Redeia Corporación, S.A. (RED) Earnings Call Transcript & Summary

[Interpreted] Good morning, ladies and gentlemen. We are going to begin our earnings presentation for the first half of the year. We would like to welcome all of you joining us through this webcast. We have with us today, Roberto García Merino, who is the company's CEO; and Emilio Cerezo, who's Corporate Economics and Finance Director for the group. First, our group CEO, will give you some information about the context and the sector and the highlights of the first half of the year. And then our CFO will go through our financial results. Finally, we will conclude this presentation by reviewing the targets that we've set in our strategy and the main conclusions. After the presentation, we will have time for a Q&A. I will now hand it over to our CEO, Roberto García Merino.

[Interpreted] Thank you very much, Irene, and hello, everyone. First of all, I'd like to welcome Emilio Cerezo, our new CFO at Red Eléctrica, who's recently taken over the economic and financial management role, replacing Teresa Quirós who after a long and successful career in the company is now embarking on a new personal and professional phasing. I'd like to take advantage of this opportunity to personally thank Teresa for the years of dedication to the group, especially these last 2 years in which she has given me particular relevant support. Thank you very much for everything Teresa. Emilio has also been at Red Eléctrica for a very long time, lately as Director of Strategy and Management Control. And therefore, he has deep knowledge of the group's financial and economic situation as well as a clear understanding of our strategic vision for the future, which means that his involvement in this new strategy will be particularly relevant. And with that Emilio, I wish you all the best in this new stage in your career. And moving on to the presentation, I'm going to review the sector for the group, both in the electricity market and the telecommunications sector, both of which are undergoing profound changes in which Red Eléctrica, as we always say, has to move swiftly and resiliently as key agent in pillaring the energy transition and as a provider of telecommunication infrastructures. I will review the highlights of the first 6 months of the year, and we will share the company's results for this period with you. As for the energy sector, green transition is one of the key pillars for the EU's broad transformation program, and it is the cornerstone for our overcoming the crisis caused by the pandemic. On July 21, 2020, the Council of Europe announced the next-generation program with EUR 750 billion in funds. It's important to note that this fund is an investment instrument that has to contribute to maintain social and territorial cohesion and resilience and above all, to transform the economic model towards a greener and more digital economy. The aim is to respond to the impact of the pandemic at the same time to bring about the European Green deal towards a more sustainable future for the next generation. In addition, in October last year, the road map for green hydrogen was approved. Renewable hydrogen is destined to become a valuable energy source for -- and uses where it can be the most efficient solution in the decarbonization process. Long term, hydrogen can play a key role in energy storage from a 100% renewable electrical system, a target that we expect to achieve by 2050. On the other hand, in May this year, the climate change law was approved, which defines the framework for achieving climate neutrality targets defined by the European Union, which at the national level have been set down first in the National Integrated Energy and Climate Plan, the PNIEC. The PNIEC states that by 2030, at least 74% of electricity generation will come from renewable sources, which would mean installed wind power capacity of 50 gigawatts and 39 gigawatts of PV solar power as compared to 28 gigawatts and 13 gigawatts installed by the end of June this year. In order to achieve this goal, amongst other measures, the PNIEC's economic report defines the need for a total investment in networks and electrification of almost EUR 59 billion. An estimate at around EUR 9 billion, the investment in the transport network up to 2030. Red Eléctrica will be the key actor that will enable this enormous increase in installed power capacity in renewable energy by 2030. Moving on to telecommunications. Connectivity and telecommunications infrastructure have played a vital role in our societies during the pandemic. It was hard to imagine a scenario where there would be global lockdown where central services would continue to operate normally, [indiscernible]. Red Eléctrica professionals who have guaranteed the electricity supply and telecommunication services at all times in all the areas where we operate. One of the shortcomings we identified in this 1.5 year, the fact that we need to guarantee quality access to telecommunications to the whole of society, so that no one gets left behind so that all citizens can have access to broadband networks. Expanding our telecommunication networks and services to those territories and regions that lack sufficient connectivity is one of the major challenges our society has to face. And in this regard, European funds will enable a new scenario in which the impact of telecommunication infrastructures will become even more strategically valuable as one of the pillars for sustainable growth in the European Union and the driver for the transformation of our business fabric through technology. In the satellite sector, we have seen a profound technological transformation. The new HTS satellites are achieving unprecedented capacity through spectrum reutilization technologies. This puts them at the center on our efforts to close the digital device. The demand for data for new use cases, such as mobility, residential broadband or corporate networks will support our growth forecast for satellite broadband, which we are prioritizing. Additionally, and after many years talking about the 5G revolution and its impact on the telecommunications sector, we believe that the time has now come to roll out a much denser radio access network, where Red Eléctrica's assets will play a crucial role. Now we will look back at the most important aspects of this first half of the year. Amongst the progress of these last 6 months, I will highlight the progress made and development of the electricity transmission network plan for 2021, 2026. At the start of June, the CNMC publishes a favorable report on our planning proposal sent by the Ministry of Environmental Transition in February this year with investments of EUR 6.668 billion for that period. Also in June, the system operator presented the -- to the Ministry of Environmental transition, the development proposal for the plan, taking into account the proposals sent by the ministry in the submission period. The ministry now has 4 months to draw a final proposal and initiate the parliamentary approval process. And therefore, we expect that, the final plan may be approved before the end of this year. I'd also like to point out our investments made in the transport network in the first half of the year, totaling EUR 172 million, which is 32.8% more than in the same 6-month period of the previous year. We are doing everything possible to execute the investments defined