Daniela Torras - Head, Investor Relation Daniel Aboumrad - CEO & Director Carlos García Moreno - CFO Oscar Von Hauske - Chief Fixed Line Operations Officer & Director

Amir Rozwadowski - Barclays Bank Rodrigo Villanueva - Bank of America Merrill Lynch Julio Arciniegas - RBC Capital Markets Matthew Niknam - Deutsche Bank Diego Aragão - Goldman Sachs Group Andre Baggio - JPMorgan Chase & Co. Daniel Federle - Crédit Suisse Walter Piecyk - BTIG Leonardo Olmos - Santander Investment Securities Arturo Langa - Itaú Carlos Legarreta - GBM Cesar Medina - Morgan Stanley Richard Dineen - UBS Investment Bank

Thank you. Good morning, everyone.

Thank you for joining us today to discuss our operating and financial results. And we have on the line, Mr.

Daniel Hajj, Chief Executive Officer; Mr. Carlos García Moreno, Chief Financial Officer; Mr.

Oscar Von Hauske, Chief Operating Officer. And please -- I'd want to remind everyone that you can follow our presentation and our webcast link, which you can find on the América Móvil's website.

Thank you, Daniela. Thank you, everyone.

Thank you for being in the call. Carlos is going to make summary of the second quarter financial and operating report.

Thank you, Daniel. Good morning, everyone.

Well, early in the second quarter, strong employment numbers in the U.S. and some early signs of price increases, including from salaries and wages brought about renewed concerns about inflation and the interest rate increases that would become necessary to stop it.

10-year U.S. bond yields surpassed 3% in April and reached their highest level in nearly 7 years.

A widening yield-differential versus other countries led to an appreciation of the dollar versus most currencies, with the dollar gaining 5.9% versus the euro, 7.6% versus the pound and 8.1% versus the Colombian peso from April 18 until the end of the quarter. The Mexican peso and the Brazilian real were also affected by this process, but even more so, the dollar gained 10% against -- and 14.7%, respectively versus those currencies on account of local events, basically with the reelections.

We added 1.1 million postpaid net subscriber additions in the second quarter, twice as many as last year, including 537,000 in Brazil, 184,000 in Mexico and 103,000 in Colombia. On the fixed-line platform, we gained 275,000 new fixed-broadband accesses, of which 2/3 came from Brazil and Central America.

Our postpaid base was up 8.1% year-on-year followed by fixed-broadband accesses that increased 5.0%. We have continued to reconnect mobile prepaid clients with our base of prepaid coming down by 3.1%, particularly the access from [indiscernible] practically stabilized after several quarters of net disconnections.

Revenues of MXN257 billion were up 3% year-on-year -- 3.2% year-on-year in Mexican peso terms, with service revenues rising 2.0% at constant exchange rates, in line with the pace observed in the prior quarter. EBITDA totaled MXN72 billion.

At constant exchange rates, it was up 4.5%. Postpaid revenues on both prepaid data and fixed-data revenues have all converged [indiscernible] slightly higher than 5%, as you can see in the chart.

In Brazil, postpaid service revenues continued to accelerate, our big fixed-broadband revenues. On the positive side, we are seeing a leveling off of PayTV revenues after seven quarters of declines, down about mostly by disconnections of DTH clients that were very much affected by the severe economic downturn in the country.

So continuing to grow very well in postpaid, growing even better in fixed-broadband and now leveling off in PayTV. Service revenue growth in the mobile space was remarkable both in Brazil and Mexico, 11.9% and 8.7%, respectively.

In the U.S., TracFone's revenue growth turned positive again after seven quarters of decline, as you can see in the chart. On the fixed-line platform, Colombia and Ecuador delivered the better rates of service revenue growth.

Mobile ARPUs stood up by 14% in Brazil, 9.4% in the U.S., 7.3% in Mexico and 7% in Ecuador, declining 2.7% in Colombia and 12% -- 7.6% in Peru in the midst of very intense competition and sharply lower interconnection rates. While our EBITDA margins remained at 28% same as last quarter on the prior year.

