Oi S.A. (OIBR4) Earnings Call Transcript & Summary

wwYes. Good afternoon, everybody. This is Diego Aragão, American telecom and technology analyst at Goldman Sachs. I'm glad to have with us today, Rodrigo Abreu and Camille Faria, CEO and CFO of Oi. Rodrigo, Camille, thank you very much for joining us today. It's a pleasure to have you in here joining us for the conference this year. So look, why don't we start talking about the recently amendment to the company's judicial reorganization plan that was approved by Oi's creditors a couple of days ago.

Sure. Well, first of all, thank you for having us, Diego. And it's always a pleasure to discuss the company's future with investors and with Goldman in particular. So well, last week, as we have been anticipating for a while, was a very critical day for us. It was obviously something that we have been working for a while. And it now represents the ability to execute, to put in motion, pretty much all of the strategic plans and movements that we designed and highlighted over the last year or so. We have been talking to people that when we prepare the amendments to the judicial plan that we just approved in the GCM last week. What we were doing is we were getting to phase 3 of a process that started when the new Board took over in late 2018. And then obviously, the whole process started to -- for real at the beginning of 2019. And we're saying that this is the third phase because when we look back to the company's history, especially pre-RJ, pre-judicial recovery, what happened was that in the end, everybody knows the story and the company had to go to RJ. And the RJ event -- the plan was constructed in a way that was absolutely a life-saving move, so to speak, for the company in short term. And obviously, at that point, there was a significant problem with liquidity. There was a significant problem with escalating debt. There was a problem with governance and lots of litigation and infighting within the company's governance structure. And so the plan by 2016, 2017, and then that got finally approved late 2017 and got started to be executed at the beginning of 2018, it was a forward, in particular in my opinion, because it completely changed or allowed the change in the company's governance. And obviously, at the same time, it did something which was very critical at that point, which was let's solve the super short-term liquidity problem by restructuring a significant part of the debt, especially with the bondholders; and then just postponing another significant part of the debt, in particular, with pretty much all of the other creditors. And that was done, that was approved. It was based on a lot of assumptions that -- they were, I would say, valid. But obviously, in our market, which is the technology market, things may change when you do 5-year plans. Obviously, you're taking an informed and estimated guess because things change dramatically. And in particular, with one of the assumptions that was assumed by the company by that time, which was what's going to happen with the revenues in the fixed telephony market? Things went haywire pretty quickly because the market started to deteriorate to a point, where now, we're seeing declining numbers for fixed telephony; and then all of the other copper-associated services, such as low-speed broadband, at a clip of 25% to 30%. And that started to happen pretty much right after the approval of the original plan. So what the company had in mind, having a slightly longer period to reorganize and to put things in motion and to design the long-term strategy, ended up being a very short period where, after the Board took place, it had to be completely reviewed and completely redrawn for future in terms of amending the original plan. The positive thing, and I will emphasize that, I cannot emphasize that enough, is that when that happened, the company already had a completely different governance structure. It had an independent Board, it had no controlling shareholder, it had no conflicts between shareholders or between the Board and shareholders or between the Board and management, had a new management team. So it was a very fortunate situation because then the Board -- and I joined at that time through the Board. I was a Board member. The Board started to say, what can we do in terms of long-term planning to really address the -- what's Oi going to be in the future? And that's what we started doing back in 2019. In mid-2019, you guys saw what we call the second phase of our transformation. The first was the RJ itself, which was to present the transformation plan focused at executing on 3 pillars for the short term. And the 3 pillars were, first of all, we have to be sure we're going to have enough cash. And that came in several different directions in terms of actions. It came from looking at all of the fiscal, the tax recoveries we could have, and then we worked diligently to get them. And we ended up getting