Daniela Torras - Head, IR Daniel Hajj - Director & CEO Oscar von Hauske - COO Carlos Garcia-Moreno - CFO Carlos Robles - CFO, Teléfonos de México SAB de CV

Walter Piecyk - BTIG Richard Dineen - UBS Ric Prentiss - Raymond James Amir Rozwadowski - Barclays Daniel Federle - Credit Suisse Michel Morin - Morgan Stanley Alejandro Gallostra - BBVA Carlos de Legarreta - GBM Soomit Datta - Newstreet Research Julio Arciniegas - RBC Rodrigo Villanueva - Merrill Lynch Mitch Reznick - Hermes Arturo Langa - Itau BBA

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the América Móvil Third Quarter 2016 Earnings Conference and Webcast. At this time, all participants are in listen-only mode to prevent background noise. [Operator Instructions] We will have a question-and-answer session later and the instructions will be given at that time. And as a reminder, this conference is being recorded. Now I would like to welcome and turn the call to Daniela Lecuona, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Thanks for joining us in our third quarter conference call. We have today on the line Mr. Daniel Hajj, CEO; Mr. Carlos García-Moreno, CFO; Mr. Óscar von Hauske, Chief Operating Officer; and also Mr. Carlos Robles, Chief Financial Officer from Telmex.

Thank you, Daniela. Good morning, everyone. Carlos is going to make a summary of the results. Carlos Garcia-Moreno: Okay. Well, thank you, Daniel. Good morning, everyone. For the third quarter, economic activities showed signs of renewed strength in some of the major Latin-American markets including Mexico and Brazil. Financial closing in the international capital markets remained fairly stable. There were known threats upon increasing risk by defect, the earlier move were in mid-September. Conditions throughout the summer holidays took place at - on seasonally high levels. Latin currencies traded at narrow ranges with the notable exception of the Mexican Peso, that means the prior quarter have developed an increasingly negative correlation with the U.S. election. This appeal to increase thru September, the Mexican Peso plummeted versus the dollar, going from MXN18.3 per dollar at the end of June, to nearly MXN20 per dollar toward the end of September. As of the value of this report yesterday, the dollar was trading at MXN18.8 per dollar. On the mobile platform, we added 750,000 postpaid closing the third quarter. Nearly half of them in Brazil and the rest mostly in Mexico and Colombia. In the prepaid side, we acquired 1.2 million subscribers from T-Mobile, but disconnected 880,000 clients in other operations. Our postpaid base was of 5.7% from the year before, where the prepaid one was down 3.5%. On the fixed line platform, RGUs were up 3.1% year-on-year, driven by both broadband accesses that were up 8.3% after the additions of 500,000 accesses in the quarter. Just over half of the increase came in parts [ph] from Mexico and Brazil, followed by Colombia and Guatemala. Our third quarter revenues totaled MXN250 billion. They were up 11.8% in Mexican peso and 3.1% at constant exchange rates from the year earlier quarter. Service revenue were practically flat year-on-year at constant exchange rates, which represents a 2% disappointing improvement with respect to the annual growth rate of 17% in the second quarter. The stronger revenue base shuffling about a notable increase in EBITDA; in Mexican peso terms, it grows 11.1% sequentially, and 1.5% on a year-on-year basis, to MXN67.7 billion. At constant exchange rates EBITDA, we are still down year-on-year 5.4%, exhibited a notable recovery from the 13.2% decline posted the prior quarter, an improvement nearly 8 percentage points sequentially. The main factor we can improvement in these revenues were the renewed dynamics of mobile data revenues where year-on-year rate of growth rose from 4.1% in the second quarter to 7.7% in the third. These broadband revenues expanded at a likely faster pace in the latter quarter, 8.8%, but 7.9% in the second. As stated the revenues, it might end at 6.1%. Both revenues both fixed and mobile declined somewhat less rapidly in the third than in the second quarter. That's an improvement basically across all business lines. From a regional perspective, the sequential improvement in the annual rate of growth was 1.5 percentage points in each of the South American and European blocks, 0.7 percentage points in the Caribbean and 0.5 percentage points in Mexico. Only the Central American block raised [indiscernible] in the world, 4.4% in the third versus 5.1% in the second quarter. The U.S. has a strong showing in the quarter independently over the acquisition of T-Mobile subscribers. EBITDA trends strengthened the core of the board with most countries supporting posting higher EBITDA margins. The Caribbean continued to improve its margin as they come over the last few quarters, while the South American block presented those large increase. In the U.S. platform, we had a very strong quarter with EBITDA rising 37% even before accounting for the T-Mobile subscribers. Whereas our third quarter operating profits, MXN30 billion were still 14% below those of the prior year. On a sequential basis they jump 16.7% board by the EBITDA increase. Our comprehensive financing cost total MXN24.7 billion including a foreign exchange loss of MXN10 billion which was 10% lower than in the preceding quarter and 77% below that of the year earlier quarter. Our net income totaled MXN2 billion to MXN0.1 billion in the quarter and was equivalent to [indiscernible]. In the nine months to September, our cash flow - one year currency hedges allowed us to fund capital expenditures in the amount of MXN100 billion and review net debt by MXN19 billion. In addition to these, we used a net amount of MXN9.6 billion in dividends and share buybacks which were partly funded by distributions received from our investments in Europe and the sale of parts [indiscernible]. It is important to note that our growth rate has come down by the equivalent of $3.5 billion in December. Our dollar denominator obligations were reduced by $4.3 billion in the period including the amortization in September of two pointers [ph] with a phase value of $2.7 billion. Considering the equity credit given to our hybrid bond issues and the market value for our currency derivative, our ratio of net debt-to-EBITDA later months came in at 2.2 times which was similar to the one in the second quarter. We expect this ratio to decline in future quarters as our plan deleveraging takes place. Thank you and we would like to turn the floor back to Daniel for Q&A. Thank you.

