Pablo Eguiron - Head of Investor Relations Jose Maria Alvarez-Pallete - Chairman and Chief Executive Officer Angel Vila - Chief Strategy and Financial Officer

Georgios Ierodiaconou - Citigroup Giovanni Montalti - UBS Global Asset Management Mathieu Robilliard - Barclays Capital Mandeep Singh - Redburn Partners James McKenzie - Fidentiis Equities Keval Khiroya - Deutsche Bank Alberto Agnano - Goldman Sachs & Co. David Wright - Bank of America Merrill Lynch Luis Prota - Morgan Stanley James Ratzer - New Street Research LLP Julio Arciniegas - RBC Capital Markets Fabian Lares - JB Capital Markets

Ladies and gentlemen, thank you for standing by, and welcome to Telefonica's January-September 2016 results conference call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Pablo Eguiron, Head of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Telefonica conference call to discuss January-September 2016 results. I am Pablo Eguiron, Head of Investor Relations. Before proceeding, let me mention that financial information contained in this document related to the first nine months of 2016 has been prepared under International Financial Reporting Standards, as adopted by the European Union, and that this financial information is unaudited. This conference call webcast, including the Q&A, may contain forward-looking statements and information relating to Telefonica Group, or otherwise. These statements may include financial or operating forecast and estimates based on assumptions or statements regarding plans, objectives, and expectations that make reference to different matters. All forward-looking statements involve risk, uncertainties, and contingencies, many of which are beyond the Company's control, and which may cause actual results, planned objectives, or expectations to differ materially from those expressed or implied. We encourage you to review our publicly available disclosure documents, filed with the relevant securities market regulators. If you don't have a copy of the relevant press release and the slides, please contact Telefonica investor relations team in Madrid by dialing the following telephone number: 3491-482-8700. Now, let me turn the call over to our Chairman and CEO, Jose Maria Alvarez-Pallete. Jose Maria Alvarez-Pallete: Thank you, Pablo. Good morning to all of you. Today with me is Angel Vila, Chief Strategy & Finance Officer. And during the Q&A session, you will have the opportunity to address us with any questions you may have. Our transformation process, focused on quality differentiation and data-centric strategy, is paying off. The next step is to focus on growth acceleration. Operating cash flow growth is set to accelerate as CapEx-to-sales peak is left behind and synergies flow. In the third quarter, Telefonica achieved sustained progress. We are particularly pleased with the organic year-on-year growth acceleration in OIBDA, operating cash flow, reported EPS, and free cash flow. ForEx is looking better nowadays, and its negative impact in headline is clearly easing as our Q3 reported OIBDA showed almost flat performance year-on-year versus minus 7.1% in the second quarter. Leverage is on a downward path, thanks to the robust free cash flow generation improvement in the third quarter, reducing debt by €2.6 billion in the last three months to just below €50 billion. Business sustainability is reflected in improved fundamentals across countries. In Spain, market value is undoubtedly increasing. In Brazil, we are posting a stellar revolution with operating cash flow growing 38% organically versus July-September of last year. Profitability in Hispanoamerica is returning to growth. Germany continues to expand margins. And UK financials are improving sequentially, consistently outperforming the market. Deleverage sustainability is also granted with the new financial objectives. The aim is to strengthen the balance sheet through, first, attractive and market-consistent shareholder remuneration; and second, a sustainable organic net debt reduction with growing free cash flow; and third, portfolio optimization policy in order to reinforce our strategic positioning. We are announcing new financial objectives, in order to ensure sustainable remuneration, with a pay out of around 50% with growing free cash flow and consistent organic deleverage. As such, we are revisiting our dividend policy for 2016 and 2017. The dividend will now amount to €0.55 in 2016 and €0.40 in 2017 a split into two tranches, in both cases. The first tranche of the 2016 dividend will be payable in the form of voluntary scrip dividend in the coming weeks of €0.35, plus €0.20 per share in cash to be paid in the second quarter of 2017. In addition, and in order to complement our shareholder remuneration, we cancelled 1.5% of tertiary shares some weeks ago, leaving this position at 2.8%. The 2017 dividend will consist of two cash tranches of €0.20 per share, with payments to be made in the fourth quarter of 2017 and the second quarter of 2018. As a result, in the calendar year of 2016 payments will amount to €0.75 per share, while in the calendar year 2017 they will be €0.40 per share. Our objective is to maintain a solid investment-grade credit rating through organic deleverage with a view to achieve leverage ratio comparable with a BBB/Baa2 rating. As shown on Slide 3, and regarding the operating guidance, in an environment of longer handset life cycles we expect service revenue to be the key metric going forward; and these are growing under guidance criteria at a very strong rate of 4.4%. OIBDA margin and CapEx-to-sales are on track to meet targets, set at the beginning of the year. To review Telefonica's financial snapshot, please move to Slide number 4. Organic growth rates are very sound in the quarter as OIBDA accelerated to 3.1% year-on-year, organically and operating cash flow to 10.8%, with stable service revenue growth from previous quarter and margins expanding 1 percentage point year-on-year. Up to September, organic revenue growth was 0.8% year-on-year, but this is much higher when you look at the service revenue: an OIBDA increase of 2.2% and 3.1%, respectively, while margin expanded 0.7 percentage points. On operating cash flow, growth reached almost 6% versus the last year figure. The reported OIBDA decline of just 1% versus the third quarter of 2015, along with the very solid management of the P&L items below it, drove an EPS of €0.19, 44.8% higher than last year figure. On the other hand, reported year-on-year evolution continues effected by a negative ForEx impact, although this has significantly eased in the third quarter. As in previous quarter, this negative FX effect in the first nine months is neutralized at free cash flow level as OIBDA drag, in absolute terms, is countered by lower payments of CapEx, working capital, taxes, spectrum, interest, and others. Let me mention that the LatAm FX impact on the year-on-year variation will diminish in the next quarter as the bulk of the Argentinean peso devaluation took place in the fourth quarter of 2015. Lastly, there was a strong sequential improvement in free cash flow to €1.5 billion, leading to surplus the €2.3 