Empresa Nacional de Telecomunicaciones S.A. (ENTEL.SN) Earnings Call Transcript & Summary

[Technical Difficulty] Fourth Quarter and Full Year 2024 Results Conference Call. I'm Paula Raventós, Head of Investor Relations of Entel. Joining me today is Marcelo Bermúdez, Entel CFO. We would like to inform you that this event is being recorded, and all participants will be in listen mode during the company's presentation. After the company's remarks are completed, there will be a Q&A section. Those who are connected from the webcast should send their questions by chat and by phone should request the voice. Before proceeding, let me note the disclaimer at the bottom of the slide regarding forward-looking statements. This reflects management expectations and may differ from actual performance outcomes. Let's start by outlining our agenda. We will start with a review of the most recent events, followed by Entel Group's results in 2024, and then we will move over our operations in Chile and Peru, finally, to cover ESG initiatives and then the final remarks and Q&A session. I will move now the voice to Marcelo Bermúdez. Please, Marcelo, go ahead.

Thank you, Paula. Good morning, everyone. Well, in Chile, we maintain our position as the undisputed leader across all major mobile metrics, that's including market share, revenue share, and ARPU. Despite another challenging year for the industry in general, Entel delivered a strong result. Specifically in Peru, we consolidated our position as the second largest operator in the market in only 10 years of operations, continuing to set a new benchmark in telecommunications, a very successful deployment. Another significant milestone in Chile was the commercial launch of our neutral fiber optic networks in March of this year -- of last year, sorry, following our agreements with OnNet Fibra. This initiative has shown promising results, and we expect continued growth in this area. Regarding 5G, we delivered the network ahead of our regulatory timeline and hold the largest market share for this connection type. This positions us at the forefront of the ongoing technological transition. And finally, our partnership with Starlink is another key milestone and highlight of the last year. We are now one of the 7 operators worldwide to have such an agreement with Starlink, and the only one in Latin America. In terms of the key milestones and events of the year 2024, just to highlight in the first quarter, we began mass commercial offering of the fiber -- FTTH services, marking a significant advance in high-speed connectivity in the country in Chile. In the second quarter, we were also recognized as one of the Most Honored Companies of the 2024 Institutional Investor Ranking, highlighting its performance in terms of key areas, such as management and corporate governance. Also in the third quarter 2024, we held an Investor Day meeting with the participation of more than 120 analysts and key executives of the company, strengthening our relationship with our investors and the financial community in general. New tariff increase also for our customers is one of the highlights of the third quarter of 2024. By the end of the year, in the fourth quarter, just to note that we amortized and paid principal and interest of our 2013 bond that was paid in full by the end of the year. That amounted close to $146 million that we paid in cash for sure. And also, it's worth noting that we -- in terms of the Merco Empresas Chile 2024 reputation ranking, Entel was recognized as the leading telecommunication company in Chile, occupying the 9th place in the overall ranking. Let's take now a closer look at the competition -- composition, sorry, of our shareholder base. As you can see, there have been some movements in the year. We can observe some growing interest from international and institutional investors in general, signaling a positive confidence in the company. This also show that we have a strong appeal for our strategic vision in the market and in terms of medium-to longer-term value creation that we have been consistently generating and communicating to the broad spectrum of investors. And that has an impact, as you can see in the shareholder stock performance during 2024. In terms of price change, you can see that although, in general, the price change as of December of the Entel stock without dividends is negative 8.4%, when we adjust it by dividends, we are almost at the same level of the beginning of the year with really steady price during the year. And we have been able also to deliver a strong dividend yield during the year, a little bit below 10%, which is in the range of what we are aiming and stated in our Investor Day recently. Also, just to note that as part of this commitment to our investor, just a couple -- some weeks ago, by the end of the year, we paid an interim dividend in December '24, which still reflects that we are sustaining our dividend policy to distribute up to 80% of our previous year profits. Paula? Let's now turn on the attention on Entel Group's overall context, beginning with the macroeconomic environment and where we would operate. Thank you, Marcelo. Okay. So 2024 unfolded as a very complex year in terms of economic. As you can see, economic growth in Chile and Peru has been relatively modest. While these figures are slightly above the Latin America average, in general, they remain subdued compared to historical levels. So this has been a pretty strong challenge for the company. The economies are not growing. The telco industries are with modest growth in general, both in Chile and Peru, though improving at a certain extent after the pandemic effect. In Chile, the