Thank you, Carlos.

We can start with the questions now.

[Operator Instructions] And our first question is from Walter Piecyk with BTIG. Please go ahead.

Thanks. Hey, Carlos, can you just give us your sense on where you think Mexican EBITDA margins will ultimately bottom out? And when maybe you can see some return to ARPU growth there? Obviously the interest in LTE phones is there, but you've got this other competitive headwinds. Can you just comment on where margins bottom out and when you might see some ARPU growth?

Well, good morning. What we're seeing in Mexico, I think in Mexico, we're starting to see that revenues are starting to stabilize. Some people are buying a little bit more, are increasing a little bit the ARPU. All the ones are moving to these new plans. Still we have some customers that are moving to all these new plans. So we're starting to see that. Still, the market is very competitive where the competition is top in Mexico. You can see that the prices in Mexico - maybe if you compare the same plan in Mexico and in the U.S. with our competitor, in Mexico - is maybe 60% to 74% lower the price of what they are selling in the United States are. Well, revenues as we're saying are stabilizing. We are putting a lot of effort in giving the best technology, investing in 4G. I think we're covering maybe 80% of the population in Mexico with 4G. The new spectrum that we get for the beginning of the year is helping us to have very good service, good quality of service, good coverage. I think the perception of the brand in Mexico is excellent, so it's helping us a lot. So we're moving on that direction. I still don't know what's the bottom of the margin in EBITDA, but because all of these things, we are getting some more expenses. But I think if the revenues are starting to stabilize and then we hope that next year can grow a little bit than we're going to feel very comfortable in Mexico.

Thanks, Daniel. For the follow-up question, can you just comment on strategy in the United States? Obviously there's acquisition. It looks like you're committed to stay in the U.S., but is there an opportunity for you to possibly sell that business, or potentially partner with other companies that don't necessarily have a wireless presence right now? Thanks.

We're happy with our business in the United States. Platform is doing good, I think, and that's why we are taking that more than a million customers from T-Mobile. We're managing very well. All the retail business, the prepaid business - we know how to handle the prepaid business. So we're happy the way platform is developing in the United States. I think margins are better this quarter than the last quarter and last quarter of last year, so we're doing good improvements in platform.

