>, Chief Financial Officer, and Investor Relations.
Officer to present, the main messages for the fourth quarter of 2021 .
Or your update and the new guidance.
Please Mr. Pietro you May proceed.
Hi, everyone I'm back to share a few words with you.
First I want to thank all the team in Brazil.
During the year wonderfully.
I served as CEO and seal.
I could count on great teams wholly committed and focused on delivering what we were promising internally and externally to all stakeholders.
2021 results, we're not different we accomplish all the goals, we set our self to pursue.
You will hear from Alberto Villa Sadly my friend and the new seal.
All our financial and ESG gather were met in EMEA are still full of uncertainties and the impact from the pandemic.
Although my Syconium, Brazil is closing part now as CEO of the group I will continue supporting this strategy and operation in Brazil.
I'm convinced we'll make team the preferred operator in Brazil for all stakeholders clients employees and investors.
The initiatives like always acquisition the customer platform partnerships.
And the revolution in the cosmetics being give me this certainty.
So for now it's a farewell I'm, leaving you in the capital and sub Alberto and his team.
Phil I will always remain available to discuss the future of Tim Brazil, a great future.
Now it's up to you.
Rock and that I will Miss you all all of you.
Thank you Pietro for the confidence and support during the past three years, our lead this company to carry on your legacy and further advance the development of Duvelisib.
Good morning, everyone. Thank you for attending our results conference call.
Deborah just mentioned this last year was still full of uncertainties and impacts from the Covid pandemic also the macro environment is not helping on the contrary inflation for example impact our costs and reduces the available income of our clients. Despite that we managed to post strong number.
Reaching all our targets.
Our strong execution continues to make a difference and led us to post solid results in the fourth quarter and closed the year at a healthy speed.
Our mobile strategy from volume to value continues to pay off.
<unk> grew 6% year over year in 2021 with service revenues expanding mid single digits versus 2020.
EBITDA also grew mid single digit, which helped us expand our operating free cash flow by 1 billion Reais and reach more than 6 billion in total.
In 2021, we launched the amply partnership the while maintaining a robust commercial pace, we'd see sakes.
<unk>, we close 2021 above our target of 100 million Reais for customer platform revenue.
In the fourth quarter, we had two important events the five G auction, where the outcome was very favorable to the sector and team and we also had the closing of the deal with IHS. So now we are getting the company up and running to help us reaccelerate in residential broadband.
We are also delivering remarkable evolution in our infrastructure projects and journey to cloud is proceeding well and is already helping us improve customer experience.
And we successfully prepare our metal to receive the customers from the deal with <unk>, We will have the chance to talk more about the transaction in the second section of our presentation too.
2021 meant a remarkable achievement in the ESG arena.
We reached 100% of our energy coming from renewable sources, and a 95 or 94% reduction in direct and indirect emissions, we took a leading position in diversity initiatives through the <unk> yet is positive our partnership and implementing employability programs for minorities.
We were included in the new diversity in the access and maintain our position in Dmitry sustainability index.
Detailing our revenue dynamics in 2021, we saw positive mobile and fleet service contributions with all significant lines improving mobile service revenues grew four 7% year over year, while fixed service was up almost nine.
<unk> consolidated our service revenues expansions at 5%.
Postpaid customer platform, and Tim live, but where the elements driving this performance.
Postpaid revenues closed 2021, representing almost 60% of our service revenues and growing five 4% during the year were through 2020.
Customer platform totaled nearly 120 million reais, becoming a relevant contributor to growth.
Despite the challenges in the second half of the year, Tim live continued to support revenue expansion. It rose almost 15% during 2021.
Those results once again show that our choice to focus on our value strategy is working well we have been outperforming our peers in mobile <unk> dynamics for many quarters, our output reached 2000 feet.
For re is following a 6% rise.
<unk> 2021 at the same time, we reduced voluntary churn in postpaid, which also helped improve postpaid net additions.
It is worth highlighting that we sustained our offer differentiation through innovation and go to market changes, while reinforcing our positioning.
We are reinforcing our well known and long connection with the music theme and we are back to sponsoring large events and festivals.
In <unk> life, we were also able to improve output by approximately 4%, while the customer base grew more than 6% year over year with FTP H being the key adoption driver.
It is essential to highlight the transition to a new rollout model renting instead of building, we expect that utilizing specialized network companies will produce an acceleration of coverage still.