exchange rate has been highly volatile. In Peru, it has remained more stable, but still as a consolidated view, still a very challenging exchange rate in overall. Here, basically, we always take a look at the consolidated view, posting CLP 2.7 billion in revenues for the year, with more than CLP 20 million subscribers in mobile and with EBITDA generation of CLP 788 billion with EBITDA margin of 28.5% for the year, with CapEx totaling CLP 477 billion, which is 17.3% of revenues and 67.7% bottom line net profit for the consolidated entity. So that's the share between Peru and Chile. Just worth noting that Peru is still growing. It's already 1/3 of our total revenues and EBITDA. In terms of market valuation, market cap, close to CLP 900 billion. As I mentioned before, the dividend yield 9.7% and EV/EBITDA 3.9x. So if go in more depth to the market trend in terms of competition in Chile, the mobile competition has really kept very stiff, very aggressive still during the year, though, we have seen some level of ease after the second quarter of the year because of the situation with some competitors that you already know. So what we see is that we are being able to keep and sustain and growing our share in this market. If you see Chile, for example, mobile line postpaid, we have been able to grow. We are the blue boxes in each one of the quarters. Each one of the quarters basically depict the net growth of that market and which player of the market takes what part of that growth. And you can see that in general, although quarter-to-quarter the market on mobile has been growing, but at a declining rate, we have been able to capture most of that growth during the -- at least from the first quarter '24 to the third quarter. This is very good news for us. In fiber connections, which is in the middle chart, pretty much the same. We have led the share and the growth in the market. There's another competitor also that had some growth and captured a significant portion of the market in the second quarter. But in total, since we have been growing through the OnNet footprint, we have been able to capture most of the growth of the market during the year. So it has been also a very good year in terms of growth in mobile. And Peru, for mobile postpaid lines, you can see that we also took a relevant chunk of the growth for every quarter, competing you can see in the last quarter, it's very significant that we led the growth against all other competitors, including the market leader. So we're very proud of that, that we have been able to grow in both markets and capture most of the growth in those 2 markets. And in terms of growth, you can see that we have been sustaining our growth in postpaid, as I mentioned, and fiber in both countries. Mobile users still growing, but at a very lower pace. You can see just 1% growth in 2024 compared to last year in Chile, though, postpaid is growing very significantly, 6.8% and prepaid naturally is decreasing. But the most value-added or higher level of ARPU postpaid customers are growing still in the country. In mobile Peru, you see something similar, a little bit higher in terms of growth for the postpaid and almost no growth in prepaid. Still, Peru is growing at a faster pace than Chile in general in subscribers as a whole. In terms of the fixed sector, Chile with very low growth compared to -- in the recent years, but changes of technology, you can see the green box it's fiber basically with TV and HFC decreasing aggressively. And all of the growth is basically fiber today growing compared to last year, 43% year-on-year. That's a very interesting. As I mentioned before, we're capturing a lot of that growth in the industry. And in fiber, Peru is still lagging behind because of the market penetration, still growing, but in a very smaller market. And what we see is that fiber is starting to catch up. So we will be part of that growth in the coming years, along with market penetration of fiber in Peru. In terms of financials, the consolidated view is that we had a very good year in 2024 financial-wise, with a rising revenues and EBITDA. You can see 7.4% increase compared to last year. Also in the quarter, we posted some growth, 3% compared to last year. And you can see some details that we exclude extraordinary items, in both revenues, EBITDA and EBIT. The figures might change, but still the growth after adjusting for extraordinary transaction, meaning last 2023 sale of fiber business. And also, we will see there are some other adjustments for the EBIT and EBITDA, we're still growing significantly. 9% -- almost 10% year-on-year and more than 11% quarter-to-quarter in terms of revenues. In EBITDA and EBITDA margin, pretty much the same story, growing 3.4% in the year with a decrease in the quarter. But when we adjust for extraordinary fiber sale and bad debt provision that occurred in 2023, the growth in terms of year-to-year goes to positive 6.6% and the growth quarter-on-quarter goes to positive 7.5%. So on an organic base, we are growing in terms of EBITDA, both in the year and the quarter. And with some decline in year-on-year on the EBITDA margin, you can see that we go from 29.6% to 28.5%. That's basically the impact of higher exchange rate. That impacts in many cost lines, higher cost of energy, et cetera. This we are not being fully able to pass into tariffs and price increase. Some of that has been done, as you may know, that we increased customer base prices by the middle of the year with some impact only in the second half of the year. But also, there's some other phenomena, as we will see later, increasing the share of revenues and EBITDA coming from the handset sales and handset financing