close to BRL 3.5 billion in tax recoveries. We looked at let's look at pretty much all of the other short-term cash-conservation strategies, and we did them, even they were retail, small. And finally, we looked at 2 very important ones because they were big, which was, on one hand, selling assets, selling noncore assets by that time. And this included Africa, included Unitel, which was a very anticipated event since the very beginning of 2019. And other small assets, such as real estate, et cetera, on one hand. And the second component was, let's try to use the ability we have according to the plan to bring in new financing. To bring in, at least, what we called a bridge loan in terms of, at that time, BRL 2.5 billion in capacity we had to draw according to the plan. And in addition to this, we have the 2 other sides of the house which were more operational, which was -- which were -- the first one, we had to really rethink about our product strategy. Or what is it that we're going to do? Where are we going to put our efforts in terms of product development and selling? And what is this company going to be in the future? Because if we try to simply do everything that we have been doing for a long time, and if we didn't change anything, the result would probably be close to what already happened. I mean there's not enough investment capacity to actually serve all of the needs that the company had, especially after passing through a period of 4 or 5 years underinvested. So we took our time and we did a very, very in-depth strategic project. We had BCG helping us with that. And we created what we call the new operating model for the company in terms of its strategic focus. And the focus had to be on fiber. It had to be on the core assets that the company had, which were the extensive fiber network. It's by far the largest fiber network in Brazil; the extensive data network, which is also one of the largest, if not the largest data networks in Brazil; and the capacity to serve a very large number of cities which no other operator serves. And then we said, let's focus on fiber. And fiber, it's a critical asset because it serves pretty much all of the segments. It serves mobile, and mobile was important at that point because we were actually focusing on recovering the performance of mobile. It serves residential broadband. And now we said, let's completely reset our residential broadband. It serves B2B. And B2B, we always was a pretty significant player and we were restarting, reigniting B2B, including launching a new B2B brand, although Oi Solutions. Finally, it serves wholesale. It serves all of the provisioning of infrastructure to other operators. And out of all of that, fiber was the one point in common, and we said, let's really focus on our strategy around fiber. And then when we looked at the third pillar, it was let's really simplify this company. It's still too big, too complex, too costly. It has to be simplified. It has to have a lot more efficiency in place. And we started executing on the 3 of them. In the middle of this process, we also knew that, in addition to selling the noncore assets, which were towers and data centers and all of that. There was a big possibility, according to our plans by that time and according to our analysis, that we would have to sell at least 1 core asset. And obviously, the obvious response at that time was mobile because we were the fourth player. We were behind. We had the less frequencies than anybody else. Despite the fact -- and let me emphasize that. Despite the fact that we were having significant performance, I believe, at the beginning of 2019. And 2019 was a very stellar year for mobile in Oi. We were second only to Claro in postpaid, which is unheard of. But looking at mid- to long term, we saw, anticipated that we had to sell mobile, especially to execute on the investment strategy that the company had. And that was the second phase of our strategy. And at the end of 2019, when we look back, we have pretty much executed on all 3 pillars. We had sold Africa, which lots of people didn't believe would happen. We had sold a lot of smaller assets which didn't depend on changing any conditions in the plan. We were faced with the challenge of having a lot of interest demonstrated for our towers and for our data centers. But then we faced an obstacle, which was, you know what? In order for us to sell this without any succession issues to the buyer, we're going to have to amend the plan. We brought in a bridge loan at the beginning of the year, which gave a significant cash capacity to the company. And we very successfully repositioned the business. And the key things were, first, we really, really executed well on fiber. And now we're not only the largest, the fastest-growing fiber player in Brazil. But we believe, in a very short time, we'll not only be the largest fiber player, but we have the intention to be, again, the largest broadband player. So