Still on the broadband services, we started to experience a more conflicted competition environment since the beginning of the second half in our case, we are trying to differentiate by launching ultra fast download and upload speeds with new content.
Finally, we were granted the recognition for the best video and video conference experience now being feature in our new commercial AG campaign will also improve NPS metrics reduce anteaters complains and ranked first in the satisfaction ranking from resolutions given to <unk>.
<unk> demands at AMETEK.
Those were the outcomes of our strategy based upon offer differentiation and customer experience.
Jeff mentioned the customer platform initiatives are proving to be an exciting opportunity. They also have differentiate our offering and improve our value proposition to customers.
A quick recap of our strategy. The framework is composed of two models of partnership this strategic partnership where tap fees and equity Stakes remunerate team and the commercial ones, where we are remunerated monitor Lee per video views and clicks for advertising campaigns and that intelligence.
<unk>.
Models leverage <unk> size and AD platform to target these suitable cost third inside our base and put them through channels within their journey as athene client.
Under this framework, we are already operating in some ways because with robust results as mentioned before with some 120 million rising revenues in 2021, we contribution for mobile advertising and financial and dedication services, we earned subscription bonuses equivalent to an equity stake.
Four 4% in Cc Bank, we also doubled our enrollment rate for undergrad and open courses sequentially to reach more than 50000 students total our audience for mobile advertising surpassed 27 million people, which give us the ability to engage.
With them in multiple forums.
We continue working to grow this ecosystem of partners to do so with greater accuracy, we hired a financial advisory to help us finalize the evaluation of the partnerships and the development and future opportunities.
Moving to infrastructure, we sold our <unk> coverage leadership be confirmed during 2021.
We have completed 85% of our target agree with NFL to cover all the cities of Brazil at.
At the same time, we are preparing our network to receive or is customers as a matter of fact, we modernized one.
4000 sites and implemented a capacity increase using massive mimo in one 6000 sites.
Our network sharing agreement with vivo ended the year meeting its goals, we expanded <unk> coverage to more than 350 cities and we are conducting the test for a full single grid in 21 cities. Those tests will be very relevant to the fund the feature of the agreement and if and how.
Now we can include <unk> in this sort of sharing.
On the IC front 2021 was pivotal for the journey to cloud transformation, we closed the year with 90 system running from the cloud we migrated more than three 5000 servers. This means that about 40% of our processing power is already coming from the cloud improving.
Operational and fleet efficiency and customer experience.
Other element of our strategy that keeps helping us become more efficient is the digital transformation process. During 2021, we improved all our digitalization metrics recharges in digital channel increased 70 percentage points <unk>.
Lection unitary costs reduce 12, 4% E billing penetration increase almost six BP fixed payments reached 16% of our invoice payments.
Now I pass the floor to come in this our.
Our CFO to give more color on our financial results.
Thank you all battle and good morning, everyone. Since they were already discussing efficiency, let's start with cost trends and here. It is essential to make a disclaimer you will find in our document some of Amortizations. The most relevant one is related to the sale of <unk>.
Assistance with the closing of the deal with IHS, we had a positive impact of close to $800 million has in our EBITDA.
To maintain comparability, we will analyze only normalized figures.
Opex ended 2021 up by five 8% significantly below inflation, but materially impacted by the pandemic. If you recall the only quarter that our costs were above the low single digit range was the second quarter.
When the comparable base was significantly impacted by the pandemic.
It is easier to understand and eliminate those temporary effects by comparing the 2021, opex, but 2019.
Under this comparison, our costs and expenses stood almost flat showing our capacity to control costs and implement initiatives that helped him remain the most efficient operator in Brazil.
Consequently, our EBITDA reached more than $8 7 billion highs growing four 4% year over year and maintaining EBITDA margin above 48% in the fourth quarter, we achieved the highest margin in our history, 51% net.
Net income also rose solidly up close to 20% year over year.
Our capex and 2021 right below our target at $4 38 billion highs.
This number of course does not consider the spectrum acquired during the <unk> auction, we booked another $3 6 billion hasn't capex from the licenses and obligations related to our acquired frequencies.
This $3 6 billion was fully booked for accounting purposes, but only a very small amount was disbursed in 2021.
Most of the remaining cash outflow happened in 2022 and 2023 in this context operating free cash flow for the year stood at a record high of $6 1 billion highs, which grew more than 30% and drove our net debt down by more than 30% and a cash position of $9 8 billion.