that is done at a lower EBITDA margin. In general, that's average between -- depending on the country, between 12%, 13% margin. So as long as we increase in terms of handset financing and sales, that will imply some impact in the EBITDA margin. So it's a combination of mix, product mix in terms of normal services to handset sales and financing, plus the impact of higher cost and its partial pass-through to revenues. But still it's very positive being able to deploy fiber this year, this is still very strong EBITDA margin. And that goes down to EBIT, pretty much the same phenomena with some higher depreciation this 2024 that is pushing down a little bit the EBIT margin. That is a result of the higher CapEx that we have been performing in the last years. And in terms of net profit, you can see that we're posting a decrease of 24% compared to last year. That [ is mainly explained ], basically, last year, we had the impact of the sale of fiber, which imply an impact that if we take that out, is basically after taxes is CLP 36 billion. So we should adjust that to compare to 2024. Plus, all the impact of the exchange rate that I have mentioned several times in the tax line, and that is coming from our investment in Peru, that every time the exchange rate goes up, we have to post higher taxes related to that investment, and that impacts our bottom line. Just to mention that -- and this is very important to understand. By the third quarter of 2024, we have been able to hedge 1/3 of our exposure in Peru. The hedge is done through FX forwards basically. And the result of that hedging, which is positive for the year in the range of CLP 19,000 million, that is accounted for as an interest income. So when you see only the tax line, it includes the impact of the exchange in Peru gross. It's not netted of the hedging, yes? So roughly in the year or in the last quarter, just the impact of the increase in the exchange rate, which was roughly CLP 93 just in the last quarter of the year, that impacted around CLP 40,000 million, just the tax line. But we also had half of that, CLP 19,000 million as a positive result of hedge in the interest income. So when you consider the net effect would be in the range of CLP 26,000 million, CLP 27,000 million net, the good news is that starting the 1st of January of this year, we were able to hedge in full, 100% of our exposure in Peru. We were not able to do that during 2024. We tried to, so we were able at the end to hedge a little more than 1/3. But starting on January 1, we fully hedged. So for 2025, hopefully, for the coming years, we won't see an impact in that line again. So that's good news in terms of having stability in the bottom line. This is a quick view of the -- to compare the EBITDA 2023 and 2024 with the main drivers, putting aside the extraordinary items that I just mentioned before. As you can see, in whole, our businesses performed pretty well, generating CLP 26,000 million in positive impact of EBITDA during the year, and this is consolidated. And also, I have mentioned before the positive impact we have been getting from our efficiency program, which we call Entel + Reloaded that contributed with CLP 57,000 million to the businesses in general. That is the impact that, we will explain it later, will remain in '25, and we expect it to expand it again more than this figure. And this efficiency program plus the business performance had been able to offset the impact of inflation rate and exchange rate, which is 26.5% plus the impact of the higher leases, that is including the lease from OnNet related to the fiber, and other incremental costs, mainly energy, that we are depicting at CLP 6.4 billion during the year. So good business performance, good efficiency program that is here to stay and offsetting leases and FX and inflation impacts and energy basically. So although it has been a good year in terms of performance, we are driving with these higher cost and -- but still, organically, we were able to expand our EBITDA in 2024 compared to 2023. That's good news. And this is just a slide that I mentioned before, but it's basically we're updating the impact. We are increasing -- the actual impact in 2023 of the Entel + Reloaded, which is this efficiency program up to $63,000 million. You can see the main lines. We have been touching every aspect of the business in B2C, B2B, network, SG&A, and other areas of support such as billing, collection, and services. Basically, we're very proud of this. Paula, next slide. You can see also that we expect for next year or 2025 to keep pushing these initiatives, and we're still aiming at least to have in terms of OpEx and CapEx in the range of $80 million to $120 million in 2025, which is keeping, maintaining what we did in 2024 and growing and accelerating that pace in 2025. Also, we would like you to know that Entel and the industry, in general, is really increasing the usage, the traffic, and GOU, which is the traffic by or the usage by customer. And the good news is that in this scenario of a growing volume of data, 6% growing compared to last year, third quarter to third quarter, Entel is leading the share on this. We are -- our customers basically are really pushing the volume of traffic. And this is very important because we need to tie this increase in traffic to the quality and coverage of our network. So this is basically what we're facing. Customers will demand more speed and upload, download capacity given this higher volume. So when you see the split of the share between different technologies, you can see that 5G is growing up dramatically, 9% as I mentioned before. 