TIM S.A. (TIMS3) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. And welcome to TIM Participações conference call to discuss its strategic plan for the period of 2020 and 2022. We would like to inform you that this event is being recorded. [Operator Instructions] There will be a replay for this call on the company's website. [Operator Instructions] We highlight that statements that may be made regarding the prospects, projections and goals of TIM Participações constitute the beliefs and assumptions of the company's Board of Executive Officers. Future considerations are not performance warranties. They involve risks, uncertainties and assumptions as they refer to events that may or may not occur. Investors should understand that internal and external factors to TIM Participações may affect their performance and lead to different results than those planned. [Operator Instructions] Now I will turn the conference over to CEO, Mr. Pietro Labriola, so he can present the main messages of the strategic plan. Please, Mr. Pietro, you may proceed.

Good afternoon, everyone. Thanks for taking the time to participate in our plan update conference call. So let me comment briefly about the elephant in the room, and we can move forward to the plan. Related to the COVID-19 outbreak, I'd like to assure you that we are taking all the measures to reduce the risk to our employees, suppliers, clients and all stakeholders. At the same time, we are guaranteeing business continuity for our operations, leveraging on the Italian experience. Since the end of February, we have been implementing measures and we are broadening them as the outbreak abounds. So far, we are starting to experience some changes, but at this stage, nothing severe to impact drastically our business demand. But we cannot discard that it might happen in the future. The telco business should have some level of resilience, and considering the necessity of social distance, telecom service could play a support role for society, maintaining people productive, in addition to contact with families and friends. We are ready to serve and support Brazil if necessary. Now let's move to our plan update, which will focus on TIM Brasil's evolution and transformation. Since the summary of our plan and guidance was already disclosed last week during the group's conference call, I will make some quick remarks, and then we can move to Q&A. We ended 2019 with solid results and on the right path to transforming TIM Brasil into a 4.0 tech operator. But back to the basic mindset, supported implementation of necessary adjustment, we were able to adapt the company to new realities, maintaining our DNA of innovation, agility and efficiency. All of this has been translated into our financial figures: positive growth in revenue and EBITDA, controlled costs, margin expansion, maintaining solid cash flow and interest on capital distribution. It is time to move forward. We developed this plan update in 2 major verticals: evolution and transformation. On one side, the evolution plan to further develop initiatives already in place; on the other side, transformation plan to reshape company's skills over the next 3 years. Under this framework, we elected 6 strategic pillars for 2020-2022 plan. In infrastructure, [ follow ] the initiatives that will prepare us for the future by evolving our IT architecture and platform and by transforming our network via the implementation of new technologies. On the efficiency pillar, we will work to take our results to the next level with a broader set production both on OpEx and CapEx, but not at the expense of customer experience. In our mobile operation, as the environment is changing, the focus will be on the evolution of our strong volume to value approach, giving more emphasis on churn management, portfolio construction and ARPU increase tactics. For our ultra broadband services, we have 2 clear paths: one related to the organic evolution of the business; and the second that aims to accelerate the deployment of FTTH, transforming the contribution of this service. As the fifth pillar of our strategy, we plan to monetize better our customer base, developing new sources of revenue on 3 areas: Internet of Things, mobile advertising and financial services. Number six is ESG, a pillar that represent [ themes ] that we already worked in but not necessarily in an integrated manner. When we transform the way we approach ESG, then that will lead into our strategic initiatives, aiming to produce a positive transformation to all stakeholders. For our infrastructure, we need to act today to be ready for the future. So our plan is divided between evolution action, more focused on the short term; and transformation initiatives for the medium and long term. We plan to take our IT to the next level in 24 months through architecture and platforms review, larger use of cognitive systems and use of big data to drive a faster next best action rollout. On the network side, we have 5 major areas to develop: cope with the data growth by using new technology and spectrum efficiency techniques; to get the network ready for 5G using the technology as a tool to innovate; support future broadband growth with agnostic approach and convergent architecture; IoT-dedicated infrastructure utilizing the network for service optimization; and new initiatives to improve efficiency and decommissioning of older technologies. In the new plan, we expect to continue with the shift of traffic towards 4G network, reaching more than 90% while improving indoor coverage with the low-band spectrum and site densification. The fiber expansion is planned to support the mobile customer experience and TIM Live business to accelerate its growth pace. We are planning to expand TIM Live