TIM Q2 2024 Earnings Call Transcript

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Provided by Quartr
July 31, 2024

There are 10 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to Team S. A. 2024 Second Quarter Results Conference Video Call. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company's presentation.

Operator

There will be a replay for this call on the company's website. After TSA remarks are completed, there will be a question and answer session for participants. At that time, further instructions will be given.

Speaker 1

Hello, everyone, and welcome to TSA's earnings conference for the Q2 of 2024. Thank you for joining us. I am Vicente Ferreira, Head of Investor Relations. Today, we share our highlights on video and afterwards, we will have our live Q and A session with our CEO, Alberto Griselli and our CFO, Andrea Vieques. Before we discuss our results, I remind you that management may make forward looking statements, and this presentation may contain them.

Speaker 1

Please refer to the disclaimer on the screen, which is also available in our earnings materials and on our Investor Relations website. With that, let's move to our results.

Speaker 2

Hello, everyone. I'm Alberto Griselli, CEO of TIM Brazil, talking from our headquarters in Rio de Janeiro. I'm pleased to share the highlights of our solid Q2 'twenty four results. Despite some macro challenges, we are taking advantage of favorable market dynamics to develop further our 3 Breeze approach and deliver robust results across the board. In the Q2, we maintained the pace growing our service revenue high single digit year over year.

Speaker 2

Our EBITDA grew above our revenues, sustaining margin expansion despite a tougher comparative basis. Our proxy for operating free cash flow reached a record high for the Q2, growing approximately more than 20% year over year. These solid financial results are accompanied by improvements in our services, innovation in our offerings and consistent infrastructure development. Our results are driven mainly by mobile services with revenues growing by 7.3 compared to Q2 2023. Consequently, ARPU is expanded by 6.8% through more for more initiatives and migration strategy.

Speaker 2

Our customer base profile continues to improve with postpaid net addition accelerating to solid levels. In Q2 2024, we added 458,000 clients. We combined initiatives to reduce churn and expand migration from prepaid to postpaid to support this performance. Behind these numbers is a sharp execution of our 3B strategy. Building the best offer in the market requires an innovative mindset, bringing novelties valued by the customers at the right price.

Speaker 2

In the coming weeks, we will showcase our new postpaid portfolio with the best control plans in the market. The best netcor combines excellent coverage with the best availability and quality. As you know, TIM ranks number 1 in those metrics in 5 gs and overall. Building this while reducing CapEx pressure requires an innovative and efficient approach. An example is the new 4 gs and 5 gs integrated antenna we developed with 1 of our vendors, which increases capacity and coverage at reasonable prices.

Speaker 2

To deliver the best service, we are changing our portfolio of offers and improving how we serve our clients more effectively. We are increasing 1st call resolution rates and facilitating digital interactions. Therefore, call center NPS is improving and we continue to outperform the sector in resolution rankings. Moving to the other areas of our operation, our fixed broadband unit is performing well despite fierce competition. The focus remains to grow with profitability, so we kept revenue expansions at high single digit, while our FTTH base increased double digit.

Speaker 2

Our TIM IoT solution continued to evolve fast, winning new connectivity contracts while developing end to end solutions. In the last 12 months, we added close to BRL280,000,000 in contracted revenues, growing in the 3 verticals we selected. Before Andrea join us for this update, I'd like to remark on how effectively our 360 degree approach to productivity and efficiency is helping team reduce cash cost pressures while improving customer satisfaction with technology and discipline. We have done a great job with digitalization in the past years. However, there is room for additional improvement.

Speaker 2

2 examples: PIX is the new frontier for repayments and My Team app will contribute more to our digital interaction after its new version is released. In terms of our infrastructure, the network sharing with Vivo was resumed. We should accelerate more, but we are back working on the 2 gs shutdown and the single grid. On another front, we recently closed new agreements with vendor for our access network. We are bringing new 5 gs technology at an effective cost to improve the quality of our customers.

Speaker 2

Our AI initiatives are moving from pilot to full rollout. 2 of the 10 use cases mapped to be tested in 2024 have completed their testing period, and we are rolling them out until the end of this year. During the test, the TIM AIX Customer Care Copilot showed a decrease in average service time and increased satisfaction. For network predictive maintenance, the test showed that our system was able to predict failures and we were able to resolve them. Our hypothesis that generative AI could benefit teams by reducing costs and increasing customer experience is holding so far.

Speaker 2

We will keep you updated on this topic in the coming months. Now I will pass over to Andrea to talk more about our financial highlights.

Speaker 3

Hello everyone. I'm Andrea Viegra, CFO of TIM. As Alberto mentioned, we delivered robust across the board. The top line grew 7.5% year on year this quarter, with positive contributions from all revenue lines. Our EBITDA showed solid performance despite a tougher comparative basis.

Speaker 3

It grew more than 8%, with the margin reaching an all time high of 50% for a second quarter. Considering the lease's effect, EBITDA of the lease grew by almost 14%. This performance continues to benefit from the decommissioning project, which has reduced recurring lease payments by R56 $1,000,000 versus Q2 2023. The EBITDA after lease margin grew notably by more than 2% points year over year. In this quarter, our net income grew by more than 20% year over year, benefiting from the overall operational performance and positive effects at the D and A line.