4G started to go down, still very important, and 3G is almost negligible at this point. And that's really important that we are ahead of the rest of the market in both Chile and Peru, leading the 5G presence and network in general. And this is related to the CapEx. And we ended this year in Chile with still investing a lot, but still less than the 2023 because we're in a later stage of 5G deployment. But still in mobile, which is the blue box is still relevant, lower than last year. And we're focusing a little bit more in FTTH, home CapEx and everything that is related to also the B2B network. But still it's very strong level in CapEx in Chile. And Peru, the news is, it's growing. We're really putting some speed in coverage in Peru. I mentioned in different meetings before that we are expanding in Lima and other cities, increasing the quality in Lima specifically and expanding coverage in the rest of Peru. That spike in CapEx in Peru started by the end of 2024. So we should expect some increase -- a significant increase in 2025. So in the consolidated figure, you can see that we invested pretty much the same figure compared to last year, which is 17.2% of revenues, and it's a little bit lower than last year. But the message here is that this figure of CapEx of 2024, it's below what we initially expected to invest in our plan for 2024, even the forecast at some point we gave in the investor meeting that we did, I think it was in October. So basically, what we did here is given the competitive dynamics in Chile, mainly, we were able to pass into 2025 a part of the CapEx that we had planned for 2024, meaning that we will always try to balance investment in infrastructure to our competitive environment and also always trying to keep solid financial indicators in terms of debt, EBITDA, et cetera, and assuring our investment grade. So I think that 2024 was a good year for us in terms of market growth, competitive environment. So that allowed us to free some cash, passing investment to 2025. So what we would expect -- what I can say is that we should catch up in 2025, but still keeping the target we mentioned in the investor meeting for 2027, which is be in the range of 19% -- a little bit more 19%, 19.5%, 19.1% in that range. So we had a low 2024 in terms of total CapEx to revenues. We'll go back again in '25 because of this passing from one year to the other. Do not forget that we still have to expand in 5G in Chile and Peru aggressively, but also support all the CapEx that is related to the expansion of fiber, both in Chile and Peru. So we are all [ mentioning ] and expecting 2 intensive years for 2025 and 2026 and a decline in 2027. But still at levels that are still very healthy in general, not something that we haven't seen in the past year. So it's basically that. In terms of cash flow, just to know that we ended 2023 with a significant amount of cash, $660 million, roughly the same figure in pesos, CLP 658,000 million. And basically, we had a very good year in terms of EBITDA compared to the previous year. After leases, it's very similar to the previous year. And we had some impacts basically in working capital, mainly explained by the increase in handsets financing. That implies a use of working capital, which was almost CLP 56,000 million. And also, we had to pay the VAT related to the sale of the fiber of the end of 2023. That also was a use of cash at the beginning of '24. And that was partially offset by some postponement of vendor payments that went from 2024 to the January 2025. Basically that allow us to offset a little bit that effect. But basically, 2024 is kind of a normal year in terms of working capital. 2023 was positive. That's unusual, and it's mainly related to the bad debt adjustment in account receivables in Peru of 2023, CLP 32,000 million, plus the provision of VAT payment that we have to account for at the end of 2023, that also is accounted as a source of funds. So the tricky figure there is 2023. So the normal figure is 2024 in terms of working capital. And then CapEx, as I mentioned before, net financial cost is a little bit below 2023. That's mainly due to what I mentioned already, CLP 19,000 million of positive hedging of Peru, which is in that line, and we had also full year of interest income related to the cash -- to the positive cash position. That implies a lower financial cost compared to the previous year. Then taxes, as I mentioned, normally, this is including the normal statutory tax rate for the company of previous year results. That's mainly driven by the normal course of business, but also the taxes related to the sale of fiber, which were paid in 2024. And then, dividends, we already mentioned the normal dividends that we paid in April, plus the dividends that were paid in December, the provisional dividend that was paid at the end of last year. That in total is CLP 86,000 million, [ totaling ] with a very strong -- still very strong cash position of CLP 273,000 million. That we will start to deploy and use not only in our CapEx in 5G, but also to support part -- the 2 next years of fiber. Just remember that part of that cash comes from the sale of fiber. We just paid a portion of that as dividends, and we are keeping that cash to support the CapEx plan of fiber for the coming 2 years. This has allowed to keep still very strong financial indicators: net EBITDA, 2.53x; pretty steady net financial debt, a little bit higher because of the use of cash we have already done in 2024, given the CapEx plan and already we started expansion of fiber; and a stable credit risk rating. Fitch just some days ago, just assured the AA -- the BBB- rating for international and local AA-. And in terms of dividend yield, we already mentioned that.