services coverage to approximately 5.5 million homes passed, composing 70 cities. In parallel, our transport network should grow more than 50%, growing beyond 130,000 kilometers of fiber for backhaul and backbone, reaching close to 1.5 (sic) [ 1,500 ] cities [ with the job of ] fiber. On the efficiency pillar, we plan to take our action plan to the next level with a continuous end-to-end review on how we operate while enhancing our customer experience. Four components will contribute to this goal: evolution of our processes, closing gaps and improving our results on specific areas; acceleration of digital and automation initiatives, taking into consideration characteristics of the Brazilian environment; implementation of a new make-versus-buy model focused on productivity and specialization; and the transformation brought by the smart CapEx approach in all fronts of the business. The evolution and transformation of our infrastructure and customer experience improvement will help us to further develop our positioning as the most innovative operator in Brazil while reinforcing the quality of our services. These elements will support in Brazil transition from volume to value in the mobile segment. As we reach a more mature phase of the market with residual growth, we divided our action in 3 categories: churn management that is becoming a key lever for revenue growth; meeting clients' true needs using multi-segment approach to explore opportunities in prepaid, Controle and to postpaid; share of wallet focus, looking for opportunities to generate ARPU [ upside with smart ] upsell, "more for more" approach and new customer knowledge capabilities. The ultra broadband market continue to offer growth opportunities. Fiber penetration in Brazil is below 20%, and in São Paulo, the richest state, it's below 25%. So it's important to reconfirm our strategic interest in continuing to compete in this field, but always with our financial discipline. Evolution for TIM Live needs to expand the footprint, improving operation in client-facing and back-office activities and maintaining our differentiated approach of ultra broadband and OTT content. Performing well on these fronts will lead us to grow more than 30% compound rate in the next 3 years and more than double the customer base. To transform this side of our business, we are aiming at a strategic partnership that will help balance better the equation between sales and CapEx, the creation of an infrastructure vehicle combined to continued rolling out fiber, expanding TIM Live's services without scaling significant additional CapEx while unlocking additional value for the company. As I mentioned last week, we have started a market-sound process to find the right partner to our task to create this neutral fiber company. In our plan figures, the effect of this transformation project is not included. To move beyond the core, we will leverage our assets with strategic partnership and taking advantage of the unique window of opportunity. We will explore 3 verticals: Internet of Things, mobile advertising and financial services. Internet of Things connection will double until 2022, and we plan to surf this wave developing solutions into major markets, transportation and agriculture. Together, those are more than $1 billion in size in Latin America. As of today, we are already building a solid presence in the agribusiness segment through the ConnectarAGRO partnership, with more than 5 million acres covered with 4G and more than 3,000 cities with narrowband IoT technology. In the past 18 months, we closed important contracts with major players in the Brazilian agribusiness sector. We can say that we are the leaders in this area. On the connected car front, in the following weeks, we are going to announce an important agreement with a car manufacturer to provide in-car connectivity and automation. Digital advertising is becoming every day more and more mobile. Out of the BRL 24 billion estimated for the market in 2022, 80% would be delivered through mobile. The red here show me that TIM as a Brazilian operator has a huge opportunity for gains if we manage to cooperate. TIM Brasil plans to address it in 2 ways: as a publisher using available touch point it already has and as an ad tech player leveraging customer knowledge and ownership. Today, we already generate revenues that are advertising originated, and this number in 2019 is close to BRL 190 million. We see the potential to more than double this number by 2022. In the mobile financial services vertical, we see very interesting opportunities. As it is very well known, banking services are concentrated in 5 major institutions, but the unbanked population in Brazil is estimated at around 45 million people. They make transactions that accounts for more than BRL 800 billion per year. At the same time, unique user penetration of mobile services is significantly higher than debit or credit card. So we are planning to address those opportunities in 2 ways: a partnership with a digital bank, under which we plan to combine telecom and banking services in a single proposition. We expect to leverage our customer base and channels to provide services to customer only the full banking offer. Another partnership, more focused on giving access to banking services to the unbanked population is being negotiated. We have a short list of partners, and we expect revenues on this front in the coming months. I am reaching the end of my presentation. Our guidance is already public and is a clear confirmation of the positive trajectory we started in 2016. We are going to face in the short term a not easy context. And the less it will last, the most we will have the chance to achieve our target. So we can move to Q&A. Thanks once more.