Yeah.
In 2021, we almost completed our financing plan for the extraordinary payments that will happen in 2022.
We raised 3 billion has no debt and we received $1 1 billion highs for the sale of 51% up to SaaS and assistance.
Now I hand, the call back to our battle to complete the discussion related to the 2000, if anyone results and move forward with an update on the acquisition of <unk> assets.
Thank you Camilla as I mentioned in the beginning despite the challenges imposed by the external environment that we were able to deliver all our targets service revenues grew at 5% EBITDA growth at 4% and margin at 48.
4% Capex at approximately $4 4 billion Reais and EBITDA minus capex on revenues at 24%.
These results were accomplished while we improve our customer experience enhanced team brand recognition and positioning brought innovation to our clients and open new avenues for growth.
I am proud of what we deliver and it is an excellent manner to think Pietro for all the support and guidance. It gave us during his years as CEO of Tim Brazil, I'm sure. We will continue to support us in the new position of group CEO now, let's move to the second section of today's presentation.
Our update starts with a quick recap of the approval process with the regulators.
<unk> and <unk> approved the transaction, we certain conditions most of them were behavioral remedies with one structural condition. The buyers will have to offer 50% of the acquired sites to the market.
In our evaluation the regulators and the parties involved managed to build a scenario where the remedies guarantee access to infrastructure consumer will have the freedom to choose from three strong operators and rivalry among them will be maintained steel buyers and seller will create significant.
Value from the transaction.
However to generate value first we need to integrate properly and promptly. This is no doubt that the integration will be complex, but we have been planning this for a while so we have a solid plan and we are ready.
We expect the closing to occur before me and 30 days after we assumed to be able to sell the natural migration. This process should take approximately three months to bring all our customer to our magnum full spectrum migration should take longer but we expect to start using the acquired spectrum sooner rather.
The later.
System operation should they should start in the second quarter. After the closing of course, we will migrate customizing waves to have a smooth process and minimal disruption to declines.
That process will be longer and link most likely close to 12 month mark from the closing.
I know the discussion around synergies and value creation from this deal has been eagerly expected by the market, but there is still much information to be confirmed and we feel more comfortable sharing our estimate once we have the closing and all the financial figures from the SP and the better.
Understanding of the asset base, we are receiving.
Nevertheless, we can share how we imagine things will occur over time.
We estimate that the full effect of the transaction will only be perceived by in 2024.
Since the closing will occur in the second quarter, there will be a delay in all the expected effects for 2022 revenues and Opex and normalization will be pushed into 2023 between 2023 and 2024 the impact of the delay is significantly smaller.
But there is some still.
In 2024, we expect migrated clients to contribute with revenues that would account for at least 50% of our net service revenues.
And more than 20% of the total EBITDA migrated clients will arrive with a higher margin, but since we have the TSA and some other integration costs. The endpoint of this margin would be only achieved in 2024.
We are arriving at the end of our presentation. So we need to start putting together all those blocks that will compose the basis of our new strategic plan and Consequentially our guidance.
We have very robust operation and the 2021 results are clear evidence of the strength and health of the company. We are plugging on top of this machine a set of opportunities such as <unk> rollout the customer platform development and your approach to ft th with the help of a system and infrastructure.
<unk> projects.
But those are evolution to our business model, we are not transformational acquisition of voice mobile assets that will transform this company for the better it will work as an accelerator to our plan to become the preferred mobile player in Brazil.
Additionally, all those moving pieces will impact our numbers in different ways and Timeframes. So to help you understand and bridge today's reality to what team will look like in the future. We present to simple models, showing what will happen in 2022.
From those two charts, we see the positive impact coming from oil assets also I system promised positive impacted free cash flow level is confirmed and in the first year <unk> is taking a toll of suspected for any new technology that will start to deploy.
Based on this explanation we present, the new guidance that is not totally comparable.
Previous one.
Last year, we expected to.
To close in December while the auction and IC stems transaction Werent included.
But if it were to exclude those elements on a like for like comparison, all the metrics will be on track.
To conclude we explained our service revenues and EBITDA to grow double digit in the short term and long term Capex will remain below the 5 billion reais range in the coming years uptick in Capex on revenues ratio below 20%.
And a bit there minus capex on revenues to grow over 29% in 2024.
The future looks bright with many opportunities for us to explore.
We are ready to talk too much let's open the floor for questions. Please operator.
Okay.
Thank you.