Thank you, Marcelo. So, now, we will go over the Entel Chile results, please.

Yes, real quick, this is mainly the same figures we already mentioned. The good news here, I mentioned before that we are being able to capture a significant portion of the growth in the market, mainly in postpaid, the industry growing slightly, but we have been able to capture most of the growth in the last year, 2024. Same for fiber. I already mentioned that, some growth in fiber, and we have been able to capture every quarter -- as you can see, in the third quarter, 25% of the growth in the third quarter of '24, still 32% of that growth in connections. So we're very proud of that and working to continue on that trend. And this is what we already saw. Just focusing in Chile, same story, capturing most of the growth of the market in terms of mobile postpaid connections. Still very strong year with a very strong third quarter. This is the only figures we have. You see third quarter, we explained almost all of the growth of the market. We captured all of the growth of the market; same in the second quarter. So, this is very positive. It's very hard to see how the market will work in terms of competitive dynamics in 2024 because the situation of competitors is kind of -- will tend to normalize a little bit. But we still see some higher level of competition, but it's in a very weak industry at the end. So, we expect still, given our -- that we have been able to continue to invest in our network, we are very confident that we will be able to still capture largest chunk of the market and from the higher ARPU customers. And this still is being shown in terms of financial revenues for the company in Chile growing year-to-year. When we do the adjustment for the quarters, we're still growing at a very significant number. You can see it up to 25% if we do the adjustment of the extraordinary, excluding fiber in 2023. So, for the quarter-to-quarter, very strong figures in Chile. And same story in terms of EBITDA and EBITDA margin. As already mentioned, we -- when we adjust for the extraordinary, you can see year-on-year, we're growing 1% in terms of EBITDA in Chile, and for the quarter, more than 8%, but still in an industry that is very competitive and challenging in terms of really expand margins. We have been facing, as I mentioned, higher costs, facing some challenges to pass those higher costs to prices. We have been doing so partially. So we don't see any dramatic change in this in the Chile industry, at least for the short period of time of the future. And then, this is basically -- thank you, Paula. And this is very important that we always get the question about the -- why we're investing so much, what's the reason for that? And I want to point this slide, which is really, I think, summarizes the soul of our strategy. We call it the value creation triangle. And it's basically -- you have to read it this way. We believe that having some key foundations or the key fundamentals that we call them, which are a robust network, and we call -- we use the word obsession with the robust network allow us to deliver an exceptional experience in terms of connectivity. Specifically, I mentioned before, and we showed the charts of usage of GOU increase, traffic increase. So we believe the network is relevant to have really a good experience for our customers. That will imply a strong brand power and customer satisfaction. That is really our soul, and we work to be -- really understand our customer needs and provide them a good service, not only in network, but also in the other support services. And this is the only way to have a higher ARPU and lower churn, which is, at the end, result in higher returns for the company. And we have been able to show in the last years that this strategy make us being the most profitable company, telco in -- if you [ can use ] Chile, in a very competitive market, far away in terms of return on assets, but still [ being 4 ] players in a competitive margin is very tough to really expand margins. But in this scenario, we are far away in terms of profitability. So we are keeping this oath, this value creation strategy for the coming years, expanding to fiber with the same idea, have really overall, a total complete one experience for our customers in terms of not only mobile but also fixed. This is including B2C, but also B2B. And because of this value creation triangle, we are able to show this -- how the market is perceiving Entel. You see brand power leading, NPS leading far away from the rest, and what is called the excellent consistent quality rating also with a significant gap against our competitors. So this is the result of network investment, support, other areas of support, customer satisfaction, and that all ends in higher ARPU and profitability and lower churn, which is the same. And that's allowed us to have the -- keeping the leadership in the mobile service revenue share and keeping a strong gap in terms of postpaid compared to our competitors and the rest of the industry and being able to increase our blended ARPU on time. Still this is low ARPU compared to OECD and other countries, but it's basically explained by the 4 competitors that we have in Chile. But still, we are the leader in terms of ARPU. Fibers, pretty much the same. We're much smaller, but we're growing. We posted an 11.2% market share in the third quarter. You can see on the bottom of the right of the left-hand side chart. And in terms of revenue share, we are still growing, but very small. We expect to continue to expand that as long as we increase our footprint and our expansion in 2025 and 2026. Also, in this scenario, we have been able also to capture the bulk of the growth of the market in third quarter 2024, sharing the growth with other competitors in second quarter 2024. But in general, you can see the whole picture in 2024. We have been leading. That's because we are one of the companies that are expanding. The rest is not necessarily expanding. And in fiber, I want to note this is very relevant. I have shown this slide in previous meeting. That's basically that since we sold our assets to OnNet. The part of the FTTH and the fiber activity that we perform as Entel is basically on the core network, transport and all the data that's flowing, but goes through the network of OnNet. And then, everything that goes to the home, what we call the last mile to the customer after the drop and the equipment in-house is part of Entel's responsibility. And that's very relevant because 65% of the failures of fiber service happen in this area, in the last mile, where Entel really can do something. And the good news is that when you see what are the factors that explain customer satisfaction, which is quality of the network, pricing and others, 83% -- almost 83% of those factors that explain satisfaction are also being -- can be managed by Entel and not necessarily by the OnNet. So what I want to say here is that we get all the time this question is that we really can make a difference in terms of value for our customers because we own the quality of service, the quality of the installation service, the quality of how fast we can reconnect in the case of a failure. And that's the chunk -- big chunk of customer satisfaction. So we will be leading, putting our brand in this business, and that is explaining why we are growing so fast in our expansion in fiber and try to make this business contribute with positive EBITDA as soon as possible. It will take a couple of years in total, given the expansion in Peru and Chile, but we'll get there pretty soon.