Great. Thank you.

Thank you.

And our next question comes from the line of Richard Dineen with UBS. Please go ahead.

Good morning. Thanks for taking the question. Just a question on the depreciation and amortization. They seem to accelerate sequentially this quarter, up 20% year-on-year. It was running up more like 10% increases in the first and second quarters. If you could maybe just explain what's perhaps behind this? If it's changing CapEx, changes in the mix of depreciation rates for different assets? Maybe if you can say if there has been any change in the methodology or how we should think about that line going forward? That would be very helpful. Thank you. Carlos Garcia-Moreno: Thank you. I think that a portion of the depreciation has probably to do with more CapEx, but there's a portion that is probably a bit more than half of the increase and this is basically for Brazil, which has to do with the qualifiers, for instance the set of boxes. The set of boxes and the antennas were basically short - depreciation, the life of those for purpose of depreciation, that's basically it.

And is there guide for that line, Carlos, going forward? Carlos Garcia-Moreno: If you look at the numbers in the income statement, that also has to do a lot with foreign exchange movement. Like in this quarter, the peso came down to all other currencies and that means that all of the depreciation expenses, one is in Brazil and Colombia, were more in peso terms. So what we would need is to look at these constant exchange rates and maybe we can be a bit more guidance for that. I think for the consolidated, in the absence of this currency move, we would not have much of an impact on the overall depreciation of the company. I'll provide you with numbers. If you can't contact Daniela, we'll send you those numbers.

That's terrific. Thank you very much, Carlos. Thank you, Daniel. Thank you. Carlos Garcia-Moreno: Thank you.

Thanks.

And our next question is from the line of Ric Prentiss with Raymond James. Please go ahead.

Yes, thank you. Good morning. A question, obviously a very large deal in the United States with AT&T and Time Warner announced recently. What are your thoughts as far as combining your networks with content? How important is it to have content and also maybe update us on where you stand as far as being able to combine, add video to your bundle?

Well, interesting move in the United States. Let's see what's going to happen. In Mexico, we think that content is important. We have some things in Colombia, we're doing some things in Brazil, we have also UnoTV [ph] in Mexico. So we feel that content is going to be - it's important, it's going to be very important, makes a lot of sense to have some content to give to your customers. We have satellite TV, cable TV and all the wireless TV everywhere, streaming, all our OTC products that it's Claro Video and even Claro Musica. I think content, it's important right now. It's going to become very important in the future.

And an update on where you stand in getting video?

In Mexico?

Yes.

We have video in all the countries. Not in Argentina, but I think in Argentina, it's at some time...

Two years.

Two years and then we can have video. And in Mexico, well, we don't have nothing, still as with video in Mexico. We feel that we are covering all the requirements of IFETEL and we hope that we can get the video soon.

Okay. Thank you.

But we don't have now.

Yes, right.

And our next question is from the line of Amir Rozwadowski with Barclays. Please go ahead.

Thank you very much for taking the questions. I was wondering if we may chat a little bit about the competitive environment in Mexico. It looks like based from the metrics you reported, it seems as though pricing pressure has eased that and you folks are doing a lot better in the postpaid market. So it does seem like some of the more pressured competition that we've seen in the market may be easing. Is that a correct way to think about the current environment?

It's really competitive, so I don't think we're getting lower rates in the market, but still the competition, it's tough, it's big. So everybody is competing. As I said, that if you compare prices in the U.S. against prices in Mexico, in Mexico is maybe 70% lower than what they are selling in the U.S. I don't think it should go lower now because it's very competitive. What we are seeing is that a lot of our customers are moving, still moving a lot to all these new plans, but we don't think that we're going to compete only with price. I think people wants quality, people wants coverage, people wants speed in the networks and we are doing that. So we are being very careful to have the best network and the best quality for our customers. Telcel is focusing a lot on moving to give the best - let's say quality to our customers. When they go to a store, we have to give the best service, the best in our own stores, then the quality of the network, then the throughput. So we are working a lot on giving them a good service in here. Well, in Mexico and in all around Latin America. We're also looking a lot on the ARPUs. We don't want to see only subscribers. We want to see good subscribers, good ARPUs and revenues. Because we can get a lot of subscribers and reducing revenues, so I think we are being very careful also on the ARPUs of our customers. Now increasing their ARPUs, trying to sell them more things, that's where we are right now in Mexico.