we did that right. And on the other hand, we did something that a lot of people really looked and questioned initially, even actually inside the company, which was, you know what? We have a big issue with copper, all of the legacy infrastructure. Let's simply stop, interrupt, selling any kind of copper other than the absolute requisite of fulfilling concession requests, which obviously is a legal obligation we have with the concession. So we interrupted proactively any selling of copper, any selling of legacy broadband. We really dramatically diminished the selling of DTH, which was also a legacy technology. And we focused on the future. At the end of the year, all of that was pretty well executed. Our costs went down. We were growing tremendously in fiber. Fiber was having a gigantic response, both internally and externally. And we at least completed a lot of cash transactions that we needed to continue investing and planning in the future. And this was when we said it's time now to execute on the third phase of the strategy, which is what is this company going to be long term? And in order to do that, we have 2 things. One is, in addition to selling the core asset of mobile, what are we going to do with the -- what remains of the company in terms of capacity investment, in terms of how do we structure our operations? How do we bring in new cash, new resources to the company to invest? And most importantly, what do we do with our financial debt? Because at the end of the year, we came to a conclusion, and we did a lot of very detailed planning. Camille and I spent countless and countless and countless days and weeks doing every little detail of business planning you can possibly imagine for every aspect of this company. And we said, you know what? We have one very, very good piece of news, which is our operation and the results that we have been able to show, they actually sustain themselves. And we can have a very sustainable operation going forward. But then there was a second piece of news, which was -- on the other hand, even with everything that was going at the original RJ because of several restrictions in the plan, we still need to address the financial aspect of the company. And this is when we started working on the amendment to allow for the sale of mobile with no succession issues with towers, data centers. To allow -- and then to allow for something which was the hat trick there because we said we need to create a model that will allow us to invest, reduce debt, not lose financial position in the process and readequate our commitments, our financial commitments going forward. And this was the structural separation idea that we brought forward. It was something that had been in the making for a long time in terms of industry speak and discussions. When we looked at what we had, we said we have the perfect candidates to do structural separation proposal here. And by the way, we're going to do that, but we're not going to let go completely of the infrastructure because we can remain a very significant financial player, economic player in the infrastructure. And with that, we bring in a new partner, of bringing new financing, we're bringing new leverage capacity. And in the end, we do what we said we needed to do. We bring in new resources. We have resources to invest. We make sure that we are able to fulfill our financial obligations, and we bring back the company to sustainability. And this was what was proposed in the GCM. And obviously, as you can imagine, a GCM like that is very complex because we had a gigantic number of creditors, and we had to kind of cater to pretty much a little bit of everybody's appeal. And in the end, understanding that it would be virtually impossible to have a unanimous plan. We ended up negotiating very, very detailed-ly with pretty much all of the creditor classes, and we were able to, I believe, very successfully catered to everybody's interests. And even in one of the classes where, obviously, there was a lot of discussion and a lot of complaining. Even in this class, which was the ECAs and the banks, we were able to have a significant piece of the creditors approving the GCM, which was, I would say, not surprising, but very pleasing. Because we said, you know what? We've been trying to do the fair thing. The company is not trying to do anything other than fulfill the minimum conditions to bring it back to sustainability. And gladly, that's what happened. I believe that our negotiations bear fruits. And here we are. We have the GCM approved. And now -- as we joke internally, now we just have to execute on everything we propose, but at least we have the means to do it. So we have a GCM approved. We have plans that can be executed. We have M&A processes which can be completed. And then let's just roll our leaves and go do it. So this is just a very, very long story made short in maybe 20 minutes or so, or less than 20 minutes. So this is where we are.