Thank you, Marcelo. Now, I will explain the Entel Peru results. First of all, regarding the industry in Peru, the mobile industry has experienced a decline after the pandemic. However, in 2024, we saw a recovery in postpaid segment, driven by high revolving and introduction of a lot of discounts and promotion. Also in the fiber Internet, we saw some increase and because mainly of the lower penetration that there is still in the industry. Regarding the postpaid mobile customer base in Entel, in the last 2 quarters, Entel has led the portability, achieving positive net growth with all operators. This success is associated with expansion of sales channels, family plans, retention strategy and network improvement. The sales strategy has shown good progress with growth in the sales of equipment and family plans. The postpaid base is growing also, too, and since the second quarter, as I mentioned, with better results have been observed since the sales strategy of channel with express stores and channel strengthening. The good admission and retention plans, along with network improvement, had also contributed. Revenues in 2024, we saw that they increased 1.3%, affected maybe from the high [ revolving on ] the industry, which has led to many discounts and promotions. EBITDA for the 2024, excluding bad debt provision in 2023, grew 10%, reaching a historical EBITDA margin of 25.7% and a positive EBIT in 2024. What we have aimed in Entel Peru is that we want to offer also the best satisfaction and network for our customers. We maintain our leadership in satisfaction, and we are second in brand power. In NPS, postpaid and prepaid, Entel maintained leadership. We have worked a lot in customer proximity, also with room to growth. We have more the base with family plans and benefits that generates loyalty and Entel lovers. Also in brand power, we maintained the second place with important recognitions. For example, in first place -- we got the first place in telco experience in Peru for the 18th -- for the 10th year consecutive by -- led by IZO. That is a leading consultancy customer award. Also, we got the first place in telco sector reputation and digital reputation by Merco companies. As we mentioned, our [ focus is ] also how it is in Chile, we want to offer the best network. In Peru, we have made progress, and we are achieving the first place in 5G speed in Lima according to OSIPTEL and the second place in 4G presence. We are working on improving coverage and presence also in Lima and outside in Lima. Also, we have consolidated as a second mobile operator in revenue share, which has a greater opportunity to grow for us where we have been able to achieve a lower port-out rate in the industry over the last quarter. These better results have been observed due to the sales strategy in the channels and strengthening retention plans, along with -- also with our network improvement. Also, we have made progress in ARPU, led by superior service and network quality. However, it was affected in the last quarter by the high revolver or turnover in the industry and the promotions and discounts. Finally, regarding the fiber-to-the-home business, we still remain looking for the opportunity. It's been delayed, but we have the condition to reach homes. It's remained. This is an opportunity where we see that fixed line market, which grew 57% last year, but still have low penetration. So we're still looking, as Marcelo mentioned, for opportunity to grow in this fiber-to-the-home market. Regarding our ESG advances highlighted during 2024, I would like to mention that for the ninth year, Entel remains in the prestigious Dow Jones Sustainability Index in the stock exchange in categories Dow Jones Chile and Dow Jones MILA with being the only 2 companies in the list in Latin America. One of the reasons of Entel's inclusion in this excellent result achieved in the progress evaluating of the corporate sustainability, CSA by S&P Global, where we scored 80 points in 2024 out of 100, an increase of 3 points compared to 2023 measure. We had a high performance in overall measures, standing above the industry peers, international. We averaged 36 -- where the industry peers, they have an average of 36 over 100. The company obtained very good results in the main dimensions of index. For example, in social, we obtained 82 over 100, where the average industry is 33 over 100. In economic dimension and governance, we obtained also 82 over 100, where the industry average is 36. And environmental, we obtained 70 from over 100 where the industry is 37. So we're very proud of this achievement. Also, we achieved the highest score in the categories in transparency and reporting risk and crisis management with important advances in private protection and also with an important score as a [ perceiver ] in the supply chain management. Other important highlight in this area is that Entel was recognized as the top telecommunications company in Chile, ranking ninth in the Merco Empresas Chile 2024 Reputation Index. This marks the ninth consecutive year where the company has been among the top 10 most reputable businesses in the country. Also, our Entel's 2G network shutdown as a technological renewal project was honored as the Best Sustainability Initiative of the Year in Telecommunications at the Conecta Latam Awards in 2024. This award highlights Entel's leadership in driving technological modernization with ensuring no one left behind. Now, we will go over our final remarks where Marcelo is going to mention. Please go ahead, Marcelo.