Chile, Brazil and Mexico saw EBITDA margins rise 3.7, 2.5 and 2.0 percentage points from the year-earlier quarter. Whereas in both the Dominican Republic and Colombia, margins increased 1.1 points.

In Central America, the margins were down three points, mainly because of the resolution of an old interconnection dispute with one of the operators. In Puerto Rico, although the margin is still below that of a year ago, there has been a steady recovery of margins from minus 3.5% in the fourth quarter to 9.5% in the first quarter and 13.6% in the second quarter.

Now in Mexico, EBITDA jumped 14.9%, it's its best annual increase in nearly 11 years, with more operating leverage coming from the continued recovery of service revenues, as you can see also in the chart. Our second quarter operating profit of MXN32.5 billion, and comprehensive financing costs of MXN32 billion mostly on account of foreign exchange losses arising from the depreciation of Mexican peso versus the dollar resulted in a net loss of MXN236 million for the period.

Our operating cash flow in the six months to June allowed us to cover capital expenditures of MXN57.1 billion, reduced our net debt by nearly MXN15 billion, including the payment of the hybrid bond of Telekom Austria that was carried as equity in their books, and contributed MXN11.6 billion to our pension funds, mostly Telmex. At the end of June, our outstanding net debt stood at MXN617 billion, which represents a reduction of MXN11 billion relative to December.

Again, Telekom Austria hybrid bonds have been considered to be debt at that point. Well, with that, I would like to turn the floor back to Daniel, and maybe we can begin the Q&A session.

Thank you.

Thank you, Carlos. We can begin the Q&A session.

I'd like to focus on Mexico, if I may. If we think about EBITDA growth within the region, it seems like you're continuing to deliver EBITDA growth, but perhaps the margin expansion has not been as big as anticipated given the recovery in service revenues.

What do you attribute that to? And then the second question is, with the election now behind within the country, are there any signals of any potential changes that could happen from a regulatory perspective or anything that you folks are paying close attention to?

Well, on Mexico. Talking a little bit about Mexico, I think, Mexico is stable under a lot of competition.

We are still with a lot of promotions in the market in the mobile and also in the PIC side. So talking a little bit about the mobile.

ARPUs are growing because we are giving a lot more data in our promotions and people are using more data and whatnot and that's the reason why ARPUs are growing. Service revenues also are growing, as you said, and I think margins are growing also.

So we have been competitive in the last three years with this big promotions, so we want to still be competitive and don't, let's say, change our strategy and move more on an EBITDA side than on the share of market and on the service revenue and on all of that. So we still want to be competitive.

We have a very cost-cutting program in Mexico, and I think that's one reason. And the other one also in the PIC side, we are -- things are -- the revenues are not growing as we want to grow, and also margins are declining a little bit.

So that's really the reason why our consolidated margin is not going as high as we want. But in the talks about Mexico and elections and new government.

Well, what I think is that we just recently have a new telecom law, maybe six years ago. So I don't think there's going to be big changes on that.

We are one of the countries with the price -- lowest prices in Latin America, maybe in the world. So in terms of prices, we're very competitive.

And I think this government, in my view, and what I'm reading is that they want more coverage and to give more internet to all the people. And I think it's good and also it's going to help, they're going to drive more -- they can bid and do rules to increase a little bit coverage to give more Internet and to give more service to all the people.

So I think -- and what my view is that this government is going to try to expand all the coverage in Internet in all the rural areas and all of that. So mainly this is what I see.

In Mexico, mobs are still growing 10%, megabytes of use 40% it's that -- we are growing in penetration, but still we have a lot to do in prepaid. In prepaid, there is still a lot of penetration with smartphones that we need to do.

And as I said, we're going to continue our cost control, not in Mexico, in all Latin America, we have a big target to deliver this year on cost control.

My first question is related to Brazil. And I was wondering if you could share with us why it is driving such strong wireless service revenue growth acceleration?

It was 12% year-on-year this quarter compared to 8% last quarter. We find it particularly strong considering that team probably are growing wireless service revenues in the low- to mid-single digits.