It was a great summary, Rodrigo, congratulations. And congratulations on the achievement. Actually, it was a great achievement. I can imagine how you guys have been working hardly on these, so congrats on that.

So look, just let's step back a little bit. And when we think about like the time line for you to, let's say, to keep progressing with your strategy. I understand you have like some dates, right, that you were sharing with the market. Can you remind us, what are those dates? And what do you expect to achieve, let's say, in the next 12 to 18 month?

Sure. Well, Camille, why don't you pitch in? And obviously, I'd like to have Camille having a chance to talk to you all because she has been an absolutely instrumental part of this plan. And we have been doing so much exercises in terms of timing and when things need to happen that it would be great if you could pitch in.

Thank you, Rodrigo. Thank you, Diego. So in terms of execution, I think a big part of the M&As have already been completed in a sense that we already have a Stalking Horse for the towers, for the data centers. And more recently, right for the GCM, we closed the Stalking Horse position for mobile. So we expect the creditors meeting votes or the results to be confirmed by the judge until the end of September. So next couple of weeks after that, we are free to start publishing the auction documents, the [ digitize ], the so-called [ digitize ]. I think the first 2 that we are going to release immediately, we expect to release right after we got the confirmation from the judge are the 2 auction documents for towers and data centers. And then after 30 days, we go ahead and do the formal auctions. And then we'll have the winner sign SPAs. And given that [Audio Gap] has been called -- the year, [ although money ] in our pockets. Right after working also on the documents for the auction for the mobile entity, which, given the complexity, we might not be able to publish right after the confirmation. But within October, we should be able to publish the auction document so that we can conduct the auction in November and have the deal signed in [ 2020 ]. Regarding the closing of the mobile transaction, I think it depends on the winner. Of course, as you can imagine, if we go ahead with the current Stalking Horse and they end up being the winners of the auction, the regulatory and antitrust approvals tend to take longer. And we expect closing to be more towards the end of 2021, although we don't anticipate any real problems here. It's just a matter of time that, [ especially Kaju ], will take to analyze the situation. So we are talking about closing and cashing of the mobile entity in end of 2021. In parallel, we are running the 2 other processes that we have introduced in the strategic plan more recently. So the first one, Rodrigo mentioned, is InfraCo, is the structural separation. And in this, we've been giving a public updates. And we did the first phase of the market sounding, the -- let's say, the nonbinding phase prior to the creditors meeting so that we could reflect, let's say, the learnings from that initial phase in the plan, and in the amendment of the plan itself, which we did. And now we are in the middle of phase 2, which is sort of the binding phase. And we expect to be able to announce a Stalking Horse. It's not really a Stalking Horse because formally, the Stalking Horse is only announced prior to the creditors meeting. But in the plan, the company has introduced the ability to give a right to top to the winner, let's put it that way, of the market-sounding exercise. So it works much like a Stalking Horse. That's why we're calling it a Stalking Horse, but formally, it's not. But we expect to announce the winner of the market-sounding exercise before year-end and conduct the auction as early as January next year. And then we still have to see conditions precedent and all of that to see how quickly we can close that transaction. But today, our best guess is third quarter of 2021. But it could be earlier. And cash in might be installments. So we're still working on that. Although the transaction closes, we're going to have a new controlling shareholder for that entity, and it's going to start operating fully as a neutral network. Although we are already doing some pilot projects to get that concept up and running as soon as possible. And then finally, we have the TV UPI, which I think was the most recent introduction to the plan. And also, we released, I think last week, a communication to the market announcing the beginning of the first phase -- or it's probably going to be a single phase market-sounding exercise. So I would say that this is the process in which we are earlier in the time line. But still, we expect to be able to announce a Stalking Horse-like candidate by year-end and also have the auction early next year. And given that there is naturally a lot of concentration in this TV market, we also expect the regulatory approval period to be not very expedited, let's put it that ways. So that closing should also be expected in the second half of 2021, not earlier than that. So I guess that's right on the M&A side. On the debt side, there are several pieces of debt that will disappear in the plan. So there is a significant deleverage of the company, as Rodrigo mentioned. I think there's an important part that happens at the closing of mobile. So we will pay BNDS, which is the only creditor that we have with guarantees. So they need to be repaid and release the guarantee so that we can actually sell the mobile entity. They get repaid at that moment, as well as the bridge loan, the bridge financing that we raised earlier this year, if it's still outstanding. So that would already reduce the company's debt by slightly over BRL 7 billion. On the financial settlement of InfraCo, either in one or more installments, we then exercise the call option on the bank, initiate that. And after all of the call options are fully exercised, that will allow us to reduce our debt at face value, roughly BRL 18 billion or more, which will mean a BRL 26 billion, roughly, if you use June numbers, BRL 26 billion reduction in the face value of our debt, that in June was BRL 42 billion. So it's after everything is sold, settled and implemented, this will mean a very significant reduction in our gross and net debt as well. So this is sort of the time line of execution here.