billion in the first nine months. As seen in Slide 5, free cash flow generation continued to improve, both sequentially and year-on-year. In the third quarter, free cash flow totaled €1.5 billion, up €0.8 billion quarter-on-quarter, with a stronger performance across the board, despite greater investments and spectrum payments. Excluding spectrum, free cash flow grew 30.8% year-on-year. In the first nine months, free cash flow generation remained robust at €2.3 billion; up €1.1 billion versus the same period of 2015, on improved operating cash flow and lower interest taxes and minority payments, as well as spectrum, and despite higher working capital consumption, still impacted by seasonality. We expect free cash flow to improve further in Q4 as operational performance improves, and FX and other seasonal factors ease. We estimate full-year free cash flow to exceed €4 billion. Please move to Slide number 6. In this slide, we show the different moving pieces affecting OIBDA evolution. On the one hand, organic growth remains and is stronger, as already mentioned. On the other hand, FX negative impact is markedly improving. OIBDA year-on-year evolution improved sequentially, more than €250 million, as FX drag was reduced to minus 4.4 percentage points and organic contribution accelerated. I would like to stress that we expect this trend to continue in the fourth quarter on easier FX year-on-year comps. To review the quality of our revenues, please turn to Slide 7. Organic service revenues have, once again, performed better than total revenues, in almost all regions, increasing the third quarter by 1.4% year-on-year, offsetting the continued downward trend in handset sales across the board. I am particularly pleased with the acceleration that we have seen in both HispAm and Brazil this quarter, with Germany and the UK improving their trends, too. The revenue mix reconfiguration continues to be supported by the growth in broadband connectivity and service on connectivity, representing 49% of total sales; 7 percentage points more than a year ago, capturing Internet of Things, cloud, and data opportunities, among others. Slide 8 takes you through our accelerating OIBDA expansion. Organic OIBDA ramped up in the quarter, fundamentally, due to our disciplined cost management efforts derived from merger synergies, and from the global efficiencies and simplification plan. These factors led to a 3.1% year-on-year boost; up 240 basis points versus the second quarter. In the first nine months, there was OIBDA growth across the board. It's also important to point out that our portfolio diversity is really helping to drive our OIBDA performance. On the back of what I have just mentioned, we also saw margin, which was 31.9% at Group level, expanding year-on-year across all segments this quarter. As you can see on Slide 9, our progress made at OIBDA level is driving a brilliant operating cash flow performance, which grew 10.8% in the third quarter, 930 basis points more than in the second quarter, benefiting from CapEx and OpEx optimization. Profitability in Brazil and Spain contributed most to the operating cash flow performance over the quarter. In July-September, 79% of CapEx was devoted to growth and transformation as we continued to invest in our networks to provide and rebuild connectivity for our customers. The slight year-on-year dip in CapEx investment reflects phasing effects. Please turn to Slide 10. Once again, this quarter we have successfully executed on our substantive high-value strategy across our footprint, focusing on network evolution, and setting the stage for further topline growth. We have driven penetration levels up year-on-year, mainly smartphones, LTE, fiber, and VDSL, [propelling] higher customer lifetime value. As such, average revenue-per-access expanded 2.6% versus January-September 2015, and churn was reduced. It is also worth highlighting the success of the more-for-more tariffs we are landing, and the high-end pricing power achieved with fiber and 4G bundling strategies. In Slide 11, let me highlight data trends and the significant upside opportunity we foresee ahead of us. As shown in the different charts, in recent years we have been experiencing a sustained data traffic explosion, with the third quarter of this year year-on-year growth at 65% for mobile data and 45% for fixed. This rocketing demand requires stronger networks. A good example of this is that in Spain private accesses already have two times higher data consumption over DSL. While in mobile broadband, a comparison with other regions suggest that mobile broadband in Europe can double in the coming years. The conclusion is clear: data growth is unstoppable. Slide 12 shows the evaluation of our data monetization metrics. We continue to develop innovative data propositions across the Group to benefit from the data explosion, commented before. In mobile, it is worth mentioning our new more-for-more contract portfolio in Germany, and new prepaid data plans for LatAm, with a focus on integrated recurrent plans. As a result, the larger smartphone base and the higher data usage, led by LTE customers up 2.5 times year-on-year, and its average consumption uplift of 63%, translated into higher ARPUs and the acceleration of data revenues to 12% versus the third quarter of 2015. In terms of fixed data, a wider fiber customer base, along with offerings focused on bundling content, are driving a strong traffic expansion, especially around video. Turning to Slide 13, with the customer at the center, Telefonica is becoming a platform where innovation is offered to our customers and integrated in our internal processes. In addition, our increasing number of partnerships with industry leaders reinforce our global positioning. Digital services revenues grew 10.7% year-on-year in the quarter, mainly driven by video, on the back of our investment to transform ourselves in this new digital era. I am pleased to highlight that Gartner has, once again, recognized our efforts in the managed machine-to-machine services space, naming Telefonica as a leader, for the third year running. On Slide 14, TGR continued to expand ultra-broadband networks and simplifying operations across its footprint. As a result, 33.7 million premises were passed with fiber already, of which 21.4 million have fiber to the home. And LTE coverage increased 9 percentage points year-on-year to 58%, with Europe expanding at 86%. Additionally, we continued to progress in network quality and users experience by building a Smart Wi-Fi home experience and a new set-top platform to enhance high definition video. On network innovation, I would like to highlight milestones, such as the successful trial of 4G speed of up 800 megabits per second, and the extension of our software optimization, the [indiscernible] network optimization. A key step towards IT transformation in the quarter includes continued advance in Full-Stack evolution of an online channel in Spain and system consolidation in Germany. Lastly, I am pleased just to highlight the strong advance in big data platforms, with capacity four times higher year-on-year. Now, I hand over to Angel.