So I was wondering if this has to do with reclassification of revenues and more to value-added services? And any answer on this would be very helpful.

First thing, that question, there's no changes in the reclassification of any revenue. And what we are doing in the service revenue, still we can grow around 9% or 9.5%.

So the growth is in the market. The growth is with the subscribers.

And just Roderigo to -- what we have been doing, when we buy the company, the big company in Brazil, we invest a lot in fixed siting. We go from 5 million households to 27 million households, and we start to invest a lot in the PIC side.

The last 2, 3 years, we have been investing also in the wireless side. We give lot more coverage in 3G; two years ago, in 4G.

And today, we have the best network in 4.5G. So people is consuming, people is preferring our network, and I think the growth that we're having is in the market as subscribers are preferring to come to our network and they are using more our network.

So I think that's really what I see. We have good -- very good infrastructure.

We are convergence, that's another thing important. We are at the only one, which really, really convergence, so we're giving to our big subscribers, we're giving mobile and to our mobile subscribers, we're giving also the PIC's broadband.

Broadband is growing very good in Brazil. I think we can end -- this quarter, I don't remember exactly the number, but maybe it's 4x what we grow last year's quarter, 4x in broadband.

So we're doing also very good. And also we have been the most creative and innovative with good plans in the market.

We start with unlimited, then we go to Americas, then -- and we have been really driving good plans and good promotions to all the customers. So I think that's really what we're seeing in Brazil, Rodrigo.

Understood, Daniel, very helpful. And my second question is related to Mexico and the functional separation of Telmex.

I was wondering if you could give any update regarding the status of your legal claim. And also, I mean, given that, that legal claim is ongoing, which would be the next steps regarding this functional separation from your side?

No, I think there seems -- we talked last quarter. There's no big changes.

I think the functional separation has some dates, calendars that we need to accomplish and that we need to discuss. And I really cannot tell you nothing new on that.

We're still discussing a lot of the -- to really go in detail on all these rules and policies for this separation. So we're in that process, and I cannot add anything at -- Roderigo, on that.

So regarding Colombia. Mobile postpaid base has grown, however, mobile service revenue declined almost 2% implying some pricing pressure.

Can you give us some color on the pricing dynamics in Columbia? And my second question is regarding to the other smaller countries.

For instance, competition is in Chile. Chile is growing, but actually far from the 5% to 10% mobile service revenue in previous quarters.

And in Peru, for example, mobile service revenue has deteriorated with a decline of almost 8%. Can you give us some color or so why are other drivers for such deterioration in these markets?

Yes. I think the three contract that you're talking totally different what is happening.

Well, I'm going to start with Colombia. I think in Colombia we're growing our postpaid base.

The market is really aggressive in prepaid and in postpaid. So that's really the reason why our revenue -- service revenue is not growing.

But in the other side, we are doing a very good work on the cost side. So in that side, I think we have a very good EBITDA, I think one of the highest EBITDA margins that we have.

So in Colombia, prices and competition is tough, but we are doing a very good job there. We're more or less maintaining our share in the market.

And I think is deducting in the prepaid/postpaid in wireless side. In the PIC side, we're really growing very good doing a very good work on that.

We're growing our net ads. We're growing broadband, I think 8%, we had 8% growth in the PIC side.

So in the PIC side, we are doing good. And as we have convergence, I think it's going to help us in the future.

Now we're going to start -- we're selling postpaid to our customers, and we're doing that up-selling and cross-selling in that. Talking about Peru, moving to Peru, I think, in Peru, it's really tough.

I think it's -- I think sometimes some promotions in the market doesn't look even profitable, it's great to see what is really -- the market is really tough. Let's see what's going to be the results of my competitors there.

But I think they are also suffering as we are suffering in Brazil. The good news -- sorry in Peru.

The good news is that we are not losing market share there. We're maintaining our market share.

And I think and I quote for the next six months that the promotions could be a little bit more rational, and let's see what it has got. We have a very good network with a spectrum that we have in Peru, there the one that we just bought.