Thank you very much and a brief follow-up if I may. I think we've all been watching and waiting for color on the regulatory review process. When do you think we should get some color and how do you think about the potential for incremental asymmetric regulations? I think it's hard not to argue. The competition hasn't increased and clearly, pricing as you've mentioned has come down fairly significantly. So we'd welcome any thoughts there.

I think we have competition. Even the regulatory department are saying they do some segments that there are a lot of competition in Mexico, so there is no doubt that we have a lot of competition. We don't know exactly when IFETEL is going to decide on this new regulations, or take, or put more regulations. We think that maybe between in the first quarter of next year, we can find some decision on the IFETEL. Carlos Garcia-Moreno: I think one thing that is important to note is that the notion, those general notion of competition, I think there's very clear parameters, very objective. You can look at specifically in terms of pricing and in terms of what has happened to the consumption. For instance, take a look at MOUs in Mexico were up 68% year-on-year. They went from 263 minutes per user last year to 442 minutes per user in this quarter. This overly goes to show two things: on the one hand, that we have a fantastic network that has been able to accommodate this kind of an increase in such a short period of time and the second thing is that overly, all the consumers in Mexico have benefited because they are nearly increasing by 70% their MOU. But this is happening for large expenditures because prices have come down commendably. If you continue to look that we don't too much anymore and you continue to look at all the metric of prices per minute, the prices per minute today in Mexico are MXN0.10. That means that it's approximately half a penny in the U.S. and that means overly that consumers have benefited because of low prices and much more consumption. I think these are very objective metrics that we can discuss with the regulators and that they should point to the reduction of asymmetric regulation for us.

Thank you very much for the incremental color.

Thank you.

And our next question is from the line of Daniel Federle from Credit Suisse. Please go ahead.

Hello. Good morning. Thank you for taking my questions. My first question is about Brazil. We see that in Brazil, Suezmax [ph] has one of the best service quality in the mobile segment, but this financial performance so far, it has not been that strong. So I'd like to know if you have any plans to change strategically or commercially your strategies in Brazil. And my second question about CapEx, with all these FX volatility, how are you thinking CapEx for 2016 and 2017? Thank you.

Well, on the CapEx, we don't have it still. We're working on the budget for 2017, and 2016, we are on budget. We said that we're going to have CapEx around $7.5 billion and it's what we think we're going to end this year. So we are on budget and still working on the next year CapEx. I think on Brazil, we are doing much better in the postpaid mobile customers. We're increasing our postpaid mobile customers. We are also improving on our prepaid ARPU, our prepaid usage. So I think all of it all, we are going better, we are in the right direction, but still a lot to do. When you see the numbers of the competitor, you think we still have a lot to do and we're investing in our network, we are investing in the synergies of the company and we still have some bad debt, we still have customers that are not consuming. When you compare our ARPUs and the ARPUs of our competition, still our ARPUs are much lower than what they have, so we still need to work to have better customers when they get into our network to have a better ARPU. I think we're having around BRL89when our competitor is around BRL120 or BRL130 real. The ARPU of the postpaid, we think we need to increase that, we need to move on that direction and I think we have a very good organization there and I'm sure that we're still going to see good performance still this year and next year in Brazil. We're still reviewing the numbers for next year, but I'm sure there's going to be growth in revenue and better EBITDA for next year.

And our next question is from the line of Michel Morin with Morgan Stanley. Please go ahead.