Thank you, Jose Maria. Slide 15 reviews our domestic business. We are pleased to present the early results of the new conversion portfolio, launched in July. The first, and most notable was the acceleration in higher quality accesses growth, with ultra-broadband and mobile contract net adds posting robust figures. In addition, churn stayed low across services, proving the resilience of our customer base. On the other hand, TV results were impacted by the start of the football season and promotional activity in the market. Our superior fiber-to-the-home and LTE networks, along with top TV bundles are clearly paying off, and give us plenty of room to up-sell in a market where commercial activity is more and more focused on quality. As such, solid loyalty and increasing convergent ARPU, 11% up year-on-year to €82, translated into a positive evolution of financial results, as you will see in the next slide. Service revenues continued their upward year-on-year trend, despite tougher comps this quarter. Wholesale revenue TV revenue declined, and the year-on-year effect of the tariff update in May 2015 faded from May 2016. The topline increase in consumer and wholesale segments accelerated sequentially and more than off the IT seasonality in the business segment, which is expected to revert in the next quarter. Once again, OpEx declined year-on-year through increased efficiencies, which accommodated the higher net content costs and led OIBDA to increase 1.8% year-on-year, ex non-recurrents with a margin expansion of 0.9 percentage points to 43.3%. On the bottom of the slide, we would like to highlight how cash conversion is accelerating with operating cash flow growing year-on-year for the second quarter in a row to 7.1%, ex non-recurrents. To review Telefonica Deutschland, please turn to Slide 17. Good trading momentum was maintained with strong contract net adds on the dynamism of partners. After the migration of contract customers to O2 premium brand, we enhanced the commercial offering with O2 Free, launched in October. The market continued to be highly competitive, but with early signs of easing pressure in the non-premium segment. Additionally, LTE continue to make progress with average data usage up 15% quarter-on-quarter. As a result, mobile data monetization continued to flow through to mobile service revenue, and led to an improving quarter-on-quarter trend when excluding regulatory impacts. Incremental synergies, together with a lessening effect of transformation OpEx, translated in OIBDA acceleration in Q3, year-on-year to 3.6%, and OIBDA margin expansion of 2 percentage points to 24.7%. In the UK, as seen on Slide 18, we highlight continued traction in the contract segment, driven by market-leading levels of churn in contract, thanks to our high customer satisfaction. LTE is the main growth lever, with a penetration of 45%, up 15 percentage points year-on-year and with LTE traffic accounting for 67% of total data traffic, up 23 percentage points versus Q2 2015. CapEx continues to grow as we roll out LTE with outdoor coverage now at 93%. Mobile service revenues were up 1.1% excluding auto refresh, reverting from minus 0.2% in the previous quarter, as customers choose higher tariff bundles and larger data bolt-ons, as can be seen in the 8.2% average subscription per user year-on-year growth. OIBDA returned to year-on-year growth of plus 1.6% on revenue flow and cost control. As a result, margin expanded 1 percentage point year-on-year to 27.3%. In Brazil, as shown in Slide 19, ARPU growth in key services is the base to our outstanding performance. In this sense, our positioning in value segments, which was reinforced once again in Q3, drove double-digit ARPU growth in mobile, ultra-broadband, and payTV services. In mobile, this performance was mainly leveraged on data consumption with an ongoing increase on 4G adoption and improvement on top ups in prepaid. In fixed, it was driven by the successful cross-selling execution, and the gradual deployment of our fiber reach. Turning to Slide 20, let me highlight the year-on-year growth acceleration across financial metrics in Q3, driving a very strong operating cash flow generation. This outstanding performance is built up on three main premises: first, the consistent service revenue growth acceleration, well above the sector, reaching 3% year-on-year in Q3, despite macro headwinds and lower handset sales. Second, the increased profitability, above 33% this quarter, on efficiency measure and successful execution of operational synergies, already executing two-thirds of the best-case scenario with €229 million achieved as of September. And third, on our CapEx execution below initial expectations with strong efforts on optimization, partly on the clear benefits of big data intelligence at the core of our strategy. In HispAm, as seen on Slide 21, commercial activity is focused on value with accesses growing at strong rates, despite more intense competition in the last quarters. In the mobile business, third quarter net adds improved to reach 1.1 million new customers, with contract accesses up 6% year-on-year, reinforcing our leadership in the region. In fixed, our focus is on improving the quality of service, delivering higher broadband speeds to our customers and bundling new services. As a result, high-speed broadband accesses grew by 14% and payTV by 7%, year-on-year. Please turn to Slide 22 to review the financials of our business in HispAm America. Quarterly revenue growth accelerated to 4.1% year-on-year with better contribution from Argentina and sustained positive performance from Colombia resulting in OIBDA returning to growth of more than 6%, with a sequential improvement in all countries, except Mexico and Peru. As such, profitability expanded by 0.6 percentage points, to pass the 30% threshold once again this quarter and revert negative year-on-year growth posted up to June. Let me now move to the financial metrics, starting on Slide 23. In the third quarter we have made a substantial reduction in our net debt figure, which was reduced by €2.6 billion to just below €50 billion. Almost 60% of such debt reduction is purely organic. It's explained by the growth in free cash flow, which reached €1.5 billion in the quarter, up 7% versus third quarter 2015. The remaining debt reduction is explained by financial measures, mainly the €1 billion hybrid issue and the partial disposal of our stake in China Unicom. As a result, our leverage ratio goes down to 3.05 times, 0.15 times lower than in June. We expect further deleverage, thanks to the stronger free cash flow in the fourth quarter, as well as the cash preservation through the voluntary scrip dividend in November. On Slide 24, we continue to tap different markets at historical lower rates, further strengthening our liquidity cushion, currently close to €22 billion to cover coming years' maturities. Our latest capital market transactions have also increased our average debt life above six years, taking into consideration our recent bond issuance, launched in October. Effective cost of interest payments in the last 12 months stood at 4.31%; 32 basis points lower year-on-year. Europe reduces 72 basis points, thanks to debt refinancing at rates below average cost. Interest payments in LatAm increased, of course, by 40 basis points, mainly due to higher payments in Argentinian pesos, higher cost of Colombia, due to interest rates and inflation increase and other non-recurrent effects in Brazil. I will now hand back to Jose Maria, to recap. Jose Maria Alvarez-Pallete: Thank you, Angel. To conclude, please turn to Slide 25. Our strategy has been successfully executed. We are now back to growth, thanks to transformation strategy has paid off. Our next step is to accelerate growth with the CapEx intensity peak already behind us and benefits from synergies. As you can see from today's presentation, our proof points in the third quarter of this year are clear. OIBDA and operating cash flow ramped up organically year-on-year in this quarter. EPS and free cash flow also are reporting very solid increases and leverage is on a downward path. Earnings momentum is very positive, as all business units are improving fundamentally, reflected in the year-on-year organic growth posted across the board, up to September, built on best-in-class assets namely, spectrum, networks, and differential offers. New targets set today have the objective to be a solid investment-grade credit rating company through, first, an attractive shareholder remuneration and second, consistent organic deleverage, linked with growing free cash flow. Thank you very much. And now, we are ready to take your questions.