It's giving us good spectrum. We have very good quality, good speeds.

So we're prepared to still give a lot of promotions, but I hope that the market will be more rational in Peru. Still also, we're reducing our costs and expenses.

And in Chile -- well, in Chile, we have been growing. Our growth has been declined a little bit, but still growing there, and we're going put more focus in Chile.

Now in Chile also it's another market that is competitive, and we're going to put a little bit more focus to be -- we need to be the challenger there, we need to give more intelligent promotions. And it's -- I think it's what we're going to do in the next six months or the rest of the year.

Okay. If I might follow-up very fast, you mentioned that Globo in Brazil is the only convergent player.

What is stopping the other players to implement convergence?

No, we are the real convergent players. So we're -- we have a very good fixed network.

Nothing stops that, the other ones could do whatever deal. What I'm saying is that we really are working as a convergent player.

We have our PIC's mobile networks converged. We have our marketing already converged.

So we are really a convergent player. And it's one of the reasons why it's helping us to grow our revenue in wireless faster than the other ones.

Just two, if I could. One, on the removal of handset subsidy.

You just talked about that as a bigger-margin tailwind. I'm just wondering, at this point, as you look across your markets, is there any ballpark estimate you can give in terms of percentage of handset activations that are still coming on with subsidies?

I'm just trying to figure out how much of this tailwind is left to go in terms of benefiting your margins. And then secondly, on leverage, just wondering if there are any updates you can give on the past from where we are today to getting to that 1.5-turn target in terms of timing?

It's a very difficult question. I think, we have a lot of countries, we've 26 countries, we have 25 countries with the Europe.

And in each of the markets behaves different. And even with that, prepaid is different than in postpaid.

And in postpaid is different when you have a contract and when you don't have a contract. So we aim not to give any subsidies in the future, and we are moving on that directions.

In some markets, let's say, in Colombia, there's no more contracts in the postpaid. So it doesn't make any sense to subsidize there because you can subsidize and then they can move to another company immediately.

So we're trying not to do any subsidy. In Mexico, still some subsidies in postpaid, no subsidies in prepaid but then we are financing the handsets.

So depends a lot on the competition. What I think for the market, not for América Móvil, for the market, for all the telecom sector, doesn't make any sense to subsidize the handsets.

So I'm sure that competition doesn't want to do it. We don't want to do it.

And let's see how we're going to move and how fast we can move to -- not to subsidize anymore handsets. But today, there's a $1,000 handset.

So when 5 or 6 or 8 years ago, when you subsidize some handsets are $200, $300. Today, if you subsidize the handsets, it's $1,000.

So you have to be very careful on that. And we are moving in América Móvil not to do -- we are financing today in a lot of countries the handset and that is helping us also to take out that subsidy.

And on the leverage?

Matthew, can you repeat the leverage question, please?

Oh, sure, yes. I think you're just over two turns right now, and I think you've talked about targeting 1.5 turns before potentially reevaluating -- taking up shareholder returns.

So I guess, I'm wondering is 1.5 still the target and any update on timing on when you expect to get there?

Well, Matthew, I think, it's not different from what we mentioned not that long ago that we were expecting to pay down debt probably much less than MXN2.5 billion per year. I'd say that -- where we are exactly in terms of leverage at any given point in time is, yes partly a function of where it comes and what's then is paid down and partly a function of the exchange rates, because the exchange rates determine in dollar terms the value of your EBITDA and determine also the value of your obligation.

So it's difficult to pinpoint a specific number or specific point in time. I would say if exchange rates remain constant, I think by the end of the year, we will be close towards the target, okay, or we believe that we might be able to get to it probably by the first half of next year.

But I think that's the assumption you have to make, okay. At constant exchange rates, we expect to pay down the debt and costs have already been paid down so far this year, we should expect to be in a position or either we will be at or close to the target by the end of the year.

Two questions, if I may. The first one is related to the prospects for consolidation in Brazil.

I guess, there are like three, let's say, kinds of assets that could eventually be consolidated by existing players at this point. So my question is, will you -- first, will you participate on the auction process to buy SEMIC Telecom?