In that time, Diego. By that time, Diego, if everything goes according to plan, it will be even possible for Oi to start offering residential fiber or residential broadband, fiber broadband in São Paulo. Because as you could see, Camille is in São Paulo today, and she doesn't have Oi Fibra. And that's the reason why initially, there was a little bit of a glitch there. If she was in Rio, as I am right now, that wouldn't have happened, unfortunately.

You are lucky to be in Rio, Rodrigo. So look, let me ask you something. My understanding, please correct me if I'm wrong. The Oi -- the client business of Oi would be very dependent on the segregated infrastructure company in order to deliver the service, right? So in terms of network structure, where do you draw the line between the 2 of them? I mean in other words, up to what level of the metric equipment would be owned by the ClientCo rather than by the infrastructure company? And I guess when we think about like the television business, right, the pay TV business, that it's also for sale. I mean how can you continue to eventually bundle services if that will be the case for you?

Those are fair questions. And we obviously went into a lot of details to answer that and to create the plan. Let's start with the infrastructure. On the infrastructure side, what we are assigning to the fiber company, to the InfraCo, is the fiber infrastructure that is completely detached from any concession issues. So meaning all of the local metropolitan networks and the customer drops and all of the backhaul and backhaul components that do not serve concession at all. And so pretty much all of the fiber infrastructure that was built after the concession is going to the fiber company. In addition to that, in addition to that, there will be a significant component of data cores. So all of the data network in terms of the IP data cores and the IP edges, which are required to serve obviously, the residential and other kinds of services, including B2B. They also go to the infra company. And this is absolutely aligned with what we see as all the regulatory conditions that we face right now. And then there's a third component, which is we know that Oi has a significant amount of fiber which also serves the concession today. Even though the concession traffic, the voice traffic, is minimal. It's less than 1% of the network capacity we have. So what we did to avoid any issues with all the regulation and the discussions around the regulatory assets was to assign to the infrastructure company a rights to use, what is commonly known as an IRU, and in the face of a right-of-use of all of the transmission components of Oi's fiber network, which remain at the Oi S.A. level, which remain at the company which is under RJ. And obviously, this -- for practical effects, has the effect of the infrastructure company having pretty much the entire transport and core and data networks of the company in terms of capacity to serve, not only Oi, but other clients. What stays with Oi is all the legacy networks. So we continue serving the copper broadband, we continue serving STFC. We continue serving the DTH components, and I'll talk about it in a second. And obviously, we continue operating those networks and operating all of our customers based on the mix of both. When you imagine that the separation is done. We're going to be serving our clients based on a mix of services that we acquired from the infrastructure company and services based on our own infrastructure. Talking about the television business and what's happening with that, especially the TV Co UPI, which was introduced at this last version of the amendment. Our key objective with that is not to get out of the content business, but it's to get out of