[Operator Instructions] Our first question comes from Georgios Ierodiaconou of Citi. Please go ahead.

Hi. Thank you for taking the questions. I have two questions. The first one is on the business revenues in Spain. And I appreciate you have already made a comment around the IT service seasonality, but even the connectivity revenues look to have gone backwards a bit. In the previous quarter they were down a couple of percent, and they were showing improvement, now we're back to around negative 5%. So I was wondering whether there is any specific drivers for the third quarter or you are seeing any renewed pressure on the business revenues more broadly. Also, my second question is on the UK. Part of the improvement, from what I understand, and maybe I'm getting this wrong from the presentation, comes from roaming and the O2 Travel bolt-ons. So I'm just wondering, given that we are going to - you are not going to be able to charge for EU roaming next summer, probably you're also going to have to pay for higher volumes when customers travel. Are there any measures you have in place to compensate the impact on EBITDA in the UK? And will that affect churn? Or do you think you can keep that low also? Thanks. Jose Maria Alvarez-Pallete: Thanks for your question. In terms of your question on Spain, in fact, what we see is that recovery, in terms of ARPU expansion, is a reality and is happening, namely on the residential market. You have several effects out of the revenues in Spain this quarter. First, handset sales have declined 21% year-on-year and that has been affected. Excluding that, service revenue has grown 0.6% year-on-year in organic terms and it has been pushed by mainly Fusion and the new wholesale services. It is true that their year-on-year comparison is going to be affecting us in terms of all different factors. First, our price upgrades I mean our order for upgrades. We have one offer upgrade in July this year and therefore, you need also to take into consideration the year-on-year comparison with the previous year. Secondly, and probably more importantly, on the B2B side of our revenues we have some seasonality effects namely on the IT part of our business. That has been providing us with a weaker quarter in Q3 that we foresee to improve in the next weeks, in the next months. And In terms of our other revenues are accelerating, they account for 90% of our service revenue; they have accelerated to 8% year-on-year. Those are revenues coming from wholesale. It is true that it's coming from easier comps, we have not the [owner] revenues in the third quarter of 2015 and MTRs; and also some MVNO revenues. So, overall in Spain, we have market dynamics that are going to the right direction. We have some volatility coming out of some seasonality effects on the business, on the B2B business. We have the handset revenue declining sharply, this is across the board. But out of the consumer trends, what we can see is that we are growing the consumer segment 1.3% in the first nine months of this year, with Fusion revenues coming up 23%. So everything is evolving according to expectation. And we will have some seasonality effect namely on the B2B business. In terms of your question around the UK, mobile service revenue have grown 1.1% year-on-year, if we exclude the refresh effect and therefore, we have returned to growth. And this is mainly due to higher subscription revenues, increased number of data bolt-ons, and moving customer to higher tied bundles and therefore, out-of-bundle revenues. And those have been more than offsetting negative impacts coming from roaming declines, and MTR. So basically the effects coming of the O2 UK is due to an improved trend in terms of higher subscription revenues and therefore, we think they are recurring, they are sound. So they are not just coming from one single effect. In terms of the roaming part, roaming revenue has been supported by strong take up of what we - the protocol O2 Travel is a proposition. Approximately 80% of our roaming customers are on O2 Travel and, therefore, they have been giving customer confidence in terms of using data abroad. So overall, we think that if you exclude both effects, the fact that the major driving part of the service revenue growth is basically around higher subscription revenues. And that we have been able to stabilize roaming revenues through these new tariff, we think that the revenue trends in the UK are sustainable.

Thank you, Georgios. Next question please.

Our next question comes from the line of Giovanni Montalti of UBS. Please go ahead.

Hello, good morning. Thank you for taking the question. I don't know if you can help us understand better the divergence between the acceleration in net adds for mobile contracts and a bit of light net adds in terms of fixed broadband. And also, if you can share a bit more comments with us about deleveraging potential asset disposals. Thank you. Jose Maria Alvarez-Pallete: Thanks for your question. Taking the first one, on these divergence that you mention, you know that we have renewed our offer in Spain and therefore, we have included that second line in most of our Fusion package and therefore that is an accelerating mobile net adds. We are right now under a promotion, which effects are going to be flowing into the last quarter. And therefore, we have also some promotional impact this quarter that, as the promotion will be expiring in the next weeks will derive into a - and we will see where the customers evolve after the promotion. But the previous experiences are telling us that those promotions at the end are resulting into ARPU accretion. So the divergence that you are seeing are coming from these bolt-ons, out of this bundling strategy of having a second mobile line. And we expect to see the impact of the promotion in the next weeks. We are basically having more mobile, announcing higher level packs and therefore, we will foster portability as some of our Fusion subscribers are also competitor subscribers. So that's why we have been willing to add this second line on the Fusion offer.

Hi. Giovanni, this is Angel. Regarding deleveraging, you have seen that at the end of September we stand below €50 billion of debt. We have enjoyed or managed to get a very strong debt reduction in the quarter of €2.6 billion. We remain committed to maintain a solid investment-grade credit rating, aiming at ratios compatible with BBB, BaaA2, so what we are doing is reiterating our commitment of solvency and liquidity although reformulating this objective. With a decision that we took or the Board took yesterday to reduce the dividend, we are moving to an objective of organically deleveraging since we are increasing the retained free cash flow in the business, and generating cash in excess of our dividend payments that clearly will be directed towards improving our balance sheet. On top of this, all inorganic measures that would be thought of remain available to us, if anything, de-risked. But we would not want to entertain discussions on those potential measures we will just execute them when they make strategic sense and they create value.

I don't know if I can follow-up very quickly on the last point. Thanks so much for your answer, but if I can follow-up very quickly. We have already discussed this last quarter, and I know you have taken actions in this line, but since there is a lot of focus from investor on your balance sheet, just to get a bit more visibility. I understand today we have more flexibility. What's the biggest risk that you see in your cash flow projections to get you where you want to be in terms of deleverage? What's the biggest risk in your view, on this side? And where would you look for more flexibility if things do not go as expected? Thanks very much. Jose Maria Alvarez-Pallete: Well, let me take that question, if I may. What we are doing right now is that we are betting - we think deleveraging is the right decision and we are betting our deleveraging strategy on organic free cash flow generation. During the last three months, we have been working on our business plan for the next three years. And what we see ahead of us is a growing business, namely in terms of free cash flow, but also in terms of revenue [IDA], and with a lower CapEx intensity. And that's a vision that is also sustained by the recent performance namely, this quarter figures shows that we are moving into that direction. As a result, we are fully confident that we can rely on organic free cash flow generation to be the base for an organically based accelerated debt reduction. And this is why we think that the most value-creating option for our shareholders is to adapt our dividend policy in order to warranty that we do not depend on external factors of processes to deleverage. And remember that we have indicated that dividend payment is going to be below 50% of free cash flow generation. So we think that with the current business trends that we foresee, with the investments that we have been doing in the last four years, in which we have been very strongly investing in our assets, with the fiber position that we have in Spain, with the LTE positioning that we have everywhere around, and with the data traffic and data volumes that we are seeing ahead of us, and data monetization that we are starting to have and take a look at how data monetization is growing, excluding SMS, we think that we can be basing our deleveraging strategy on free cash flow generation. So that's what we are betting; that's our view. And we don't want to have is to be depending on external factors to deleverage that are out of our control.