Beginning of the Q&A session.
First we will take questions from analysts followed by general public both in English.
If you are listening through webcast.
Questions can be sent.
Hi, Chad.
Our first question comes from Bernard Gutmann with.
English rates.
Yeah.
Hi, good morning, everyone and thanks for taking my question I have two questions here. The first one about the deal we fully I do understand that you guys prefer to wait for the closing to diverse the NPV of synergies, but I was wondering if it's possible to have some color about the goodwill that is transaction regenerates.
And my second question is related to network sharing which vivo how is the project evolving and what do we expect in terms of Opex and Capex avoidance forward. This year. Thanks.
Yeah.
Now let.
Let me start with the first one which is about the network sharing gas through some equal here, let me just make sure that it's fixed.
Yeah.
Okay. So bernardo.
To the network sharing agreement as a win.
We just say.
The project is going well.
The expansion of coverage was quite successfully and we are moving now into the.
The second phase of the project whereby we're looking at.
Synergies.
In the second phase, we ran a pilot with vivo has been successful. It's a limited number of CD at this stage and there is a plan to reach.
At regime.
Something about 1600 cities.
So the project is up and running I would say that.
We are committed to it.
This year, we also have a number of competing.
Activities on the network side.
Basically we we need to integrate the assets and which is a huge effort on our side.
And we need to launch <unk> in June July and that's where we are deploying massively on that our metal side. So it's.
It's up and running H E E.
<unk> built a significant NPV on the long term.
And we are now deciding with vivo the pace of it.
In order to accommodate for the other.
Activities.
Quite important there in our industrial plan <unk> and the <unk> integration.
On the second one on the deal.
The first point, we are we understand that you are eager to know the NPV of the synergies.
<unk>.
We are more on the cautionary side because the deal is going to be close soon but it's not closed.
I will hand, it over to commit led to to discuss a bit about the goodbye.
Okay.
Okay. So in terms of.
The benefit coming from the goodwill that we expect to have that benefits benefits coming from Google that exact number we'll only know once we have the final financials.
S. B that we are buying that is why we want to wait for the closing to release. These numbers stood out to the market, but it is it is we expect it to be a significant number and in the neighborhood a few hundred million highs in net present value, but more precise number Google who will release once we have the financials from.
Nasty that we are acquiring.
Okay. Thank you carmina thanks Alberto.
Our next question comes from our dorms with UBS.
Hello, everyone. Good morning, My my questions. So we focus on mobile strategy.
So the first one is regarding the task for Q.
We noticed that net adds were over 70% concentrated in the fourth quarter can you discuss if this is a shift on your strategy.
If you will.
We'll be fighting for more market share in 2022. Thank you.
Hi.
First point there is no shift in the strategy so our strategies.
From volume to value and we are a pool suite on different aspects.
I think that when you look at our past performance you see that this strategy has been delivering significantly in terms of ARPA growth.
And we've got a number of a quarter, where we managed to grow our ARPA and bought sentiment consistently.
This is just one piece of the equation when you look at the other piece of the equation. There is another element there which is quite important which is.
The churn of our customer base. So we have been working extensively to improve the level of services and our commercial policies and so.
We.
In the in the fourth quarter, we managed to reduce substantially the voluntary churn of our customer base.
As a matter of fact.
We are currently at the lowest level of <unk> in Brazil.
So when you combine that.
The top line growth, which translate into the <unk>, which is the ARPA growth.
And when we factor in the D D.
The reduction of churn this delivers the increase net additions that we are seeing on the on the fourth quarter. So the strategy is.
Confirm is the same from volume to value.
We are working on both sides of the equation.
Basically monetizing our customer base and therefore also increase on one side and working on churn reduction and that deliver the net the net additions there are some a specific aspects related to the fourth quarter, which has related to the component of <unk>.
Consumer versus business gross additions.
But I can't confirm that when we look at.
The January and February performance.
We are.
Moving at a stable pace. So we the trend that youre seeing is confirmed.
Great. Thank you and just a quick follow up about 2022, it's definitely going to be an interesting year.
Can I have the incorporation of <unk> mobile the interest of regional players with five G.
Considering all that before.
That will be if this is a fair question what would be your growth in 2022.
We've worked with regard <unk> mobiles integration.
Yeah.
This is.
This is an interesting question because at the end of the day, we already don't look at it this way because we look at the overall number with or inside always confirm is happening.
Got it double.