in our strategic plan, optimizing processes so that we can accelerate the different permit and construction phases. In addition, during this period, the CNMC has approved a letter regarding access and connection of electricity facilities to transport and distribution networks. Crucially important regulation for an orderly development of renewable energy. New submissions were accepted from July 1 after moratorium, which began last June 23. In order to improve the transparency of the process and guarantee the dissemination of the information, the letter states that network managers must keep detailed information about available capabilities in there -- and capacities in the nodes of their power networks above 1 kilovolt. This in the sense Red Eléctrica organized the webinar on access and connection to explain the changes in the new calculation criteria and to present the new remote management platform that will handle new access and connection requests to the transport network. And finally, I should point out that the Climate Change and Energy Law has been approved, which takes us a step closer to achieving Spain's targets to combat climate change. This law defines several minimum national targets for the year 2030, such as achieving an electricity system with at least 74% generation from renewable energy. The ultimate goal is to achieve an electricity system that will be 100% renewable by 2050. The achievement of these targets will require major efforts on the part of companies in the sector and particularly for Red Eléctrica, which is taken on a central role as the backbone of Spain's energy transition. The law also states that Red Eléctrica must carry out a risk and opportunities assessment every 2 years connected to a decarbonized electricity system. Other highlights related to the company's diversification with significant progress in the first 6 months of the year in our international business and in the definitive consultation of our telecommunications business. In recent months, we can highlight 3 major milestones in these efforts. First, the agreement between Hispasat and Media Networks, Latin America, which is a Telefónica subsidiary to acquire the signal management and transmission business, strengthening our position as a leading operator in video data. This action is the first step of our 2025 strategy aimed at turning Hispasat into a satellite services and solutions company and has contributed almost EUR 4 million to the company's consolidated EBITDA since it was incorporated into our perimeter at the beginning of May. Also at the end of June, the U.S. export import bank approved a loan of $80.7 million to Hispasat. The loan will be used to fund and ensure the launch safety and initial orbit operations of the Amazonas Nexus satellite. The launch is scheduled for the end of 2022. Additionally, and with respect to the potential divestment of REINTEL, the CNMC has issued a decision of the procedure for issuing a binding legal decision with respect to the contracts on the use of fiber optic networks between Red Eléctrica and REINTEL. The CNMC ruling established the certain conditions to guarantee that the fiber network allocation, which is crucial for the transport operation complies with legal requirements. And specifically, Red Eléctrica and REINTEL have to adopt certain contractual clauses so that the use of the fiberoptic network needed to operate the transport network and the electricity service will be fully prioritized. And finally, and guaranteed in our international diversification efforts, I should highlight that last June 17 -- the 220-kilowatt Centinela substation entered into operation in Chile. The substation will improve the transmission network in the area and integrate new renewable energy projects. Likewise, in Chile, we are undergoing a regulatory review process which takes place every 4 years and which involves a part of the group's assets in the country, which we will give you a full report when the process is completed. Another highlight, the fact that in June this year, European Commission approved the recovery transformation resilience plan presented by Spain for EUR 140 billion in direct transfers and credit for the period 2021-2026. This tremendous volume of funds creates an extraordinary opportunity for our country comparable to the economic transformation that took place when we joined the European community in the 1980s or when the European cohesion funds were created in the mid-1990s. This plan will allow us not just to reactivate the economy and recover employment, but will also facilitate the modernization of our economy so that our recovery will be green, digital, inclusive and social. During its implementation, structural transformation and reforms will be implemented with the goal of transitioning towards a carbon-neutral sustainable, circular and environmentally friendly economy. And [indiscernible] will be a in the use of resources. And very proud to announce that in the approval ceremony for this recovery plan, the President of the European Commission and the President of the Spanish government visited our Electrical control center, highlighting the role of the electricity system will play in the plans implementation. As you know the recovery plan has 4 pillars: Ecological Transition; digital transformation; gender equality; and social and territorial cohesion. Therefore, based on these pillars, Red Eléctrica has developed 14 proposals around basically 3 of these pillars: network of electrical transport and operation of the system; telecommunications; and the environment. As for the company's commitment with sustainability, we have significant milestones in this first half of the year, including the issuance last May of a green bond for a total amount of EUR 600 million for a 12-year period. The funds obtained from this bond will be used to refinance or fund electrical projects as part of the Red Eléctrica green finance framework in Spain. Underscoring the crucial role that the financial sector is playing in the transition towards a sustainable future. Furthermore, together with Endesa and [indiscernible] Red Eléctrica has been leading the contribution and transparency report ranking, which analyzes transparency or disclosure and good governance practices amongst the Ibex 35 companies in terms of public information on their fiscal responsibility. In addition, the Red Eléctrica Group has expanded its addition to the diversity charter for the period 2021-2023, in recognition of its commitment with equality and inclusion policies within the group. And finally, we should point out that in the general shareholders meeting that took place last June 29. A new long-term incentive scheme has been approved to drive energy transition, reduce the digital divide and improve diversification. In order to set the targets linked to this incentive scheme, the Appointments and Remunerations Committee and the Board of Directors have taken into account, amongst others, the horizontal sustainability strategy incorporated in the Strategic Plan 2021-2025, alignment with the group's commitment with sustainability, its sustainability policy and the UN's 2030 agenda for sustainable development. Post compliance by the Group is monitored by the company's sustainability committee. And I'd now like to hand it over to our CFO, Emilio Cerezo, who can review the results for the first 6 months of the year. Emilio?