And then also, how do you see the Brazilian market once this spectrum cap is removed by the regulator? This is the first question.

In terms of we're going to get [indiscernible] submit, I think we're reviewing the data. It's just -- I think, we're in that process today, and we don't know still if we are interested or not.

We are in the process, and we are reviewing the information. So nothing to say more than that.

If that makes sense for us and the price looks good for us, then I think we're going to do it. And if not, then we're going to step out.

No, in the consolidation of Brazil, I think the consolidation that everybody is talking about Oi, if that is going to do something or not, we don't know. But as América Móvil in Brazil, we are not on a hurry for the consolidation.

I think we need -- we have what the -- everything, we have a good fixed cable company that we're giving fixed-broadband and TV growing, and with that we're giving DTH also. We're doing fixed-wireless, broadband -- fixed-wireless broadband.

And we are really having very good wireless network. So that's good for us, and we're moving on that direction.

And the last question? What was the last question?

Yes. No.

It was regarding M&A. It was on the spectrum cap.

I mean, what are your expectation once it's removed? Is there any other asset that might be considered by you?

Well, as everybody knows that this cap would be for the sale of Nextel. And well, I don't know that in which stage is that in the government.

What I think, if they want to -- if Nextel wants to be consolidated or the government wants that Nextel be consolidated, I think they need to move that cap. So the value -- big part of the value of Nextel is the spectrum that they have.

So I think that's the reason why they are doing that.

Okay. Perfect.

And the second question is regarding your PayTV business. I guess, you mentioned on the release that your revenues from PayTV were almost stable on a sequential basis.

So what's your expectation for this business in the second half? I mean, can you -- can we expect this business growing sequentially in the second half?

And also, when do you expect the fixed-broadband growth together with this potential for stabilization PayTV to fully offset the weakness from fixed-voice revenue?

Well, if you look at the PayTV business that we have in Brazil, we have the HMC networks. I mean, giving PayTV through cable.

And as you can see, broadband is growing pretty good against last year. And even in ultra broadband, there is the segment of the market, we have a very good market share there.

PayTV in HMC networks, we are growing a little bit the last two or to months. And you look at the PayTV, it is given through satellite DTH, what we see in the last three months is that the revenues have been stable.

And the disconnections go really, really down. So what we're working in DTH is to change the mix of the customers in the platform.

So we are more focused in very ARPU products in the market and with a differing convictions to have a good payback of the platform. So we are not really focused on NetApps who we are focusing improving revenues and improving profitability in the PayTV DTH market.

So we expect the second half of the year will be more stable than the previous semesters.

So the first question I have is on the convergence. We are seeing a very good results in Brazil and you attributed that to the convergence.

Specifically in that sense like say, were you saying that people like they go to data and then use of the fixed-broadband with mobile data? Or just the PIC is yet significant part of the success because we have not seen greater results at least in PayTV, so I would imagine it would be the first one?

I would -- Andre Baggio, can you repeat it because...

Oh sorry. All right.

So the question more clearly is why the convergence in Brazil is working so well? And if it's related mostly to broadband and not PayTV?

No, I think that convergence is one part of what is working in Brazil. As I said, it's -- we are having a very good network.

We start from having 5 million home passes when we start during the peaks when we buy the company. Today, we have 27 million home passes, okay?

We have been growing in PV and HFC. We are growing in DTH.

We have a lot more broadband subscribers. In fixed, we are growing and four years ago, we started to invest a lot to put a lot of CapEx in the wireless platform.

And with the convergence of all the new technologies that we have in the platform and all the new technologies that we have -- we have a very good platform in Brazil. And I think that's why our customers, today, we are having 4.5G in wireless and it's working very good.

We have very good speeds. We have a lot more coverage in 4G as we are saying so.

That's one part. The other important to have convergence is that a lot of our fixed or TV subscribers were moving and giving them promotions on the postpaid, on the prepaid, and we are up-selling and cross-selling, that's something that we're doing.