So let's say the 50% payout, as a guidance, is as important as the absolute amount of the EPS, €0.40, we need to look also at the 50% payout. That's important for us to understand. Jose Maria Alvarez-Pallete: We don't guide on that. We are just indicating what we see ahead of us today, and that's where we are at in our policy, our dividend policy.

Thank you very much. Thank you. Jose Maria Alvarez-Pallete: Thank you.

Our next question comes from the line of Mathieu Robilliard of Barclays. Please go ahead.

Yes. Good morning, thank you for taking the questions. If I can follow-up on the previous question. If I look at the absolute cash dividend that you will be effectively paying throughout the calendar 2017, and going forward, if I'm doing my math correctly, there's not a big change; there's no almost no change at all compared to the previous policy. I guess, where you're gaining more flexibility is probably if you don't buy back shares, as you've done in the past, to kind of offset the scrip dividends. So is my understanding right, that that's where you're gaining more flexibility from? And the second question had to do with Hispanoamerica. At the Q2, you had flagged that in a number of countries the competitive and macro environment had deteriorated and you were not expecting a quick recovery, which is basically what we got in Q3, apart, maybe, from Argentina, and Colombia to some extent. Are you becoming a bit more constructive when you look ahead? Or you still think this is going to be some tough quarters on the basis of competition and macro environment? Thank you very much.

Hi, Mathieu, on the first one, if you compare the €0.75 to the €0.40 to which we are moving, that is 1.9, 1.8, depends on the number of shares, billion euros cash saving. In your statement, you were assuming that we would have continued with the voluntary scrip dividend partially for the next year, which is something that was not communicated to the market. We are executing now in November the €0.35 voluntary scrip dividend tranche, but it was not approved that, that would be the same for the coming years. So if you look at calendar year 2017, compared to €0.75 going to €0.40, it's [€1.8 billion] saving. And that is something that arithmetically leads you to less or around 50% payout of the free cash flow that we are going to be generating in a year like 2016. And we are, for the first time, committing to our free cash flow target in our presentation to show to you our commitment to cash flow generation. And, as Jose Maria was saying, we are seeing growth ahead for the coming years. Had we stuck to the scrip dividend, we would have been issuing shares continuously, and at some point we would have to remunerate those expanded number of shares in cash. So by stopping to do the scrip dividend, we are stabilizing the cash outflow and the number of shares. So there is a very significant saving for the coming years in this new remuneration policy. Jose Maria Alvarez-Pallete: And taking your second question on HispAm, we have some markets in which we are concerned, namely, Mexico, in which their market dynamics are not sound. They started to be not sound in the Christmas campaign last year, and it has continued all over this 2016. It is true that we are seeing some signs of a more rational approach, not in pricing, but in terms of the time duration of promotions and bolt-ons, but still very weak to bet on a recovery of the value of that market. We are growing in terms of customers, but the impact in revenues and the impact of OIBDA also has the asymmetry in terms of interconnection is being faded way because interconnection rates are dropping. So it's not going to be an easier year, and still too soon to say that we are seeing any signs of recovery of the Mexican market. So we think that the Mexican market is going to stay complex for a while. The other market that you were mentioning, Peru, we have a very sound commercial position there. And what we are doing there is fighting for the value customers. There is competition being intensified, mainly on the low end, but also on the high end of the market. But in terms of contracts and in terms of payTV, we are doing pretty well. It is true that we have some impacts in this quarter coming, namely, in Peru, from some regulatory effects in terms of interconnection MTR declines, and also in the fixed line business, coming from less hardware revenues. But it is also true that we are defending very well our market share, and the value market share, the value customers. So we think that in Peru, market dynamics will be back to normal at some point. And in the meantime, we are effectively defending our position. And in the low end, in Latin - and, by the way, you have two other countries which have been turning around in the positive way, which are Argentina and Colombia, which are showing good signs of recovery: namely, in Argentina due to a tariff repositioning, and in Colombia we are starting to get more traction on prepay. So we are seeing a different mix of performance in Latin America, some of them, namely, Mexico, being concerning, but Mexico weighs little on our overall revenues, while there are other markets which are weighing more, like Peru, Argentina, or Colombia, are doing better. We are concerned in terms of the low end of the market, namely, on prepaid. Our evolution of prepaid in Latin America has not been brilliant in the last quarters. But we have learned how to proceed. And namely in Colombia, we have been testing in Colombia, we will be expanding a new tariff portfolio across the board to improve the competitive position in prepaid. And we are starting to see better trends. And, by the way, efficiency targets of OpEx are paying off. OpEx is growing below inflation everywhere. So we have a better impression than what you have in terms of Latin American prospects.

Thank you very much.

Yes. And to complement my previous answer, you should not expect us to carry any share buybacks in any meaningful way.

Thanks, Angel.

Thank you, Mathieu. Next question please.

Our next question comes from the line of Mandeep Singh of Redburn. Please go ahead.