Digit growth targets on our mbo, and so we need to get there.
Whatever the mix of the component there all vessels from <unk> is.
Now to give you a bit more color in terms of it and so we look at the budget as an overall figure so without these distinct xiaomi in terms of what is coming from Walter.
When.
We look at.
The first quarter, which is definitely without or.
What we see is that we've got a good pace and so we enter 2022 at a good pace.
And Uh huh.
On the revenue side and.
This reflects.
The combination of the.
The balance growth of our customer base, and ARPA growth and an improvement in prepaid.
On the if you look at prepaid in the fourth quarter you see that that is the only line of our revenues that is.
Going is not growing actually is decreasing.
When we go into a bit more detail of what happened you will see what you won't see but I would tell you that there is.
There is a in November which is have been impacted by a specific campaign that we did where we tried to increase the number of recharges.
By doing so we cannibalize the recharges so all in all there was a.
Hitting our result in November but.
December January and February are up to now we see a positive performance of prepaid. So all in all we see that we are entering at a good pace in 2022.
That's great. Thank you very much and we are all looking forward for next update thank you.
Okay.
The next question comes from GE.
While ago with Goldman Sachs.
Hi, good morning, everyone.
Thanks for taking my question first just wanted to congratulate Albert for your promotion to CEO glad to see you there.
We're really excited and looking forward to working with you over too.
So look.
I know that are like several data points on the IPR transaction, but I want to explore a little bit more.
These.
So maybe just to start can you detail towards what are the next steps for the transaction to be concluded and secondly.
If we would think about the NPV of synergies you are expecting.
Can you just help us to quantify synergies may be providing a range and down also provider breached showing the key line items.
Polls defend Ppl's senior juice that you are expecting thank you.
Well.
Let me do a brief introduction and then I will hand over to Camilla for additional details in terms of next step.
It's fairly simple.
Or are you just created the three ESP that each by a Wheeler receiver and now we are all the thing.
The correct functioning of these entities for us to be sure that we get.
What we are expecting to get.
When you look at the synergies Unfortunately again.
That's something that we are.
He got to share with you, but not at this stage.
Generally we define that as a as a.
So it's a more general statement that in.
Two main.
Source of revenues the technical side.
And the commercial side.
And technical side is related to the to the increase of spike drama that translates into a lower opex capex and on the commercial side.
We are we are we basically factoring.
B a more rational.
Competitive environment, there and the positive effects on our customer base from increased service quality and that there is the third one actually that the company that just mentioned, which is a good one so when you look although this is a big chunk comes from the technical side that we landed over to Camille it'll be more precise on the on the figures.
<unk> or.
As far as we can go.
Okay. Thank you. Thank you.
Thinking about I actually don't have much more to add so as I said in terms of what.
Its still necessary for us to proceed with closings, mainly internal bureaucratic steps nothing that really depends on third parties and these steps there are mainly related.
To us I mean that the special purpose company being created and us being able to audit that where.
That we're actually paying for what we thought we were buying so it's creating the SPE, having financials as being able to look at those financials and then being comfortable to go ahead with closing so internal.
No no worries there is just a matter of.
Time.
In terms of the synergies again, we would love to have been able to share that.
Value up the synergies with you in this call, but we just didn't have we just didn't feel that we had enough information to be precise. So we preferred to wait for again, the Sps to the fully created to have their own financials and us having the final numbers. So that we can calculate the synergies and share them.
With that with the market and as Alberto mentioned, they come mainly from three areas most of the synergies in that that clinical network synergies in the commercial and lastly, the goodwill which in the previous question I already mentioned that <unk> is in the neighborhood of a few hundred a few hundred million high so quite significant that's the goodwill of course.
[noise] alone the other ones are much larger and we will share them with the market and proper time.
Maybe just a quick follow up in here.
Thanks for that I guess.
I would just like some some some some numbers as a percentage of the total NPV.
NPV homeowners technical site would represent.
Like 60%, 70% <unk> 50, I just wanted to get a sense because for this one in particular, we can we can make the math right and then we can work with.
Some scenarios to calculate like the commercial which should impact your business much more in the midterm to long term on the goodwill right.
Yeah, Yeah, we can say that we expect the first portion of the synergies.
Technical network to represent roughly two thirds two thirds to 70% of the total MTBE off after synergies. Please keep in mind that as you know we are we arguably player getting let's say most of this back to most of the network most of the clients. So oh, so it's understandable that the on the technical side.