Good morning. First one, Mexico, I was hoping to see if you can give us a little bit more color on your margins this quarter. If we look at relatives of the second quarter, you're up on service revenues and yet your margins were still down even if we exclude equipment sales. So I'm wondering if you can help us quantify, give us a little bit of color of what's behind this. Have you increased handset subsidies? Or is it the asymmetry of termination fees? What's really driving that margin comparison in the third quarter? And also you had very strong fixed RGU net ads. I think it's the five-year high. I'm wondering also if you can talk a bit about what you're seeing in the competitive landscape on the fixed line in Mexico. Thank you.

There are a lot of questions in one question, Michel. Good morning.

Sorry.

Talking about Mexico. In Mexico, I think as you said, service revenues are stabilizing as we said at the beginning of the call. Still, EBITDA is not stabilizing. We have some costs and expenses, yet our asymmetric interconnection is costing us money and people are talking more to us. As the prices are going down, there are more calls and more calls means more interconnections. It's part of the cost that we have. Another cost, we get some spectrum at the beginning of the year, then you have to pay monthly a fee for that and we are growing on our postpaid base and the postpaid base cost you all saw more sat than the prepaid base. There's still some cost and expenses that we need to work for the next year, but well, the important issue is that service revenue is starting to stabilize and that's something important for us. That's a good metric in America Movil. As we said, we are working a lot on the networks, doing coverage, more 4G, better quality, more capacity. As Carlos is saying, some of our customers are maybe using three or four times more the minutes than what they used to have at the beginning of the year. So if you need to put more capacity on the networks, there's still a lot of things to do in Mexico, but I think the first phase of stabilizing the revenues is looking good. Okay? What's the other question?

What was around your fixed RGUs in Mexico? They were pretty good. It looks like it's a five-year high. I'm wondering if there was anything unusual this quarter.

Carlos? Carlos Garcia-Moreno: Yes. If you want a good quarter, it depends. As we mentioned when we are doing it, we are providing better quality and we are focused in the mobile side in the fixed side. We're focusing on quality, having the best network in the country and also what we are doing is including more benefits on the packages that we offer to our customers. So our packages, if you compare them from an international point of view, in prices they are very low compared to other countries, in U.S. and Spain. Just as it is in the mobile, in the fixed line, you can see that prices are going down, but what we are looking forward is we grew through more minutes to our customers.

The bundles that we're giving to the customers, the packages that we're giving are working very good.

That's great and Daniel, just to clarify the CapEx number you gave earlier, 7.5, that does not include spectrum. Right? You had some, I think in the third quarter in Peru. Is that correct?

800 million.

800 million in Peru, yes. That's what we have last quarter in Peru and 200 million in Mexico. Maybe we're going to get to 7.5 plus 500 of spectrum. I don't know if we're going to get exactly to the 7.5, so we are more like in those number, Michel.

Okay, perfect. Thank you.

Thank you, Michel.

And our next question is from Alejandro Gallostra with BBVA. Please go ahead, Alejandro.

Hi, good morning, Daniel, Carlos and Daniela. Can you hear me well?

Yes.

Great. Thanks. Is there anything specific that you're doing to keep the good momentum going in data consumption? And I'm wondering if growth continues at this pace, would that attribute a higher CapEx, or you're still committed to reduced CapEx to those $7.5 billion to $8 billion for the next 40 years? Or do you believe you're still pretty much covered to face increased data consumption in the years to come?

Data consumption is different in each country. I think data, it's growing and it's going to grow for the next years. As we move customers from 2G to 3G and from 3G to 4G and then in the future for 5G, there's going to be much more consumption for all of our customers. All the CapEx that we're putting includes all these consumption, the increase of the data that we're having. I think it's different in each country. Let's say talking a little bit about Peru, that we talk about the spectrum, I think in Peru. We get the spectrum, we put the infrastructure and everything is working very good in Peru. I think it's stabilizing our customers, using more the data, so things are going well. In each of the countries, we have a different strategy, but overall, Peru is doing very good on the new strategy with a new network. Colombia with the new organization is looking very good also. Chile is also increasing revenues. We're selling much more data to our customers. Argentina is doing also very good, Central America, all of it all, besides Mexico and Brazil, that we already talk about them. All the other countries are also doing very good in terms of moving to 3G and 4G, new smartphones, more data, more usage. When you talk about the CapEx, we already put our cable submarine that help us to move all the data around that in America, a lot of transport networks, a lot of sites connected to fiber, also satellites. We have been doing as Carlos had been saying in the last call, we have a 30 billion in three years. I think it was '12, '13 and '14 or '13, '14 and '15 that we put 10 billion per year and that allow us to do everything that we're doing today.