the DTH business, of the satellite business. Remembering that when I look at what's most likely coming in the next 3 to 5 years is a sharp decline in satellite TV as a technology as broadband continues to expand very rapidly. We've been seeing that in real time. And in addition to that, the way the business was structured back in 2012, 2013 in the company, prior to all of those discussions and prior to understanding the capacity to invest that the company would face -- the issues with capacity to invest that the company would face, there are significant obligations to the satellite TV business, including the commitments to purchase satellite capacity. For -- I wouldn't say it's super long term, but mid- to long term. It goes all the way up to '26, '27. As such, what we've been selling here in the case of the TV Co is the DTH infrastructure and the DTH clients, plus as well some of the IPTV clients, but just for a detail. Because one of the key aspects of converting a pay TV business into a relatively okay business, I would say, for any player in the near future, it has to do with scale. If you're a small player, it doesn't work. And regardless if you're 1.5 million, 2 million, 2.5 million. At those numbers, the current financial structure of a TV business in Brazil are marginal at best. And this is pretty much what's happening with the exception of 2 players, right? So you have only 2 players which have a scale which goes north of 4 million subscribers. So we see a ripe space for the country to actually consolidate the TV business a little bit and to go back to scale -- to a scale that makes sense in terms of content acquisition. And this is what we've been trying to do with our IPTV business as well because we maintain, we retain 100% of the IPTV infrastructure with us. We don't sell it. We're going to retain all of the IPTV infrastructure, and we're going to continue serving our customers with our IPTV infrastructure. But we expect to benefit from a much more favorable environment in terms of content cost because that's the issue for pretty much all of the providers, except 2 in Brazil right now. And even amongst those 2, there are several discussions about what's going to happen with the cost of content and now in face of what's happening with the SEAC and the recent decisions that you guys are following now, content delivered over the Internet, even if it's akin to linear content, is not going to be subject to the cable laws. So obviously, this opens up a space, which is completely different than the past. And in summary, even by doing all of that and even by selling the assets, as we retain the IPTV infrastructure and as we retain the bundles, we're going to continue having our TV bundles as part of our residential broadband. And obviously, we're also investing in what we believe is the future, which is the OTT content. Oi Play, which was launched very successfully last year will have a capacity as soon as the market evolves to that, and it's going to evolve very, very, very soon, of having even open TV content as part of it. And this is -- when this happens, it's the beginning of the end for pay TV as we know it. And so we're simply looking towards the future and aligning what we have in terms of infrastructure and content and delivery and customer demand to what we believe is going to happen. So we're going to continue providing the content services, just not DTH, if the deal goes through. Then -- but even with the DTH, there's nothing that wouldn't prohibit us -- that wouldn't allow us, to actually provide bundles in partnership with whomever requires this because we do have a great distribution channel. We do have a great base of users that can benefit from that. So -- and in summary, that's the story.