[Interpreted] Thank you very much, Roberto. Let's have a look now then at the results we've achieved over these 6 months. I'd like to begin mentioning the strong performance achieved by the Grupo Red Eléctrica in a year marked by lower revenues in electricity transportation business in Spain due to a more restrictive regulatory framework. Against this background, the earnings for the year have grown by 8%. This was mainly driven by 3 aspects. Firstly, positive results from diversification in our businesses. Secondly, cost containment and finally, the reduction of financial costs due to better interest rates obtained in our financing. Earnings for the period have increased by EUR 5.5 million compared to the same period of the previous year. That's equal to a slight increase of 0.6%, standing at EUR 991.4 million. As I've already said, the positive effect from the diversification of the group can be seen in this slide where we show the contribution of the different businesses to the increase of its income in the first 6-month period. The revenues from the TSO in Spain have declined more than EUR 8 million. This is mainly due to the reduction in the rate of financial remuneration, which had gone from 6% in 2020 to 5.58% in 2021. It will probably continue at around about this level until 2025. International and electrical transmission has returned to an increase close to EUR 5 million, mainly due to the increased results returned from our operations in Brazil through the holding in Aragón. Since in 2020, it only contributed to the results in the second quarter, having been purchased or acquired in March 2020. Likewise, revenues corresponding to our activity in Peru and Chile performed favorably in line with our strategy plan and they will progressively increase as the projects currently underway are completed. The satellite business has contributed to turnover as well with an increase of EUR 5.4 million. This increase is mainly based on the following aspects. The acquisition of the signal management and transport business of media networks in Latin America and the increased organic growth of Hispasat and Hisdesat, its subsidiary, through new contracts and contract renewals. Both aspects have offset the unfavorable performance of the exchange rate, which brought about decreased income in the amount of EUR 2.8 million in fiber optics. We've also seen a contribution to an increase in income of EUR 0.5 million additional through organic growth. Looking at our EBITDA, you can see the improvement of the EBITDA margin, which is 79% compared to 78.4% in the first 6 months of 2020. Based on the increase in the EBITDA, the net profit of the first 6-month period shows an increase of 8%, mainly based on the reduction of financial expenses from lower interest rates on the new financing. And the diversification of the group shows positive effects in all businesses, EUR 4 million in the international business, EUR. 5.5 million in the satellite business and EUR 1 million in fiber optics. Likewise, EBITDA improved EUR 3 million due mainly to nonrecurring costs incurred in 2020 related to COVID. I also want to show the effort that we've been making to contain operating costs in all the group activities. This has meant that practically all the increase in revenues has passed on to an increase in EBITDA. This aspect is reflected in the improved margin in EBITDA, which is 79% compared to 78.4% in the first 6 months of 2020. Now let's look at net profit. Based on the increase in the EBITDA that I've already mentioned, net profit for the first 6-month period shows an increase of 8%, mainly based on the reduction of financial expenses from lower interest rates for new financing and also our ongoing search for overall financial efficiency. As can be observed, all the group businesses have contributed to the increase in net profit. Although it's worthwhile mentioning once again, the contribution made by diversification. A particular note is the increase in income returned by the satellite business more than EUR 14 million and the international business, about EUR 8 million. Likewise, in fiber optics, we see an increase of EUR 2 million. Continuing with our commitment to making the group's results easier to understand, this slide provides a summary of the main income items. EBITDA and the net profit from the different businesses in the group. In line with the comments made earlier, we can clearly see the high growth rates in these figures for the satellite and international businesses, which allow us to offset the performance of the TSO earnings in Spain. Likewise, we can also see on this slide, the slight increase in the weight of unregulated businesses in line with the group's diversification strategy. As a result, revenues from the TSO in Spain have taken a slight backseat in terms of waiting to the telecommunications infrastructure business, which in the first half of 2021 represents 16% of total turnover and 15% of EBITDA. Even so, the national TSO continues to account for 80% of the group's EBITDA. Let's now have a look at the level of investment achieved during this first half year. Investments made by the group over the first 6 months of the year, amounted to EUR 252.8 million, investments in TSO in Spain were EUR 183 million that's 72% of total group investment. I'd like to highlight that investment in the national transport network has increased by 32% against the previous year. This was the result of our efforts to improve the execution dynamics of our investments. And all of this has happened while we were waiting for the approval of the plan as mentioned before, by our CEO, which is a basic condition for the notable increase in investment for upcoming years. International transport investment has increased to EUR 15 million in line with our forecast. The telecommunications business investment has been EUR 46 million. We're advancing in accordance with the forecast for the Amazonas Nexus satellite development. The remaining EUR 8.3 million correspond to diverse investments related to a new data processing center, cybersecurity, information systems, a search for innovation through start-ups, et cetera. Now let's move on to discuss the performance of our financial debt. As of the 30th of June 2021, we've reduced net financial debt by EUR 343 million through the positive evolution of operational cash flow, which stands at EUR 809 million. Its performance has been based on 2 key aspects: the generation of an FFO of EUR 653 million and the excellent performance of our working capital as a result of greater collections from the transport rate and the efforts made to optimize working capital from the unregulated businesses. Taking this into account, investments made and dividends paid out, the net financial debt stands at EUR 5.771 million at the end of the period. We can now focus on the financial debt structure. In the next 4 years, the group must tackle maturities of approximately EUR 3 billion. This amount is covered by our liquidity position, which is currently slightly higher than this figure for the maturities. Nonetheless, as we show in our strategy plan, we're expecting that there will be new additional finance requirements as our investment volumes increase. If we look now at the structure of the debt by instrument, we can see that we have a strongly diversified debt with 85% at a fixed rate until maturity and a clear prominence of the euro over other currencies. The average life of the debt is 5.7 years at the moment with an average cost of debt of 1.53% as compared to 1.93% for the same period of last year. Finally, and in line with our commitment to maintain a sound credit rating, I'd like to highlight the strength of our balance sheet with a solvency ratio, FFO to debt of 21.5 % and a net financial debt-to-EBITDA ratio of 3.7x. Now our Chief Executive Officer, will present the main conclusions of our 6 monthly results.