We have a plan, called Combo. That is the triple play combo that we're having in Brazil, and where we're offering TV, broadband plus the wireless.

So that's I think are the benefits of having the convergence in Brazil. But to have this convergence in Brazil and working good, you need to put a lot of investments and a lot of CapEx.

And that's what we have been doing in Brazil for the last year. So I think today it's starting to work very good everything that we do in the last years.

Great. And the second question is somehow related that in Mexico, we know that so far you have not access to PayTV because of regulatory issues.

But do you think it's -- what can you do in order to resume the growth in the broadband market? Because we have seen lot of players, especially cable players growing a lot in broadband, and we have not seen a growth in fixed-broadband users in Mexico.

So is there anything that can be done investments or other stuff?

Yes, you're right. I think the market is growing and we are not growing on the fixed side.

And I think we need to correct that, and we need to invest a little bit more there and to grow and to have better promotions and to be more competitive there. So you're right.

We need to move and to -- first, to have a better network to invest more and that's what we are doing. And I think with -- and I hope to have the addition soon.

I am sure we -- Argentina just gives TV, so I think Mexico is the only country where we don't have TV. And I'm sure and hope that we can have TV soon.

And well even that, the only -- not sector, the only -- the TV is the only segment of the market where prices are increasing. So wireless is decreasing, broadband is decreasing, fixed is decreasing and TV is increasing.

So there's no reason not to give off the TV. So I am hope that we can have also the TV and while TV will help us to grow more of the broadband segment in Mexico also.

The first one is regarding the cost-cutting initiatives. I think it was mentioned that cost-cutting initiatives are mostly concluded in Mexico.

So it would be great if you could tell us, which regions if you present good upside from cost cuts? And the second question is, if you could remind us about the guidance for CapEx for the year?

And if you see increased investments from competitors, especially in Brazil in fiber-to-the-home adding Brazil when Mexico in the fixed-to-wireless broadbands as upside risks to CapEx and re-come over this CapEx in the coming years?

In terms of the CapEx, I think, we have MXN8 billion, and I -- we still think that we're going go up to MXN8 billion CapEx for América Móvil. So I think that's -- no changes on that.

In Mexico, about fixed wireless, we are also doing fixed-wireless. We start in April.

I think we have until today 30,000 fixed-wireless subscribers. I'm not so sure exactly, what between 20,000 and 30,000 subscribers is what we have.

And I think it's a good profit. It's a profit -- in some places, it's going to work very good.

We are doing that also in -- our Latin America, it's not only in Mexico, between Europe and Latin America, I think, we have like 800,000 fixed-wireless subscribers. So that's not a new profit for us.

And all the investments that we have been doing is contemplating this profit on that investment. What was your other question?

Cost-cutting.

The cost-cutting plan. I think the cost-cutting plan never ends and I think we finalize, let's say, phase I or some projects, but we are starting other projects.

So we will be -- for the next three years, I think, we are going to be really focusing on cutting costs. And not only cutting costs, to move to the digital part -- now I'm moving to the digital part and the digital transformation is going to help us to reduce more and more cost.

So there's two type of costs. What you renegotiate, what you take out from the company.

And the other one, all the digital transformation that we're doing, and it's going to take us 1, 2, or 3 tier in some places and that is going to give us a lot of synergies and a lot of cutting. And it's all around Latin America and in Europe also.

Daniel, the smartphone financing. Is that available across all of your markets or just Mexico?

And when someone does a handset financing, do they also get a discounted service plan?

No. I think it's not only in Mexico.

The countries that I remember is Mexico, Colombia, Peru, Argentina. I think Ecuador also, we are financing.

So I think we are financing in a lot of countries and moving to all of the countries I think it's important. And what is the -- our customer think they don't have to pay.

Sometimes we did promotions, so there is not -- the important thing is -- here is that they are going to pay small -- a little bit upfront and then the small, how do you say..

Installments.

Installments. Small installments through 12 months or 18 months and that will help that they get a better handset or that they get the handset that they want.

So that's more or less. And we include that in the deal.