Okay, great. So it seems that your CapEx is going to re-include maybe the interest and data consumption and that you'd be comfortable meeting this [indiscernible]. Thank you. And then my second question is can you bluntly change the dividend policy or if you will stop paying in stock going forward, part of the leverage your balance sheet?

Can you repeat the question? I don't understand the question.

It's regarding the dividend policy. If you would also propose to keep paying in stock going forward, it would put yourself deleveraging the balance sheet.

For this end of the year, I don't know what the assemblies will now propose next year, so I still don't know what's going to happen for next year.

Okay, very good. Thank you.

Thank you very much.

And our next question is from the line of Carlos de Legarreta with GBM. Please go ahead.

Thank you. Just a question with...

I'm sorry. Just to answer the other question, we remember that it's always going to be your decision if you want to do shares or cash. If you want cash in your dividend, it's always going to be the cash. It's your option and that if we do that and the assembly proposed that, I think it's going to be the same for next year. It's your option to do cash, or shares, or cash and shares. That's your option.

Go ahead, Carlos.

Thanks. Getting back to the question - no problem - for the first on prepaid in Mexico, you're measuring improvement there. I just want to know what is the driver that you're seeing for the increases in the recharges. Is it perhaps the more attractive pricing? Is it the fact that the recharges last longer? What is exactly going in the market there?

Quite a lot of things. I think people is using more, so they need to recharge and data. So data because we have unlimited minutes, but also the prepaids, we shorten a little bit the date of the cards, so also make them to recharge a little bit more. There's a couple of things that we're doing in the prepaid side now. Carlos Garcia-Moreno: I would like to add and this is not particularly about prepaid, but when I was mentioning that we already have a 442 minutes of use in Mexico, you want to put it in perspective, this compels - this is more than twice the medium of MOUs in the rest of the countries where we operate and we're operating today in 25 countries. If you take the medium of MOUs in all of these 25 countries, Mexico has twice the medium.

Thank you. That's very unlikely. And the second question is a bit more forward-looking. It's a little bit early perhaps to talk about 5G deployment for America Movil. I was wondering if you could share with us your view on this technology and what it implies for the market for internet of things because I really haven't heard much from you guys regarding this segment.

Well, we are still putting more coverage in 4G, but of course we're thinking to put 5G. We're moving a lot, we're preparing the company at the end on virtualization, we're moving on 4G+, 4.5 LTE...

Narrow band.

The narrow band and we are moving there and of course we are getting prepared to 5G. If you don't hear about America - I think we lose some testing's in Brazil have our 5G and in Puerto Rico with our networks in 5G. So we are testing and we are prepared when we decide to do that. I think it's too early to talk about that, but we're preparing our networks. When we decide to go to 5G, we can go there.

That's great. Thank you.

And our next question is from Soomit Datta with Newstreet Research. Please go ahead, Soomit.

Hi, yes. A question on Colombia, please. First of all, the numbers look to be improving there. The margin was a little stronger than in the first half of the year. The instinct to get some from a general perspective on how you see that market. On a related note, we've heard from one of your competitors this quarter, you won't believe of pursuing anti-trust measures against you in Colombia, suggesting you being discriminating pricing by geography. Have you got any perspective on that particular accusation, please? Thank you.

Let me answer you the first question and then I don't understand the second question, but in Colombia, I think we have a new organization. I'm going to talk a little bit about mobile. We are increasing our coverage, doing much better in terms of quality through both of our networks. So we feel that our customers are getting very satisfied with that network and we're increasing our distribution. We're putting a lot more focus on the commercial side. So this new organization is a lot more focused on commercial side and I think also we're doing very well in the fixed side in TV. Oscar can talk a little bit about what we're doing in the fixed side in Colombia.