[Interpreted] Thank you very much, Emilio. I'd like to end the presentation with a quick summary of some highlights. First, the progress made and investments in the transport networks as well as in the approval of the transport network plan 2021-2026, which we hope will be completed before the end of this year. Secondly, we believe that this first half year has been a successful one. We've managed to absorb the impact of the reduction in the financial rate of return for the electricity transport assets in Spain, offsetting it with the strong performance of our telecommunications and international businesses and through operational and financial efficiency measures. Other notable aspects include the fact that our financial structure with very solid solvency ratios has been appreciated by our credit rating agencies, which in March confirmed the group's rating as A- with a stable outlook. And finally, we fulfilled our commitment to our shareholders, distributing a complementary dividend last July 2 of EUR 0.7273 per share, which added to the interim dividend of EUR 0.2727 per share. We paid out on January 7 brings to EUR 1 per share, which we had announced in our payout policy. And finally, to close the presentation, let me just quickly review the main objectives of our strategy, which we announced in February. The investment level for 2021-2025 will be EUR 4.4 billion, of which 75% will be allocated to the transport network, system operation and storage in Spain. In a context, defined by decline in revenues from our regulated business in Spain in 2024, the company will maintain its solid credit rating with the commitment to maintain an FFO to net debt ratio above 15% and a net debt-to-EBITDA ratio of under 5x. As for our EBITDA margin, it will be above 70%. In addition, we will maintain a payout of EUR 1 per share in the period 2021-22 of at least EUR 0.8 per share in the period 2023-2025. As we've been discussing throughout this presentation, Red Eléctrica will be the backbone of Spain's energy transition with a strong investment plan defined by the PNIEC and the 2021-2026 infrastructures plan. Furthermore, boost given by our strategic plan to our telecommunications and international businesses since will enable the group to grow in 2025 and be in an optimal position to return to a path of growth in its main metrics. In this sense, the results that we presented today are the first step towards achieving those goals. Now that we have finished the presentation, both Emilio and I will be delighted to answer any questions that you might have. Irene?