So they are going to pay the rent clause, the part of the handset that we have, and that's been really good.

Got it. And so is the mix of customers on financing been very high?

And has that inspired people to upgrade their phones faster because they have to make smaller payments?

Yes, yes. Sometimes that or the other ones says that they get a better handset -- the handset that they want, that they move from 3G to 4G because of that.

Or it's from 2G to 3G because of that. So there's a lot of good things, financing, you need to be very careful on the handset not because sometimes they get something that they cannot pay.

So you need to review very good what -- your customer and what will be the credit for that customer. But I think it's a very good program.

And then just on the capital-return policy. Your dividend payments have been steadily increasing every year.

I think one year you got a special dividend maybe, but it's been up a couple of pennies a year. When we think about when you hit the target leverage ratios, is the dividend just going to grow at that same rate and the capital return is primarily focused on share repurchase?

Or could the dividend rate -- or could the growth in the dividend also accelerate?

Sure, Walter. I think that as we pointed out in the [indiscernible] 2x extraordinary dividend and also 2x we're basically on account of expenses that have been planned mostly regarding M&A that didn't come through.

So we had more cash than we intended being at the year. Basically for us, as you know, it's A, an ordinary dividend that is meant to grow alongside net income.

And then the rest of the distributions basically done throughout the year by way of share buybacks. I don't expect we are going to change this pattern going forward.

I think that we will continue to increase our ordinary dividend, as I said, alongside our profits, and we will retain the share buybacks as the main means of the distributions to shareholders.

My question is related to prepaid strategy in Mexico. Like you said in the beginning of the call, actually competition is very furious AT&T, for example, has offers that probably tackles the high-end client with up to 2 gigabytes plans, in some cases even cheaper than the postpaid megabyte per peso cost.

And Telcel now has offers that range from, I think, 60 megabytes up to 5 gigabytes on prepaid. So, I mean, my question is what's your overall strategy on prepaid?

Do you want to tackle the low-end clients and also the high-end client? What's the overall view you have there?

Well, I don't get all your numbers. But what you're seeing here in the prepaid market is that it's becoming a little bit more aggressive.

So everybody is giving more data to the prepaid clients. And well, it's really what is happening.

So we don't want to cannibalize prepaid to postpaid or postpaid to prepaid. So we need to -- as you were saying very right we need to be careful not to give more in prepaid, so our postpaid customers will go to prepaid or that's all.

There is a segment, it's still aggressive on the prepaid side. I think sometimes on some promotions of our competitors doesn't make any sense, and they are going to see that in the revenue because they can get a lot of subscribers, but they are not consuming a lot.

So we're really being looking very closely to the market. And we're going to be aggressive about doing intelligent promotions, okay?

So that's the only thing that I can tell you.

Just a second question. On Chile, the spectrum disputes on 700 megahertz and 3.5 gigahertz.

How do you see that dispute? How to see that ending?

And does that affect your long-term investment plans for the country?

Well, most of that solutions, one from the regulators expanding the 3.5 and 1 from the Supreme Court on the 700 option that we have, create a lot of uncertainty for the future development and for our future investments now. So both -- we still are allotting a series of fractions.

I'm talking to operators to find viable outcomes. So we are evaluating, taking these matters to an international arbitration, but we still don't know exactly what we're going to do.

But as you were saying, these type of things are going to reduce a lot investment in Chile. They don't -- and more for the new technologies now because that 3.5 and the 700, you are going to -- we're going to use it for 5G or 4.5G or -- so if they are not going to do that, then the country per se is going to go back in terms of investments on new technologies.

So that's still we are reviewing what are our options and of course on the international arbitration that we can go there.

Just a very quick one. In Mexico, I'm sure you already gave this number, but could you give us what the gigabytes of use per month were in the second quarter, and maybe how that compares with the first quarter of this year and maybe the second quarter of 2017?

That would be very helpful.

I don't have that information, and I -- we don't give that information. But megabytes of use in wireless, we're growing as the strong -- more than 70% or 60%.