[Operator Instructions] Our first question is from Diego Aragão from Goldman Sachs.

I hope all is well with you and family these days. Some of -- my first question is related to potential M&A near term. How do you see the current situation affecting your ability to participate in future M&A? And if you can also provide like details on the structure in terms of financing in particular. Do you believe -- what will be the best structure that you believe could maximize the value for shareholders? I guess that's my first question.

Diego, this is Vicente. Thank you for your question. Thank you for your concern as well. We hope that you and your family are all right. From our side, we are all well. The first question that you asked will be taken by Pietro and then Adrian can elaborate. Thank you again, Diego.

Diego, thanks for your question. We were discussing about the possibility to have a consolidation, and we were waiting that something could be a trigger to start. So finally, with what we communicated last week, this trigger started. Related to the way to finance, I think that we have to reiterate what was mentioned by our group CEO, Mr. Gubitosi, during the last conference call last week. He told that he would support our development in Brazil. And respecting the financial discipline and the target of the group, we see that there are rooms to allow to further proceed. About the time line of this process, I was reading this morning also some report that were discussing about the possibility that everything could end by the end of December. Now what is important to understand is the actual situation makes -- can have some impact in terms of small delay about this process. But I leave the stage to Adrian to elaborate more on that.

All right. Thank you, Pietro. Diego, I would talk regarding the financing, so the second part of your question. Obviously, it's probably too soon to say. But you've been following us in the last 4 years, and the fact is that the company has been preparing to reach this moment. And we've always said that we were working on our structure in terms of financials, in terms of assets, everything to arrive to a moment like this fully prepared. Of course, now, we have some uncertainties over the last events. But just to tell you that before this couple of weeks, the situation in terms of financing was extremely positive for making everything locally and fully cash. Of course, we always have in mind the possible impact for the group. But I think that a deal of this kind could be mitigating in terms of the impact of leverage with a lot of different alternatives. So we are confident on going forward with this deal. We'll see what happens, but we think that we will have no problem on the financing side -- financial side. Then, of course, we need to understand the evolution of what we presented to Oi. And obviously, always having in mind that Oi is under Recuperação Judicial, so kind of Chapter 11 process. So -- but again, we are confident that if we do everything right, we can close this year.

That's very helpful. I guess my second question is related to your business. Can you help us walking through the main risk you see in the near term if the current situation would persist, I think, in the coming weeks and months? I know that it might be still tough to address, but it will be great just to get your thoughts on this. And outside of the COVID-19 outbreak, if you can also provide some colors on some of the new initiatives the team is taking more recently and some of the opportunities for someone like you as a pure mobile player that could eventually capture a new source of revenue going forward.