The synergies are strong for us.
That's amazing thank you coming in.
The next question comes from regimens with Bank of America.
Hello, I would want everyone. Thanks for the call I had two questions as well.
The first one is a follow up for a while now.
Right.
In terms of the strategy.
Aqua is already you know relatively high.
Average of 2016, whereas obviously has a lot of limitations. So it's hard to look at it but it is.
For that we have so basically you know obviously now we saw an improvement in net adds but only look at Alcoa and upselling in our base.
How much more you know you'll see.
You can go closer to that the inquiries over the last years has been significant it would be my first one.
And then my second one batch of ROI and understand all of the limitations, but just the one.
You mentioned here that presentation.
Transfer client it looks like something like 5% to 7% 2024.
Just wondering if you're assuming any.
The potential Ics with digital gains here or there.
Julie.
Operational thank you very much.
Okay.
So Fred let me take the article versus base question.
We when you look at the so basically you've got the the output which is growing and we expect it to further grow.
And I will tell you the areas that we are working to make this happen both on the postpaid in the Somerset prepaid we can look at our political spending, but we're working on that as well.
And for the for the net additions that this is the combination of.
I have to say, it's a pretty stable now and churn reduction. So when you look at the Apple we basically work on a number of them on postpaid firm idly on a number of different levers to pull for it to grow.
The annual adjustment that we are going to implement this year like we did last year. According to our more for more strategy.
Last year.
I don't know if you remember we did the price adjustment that basically in the ER.
March April that was before the.
The rise of inflation.
Quicker rise of inflation and that we are going to repeat this.
In in March April of this year.
Going to start in March for the full impact they're going to be in April and this is one way we look at this than the other way we are working and we are very satisfied with the results. It's the migration that is happening.
It says that we.
We work our customer base that we look at the usage profile, we migrate customers from one offer to another one.
And this provides an extra benefit to the customer and Exxon are put to us.
And so this is the second lever is working well is producing results. So we are monetizing our customer base price adjustment there is.
The immigration and the and then.
Of course, there is.
<unk>.
The input that is coming from the data platform strategy, which is why there is copa.
That creates some extra revenues from asset by monetizing our customer base. When you look at prepaid it's a bit more tricky because it's more difficult to work the prepaid segment there to increase our pool Nonetheless.
We just implemented a review of our face value. So we introduced the <unk>.
The lowest face value in Brazilian reais.
So we just introduced at 12 <unk> face value last week, and we're gonna take dependency is out.
In a few weeks and so we expect that.
So we are going to drive a bit of the ARPA spending as well and we've got another set of marketing and commercial offer measures that we're implementing the next weeks to increase the usage of the service of prepaid and therefore, the spending not the Apple because the app was a bit <unk> in <unk>.
So in that segment.
So this is for.
The Apple cider will hand over to Camilla for the EBITDA, we beat the competition. If you if the if you're not if you don't have any further question on the <unk> dynamics.
So moving on to wait sorry.
No Super clear, but I think I'm sorry.
So with respect to the to the boy marginal EBIT contribution most of the growth or or I would say almost almost all the growth that you see between 2022 and 2024 is related to the temporary service agreement that we are that we will have with OE post closing so before when we went.
Expecting closing to happen in 2021, the full impact of the TSA was being reflected in 2022. So that in 2023, we would no longer have that debt.
That opex with that with all we know that we are expecting.
Closing and.
In the second quarter of this year, we still have a piece of that expense in 2023 years, so that 2023.
EBITDA contribution from <unk> is not that I would say normalized yet till 2020 point is really the first year in which you'll see the numbers fully normalized so that's that's that's why you see that the growth.
Between 2022 installs in 'twenty, four and with respect to I think two IC IC EMS no. Our 2024 numbers do not do not.
Taken to account any benefits from a reduction in Ics.
If we are able to capture a anything from the U S. M. S reduction that's an upside to that to the case that you see in our presentation.
Perfect very clear Albertson Committee factors may a follow up about the digital partnerships.
It looks like as you described that you may launch, especially on the financial front and also the advertising they were flat quarter over quarter and we look at the countries you are used to.
Sure the per stage.
A relevant contribution here so just.
What what are the next steps here have we reached kind of a ceiling for the to me the STREAMWAY throats.
So what can we expect here for the next quarter. Thank you.