[Interpreted] Yes, hello, again, everyone. First, we're going to take questions coming in over the phone. First questions that will be asked in Spanish and then question asked in English. And finally, we will move to the questions submitted through our website. The first question, is from Javier Suarez from Mediobanca.

[Interpreted] I have 3 questions. First, about the national energy plan or the national infrastructure plan, which has defined a total of EUR 9 billion in investment, which would be EUR 900 million a year. But this year, you're going to invest a lot less. And so I'd like to get some indication of what your CapEx might be for 2021. And whether you think that once the PNIEC is approved, it should make all the difference for structural acceleration in investments up to that level of EUR 900 million a year or whether it's going to be more complex than that. Can you help us understand what should happen in order to bring you up to that level of yearly investment. So I'd like the CapEx for 2021 and also some guidance on the EBITDA, net income would be very welcome, too. And my second question, our stock pile -- what Red Eléctrica said about hydrogen during the presentation, I was wondering if you could give us your take on how the electricity sector and the gas sector can align in the future in order to contribute to decarbonization because I think the fact that the operator of the electricity network is speaking about hydrogen as a significant driver of decarbonization is significant, and I'll hear a bit more about that. And the third question is about the company's margins. When you presented your strategy at the end of February, you said that EBITDA margin for 2025 would be around 70%. But I think you've said today at the end that it would be above 70% and your EBITDA margin, in fact has not worsened, but has actually improved. And so could you give us some indication of what your prospects are for your EBITDA margin up to 2025? And whether that guidance that you gave of 70% might actually be too conservative?