Yes, sure. Well, as you know, we launched different kind of packages through here and the market has been well receptive to our triple play offering in the markets, so we've been growing on triple play and double play offering that includes PayTV and broadband as well. I think we have the best offer in PayTV. It's not only at PayTV, we already have streaming video, video-on-demand through the offer and the market has been very well receptive to these new packages on the marketplace. We've been growing pretty good on fixed broadband and PayTV as well. And as well the bundle includes fixed voice that it all includes. It has very good reception for our customers. Carlos Garcia-Moreno: I think these revenues in Colombia on the fixed line side, having growing double digit for quite some time. They are now growing nearly 13%.

That's right.

And the second question? What's your second question? I don't understand.

Sorry. Just to be clear, one of your competitors in the market in Colombia has said it has filed against you in the context of discrimination in the pricing between different regions in the country. I just wonder what your view on that was.

I don't have any news on that. Discrimination on pricing on different regions, that's a new for the competition. Let me understand that. I don't have any news on that.

Okay.

We don't think we are giving anything different on pricing. Maybe we have some special offers in some places, but not on pricing. Maybe on handsets. I'm really sure that we are not doing something that the regulations don't allow us to do. We fulfill all the commitments or all of what the regulations ask us. We already fulfilled everything in Colombia. We are okay on the regulations side.

Okay. Very clear. Thanks.

Thanks.

And our next question is from the line of Julio Arciniegas with RBC. Please go ahead.

Yes. Hello. Thanks for taking the question. A very fast question. Can you give me some color of how your network in fixed compares against your competitors in Brazil and Colombia in terms for example at home pass and technology?

Sure. In Brazil, we have 22 million households and 98% of that, the network is fully by direction and we are using as you know DOCSIS. We are using DOCSIS 3 and in some regions we already deployed DOCSIS 3.1 and our core of the network is a fully integrated network, all IP network. We are in the process as Daniel mentioned on fully integration of the network. We are making some changes in the network to merge IP and optics in order to reduce the cause of the network and improve the throughput of the network. And in Colombia, we have seven million households and as well fully by direction and 98% of the network and the same situation. We're using DOCSIS 3 and DOCSIS 3.1 in some of the areas. So we close [indiscernible] fiber here in Brazil and in Colombia so we could deliver good speeds for broadband and very good offering for PayTV with high definition channels all across the networks. And as well, this network serves small business and enterprise market through those last miles.

Okay. Can I follow-up with another question? How do you see the evolution of fixed mobile convergence for example in Colombia? As you have said, you have been growing quite well in the two play and three play packages, but do you see any potential for fixed mobile convergence?

Do you know the weird stuff to offer some combos in Brazil that includes mobile in our offering as well? We're reaching the steps to do that in Colombia. As you know, the market in Brazil has good appeal into this kind of role, so we will test that and we're already starting Colombia to bundle triple play and the mobile operating intensity to our customers, so that's on the commercial side. Within the network, you already have just one network. We would fully merge a network on the core and aggregation of the network, is at fixed mobile. Now as Daniel was explaining, we are moving over the fine network as well and the evolution of the network not only in Colombia, we are doing this all the testing in AMX. So we really have networks in Colombia and Brazil.

Okay, thank you.

And our next question is from the line of Rodrigo Villanueva with Merrill Lynch. Please go ahead.

Thank you. Good morning, Daniel, Carlos, Daniela. My question is related to Brazil. I was wondering if you could give us an update on what you're seeing there with respect to the potential for the market to consolidate. I think there were some new reports a couple of weeks ago. Just in that you would be interested in some of the assets of VOIP. So I would like to hear what you have say on this respect. Thank you.