Perfect, Rodrigo. And let me ask you something regarding the regulatory framework, right? Because one of the questions that we get most from investor is, given the current regulatory framework, where you need to -- the fixed voice concession, let's say, we will end by 2025, if I'm not mistaken, and assets will need to be returned to the government according to this. I mean we have the PLC 79 being approved last year. However, we are still waiting to see what will be proposed by ANATEL, by the government, by PSU, whatever. So there are like several, let's say, agencies and that would need to come up with something to the industry, right? And so the question we get from investors is, how this works for the InfraCo company? Given that, as you mentioned, I mean, you will be providing like the right-of-use for certain assets, but the market understand that some of those assets are related to these concessions. And therefore, there might be like a discussion on whether or not the right-of-use would be just to use those assets until 2025? Or eventually, you might be able to have a long-term contract with them.

Sure. I started to address that when I mentioned about the separation of assets that we did exactly to avoid any kind of regulatory issues at the launch of the operation. But we also don't see any issues going forward for a very specific reason. And it has to do with the approval of PLC 79. PLC 79 brought in a new article, which is 144. And in reality, this changes significantly how regulatory assets should be considered because it opens up not only the possibility, but it recognizes that what should be considered regulatory assets in any compensation discussion or return of regulatory assets is the part of the asset that is effectively used to provide the concession service. So if you have a pair with 35 fibers, 30 pairs of -- cable with 30 pairs of fiber, and you're using a fraction of 1 pair to provide voice, the only thing that has to be returned is this fraction of this 1 pair of fiber. And this, by its turn, we believe and we have been discussing this very, very intensely with the agency, that what should be returned in this case to either whomever takes the concession if there is not the migration event that I may comment in a second. Or either to the government or to whomever is required to maintain the concession, if we return it, we would have to return just the right-of-use of this capacity that could serve the concession long term. We wouldn't have to return the entire infrastructure, not at all. And this was what was made possible by the PLC, by the new telecommunications law. It has an article, again, very specifically mentions regulatory assets are those assets which are effectively used. And in case they are mixed assets, it's just the portion of the assets that is effectively used to provide the voice service. Remembering that, again, in the vast majority of cases, except for the very, very tiny capacity of transmission networks that it currently utilizes. All of the rest is pretty segregated anyway. So we're talking about voice central office switches. We're talking about pairs of copper that go all the way to customers' houses. We're talking about the distribution cabinets in the street that only serve copper. And all of that, you know what? If somebody wants to take it today, we're glad to hand it over and receive the compensation. And that's something which absolutely -- it's absolutely important in a plan and a few people understand this. The regulatory assets have to be returned if concession ends in any way, either at the concession expiry date or before that, they have to be returned. But they have to be returned, and they have to take into consideration the unamortized value of the concession assets. And the unamortized value of the concession assets, meaning everything that we invested that is not yet fully amortized. And remember that given all of the obligations the regulation requires us to invest a significant amount of money every year. There is a significant component of unamortized investments that would have to be repaid to us. When we hand over the concession, we would have to -- the government will have to repay us a significant amount of money to compensate us for the unamortized parcel of the concession investments that we did over the last 20 years. So it's a detail, but people don't realize that the unamortized part of that is really big because the concession was thought about a very long-term investment. Unfortunately, obviously, the market showed different. The market ended up saying, you know what? Fixed telephony over copper pairs is not something I want anymore, and it's not something that I will certainly want in the near future or even though in the long future. It's going to disappear. And so this is the answer to the first question. As far as what may happen with the concession itself, which I believe it's an added point which is interesting and important. It means that as ANATEL starts to understand and discuss and prepare the model for a migration proposal from concession to authorization, this is obviously an aspect which will have to be considered, which are the regulatory assets. But let's assume that they create something which makes sense from an economic standpoint, and that actually allows the company to have at least a neutral operation going forward, then obviously, we're going to apply for conversion. And then when you apply for conversion, all of this goes away and the assets become instantly property of the new authorization. On the other hand, if the -- a proposal for migration does not make economic sense. If it's something that, for instance, perpetuates a money-losing business because of -- even the authorization will have obligations, let's not forget about that. If it's something that we look and analyze and say this is going to lose money for a long time, we're simply not going to convert, and we're going to return the concession back. And then everything that we just discussed will get into play. I mean we would only have to return what is effectively used. We will have to be repaid all of the unamortized part of the investments and things like that.

Thank you for the clarification, Rodrigo, it was very clear. So look, just -- I know that we have just like a couple of more minutes. So let's switch gears here and talk about like the operation business. I mean you mentioned how you end up locking, let's say, or avoiding, I would say, using like the old legacy copper business, very focused then on the fiber business. So why don't you provide like an update on this front? I know you have quite aggressive metrics. But indeed, I mean, when we look to the market and the type of opportunity we see in Brazil, I mean, those seems quite interesting. So why don't you make some comments around that?