Hi. Thank you for taking the question. First question I really had was on the Spanish business development. You've given a little bit of color on the revenue trends, can you help us understand how we should expect OIBDA to evolve, going forward? Clearly, you've only booked a partial quarter of increased content costs, so should we expect a negative development in Q4 from a higher content cost applied for the full quarter? And how does that work with the revenue dynamic? Would the revenue dynamic offset that? So just give me a little bit of a forward-looking indication of how we could expect the revenue and OIBDA dynamic to evolve in the quarter. Secondly, on - I'm sorry to come back to the balance sheet but it clearly is a big focus for investors. We noticed that the CEO of O2 UK said the IPO is off this year. Do you feel that the organic deleveraging, let's say it's €2 billion, because you generate €4 billion of cash, do you think that's enough to keep the rating agencies away? Have you had a constructive discussion with them, based on what you've announced today? Thank you. Jose Maria Alvarez-Pallete: Thanks for your question. In terms of Spanish business OIBDA, we have already been - as you mentioned, we have already had in the third quarter impact of - two impacts, so to say, on a quarter-to-quarter comparison. The first impact was the Champions League impact, which we didn't have last year and we started to have from the first quarter of this year. And the second one, as you were mentioning, was the new prices of the La Liga rights; and they have started to flow during this quarter, as well as less wholesale revenues coming from the packages that we don't own, and therefore has been affecting our revenues as well. So you have in the third quarter a good impact - a good proof point of what the new kind of revenue structure and OIBDA structure. 2016 margin at the end of the year, we think, will be around 40%, although it will be probably lower in the fourth quarter, due to a higher net content cost that you were mentioning. But we also have initiatives to reduce OIBDA tension. Some of them are already flowing, and will be progressively flowing, like the personnel reduction, referring to this incentive - voluntary incentive retirement program. And also, we are seeing some better mix in terms of value and tariff up-sell. So all the efficiencies, like the distribution channel restructuring that we are currently implementing, will also help. At the end of this year, we think we should be around above 40% margin, and we think that's a sustainable prediction.

Regarding rating agencies, of course, we cannot speak for the rating agencies. Of course, we have frequent contact with them. And today's announcement is not a surprise; those conversations are confidential. But what is obvious is that the revised dividend policy improves our credit quality. It's a step in the right direction towards cash preservation, since more cash is retained in the business. In addition, we are seeing a very positive evolution of our free cash flow and a growing trend, going forward. So this will allow us to deleverage organically in a consistent way. On top of this, any other measures that you can think about remain available, and, if anything, they would be derisk. So, today we are a better credit than we were yesterday. Jose Maria Alvarez-Pallete: I would like to complement on what has been said. What we are doing means that we are fully confident that we can rely again on organic and growing free cash flow generation to reduce leverage. It also means that we do not need any more to do any divestment in order to meet our deleveraging goals. It means that from now on any such process will be run exclusively according on its strategic and value-creating merits. And it means, as well, that we are no longer under any rush to proceed with any transaction. Because by doing what we are doing today, we think that we should not be depending any more, on any longer, on external factors to deleverage.

Thank you, Mandeep. Next question please.

Our next question comes from the line of James McKenzie of Fidentiis. Please go ahead.

Hi, thanks for taking the question. Just a quick question on Spanish cash flow. Could you give us an idea of what the change in advance corporation tax may mean for the cash flow in the fourth quarter? And does it affect the guidance that you gave in the first half conference call, where I think you gave quite a lot of guidance on interest costs and tax? Thanks very much.

We have been managing the situation on the change on the advance payments that has been put in place by the Spanish Government, so that you can still rely on our guidance of less than 20% cash tax rate for full-year 2016.

Okay. And I think you talked about - at the first-half conference call you talked about low-teens decline in financing and tax rates. Is that still applicable?

Our cost of debt now stands at 4.10%. This is a blend of 3.21% in Europe, which continues to go down; and in LatAm, currency is 9.25%. The trend that we see in our financing in European currencies is clearly downward, as you could see in the issuances we did couple of weeks ago, both in the four-year tranche and the 15-year tranche, which were below - the 15-year tranche was below the 2%, and the four-year tranche was at 0.3%. So you should expect us to continue on that declining trend in the current macroeconomic environment.

Sure. Brilliant. Thanks very much.

Thank you, James. Next question please.

Our next question comes from the line of Keval Khiroya of Deutsche Bank. Please go ahead.

Thank you. I've got two questions, and both related to Spain, please. Firstly, you lost 44,000 TV customers in Spain in Q3. I understand this is a quarter when many customers churn, but that level of loss is still almost four times worse than the level last year. Can you talk a little bit more around the dynamics in the TV market versus one year ago? And then secondly, going back to the revenue profile in Spain, which you have given some color on, I think on the Q2 call you said the most recent price rise in July should help the Q3 and the Q4 trends. Now, looking at the Fusion ARPU, the absolute percent growth is actually a little bit worse than Q2. As these promotions roll off should we, therefore, expect an acceleration of growth of Fusion ARPU from Q4? Thank you. Jose Maria Alvarez-Pallete: Thanks for your questions. Taking the first one on the TV net adds in Spain, they have been impacted by the price update that was included in the basic packs of the revamped Movistar Fusion+ in August, as well as the one made on the - on the one pay - on the pure one-play TV in September, which was upgraded from €22 to €25. There is also, as you were mentioning, seasonality and more promotional activity in the market; that has also been affected. And we have also included there the disconnection coming from the former satellite platform. So that - we foresee that process being almost over. So as a result, those are the major impacts that we have been having in this quarter. The consolidated churn is slightly up, 1.8% versus 1.6%, in the second quarter as this quarter has been impacted by the football or promotion in the market. Year-on-year, the churn is reduced almost one percentage point, as last year we had the bulk of the disconnection of DTS customers. So, a mix of effects. Once we - and then, taking your second question and trying to combine it with the ARPU of Fusion, ARPU of Fusion is 88 - 81.8%. And it has been growing, mainly from the tariff increases that we have been doing, but also on the higher value mix. We are moving customers upwards. And that's why today, in this quarter, in this third quarter, we have been also impacted by our own promo, in which we are trying to push customers from the low end part of the Fusion layers into the upper by giving a taste of the higher - high-end products. We should have a better view in the fourth quarter of both of those two trends. We are slightly optimistic, but too soon to say, as we will have the first customers that have been out of the promotion in the next weeks. So, probably, at the end of the year we'll have a better view. Let me just highlight one thing, and is that we are - the Fusion customers are up [17.1%] year-on-year, the number of customers. And out of that - and Fusion revenues are up 23% year-on-year. So we are much more focused. We are focused on Fusion as well, but we are also focused on the non-Fusion customers, and that's where we are dragging; and we are also focused on the business segment, in which we need to make sure that we recover the dynamics of the second quarter. So the overall impact in revenues have different colors, different flavors in Spain.

That's very clear. Thank you.

Thank you, Keval. Next question please.

Our next question comes from the line of Alberto Agnano of Goldman Sachs. Please go ahead.