Just a brief introduction and that will end at over to Ronaldo basically you see six is up and running and is going well commercially of course are we there is a limit that we can grow because we are addressing a big chunk of our customer base, we launched a new one which is amply takes some time to to get speed and so.
And the ramp up phase.
And so to maintain and grow the revenues, we need to close more partnership.
And it is within the plan.
Hi, Fred Thanks for the question.
I think your assessment is right I think on the financial services, we have grown a lot our number over the last 12 months and now we have reached a number which is kind of flat quarter over quarter.
And on the education side, we have launched the partnership in July next last year.
During the early stages I would say its already significant numbers in the education market.
We have doubled the numbers of our recruiting and our team channels. So we are learning very fast year, and we expect to see some good numbers in this partnership in the second half of this year and as Alberto said, we have a pipeline of new partnerships.
We have hired Lazard to help us we believe there is a good opportunity in digital health.
<unk> is a market there was like a fintech five years ago. So there is a potential very big overlap with our base, which is a relevant and we are working for US now to decide among the very strong proposals that we have which is the margins that are going to choose and we are on track to launch.
Toward partnership on the content area in the second quarter of this year.
Thank you.
The next question comes from Marcellus Santos with Jpmorgan.
Hi, Good morning, Thank you very much for taking my questions.
Could you. Please just discuss a bit on the guidance that you provided could.
Could give us an idea of how much would be the organic growth figures that you would be planning like without the <unk> acquisition.
Just have some idea would be interesting and the second just exploring a bit more of the umbrella partnership you already got like 50000 students which is.
Pretty sizable number for us.
I think four four.
For fast start for <unk>.
If you look they're they have that's almost 10% of their student base.
Oh.
Does this indicate that revenues should also plateau. If you if you keep at this level or should revenues grow faster than students just wanted to understand better the mechanics here and the business model of the RMT partnerships. Thank you very much.
Marcelo let me get the first one on the guidance as I was mentioning before basically we are already working with.
And integrated budgets or the sum of the parts that are we.
We mentioned on the presentation of our integrating our budget. So this is our target. So we do not work anymore with the different components, what contributes what we sum it up and that is.
What we need to deliver.
If you look at the components, we are going to integrate.
The revenue said that we will know throughout the ordering process.
The precise value. That's one of the reason we are not presenting the synergies today.
And.
It did beat the component of these revenues as both Camilla Jessa.
<unk> presented the answered in the previous question so.
The the the fact that we.
We are.
Entering the first quarter.
Healthy speed.
It's the only indication that we have and you will see.
In our next call in terms of.
Organic speed after that date that we want to look at the number of single target there for the company to achieve.
Perfect. Thank you.
And our umbrella.
So regarding <unk>.
So the 50000 or the number of customers that I have been registered in the amply platform for both the graduation as well as the open courses. So what's our strategy here just to give a little bit more color on this.
We offer with amply open courses for free to our customer base. They come they joined the platform and then we do the upselling to the graduation, so the 50000, it's already a lag that we have inside of the Ami platform that allow us to do that migration to graduation so.
The whole strategy that we have is adding benefit to our base offering something that generates value to our base and from there, creating a propensity lake where we can migrate them for a paid service and get remunerated compensated for that so.
We are doing what we call the top of the funnel. We are building. This base. We are building. This lake and then we are working actively to migrate to upsell them to the graduation, where the compensation remuneration is for us.
If you have any questions regarding the strategy and the numbers here.
Oh perfect because it was very clear thank you.
Yeah.
Yeah.
The next question comes from Luis Fernando <unk> vertical silo.
Hi, guys.
Good morning, everyone.
A quick question on the T cell.
Is that an idea whether you pay the Cisco.
That was deferred.
And regarding ROI.
What are you assuming part of the Cisco obligations or through adjusting the price of the acquisition.
That's the first question. Thank you.
So with respect to this now of course, Oh, we're not basis now because of that because there's an injunction in.
In place, but we are we have our our balance sheet ready to pay whenever we need to do so in our budget of course, you can always count with the with the scenario that we will have to pay because we have to have on our balance sheet and our cash position ready to fund these obligations, but we will follow what will happen with the case and.
And proceed with that.
With whatever we have to do but again, we have our cash position here ready to stop our obligation has been that whenever they become due.
With respect to <unk> I think there are two separate scenarios and I and I ask here my colleagues too.
Correct me, if I'm wrong, but there is a few style over the then that adds and there's this now over to sell over the average the average base.