Always a pleasure to talk about this because this is where everything is going exactly according to plan, even I would say, even beyond what we expected in terms of our planning in terms of execution. Obviously, when we started fiber. If you recall, very, very quickly, mid of last year, mid-'19, we said we want to get to 16 million homes passed by 2022, and we want to get to a take-up rate of 25% by then. Meaning that we would have, give or take, 4 million subscribers by 2022. 4 million subscribers, remember this number. And then we started executing. A lot of people say, "Wow, you guys are doing something which is very aggressive. It's going to take a lot longer to get to this take-up rate. You're not going to have the capacity to implement this high number of homes passed, et cetera." Fast forward to July 2020 -- well, now it's September. So I may even speak a little bit farther than that. Let's fast forward to September, we're probably getting close to 1.7 million subscribers already. We're most likely going to end the year with over 2 million subscribers. We're most likely going to end '21 with close to 4 million subscribers. So well ahead of the plan. We're doing over 400,000 homes passed a month. We're connecting, bringing subscribers in, at a clip of over 130,000 subscribers a month now. And it's the fastest-growing FTTH project in the world except China. And I used to joke that obviously, nothing compares to China because of the scale, et cetera. But even if you consider India, even if you consider Asian countries which invest dramatically in broadband, our FTTH project is the fastest, the largest FTTH project outside China. And the results are coming. I mean we already have an annualized revenue in fiber, which is way over BRL 1 billion. And it was 0 at the beginning of last year, 0. We expect to end the year with an annualized revenue of over BRL 2 billion. We expect to end 2021 with an annualized revenue over -- or close to BRL 4 billion. And this is exactly where we said we would need to be for the plan to work. Obviously, with the infrastructure company, those numbers get magnified. Because instead of looking at the 16 million, and the 16 million limit was not because of addressable market restrictions, it was because of investment restrictions. But if you remove those investment restrictions by bringing a new partner, by being able to leverage the company, by being able to issue, for instance, infrastructure bonds. We look at now an opportunity to get into 32 million homes passed by 2024, so adding 2 years to the mix. And when we look at that, there is an absolutely feasible targets of just Oi alone getting to close to 7 million subscribers. And the infrastructure, including Oi and other customers, getting to over 10 million subscribers of fiber. So the numbers are really impressive, and they're working. They're really working. They're coming in as planned at the ARPUs we planned. Our quality ratings have been really, really high. Our maintenance cost is dramatically lower than the cost of, obviously, anything related to copper. We've been using even fiber to replace copper voice in some cases so we can turn off our copper equipment. So it's been very, very significant, the deployments. And obviously, this goes hand-in-hand with keeping our mobile operation with -- in good standing. Now we obviously have an M&A, well advanced. And we expect to close this, as Camille mentioned, by the end of next year. Or even sooner if the regulatory proceedings end up taking less time than planned. But even in the mobile space, obviously, with the impact of a pandemic in the middle of the way. But even with that, we've been really performing well. And last year, as I mentioned, we were the second net acquirer of postpaid subscribers below only Claro. But ahead of TIM and ahead of Vivo. This year, obviously, there was a shake up with the pandemics. Everybody lost postpaid subscribers because there was a shakeup in terms of income capacity. But now market's starting to come back. And our performance, we believe, is going to be, if not at par, above market, in terms of what we've been able to do, being obviously innovative and aggressive with some of the offers as we have the last-utilized network, so to speak. And as such, we've been keeping the 2 aspects of the company, the large aspects of the company working really well. In addition to that, there's B2B and wholesale, right? And B2B, it really relies heavily on investing for the future. We've been doing that. We now have already over BRL 1 billion run rate of IT services in B2B. We believe the B2B unit is, as part of the client company, is one area where we're going to have to -- we're going to be able to have a lot of innovation. And finally, wholesale. Wholesale has been performing well. Wholesale obviously goes entirely to the infrastructure company. But it's very different when you know that you're going to have a neutral network, than when -- and obviously, the focus to commercialize it to when you have excess capacity as part of an operator and you do best efforts to actually sell this extra capacity. Pretty much in the market, what happens today with everybody, including us or what happened in the market in our case was that this was the model: Operators have built capacity, had excess capacity eventually and tried to sell that the best effort. We're building a business based on wholesale. And so this -- we shifted gears dramatically into having very, very intense commercial operation. And after we announced the neutral network, I'm not kidding, it's incredible to see the amount of response we had from small players, from ISPs, from other carriers, of people starting to share long-term plans with us because they know what we're going to build is not going to be controlled by somebody who competes with them. So this is starting to happen already. We have set up the infrastructure company. We had created -- not created, but we have separated our activities into an independent entity, which is not even part of the RJ today. It's obviously belongs to the group, but it's not part of the RJ, and we're already executing on the infrastructure company. So on the operating side, honestly, I couldn't be more pleased at this point.

[Audio Gap] Yes.

You also need Oi fiber there.

Yes. I just realized that, yes, that I had like some connection issues here, apologies for that. But look, Rodrigo, we are also running out of time, but it was a really great conversation. Thank you very much to you both, Rodrigo and Camille, for joining us today. So I'm looking forward to see you guys in person next time.

Perfect. Well, we all hope to see everybody else in person next time. Well, let's hope that this extraordinary times actually can evolve to something better really, really soon. And thanks for having us. It's a pleasure.

That's good. Take care. Cheers.

Thank you. Cheers. Bye.