[Interpreted] Fine. Well, Javier, first of all, I'd like to thank you for those questions. As for the investment plan, I think there are several prices here, which we should clarify. First, there's the reference in the PNIEC of the EUR 9 billion, that's up to 2030. So that's a different time line. And then we have the national infrastructure plan. That's for 2021-2026, which is currently, as I explained in its final stages and should be approved before the end of the year. And in the latest draft that the CNMC has looked at investment figures were over EUR 6.6 billion, but that's for the period 2021-26. As for our group, for Red Eléctrica, we're probably at the most dark point because we're just seeing the end of a planning period and waiting for the next plan before we can start to execute the projects that are in that new planning framework. As you will have seen from this half year's -- first half year results, the company has made an effort to increase its investment level, up more than 30% with respect to last year's. So we're taking steps to speed up the permit and execution process. As I've explained before the permit process in Spain is very long, and it does include some milestones that we're trying to optimize. There's a very relevant milestone, which is the approval of the plan. And so we believe that since our goal for this year is to exceed the investment level we had last year on the transport network. That was our goal for this year. And again, it's a delicate year because, again, we are seeing -- at the end of one planning period and still waiting for the next. But we think that once the new plan is approved, which is obviously a relevant milestone. We believe that in a period of 2, 3 years, so 2024, 2025, the company will be at a cruising speed of over EUR 700 million, EUR 800 million investment a year. And beyond that, '26, '27, the company will be investing at a much higher level. So we are at a difficult point, the company is making significant efforts to speed up its volume of investment, and we think that in the period 2024-2025, once the plan is in place and approved, we will reach significant investment volumes. In fact, we're already getting ready to speed up and bring forward some of our initiatives since we expect that plan to be approved before the end of the year. As for hydrogen, it is an area which is still under development. Probably not yet mature enough by Red Eléctrica's vision as operator of the electrical system. We believe that it is another alternative to implement the PNIEC and the indication of renewable energy sources. So we will keep working on cooperating for the deployment of hydrogen facilities, green hydrogen in this case. We think that coupling with the gas sector could be an additional advantage for a more orderly neutral and faster deployment of hydrogen in the national system. But in this case, of course, we will have to follow the ministry's guidelines, and there's still quite a lot of regulatory development to come. And so we think, while the company is in favor of integrating green hydrogen into the system in order to achieve the PNIEC's targets as a neutral infrastructure operator and TSO, we are, of course, open to facilitating the ministry's guidelines for the deployment of green hydrogen in Spain. And finally, about the EBITDA margin, as Emilio has pointed out, this year, we've actually seen an improvement on our operating margins with significant effort and cost containment as well. I think the snapshot for 2025 or the prospects for 2025 will require various milestones in 2024, and that will affect 2024 as well. There's going to be a relevant adjustment of the remuneration for our regulated business in Spain. That's going to be a significant impact, which cannot be fully offset with greater operational efficiency. And so clearly, that impact on our revenue will affect our operating margins, and that's why we expect that medium term in the period between 2024 and 2025, the EBITDA margin will fall to 70%. That's our target. And the trend up to that year, well, in the period 2021, 2023, we will be seeing a slight drop towards that 70% level. And then in 2024, we will see a relevant impact because of the fall in our regulated business revenues in Spain.

[Interpreted] I'd just like to add to what Roberto was just saying, of course, you're aware that from 2024, there's going to be a significant decrease in transport revenues because of the end of the useful life of our pre-'98 assets, which will be partially offset, but not at all in full by better remuneration for maintenance of precisely those assets, which are becoming older and the regulator will therefore increase our maintenance revenues for them.

[Interpreted] We couldn't hear that. Can you repeat? The next question from Javier Garrido from JPMorgan.

[Interpreted] I've got 3 questions. The first one has to do with the acquisition of Media Networks. The contribution you're expecting, is that in line with what we've seen over these first 2 months? Or is there anything that might distort the contribution, making it greater or lesser in the next quarters. And I don't know if you've mentioned it, but what's the cost of the acquisition? My second question is linked to your investments. I don't know if you answered Javier's question about the level of investment that you're targeting for 2021 in the TSO. And then added to that, could you give us a bit more color about the investments that you're making now and have made over the last years. What kind of contribution are they making to increasing the remunerated asset base? And how much contributing to work in progress? Just so we can get an idea of exactly how the regulated asset base is performing? My final question has to do with 2021. I think I'm right in saying that in the graph you showed, looking at expected EBITDA for the strategy plan for 2020-2021. The buzz you have for EBITDA suggested a drop in EBITDA year-on-year. However, in the first half year, EBITDA grew 0.7%. Can you make any comments about that? Can you give us guidance for the year? What do you think EBITDA for the whole year? Will it be similar to last year? Similar to what we've seen in this first half year? A bit more color on that, please.