And and and and it really depends on on when they become due right. So everything that's pre closing then it's its an OE obligation everything that is post closing it's it's our obligation. So if it's with respect to passing that adds they need somebody obligation independently on weight on win.
They become due from a cash perspective if.
If it's a if it's post closing related to the average base then it's and then it's the buyers obligation has any usual M&A it depends on the generating a package for that expense.
Thank you and the.
The second question that I have is regarding.
The partnerships.
It would be the revenue contributions from this partnership that we were expecting 2024.
In terms of percentage of revenues.
Hi.
We actually don't disclose that information.
Remembering one thing, which is very important here is that part of the compensation comes into revenue and part of that comes in equity and the equity value actually is the most significant one so when we look at the partnerships here and decided the new ones. We look at three vectors. We look at the offered they make more base to make sure that generates value.
That value store base the value that is generated through the revenues and the general debate that it generally to equity which is very much based on the likelihood of them becoming successful become unicorn. So we are targeting not only the revenue side, but also the equity side, which in our view has a bigger.
Upside in just the revenue.
Okay. Thank you very much.
Ladies and gentlemen.
I'd like to remind you the order to ask a question. Please press star one.
Without any more questions from analyst will now start to public Q&A session from the webcast platform.
The questions will be read.
Please Mr. <unk> you May proceed.
Thank you for so the first question comes from HSBC funny.
Can.
Kind of model.
What is the impact of ice systems deconsolidation on EBITDA in <unk> 'twenty one.
And in 'twenty to 'twenty, three 'twenty 'twenty four what would be the team's consolidated margins look like versus a full year 'twenty, one considering <unk> systems deconsolidation in five G costs.
I think this a question to come either so can you. Please go ahead.
Okay.
Thank you for saying so with respect to the first question. There are mainly two impacts in our in our EBITDA. There there are mainly three impacts in our financials.
Two of them affect EBITDA so.
Similarly to the Oi transaction in which I mentioned that we will have a temporary service agreement in the ice systems transaction. We also have a temporary service agreement, but in that in that case, we are the service providers. So there's just a very small revenue coming from this that the service agreement mm, mainly admins administrated in other banks.
Op services that we are Randy on a temporary basis, but again not relevant are the the more the most relevant impact is of course, the opex that we are that we have with that that we have with ice systems and that impacted our fourth Q financials are in one month and a half since closing are happening.
In mid November .
With respect to and then there is of course the last impact.
Which is the capex, but that does not impact our EBITDA.
With respect.
The 2023 24 on Tim consolidated margins again.
As a bathroom mentioned before when when we look our in 2023 and 'twenty four.
We really we really project this company as without the without the effects in it I mean, the only deal I systems five G. It's all part of our business. So it's to me I mean.
When we have hyped your car sometimes that also brings us some some savings that we would that we would otherwise you know off of Opex and Capex that we would otherwise have if we didn't have five G. So it's hard to it's really hard to say, what's the Standalone I system five G impact on 2020 to be at any point, we really don't look at this this new parameter.
We will have with OE with ice systems and with with <unk> inside.
Yeah.
The next question comes from New Street Eduardo Amish.
What is the budget for Capex in the <unk> JV and how much Capex did you take out of the budget to reflect the consolidation of these assets. So we can't really disclose the budget for the fiber JV. We are now I mean, I would just say holder and the controlling shareholder of that company is a list.
The company is also.
We can't really give out that number what I can tell you that we have roughly 400 million has of capex savings coming from our of Capex reduction and in a non ice systems basis by having done that transaction in 2022, So we've reduced our capex by roughly 500 million highest because of.
Up the ice systems deconsolidation.
Debt to this respect that we include this opex costs that are coming to just mention that and we took out.
The largest chunk of Capex said with a positive impact on the operating free cash flow and revenues of course because of visits.
Ladies and gentlemen, without any more questions I'm returning to Mr. Alberto <unk> for his final remarks. Please Mr. Alberto you May proceed.
Oh, Thank you for your participation today I. Thank you all the great team that is here with me.
To address all your questions and I look forward to meeting you again in the one to one sections.
The upcoming events like the telecom the next earning call goodbye to everybody.
So as we conclude the fourth quarter of 2021 conference call of Tim O'shea for further information and details of the company. Please access our website at <unk>.
Dot Com BR Slash IR you may disconnect your lines from Taiwan. Thank you once again and have a nice day.
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