Hi, good afternoon. Just a very quick follow-up on that. Can you elaborate a bit on your decision to move to a more generic leverage guidance of maintaining investment-grade rating, and whether you have a leverage ratio in mind for that, and whether that change results from the previous target maybe being dependent on inorganic delevering? Or is it just a case of the stronger organic free cash flow generation that you highlighted a couple of times? Thanks.

Yes, we are moving the articulation of our target to a different weight, but we want to reaffirm our commitment to having a solid investment-grade credit rating. This has not changed. But we are no longer constricting ourselves to reach a specific leverage target on a specific date, because this was creating an environment which was not conductive to potentially taking the right decisions to create value and the right strategic decisions for the business. With the cash flow retention that we're going to do, we can organically reach a leverage ratio of 2.5 times net debt-to-OIBDA in the medium term. This is thanks to the cash preservation, the growth in the free cash flow that we are seeing for the business. But on top of this, any other measures that you could have thought of as potential executing, all those remain available, as well, to us. But we're going to focus the deleverage on organic deleverage, because we think that it's a sustainable way to go about this and not be dependent on factors which are beyond our control.

That's very clear. Thanks.

Thank you Alberto. Next question please.

Our next question comes from the line of David Wright of Merrill Lynch. Please go ahead.

Hello, guys. Yes, just a quick question. I noticed there was no guidance reiteration in the dividend statement, or your own report commentary, Jose Maria, and I think every other quarter, you very clearly do that. Can you confirm the full-year revenue guidance over 4%? It does still look a little difficult to achieve, given the nine months of 3%. And I think the Q3 was 1.4% service revenue growth. So can you fully confirm that target, please? Thanks. Jose Maria Alvarez-Pallete: Thanks for your question. As I have been saying during the presentation, we are focusing now on service revenue. Because the handset revenue decline is general, is out of our control, and, therefore, we are focusing on service revenue growth; and this is growing above 4% on the guidance that we gave, above 4%.

I see. So the top-line revenue growth is no longer expected to be over 4%, is that correct? Jose Maria Alvarez-Pallete: We will see. Again, it will depend on the handset evolution of the last quarter. But again, service revenue, which is the driving force behind the whole P&L, is growing above 4%.

Okay. Thank you.

Thank you. Next question please.

Our next question comes from Luis Prota of Morgan Stanley. Please go ahead.

Yes. Thank you. Two questions, please. First is on Spain, a follow up on the revenue trends. And with some slowdown in the service revenues growing up 0.6% this quarter, it was 1% in the first half, I understand, the lower wholesale revenues. But what I would like to get some more color is on the dynamics from the new tariffs put in place, including the football, and whether the dynamics there are more or less in line with your expectations. And more specifically, what I'm trying to understand is whether those customers that were in the - that were paying for all football before and that they are now in the 30 megabits per second product, and, therefore, not getting all the football content, whether you see a strong movement of up-selling or trading up to that 300 megabits per second to get all the football and driving higher ARPU, boosting revenues in the next few quarters. So those dynamics, in terms of up-selling there, would be great to know. Secondly, on CapEx, you are mentioning CapEx all the time in the presentation as part of the cash flow growth next few years. We know that this year guidance is 17% on constant exchange rate, next year 15%, but you are for the nine months in 15%. You were mentioning some phasing in the third quarter. Do you think that you will still be 17% in 2016 and 15% next year, or there is any room for lower CapEx guidance coming? Thank you. Jose Maria Alvarez-Pallete: Thanks for your question, Luis. In fact, several comments. You know that on the residential, namely Fusion, namely TV, and namely football promos, we are combining promotions with up-selling strategies in order to try to add new customers while up-selling the current subscribers. In this context, what you should framework the promos on the Premium Extra TV pack that we have launched, which we are trying to - we aim to encourage further subscriptions and increase in the TV mix after the promotional periods are over by letting customers to try the new contents. During the summer of 2016, we made available to all Fusion+ customers the Premium Extra package for two months. We have 400,000 subscribers adding to that promo at October 15. The impact in Q3 revenues is negative. Although not much significant, there were some upgrades, some downwards, and also some new customers. And it's still too soon to see subscribers' behavior after promo, because, as I was telling you, it was just two months. And we will see. I think that we will be betting off judging out of the effect of those promo on the fourth quarter. But as I was saying before, I am slightly - we are slightly optimistic with the first ratings, even though it's too soon to say. Remember that we have a record ultra-broadband net adds, 159,300 megabits per second, and this is driving higher-value customer. So we are trying to push revenues up by doing this kind of promotion, and by deploying the new products in terms of the attribute of speed and capacity. We think it's paying off. In Spain, the impact in this quarter is not mainly derived out of that because, in fact, as I was saying before, residence consumer revenues were up 1.3%. The major impact in revenues this quarter is coming from business, which is down. And there, again, it has to do with some seasonal effects, namely, on the IT contract part, and we are addressing that for the fourth quarter. And then, I would also like to say something on the impact of all those impacts in Spain. I also say in the previous conference call that once included everything, the extra accounting cost, we were aiming at preserving the margins because we thought we would be able to absorb the extra accounting cost with efficiency measures, and is being done, and it will be done in the fourth quarter as well. And, therefore, we are confident that we can preserve this level of margins, which are important for us because it justifies the strategy of betting on those expensive content. So the effort that we are doing in efficiency to absorb those content rights is very significant, and that's why margin is evolving positively. And then, on CapEx going forward, we are not guiding on that yet. We will wait for the final year. But what we see ahead of us, as Angel has been mentioning all across the conference call, is lower CapEx intensity coming ahead of us, because of several factors. We have deployed during the last four years, for example, in Spain an amazing effort in terms of fiber coverage. You have more fiber in Spain today that in the sum of the UK, Germany, France, and Italy together. And, therefore, this effort is done once in a lifetime. So combined with the fact that we are going to be simplifying radically our approach to legacy networks, and also derived from the fact that we are using big data in order to a smart deployment of CapEx, and we have learned a lot along the Brazil experience, allow us to think that we can do more of the same with less CapEx intensity, going forward.

Okay. Thank you very much.

Thank you. Next question please.

[Operator Instructions] Our next question comes from James Ratzer of New Street Research. Please go ahead.