Thank you, Diego. About -- so let's talk about this current situation. First of all, it's quite clear to everybody that our main shareholder is TIM Italia. And perhaps they were among the first players that were obliged to try to understand how to face the situation. So when we discuss about business continuity of our company, we are exploiting the opportunity to use procedure and the solution that, in the last 3 weeks, TIM Italy put in place. So all our structure are in contact with the Italian team to try to exploit all the best of what they are doing. It will allow us to accelerate the learning curve. I'm personally managing the business continuity committee that is meeting per day because, in this way, we want to follow, on a daily basis, the evolution of this situation. We already started to take some decision related to the health of our employees, and we are following all the -- I mean we are putting in place all the measures that would be necessary to live on the safe side our employee, our supplier. And we're working also to understand if there could be any kind of issue related to the market evolution. So about the business continuity of our company, we are working on that, and we are leveraging the Italian experience. Related to the market, in the last 2, 3 days, first, it's important to give some statement that it's clear that it's too early to understand what can happen also because the situation also tend to get the experience of other country. If I look at Italy, Spain, France, Germany, U.S., we are facing different situation. In the last 2 or 3 days, what we are experiencing is a reduction of the flow of people in the big mall, and they can have some impact in terms of acquisition. But I think it is too early to define what can happen. What is important is that what we did in the last year to work to improve our customer satisfaction and churn management can be a defensive strategy that can help us to face the challenges that could come from this situation. I repeat, it's still too early to understand what can happen, but we are looking at a different area that can have some impact, for example, roaming. But in any case, on our revenues, it's really small, but in any case, it will be EBITDA neutral. So I think on the market, it's too early. What we can expect is a reduction mainly in the subscription, in the amount of net debt. There could come some opportunity because from a certain point of view, I think that not only TIM or the telco player but all the society will be forced to move towards a more digital environment. And in the mid and long term, it could allow to have also a leaner company in terms of cost. We are putting in place in these days several activities to reinforce all our digital capabilities, both on the marketing side and on the IT side to face a possible situation that could become quite similar to the European one. So I'll repeat, it's important to remember that in this situation, perhaps telco -- the telco business could be a more defensive industry compared to the other because in such a situation, the need to communicate, to be in touch with all the other different segments and so on will ask for more communication. But I think that if we'll have some impact in the mid and long term, we will come out stronger than before. I hope I answered your question. Or if you had -- if you need some more details, please...

Yes, that was great.

Our next question is from Leonardo Olmos from Bank of America.

My question is regarding capacity in the network. Eventually, we'll see a relevant increase in usage capacity. There is a [ great theme ] of increasing OpEx. And if you could give us an idea of how much of idle capacity you have, how much more need for expansion you have without the need to further extend CapEx. I'm talking here about 2020, eventually, coronavirus and your partnerships on [indiscernible]. So I'm talking about CapEx for this year and next year's with some -- eventually some disruption or maybe increased usage of capacity.

Leonardo, this is Vicente again. Thank you for your question. We will be passing the question to Pietro so he can elaborate a little bit on your point. And then also Mr. Leonardo De Capdeville can also speak a little bit about the situation related to capacity.

Leonardo, again, I don't want to repeat, we are looking also at what is happening in Italy to understand better how it can change the customer behavior in a -- such a situation. From this early stage in Italy, what you understood is that what is happening is that it's changing the curve of the usage. So compared to the past, what is happening is people are starting to use more also during the morning hours and the afternoon hours the network. So if the behavior of the customer will be similar to what has happened in Italy, I think that there is no particular issue. Then Leo can elaborate more on that. Leo?

Thanks, Pietro. Let's see. Are you talking about what we are facing right now and for 2020 and ahead? Now what we have discussed with our colleagues in Italy is that there was the big incremental traffic on the fixed, around 100%; and in mobile, something around 20%. But the good news is that this 20% of new traffic was not generated in a peak, but it is, let's say, spread all the day. And in fact, we have to be concerned on the network side for the peak. So what it means is that probably we will not see, let's say, any kind of emergency in the short term for this new environment that we are facing. But we are focused to see what is happening and acting [ site by site ]. When I'm talking about short term, let's say, what we are seeing is that now we are working with new technology to face this challenge of traffic explosion. If you asked me 1 year ago what was our, let's say, scenario, it was most focused on the site densification and the new spectrum. Now the news is related with the massive MIMO. To be explained, this is a new technology that allow us to have 3 or 4x more capacity on the same site using the same spectrum, specifically for 4G. So it is -- helped us to have a more accurate progress for capacity on the network because we don't need to, let's say, install this massive MIMO on the network, but in a smart CapEx concept, we can be acting in the part of the network that requires this kind of increase of capacity. And probably, it will help us so much on the next 2 years. And after that, what we expected is the beginning of the transaction from 4G to 5G and the new spectrum that probably will come for -- the new auction spectrum that ANATEL is moving and sometimes the opportunity of M&A. In resume, we are not seeing, in a short term, any kind of concerns because we have the technology to be applied to increase the capacity. And for mid to long term, we have seen a very favorable way with the new technology and the new, let's say, 5G and the new spectrum.