What I said and I said always is that we are always hoping to hear things and to review things. I never said that I'm interested in buying [indiscernible]. So what I said is I'm open and we can review and we're going to be open always in Brazil, in Mexico, in Latin America to hear and to see opportunities for America Movil. In Brazil specific, there's a lot of rumors and a lot of talks about merging and consolidating the market for the last two years. I don't know what is going to happen. I don't think there's going to be something soon. It's my perception. But you don't know, maybe things get a little bit on a hurry and starting to consolidate sooner than what I think, but all of it all, America Mobile is not having talks with anyone and we don't have anything right now.

Understood, Daniel. Thank you very much.

Thank you.

And our next question is from the line of Mitch Reznick with Hermes. Please go ahead.

Thanks for taking my question. Just from the credit rating. Notwithstanding the gross delevering that America Movil has executed for the past nine months, to what extent are you willing to defend the ratings to avoid a Triple B rating? In other words, to what extent are you willing to keep - if there's rating to keep from staying out of the Triple B rating category?

Thank you. I think it's clear that we are in the Single A category ratings.

Yes. I apologize.

Yes. We are getting confused. We thought that you were in a different call.

I just wonder to what extent and how important it is for you to maintain your single A rating is what I'm driving at.

We have been committed to the ratings and we have a mandate directly from the board to see to it that we maintain those ratings at all cost. So I think that yes, we are good, we are in constant dialog with the rating agency. They know exactly where we are, they've seen our forecast, et cetera, and I think we are confident that as indicated in the past that we will not get any downgrade until the - negative outlook will become stable probably going into next year or in the middle of next year. That's our expectation. But yes, we're committed to the ratings and we are in a path as you can see of delevering the company. We are proceeding very much according to plan, we take further deduction in debts or net debt of roughly 2 billion next year and the year after. So I think that we are in good shape in the point of view of overall leverage position of the company.

Okay, thanks. That's clear and my other questions were already answered. Thank you.

Thank you.

Thank you.

And ladies and gentlemen, we only have time for one more question and our last question is from Arturo Langa from Itau BBA. Please go ahead.

Good morning and thanks for taking my question. Just two brief questions. First, could you remind us what is the time line for the local loop unbundling process in Mexico and what are your thoughts around that? And then my follow-up question would be regarding telecom [ph]. We saw a nice increase in EBITDA. If you could just share with us the strategy that the company is implementing there and also if you could comment, there has been some headlines regarding a possible capital increase. Just [indiscernible] and that would be great. Thank you very much. Carlos Garcia-Moreno: I'll talk a little bit about Austria. I think in Austria, we took over the company, the control of the company formally barely two years ago. I think in August of '14 and overly at first, we were more than anything focused on reducing the leverage of the company. Have been very high and I can say that it has been brought now down to the level that America Movil overall have. So from 3.5 or something, maybe that's come down to 2.2, maybe 3. That's part of what we've been dealing the first year and then we've had our management on the ground for just a bit more than a year, a year and-a-half and quite frankly we have had very successful results. The EBITDA is increasing and so far, a lot of this is driven by [indiscernible]. And in Austria, we have been able to get significant efficiency from the operation simply by reducing cost, streamlining the operation. We have stabilized revenues and posed to grow, but EBITDA is really growing fairly rapidly. In a company that has now much little debt and used to be the case, that is now having a much coordinated approach towards the rest of the operations in Eastern Europe, I think this company will continue to surprise as we'd have positive increases in EBITDA. And you mentioned about capital equivalent. We have never done a capital equip to fund an acquisition. I think the company today is getting stronger financially and it is getting stronger operationally. Maybe one day it can look at East world [ph] and look at possibilities of expanding there. I don't think it's there yet and we certainly are not looking by any means at any capital including the company, all the work two years ago.

Regarding the local loop unbundling, it's something that is already implemented in Mexico. We have already started, we have implemented regarding in accordance with the rules stated by the IFETEL and we have already provided these services to the operators that have been appealing to them or have been signing the contract for them.

Okay, thank you.

And ladies and gentlemen, this concludes our Q&A for today. I would like to turn the call back to Daniel Hajj for any final remarks.

Best of thanks, everybody, for being in the call. Carlos, Daniela, Oscar also, thank you very much. Thank you. Carlos Garcia-Moreno: Thank you.

Thank you all.