Yes. Thank you very much indeed. Two questions, please. The first one was just regarding Hispanoamerica, where you've put up a very strong EBITDA performance, plus 6%. The text in the release does seem to talk quite a bit about lower commercial costs helping to support that, in particular, in Argentina, Colombia, and Peru, so it would be helpful to get a steer on how sustainable that 6% growth is. Do you think commercial costs in those markets now can be structurally lower, or this is just a timing effect? The second question I had, also in Latin America, was regarding Mexico. I was wondering if you could just talk a little bit more about how you see your longer-term strategic dynamic in that market. You mentioned the competitive dynamics weren't sound, and I think you spent about €130 million in CapEx year-to-date. I think AT&T is currently spending about $2 billion per annum. Is this a market you could consider exiting in due course? Be interested to understand what you see as the next steps forward in Mexico. Thank you. Jose Maria Alvarez-Pallete: Thanks for your questions. In terms of the first one, as I was saying before, the commercial cost evolution in Latin America has different flavors in different countries. We are being more aggressive in places like Peru, and we are also being affected in places like Mexico; but we have seen better trends in other places, like, you were mentioning, Colombia, or Argentina. So I think that going forward what you should expect from us is to be betting on the high-end-value customer, and, therefore, betting on those; and also, launching a better targeted rebate tariffs all across the board with contained commercial costs. So the overall trend that you are seeing in this quarter in HispAm, we see them stable, so we are not projecting any major impact. And remember that we have been able to grow all costs in Latin America below inflation, which is a significant proof point of the simplification efforts that we are doing across the board. In case of Mexico, our decision is going to be depending on how the market is going to be evolving. We do not see this market as a rational market. We see that - we think that something needs to change. Again, our exposure to Mexico is limited, and there are some factors that might change the market dynamics in the coming weeks. But Mexico is a pending issue for us in terms of turning around the business, or transforming our positioning in the market. I cannot comment further, because we are working on different alternatives. But what it is clear is that we are not satisfied with the Mexican situation, in our case.

And you mentioned other factors up in the market in the next - are these things within your control, or there are other market effects looking out for? Jose Maria Alvarez-Pallete: I was referring to some situations, like the Red Compartida, the shared network being auctioned by the government, the 700 megahertz; some players that might be less aggressive in the next [indiscernible]. So, factors beyond our control. On our case, we are taking our own decision, addressing operationally, and our situation for 2017 in order to be - to have a much more targeted approach into the market. So we are building our own case. And we think we can improve our own situation. But whether that's going to be enough to turn around the value in the whole market, we are not that relevant in that market.

Okay. Many thanks.

Thank you, James. Next question please.

Our next question comes from the line of Julio Arciniegas of RBC. Please go ahead.

Hello. Thanks for taking the question. Two questions, one regarding UK. The UK market, it looks like it will become a little bit more active in terms of fixed mobile convergence. I know that is not actively price promoted, but would you consider a change of strategy? Or how would you address if the UK market drives to a more active fixed mobile convergence, like Spain? And my second question is regarding the 2.5 times mid-term leverage target that you think that you can accomplish. Are the rating agencies happy with this sort of leverage? Thanks. Jose Maria Alvarez-Pallete: Okay, thanks for your question. Let me get back to something that I wanted to emphasize on some previous comment. It seems that there is some confusion around the market, reading of our words in the margins of Spain. I want to clarify that we expect margins in the fourth quarter of this year in Spain to be around 40%. So to be comparable and sustainable with the current levels of margins. I want to stress that what we foresee ahead of us in the fourth quarter of Spain is similar levels of margins to the ones that we have been seeing so far. Stepping now directly into your question around the UK convergence, we have several factors that allow us to think that we were protected, and we have optionality if that was to be the case. We do not see convergence, again, being demand-driven so far, and we do not see any of the players of the market being incentivized to do aggressive discount on the bundling. Therefore, we do not see a massive shift in the strategy in the UK. But having said that, what is crystal clear is that we have the best mobile asset in the UK with the lowest churn, the best quality; and, as a result, whatever could happen on that market, we have a very valuable asset. We think that there is room in the current market structure for a pure mobile leading brand player. And the proof point of that is that, as I was mentioning before, we are doing well in terms of subscription revenues, and in terms of customer satisfaction index, and, historically, lower levels of churn. So I think that customers are currently more interested in acquiring best-in-class value services versus a [indiscernible] service from the same provider. And we do not see aggressive discounts being promoted. That's why we think that we are in a good situation in the UK with, again, the best mobile asset, and in a market that is not looking like going to be significantly changed in the short term.

Regarding the second question, I did not set a target of 2.5 times net debt-to-OIBDA in the medium term, I want to be clear about that. What we are committing is to maintain a solid investment-grade rating, aiming at ratios that are compatible with a BBB. In an answer to previous question, I wanted to say that since we are in the new DBMS scenario, and in the free cash flow-growing scenario that we are, we expect to substantially accelerate net debt reduction organically; and this will take us organically towards 2.5 times net debt-to-OIBDA in the medium term. But on top of this, I also said we can have financial measures, as we have had in the past. And on top of this, we can also have other inorganic deleveraging measures. But we will not be rushed into those in a way that will maybe led to destroy value for our shareholders. But organically, we're going to move very much into the direction of the target. But on top of the organic deleveraging, all other options are available.

Thank you.

Thank you, Julio. We have time for just one final question, please. Thank you.

Our final question comes from the line of Fabian Lares of JB Capital Markets. Please go ahead.

Hi, guys. Thanks for taking my questions. The first one is with regards to Brazil. There's some been a lot of news flow with regards to Oi and how there is likely to be some type of restructuring there, not only from a financial point of view, but that assets could be up for sale. I know this is a recurring topic, but there's a news flow that has appeared in a number of sources, stating that Telefonica's management in Brazil would be interested. Considering your new free cash flow objectives and deleveraging, would you still consider to be looking at these assets? And if so, how would you contemplate these types of acquisitions? That would be the first question. Second, with regards to Hispanoamerica, could you let us know whether you, within these objectives, are contemplating, aside from Mexico, any other strategic asset reviews? So without specifying names, if you are considering any other possibilities of exits, or changing your footprint, et cetera, et cetera. Thank you.

Regarding potential M&A in Brazil, well, one can never say never. But we are clearly very focused on organic growth. And regarding Mexico, I think that Jose Maria already responded that we can be pragmatic in a situation of an unstable market, as we see it.

Okay. Thank you.

At this time, no further questions will be taken.

Well, thank you very much for your participation. We certainly do hope that we have provided some useful insights for you. Should you still have further questions, we kindly ask you to contact our investor relations department. Good morning. And thank you very much.