Our next question is from Marcelo Santos from JPMorgan.

My 2 questions are -- first, on the margin outlook, which you exposed a potential for margin increase, could you please comment on the moving parts, like the margin detractors, the parts that will help you to increase margins and just explain how they sum up together? A little bit more color there would be very helpful. And the second is the readiness of your mobile network for 5G. So if you could make a few comments. Like how are your towers connected with fiber? Other data points that could be interesting to understand this readiness level.

This is Vicente again, Marcelo. Thank you for your question. I will be passing the question related to margins to Pietro and then 5G to Leo. Please, Pietro, can you answer Marcelo? Thank you.

Marcelo, so related to the margin, it's clear that the improvement that we led compared to 2019 is mainly due to 2 aspects. The first one is related to the increase of the revenues because, with our target, we are planning to close higher than 2019. And it means that the delta revenue doesn't come with all variable cost. For sure, there's a part of that, but it will allow us to have also in, let me say, marginal way, higher level of margin for these new revenues. Then, on the cost side, every year, we receive always the same question. So in a company as TIM, how can we further improve the cost level and so the marginality? This year, we tried also to define in a better way the area on which we are going to work. So we define 4 different area. And we -- let me discuss more in terms of the cash cost that -- not only cost. First of all, we have defined area in which all by external benchmarks or by internal benchmark, we think that we are underperforming. So I don't have to hide to you that, for sure, we weren't happy about our performance in 2019 related to bad debt. So this is an area where we can recover marginality in a comparison year-over-year. Then there are some other areas as the litigation for labor and consumer litigation that in the -- that let me say, we can manage in a better way. This is the first cluster, I'm not going to list to you all the area, but with Adrian and with the team, we define on the list. The second is to continue with our digitalization process. We have to continue to increase the amount of sales on the digital channel. We have to increase the penetration of digital deal. We have to increase the penetration of digital payment. We have to increase all this kind of activity and maybe try also to increase the level of digitalization of internal process. And this is the second cluster. So the phase 1 was benchmarked -- the other one, where we are being benchmarked. The second is to continue our digitalization. The third area is more related to the possibility to do some make-or-buy decision. Here, I'm not talking about the classic approach of outsourcing. There are some areas and some activities that are not necessarily core for our business and our day-to-day activity. And there are some internal back office that can have a huge margin of improvement. How? Not outsourcing the activity and the people but looking for partners that are well trained and specialized in this area that can exploit artificial intelligence solution to allow to have further improvement and efficiency of -- in this area. Let me try to give an example. On our legal department, we have the [ office ] activity to manage of the litigation. Part of that is made internally. But if we try to develop internally artificial intelligence tool to manage and to improve this area, it will take a lot of time and we have to learn something that is out of our core activity. While we can find externally a company that are specialized on this kind of activity that can come to us with their technology and their methodology and allow us to improve and create new efficiency. And this is the third area. And the last one is the part that is -- that we defined as smart CapEx approach. It's not only related to the OpEx but also to the CapEx. The project of TIM Live, the MOU with Vivo or the use of new technology as massive MIMO are all activities that we are putting in place to improve our cash cost profile. So these are the 4 areas that we are focused on. And during the year, we will be able to give you more details about that. The point -- and then the second question was related to the 5G. Related to the 5G, we are working to be ready for the 5G. Also for the moment, it's not completely clear when it will happen. But what is important, I think that there's more a matter of industry and country. 5G is something that can be achieved if, as a country, we will be able to solve some issue. The 5G -- manage 5G means increase sometimes the number of antenna. So it means that you have to find a way in some state to install new antenna. So now I'll leave the stage to Leo to elaborate more on the technical part of our network. But 5G means a movement of your country. In the last weeks and -- I'm looking for a more current approach on this side, but we will see going ahead what will happen. Leo?