I don't have that number, but we're growing very strong our megabytes of use now. With these new networks that we're putting because we have 4.5G in Mexico, Brazil, other countries I don't remember it, Austria.

So these are making our subscribers use more and that's very good.

Going back to the question policy changes or potential policy changes in Mexico, if I may, we know that the new government wants to foster universal coverage, but you have you had any discussions with them as to how that is going to be funded? I mean, I believe they're talking about a social coverage fund?

No, we haven't had any discussions with the government yet. And no, we don't know exactly what they want to do.

I hope what they should do is to talk with the companies and give incentives to the companies to cover all those areas, but we still don't know exactly what and how they're going to do it.

I was wondering if you could please give us some update on your PayTV plans in Argentina. I understand that it has been announced earlier this year pilot programs that prices were below market preliminary levels.

Any update as to whether or not you want to rollout more or the speed or what type of coverage should we see on this product later for the year?

Yes. As you know, we have the license PayTV in Argentina.

We already have home passes in Argentina with people with fiber-to-the-home that is unique and excellent network to the viewer. Very high speeds in broadband.

So what we are doing is to do as we did in Brazil to develop our Combo proposition to the market and it will include a fixed line broadband and PIC TV, and of course, in the broadband we have the network to either very good proposition in high speeds of Internet. And PayTV is the first country that we have a full IT offering in PayTV and things that are consistent would include a linear TV, BOV, [indiscernible] and catch up TV, all these included in our unique simple guide to the market.

We have [indiscernible] some areas, so we expect that we will have a great deliver in the market.

Daniel, how does HMC's acquisition of Time Warner potentially change the strategic pitch of M&A globally and in Latin America by integrating content and distribution? You guys, the biggest PayTV distributor in Lat-Am, you've made some direct investments in things like the Olympics as well as some original content I understand particularly if you do.

Just wondering over the longer-term, do you see yourself needing to become more of a content producer either organically or via M&A? Would you think that that's something you can do mainly by buying third-party content, that would be very interesting to hear your thoughts on that.

I think AT&T acquiring Time Warner, they're acquiring content and how it's going to affect us in Latin America, I don't think is going to affect. Because at the end of the day, we are having content.

So they're -- they need to sell that content to everybody and even that in there, let's say, wireless companies, they need to buy content from other ones because that's not the only content in the world. So they're having part of the content and they are going to sell.

I'm sure they are going to sell to the other ones, this content, and we are going to buy from them. But we also are going to buy from all the other ones that are producing content.

So I don't think it's going to affect the market in Latin America. So that's more or less what I'm thinking and there is enough content, there is going to be more production of content and everybody is going to have access to all the content.

So I think that's what we're going to have in the future. There is a lot of PayTV content and I don't know, Oscar if you want to add something?

We use a lot of content from different vendors. One of them is HBO and Time Warner.

But of course, there is -- they have a lot of competition with the PayTV market. So they have to be competitive to have content to our customers.

So I think, it will be ecosystem that we have check on balance with the market. We will have more than 25 million PayTV customers in the region and we are buying -- we are buying linear content as well DOD, on-demand content.

So and they have to be competitive in the market. So and there is a lot of companies producing content, Netflix and a lot of them up.

There's a lot of content already in the market.

I guess I'm just -- that's really interesting, because I'm just wondering because you've made direct investments like DLA, you've made investments in [indiscernible]. You've made commissions from original drama for Clarovideo.

I'm just wondering what you see as a sort of strategic benefits of producing your own content or buying it from third-parties. If you see any sort of advantage instead of making having your own in-house content?

No, I think we're producing, let's say, in Colombia, we're producing our own content, our news, I think we are thinking to do something mostly in Argentina. In Mexico, we do not -- we're producing some content.

And other content we are buying. So I don't think one, it's statistical -- not limited.

One is complementary than to the other one. So I think there's going to be a lot of content.

You have grown up companies that are going to produce their own content and they're going to buy from everybody the content now.

I agree. We always give some TV series as well for Clarovideo and also in Mexico.

No, just thank everybody for being in the call, and thanks for the good year. So thank you.