Thank you, Paula. Real quick before going to questions, so Entel Group is leading growth in postpaid, expanding mobile subscriber base over 900,000 year-on-year despite competition. We also are continuing to lead the country -- the mobile business in Chile with significant advantage over our peers and competitors in general. And in Peru, we have secured, as this is very important, the second largest position in that country, really, and we are sure, we will be able to keep that and growth in Peru in the coming year. And keeping always a sound financial position and performance, not only in terms of EBITDA, but also in overall ratings. Very important that we have been able to offset the last year's spike in inflation and exchange rate in the country. That's also very relevant. And our investment plan, as I mentioned, focus on expanding 5G in Peru, mainly keeping up some improvements also in Chile and growing in both countries in terms of fiber. So that's the focus of the coming years for our network. And always mention -- I mentioned before, keeping sustain -- very strong sustainable financial position, healthy debt ratios and keeping up with our investment grade that we're proud of. So, now Paula, we should go to the questions.

Yes. Thank you, Marcelo. So, now, we will go over to the questions.

[Operator Instructions] Meanwhile, please, we appreciate if you -- your feedback by answering the QR survey. So we have one question from Fernan Gonzalez. Can you go up, please? Why did SERNAC request to initiate a voluntary collective process with you? And what is the potential impact to Entel in terms of compensation? Do you believe you have a strong case in your defense?

Yes. Basically, that voluntary collective procedure is something that we agreed on with SERNAC. Basically, the case is really showing support as related to the communication of a tariff increase of previous years. And we believe we have a strong case. We have done everything in terms of procedures, legal procedures, communication with our customers by different means. So, basically, what -- we are now in the process of collecting all the data and the proof that we performed proper communication, and that will be -- so we don't see any significant impact in terms of provisions or something. So it's something that is being negotiated or proven at this point. So I don't have really an opinion of the potential impact, which I don't believe will be because we know we did all the processes as were supposed to be done, and that's it.

Okay. There's another question. What is going to be the strategy to grow in fiber-to-the-home in Peru, following the failure of the KKR-Telefonica deal?

Yes. We have been exploring different alternatives that I cannot mention at this point, but there are many different alternatives to grow. We -- this issue with KKR didn't necessarily postpone any of the growth plan in Peru we have with fiber. So we are keeping that we will start, by the end of 2025, deploying our network in Peru. I cannot comment more on this, but there is an alternative, and there are actually a couple of alternatives to replace the KKR deal.

Then, we have another question. It's mainly the difference of the CapEx between the cash flow and the one we reported in the presentation. That is mainly because in the cash flow, it is the VAT included. That's the main difference that we can mention.

The VAT, yes.

The VAT.