Thank you, Pietro. Marcelo, let's see. If we're thinking about the 5G, I guess that 3 elements are very important for that: the fiber to support the connection with the sites, the core that has to be utilized and the third is the access. In this direction, all our investments that we have planned in the last 3 years are focused in the north to prepare the network for the 5G. So if you're talking about fiber, the first one, we can see on the numbers it's very interesting to observe that, let's say, the main concern that we had was the capillarity of our backbone. So in 2017, we have 450 cities coverage by fiber. In 2020, this year, we will finish more than 1,000 cities reached by fiber. And in 2022, it's in our plan, we will achieve 1,500 cities reached by fiber. The second one is the backbone in the fiber. We, this year, overpassed 100,000 kilometers of fiber, and we have the fiber to the site. But we have more than 90%, 9-0 percent, of the sites served directly by fiber on the main cities like Rio, São Paulo and Curitiba. So this is the first priorities, to serve all these infrastructure with fiber. The second, about the virtualization of the core, in our plan, we are reaching more than 40 new, what we call the network data center, spread across the country to serve the new kind of virtualized software for the core. And it will be very, very important for the 5G to use the low latency aspect of the technology. And the third is the access. Talking about the access, in fact, we have to wait for the spectrum auction to decide what kind of spectrum we will deploy on our network. But all the common part that we call the BBU or the core processing on the access is already ready for 5G. Since 2018, it's part of our specification that every site that we move on the network, new or modernization, this part of a common platform has to be ready for the 5G. So we have to wait for the, let's say, expected result, but part of the work has been done in this direction to prepare the network in a more, let's say, agnostic approach to be prepared for the 5G.

Our next question is from Diego Aragão from Goldman Sachs.

Yes. No, just want to follow up on my second question related to new business and new initiatives. If you can just provide your views and your takes on how we should be thinking about TIM playing in this environment.

Thank you, Diego. I apologize that I didn't answer before to your question. So we are working on, as I stated in the -- in my speech, one key area, Internet of Things. Here, our point of view that compared to other players that today are trying to play the game of all the IT value chain, so they're often fixed, mobile, IT services to all big company, we think that we must be very focused on Internet of Things, on mobile, trying to exploit better the flexibility and our DNA of a pure mobile operator. So we are focusing on this area. And the way in which we are active is, it seems at least up today, successful because, today, we are the leader in the agro business segment to supply not only connectivity but also solution for a sector like the agriculture one that is one of the trades of the Brazilian economy. Then, by opportunity, always on the Internet of Things, as I mentioned, we are going to announce a deal with one of the main car manufacturer. We cannot disclose yet, but it's something that will happen in 2, 3 weeks. But it's another confirmation that the path and our strategy on Internet of Things is the right one. Then I don't think that this strategy will give to us huge result in terms of revenue in the short term this year. But it's really important not only for the next year but in a view that is 3, 5 years. Then let's move to the mobile advertising. And here, it's quite interesting because without go-to general statement about ad tech and the possibility that we can act as Facebook or Google, let's start from the basics, which is, from your point of view, the service on which you will never bet for a telco operator. I think that you will mention SMS because none of us is imagining that it is possible to continue to make money on SMS while if you look at your daily life, this is one of the services that we use the most. All the banks use SMS to send a onetime password to access to their application. The same OTP when you change your handset to have the confirmation that it's not a fraud. They ask to send an SMS. So we are reevaluating the use of SMS as a tool of communication, some way of advertising. And this is one of the area where we are growing the most. And to understand that, it's quite easy. Let's look at your daily experience and the SMS that you receive not for broadcast advertising but for the use of applications, a banking system or the same OTP when you have to download again the application or to use an application for delivering -- you changed your mobile. So this is another that will give us, in the short term, good result, and it is also this fast-growing one. Well, let's see, we'd want to discuss about always mobile advertising in the medium, long term, I think that we can become a kind of Facebook and Google on the mobile advertising field, helping everybody put in a disposal of the customer -- the profile of our customer, always respecting the LGPD, so the new privacy law. This is another area where I think that the industry would have to cooperate among the operators because the publisher usually don't want to buy the possibility to advertise something to the TIM customer base. They want to advertise something to people that are working on the Ipanema Beach or people that are older than 50 years old so on and so forth. Then if you look at the amount of information that ad tech operator work today, it's huge and we never explode -- exploit. The other question could be, and you could ask us, "Pietro, but how many CapEx do you need to put in place this kind of new business?" Marginal. Leo is working since a lot of time on our big data that will be always more in the cloud since a lot of times. And Alberto is really using a lot of this kind of information to do our activity. So experiencing the huge capability that this kind of profiling give us, we are intending that this is something that can be sold out with any specific CapEx increase. The last is related to the financial services. On this area, I want to be very clear. We don't want to become a bank. Bank is another industry with a lot of compliance, and we must be focused on our business. So we will work one side -- on one side trying to find a partner with which we will offer to our customer base financial services. And so it's another way to monetize our customer base and to differentiate our offer to avoid to compete with the other players just on the matter of the amount of giga that you put in your plan. On the other side, that is the lower part of the market, the prepaid. Today, just to give you a number, on a monthly basis, we have between BRL 400 million and BRL 500 million that are transferred from cash in digital, and they are put in our recharge, in our mobile handset. So what this means to transform this recharge in a kind of wallet and allow -- use that to buy something on the beach or wherever you want, it's a small step. We are looking also at what is happening in some country in Africa, where this is something that is accelerating and can give us the opportunity as an industry because this is another element -- another area where we have to cooperate with the other players, will give us another important level of stickiness and also the possibility to avoid in the future again to compete just in the amount of giga that you put in our pricing plan. I hope that this time I was detailed enough, Diego. If not, don't worry, tell me.