[Interpreted] Thank you, Javier, for your questions. Regarding the Media Network deal. Well, I think it's excellent news for Hispasat. It's the first step towards implementing the new strategy plan, which established the transformation of the company with guidelines with the structure management, moving on to the incorporation of new services and adding to the group's management capacity. So this is the first step. Media Networks is a subsidiary of the Telefónica Group, the operator of telephone content in Latin America. They have recurring business, so the impact we've had from May of that EUR 5 million in revenues. You can extrapolate that to the rest of the year. This business is relatively stable. And then the amount, it was relatively low given its strategic relevance for Hispasat. The acquisition prices were below $10 million. So I think it was an excellent deal for the group, an initial step to implement the strategy plan that we have for the company. It's being rolled out very -- in a very agile manner and the impact, as you saw, was frankly positive. And then investment for 2021 in the transport network, I think we should answer that. The target is to go beyond the level of investment we had last year. And I should point out, we're talking about especially delicate year, because we are ending on planning period and waiting for the next plan to be approved. So we're taking measures to speed things up and to get ready for the next plan. Thinking of the target of getting the plan approved before the end of the year. And our objective is to go beyond that benchmark that we got in capital outlay in investments last year. And then our asset base. In the strategy plan, as we said, we're going to be developing investment projects of great relevance in the storage -- in [indiscernible] and then the interconnection with France, the potential interconnection between the islands and accumulate a relevant volume of work in progress. Once the period is over in 2025, that will accumulate about EUR 1.5 billion pending the possibility of bringing everything online in '26, '27. As we see this work in progress accumulating over the years, we can expect to reach those levels for 2020-2025, EUR 1.5 billion including the investment being made in [indiscernible]. And then EBITDA and the guidance for 2021. I think maybe Emilio could give you more color on that.

Yes. Thank you, Javier, for your questions. regarding the performance of EBITDA. It is true, as we saw that apart from in regulated TSO business, we've seen positive performance normally higher than our expectations. And we expect that in the second half of the year, it should continue on a similar line to what we've seen in the first half at group level because of certain seasonality in operating costs that we have. We expect that the TSO level will be multiplied by 2 because of the higher costs,which normally occur in the second half o the year. But in the rest of the businesses we think our activities should show similar performance to what we obtained in EBITDA for the -- in the first half year. And will continue to report excellent performance from these businesses both in terms of their contribution to new revenues, but also the contribution to cost containment that we've already mentioned.

Next question is from Ignacio Doménech from JB Capital.

Thank you for answering my questions. First, about the recent announcement by the CNMC with respect to the use rights by Red Eléctrica being transferred to REINTEL. Could this imply a potential delay in the divestment of a minority stake in REINTEL?

Well Ignacio, thank you very much for that question. Actually, as you well know, the CNMC, as part of its -- of the internal review process that is underway for that potential divestment of our minority stake in REINTEL. Asked us various questions, basically, in order to guarantee the use of certain fiber pairs that are used for the management of the electricity system by Red Eléctrica and to guarantee exclusive allocation to the service. And that's obviously something that is the group's greatest priority to have a secure environment for the management of the electricity system. And so the final outcome as the CNMC announced is the reinforcement of some of the provisions in the contract losses in order to guarantee just that the exclusive use of part of that fiber network for the electricity system, the guarantee, ad service in the electricity system. And that's, of course, part of our core business. So there's no problem with that. And of course, it's not going to delay the process. I think, in fact, it might even speed it up because the CNMC in the context of potential divestment has been reinforcing some of the conditions for the use of the fiber network, which, of course, we support and will make sure are strengthened in those clauses, and we'll continue to work to move forward with that process, which we will start to manage over the coming months. So I think it's good news. And it does, I think, confirm the CNMC and Red Eléctrica's commitment with guaranteeing the security of the electrical system. This is just another example of that. And the REINTEL process is still undergoing the internal review in Red Eléctrica and probably in the next months, we will be moving forward with the execution of the process.