Yes. No, this was very detailed and very helpful, Pietro.

Our next question is from Maria Tereza Azevedo from Santander.

I would like for you to elaborate a little bit more on your strategy to unlock value from your fiber assets. I mean how do you see this neutral network building out? Would you consider selling parts of your fiber network? How do you see the regional ISP providers? And what kind of JV and infrastructure funds are you thinking about? That's it. Please keep safe.

Maria Tereza, this is Vicente again. Thank you for your question. Adrian will be addressing your topics. Please, Adrian, go ahead.

Maria Tereza, yes. Regarding our TIM Live project, it's oriented to increase our deployment on fiber to the homes without affecting significantly our CapEx level. As you know, today, our TIM Live revenues account for something around 3.5% of the total revenues. But at the same time, they have a big contribution to the growth of our revenues, almost reaching 1%. And at the same time, the CapEx that we are doing today for this kind of service are around 10% of our total CapEx. So today, you can find some kind of misbalance between the revenues -- over the total revenues and the CapEx of the total revenues. What we are looking with this new project is to allow us to continue to deploy fiber through a neutral vehicle, introducing a partner on this new company. This is something that we will be carrying on this year. We already engaged an adviser on this side. We are starting our phase of [ market sound ], which is important in order to define specifically the perimeter. We are talking here of all the last mile. We need to understand better if we can introduce installation. So I think that this will be an interesting project. We can also unlock additional value with this project. So you will hear more on the following quarters about this. Hopefully, we can close this project yet -- this year.

[Operator Instructions] Ladies and gentlemen, without any more questions, I'm returning to Mr. Pietro Labriola for his final remarks. Please, Mr. Pietro, you may proceed.

Thank you again for participating in our conference call also in this strange situation. This plan will take us in the future with solid fundamental. We will use more digital means of interaction to keep the communication flow with the financial community. For all of you, be safe and healthy. Don't forget to follow the procedure provided by the authorities, and hope to hear from you soon. Thank you.

This will conclude the strategic plan conference call of TIM Participações. Your line can be disconnected from now on. For further information and details of the company, please access our website, ri.tim.com.br. Thank you.