[Interpreted] No more questions here in the Spanish room. But now we'll take questions from the English room.

[Operator Instructions] The first question comes from Harry Wyburd of Bank of America.

I've just got 2. The first is just a follow-up on the REINTEL disposals. You mentioned that you could be moving forward with that in the next month. And do you think that means that we could see some actual formal announcement by the end of the year? Or do you think that's more likely to be a 2022 transaction? And then can you give us any kind of color on what amount of stake you might be looking to divest here? I mean, presumably, you're going to want to maintain control. But does that mean we can have anything up to a 49% stake sale? Or do you think it will be lower? And then secondly, I just wanted to see if I could get some kind of guidance from you on one of the figures on Slide 28. You mentioned a 70% EBITDA margin by 2025. I don't know whether I will be lucky here in terms of you being able to clarify, but I wondered if you could give some kind of idea of what revenue number we should be using in 2025 for that 70% EBITDA margin?

[Interpreted] Thank you very much, Harry. Well, REINTEL, as you well know, this is one of the alternatives, the operations we were looking at in our strategy plan for 2021-25. So it's part of the actions we wanted to do within the scope of the plan covering those years over the last few months. We've been working in-house internally looking at the potential deal and getting everything ready to get the process going at the right moment. At the moment, we haven't got any clear idea of when we might be able to launch it. But obviously, we're working internally to get everything ready and to get going at the strategic moment when it makes sense. It's part of the strategy plan, but there isn't a specific date yet set in order to execute the process. And then the percentage of sales we need or revenues. We said it would be a majority stake about -- well, 40%, 45% probably would be the range for the stake which potentially would be subject to sale. And then the target we had for the strategy plan for 2025, this EBITDA margin of 70% there, evidently, it will depend on the performance of all the different businesses that comprise the overall revenues for 2025. So we have got this as an internal goal for 2025. And as we roll out our strategy plan bit by bit, we'll see over the next few years, what's happening, and we'll be able to give you clearer, more definite guidelines. But we are clear about the targets. We have added other targets as well, announced 4 different businesses, but then we have to see how we roll out the strategy plan, and then we can give you perhaps some more figures, which will help you to get more clarity in seeing exactly how the company is performing.

[Interpreted] Well, it seems that there are no more questions over the phone. If any more come in, we'll go back to that. But in the meantime, let's read out the questions that have come in over the webcast. One from Antonella Bianchessi from Citigroup, which says in the case of your balance sheet and solvency metrics, why is the company committing to such strict metrics? What's the benefit of having such a solid balance sheet versus your peers? Antonella is also asking what the expected CapEx will be for the end of the year, but you've actually already answered that before.

[Interpreted] Okay. Well, as you all know, we have a strong commitment to maintaining a sound credit rating at the moment and for the next few years, the volume of investment that the company will have to make the energy transition possible is quite high as the CEO said, that EUR 9 billion in the Energy and Climate Plan and then all the infrastructure's plan as well with all its investment will mean that we'll have to be very careful about the way that we are financing ourselves, and we need to have sound financing ratios to maintain our credit rating at investment grade. And that entails competitive financing costs for us. Our commitment is demanding. And I think that's been shown in the strategy plan that you know very well. And we have established our commitment to respect those figures that we gave you. Using all necessary measures to do so, issuing hybrids. As you well know, we've been discussing that with many of you, et cetera, et cetera. But really, our commitment to have sound financial ratios is there, and we will continue to deliver against them.

[Interpreted] Well, that's all the questions then that we've received in today's session. And I think that we can now bring this presentation to a close, thanking all of you for your attendance and wishing you good summer. And I just want to add that I've been speaking to some of you, with others, I haven't had the opportunity to do so, but I will be over the next few days, but I know you'll have some responsibilities here in the group. And my coordinates will be the same. So we'll be working closely together. So I want to thank you for all the work you've done over the last few years. It's a constant challenge, isn't it? But excellent job done I'd say and it enables us to get better every day. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]