Speaker 3

In addition, we recorded a substantial increase in operational cash flow of almost 24%, with the margin expanding to 24.4%. As we explained last quarter, the seasonal negative impacts on working capital and CapEx are reverting. CapEx will close the year inside our guidance bands, with no material impact from FX. And working capital should be positive in the second half. I am pleased with the figures we are delivering, which makes me confident that we will achieve our guidance by the end of the year, even with a more challenging comparison base in the second half.

Speaker 3

Now back to

Speaker 2

Robert. We just closed better than expected first half. Financial and operational performance are responding well to our initiatives. In the second half, we expect healthy competition to be maintained. So we will focus on evolving our portfolio and looking more carefully into our prepaid dynamics as the macro environment may be a concern for low income clients.

Speaker 2

Our digitalization program will continue to run, both in the more traditional way and through AI projects. We expect more pilots to move from the testing environment to full implementation. In B2B, we expect the coming months to be exciting, with more solutions being added to our portfolio. We are optimistic about the future and look forward to the opportunities that lie ahead. We are on a long journey to become Brazil's most preferred mobile operator and our commitment to this goal remain unwavering.

Speaker 2

This delivery can only be achieved through hard work, creativity and discipline, and we are confident in our ability to succeed. Now let's move to the live Q and A session.

Operator

We'll now start the Q and A session for investors and analysts. Our first question comes from Bernardo Guzman with XP. You can open your microphone.

Speaker 4

Hi, good morning, everyone. Thanks for taking my question. Actually, I have 2 on my side. The first question is relating to margin. You have consistently achieved this expansion.

Speaker 4

On the revenue side, it's evident that the more for more strategy is proving effective. But on the cost side, I would like to understand the main factors that are contributing to this expansion, the key initiatives that can drive this growth moving forward. And my second question is related to competition in the mobile segment. It would be great to hear possible competition coming from a new player, Anil Bank as a MVNO. Historically, this market never took off in Brazil, but now there is a new player with great execution capacity.

Speaker 4

What has changed in this market from a commercial point of view? Thank you.

Speaker 2

Hi, Bernardo. So I will start with the second one and then we will pass it to Andrea for the margin one. So on the first one, I would say, Bernardo, that the competitive environment so far remains pretty rational in terms of what is happening in both postpaid and prepaid. So the more for more approach and the shift from volume to value is actually happening. Everybody is more competing on quality of services and innovation rather than a straight on price or price per giga.

Speaker 2

When it comes to the possible new entrants, we need to see what kind of strategies that we'll deploy. So far MVNO been operating as niche segments, competing on a different value proposition and again not competing on prices. So far the MVNO has not been a disrupt on one lever that is the price. As they have been focusing the strategy in specific segments and so they didn't change the competitive dynamic materially. So the on this front, I would say that for the specific case that you mentioned, we need to wait to see what their commercial approach would be.

Speaker 2

So far, everything is fairly constant and focused on the more for more approach, competition on quality of services, meaning new offerings. We are launching some new ones in the coming months, natural services and the likes, less on price.

Speaker 3

Hi, Benoit. Related to the margin, we achieved a very good percentage this quarter. In the digital and also in the digital release, we will continue to focus in our productivity to increase our digitalization. But we are happy to remember that we also have to invest in some OpEx also for generating more revenue. So we always have room to improve.

Speaker 3

But in our guidance show that we will increase margin this year related to the previous years, but we also have to invest. So we have a good margin results and we will continue this in this path.

Speaker 2

And if I can add something, if you look at the categories of things that we are doing, so we got this all front of digitalizations that it's that we mentioned in the presentation dynamics on the the dynamics on the revenues that favors also the margins when it comes to the more formal strategy. So it's accretive for margin expansion. And I would say it's also that we are starting a few remote fine tuning of the make versus buy approach that we are thinking to deploy in the coming quarters that should be assertive in terms of increased efficiency and increased quality of the services that we are related to that specific activity.

Speaker 4

Very clear. Thank you, Alberto and Andrea.

Operator

Next question from Marcelo Santos with JPMorgan. You can open your microphone.

Speaker 5

Hi, good morning to all. Thanks for taking my questions. I also have 2. The first, I wanted to question you a bit about the guidance, especially the service revenue growth guidance. So for the Q2 in a row, you were coming above the guidance, above the high end of the guidance.

Speaker 5

Is there room to increase that guidance? I mean or is there some expectation that the second half is going to be particularly weak? I mean could you please just comment, I mean, on your yearly guidance in face of the results that you have achieved so far? That's the first question. And the second question is the lease line and the tower renegotiation.

Speaker 5

Where are we on that process? What's the outlook for the line of lease payments? Thank you very much.

Speaker 2

Okay. Marcelo, I will take the first one and then we'll pass to Andrea for the second one. When it comes to the second half, I wouldn't say weak guidance. So I would say the following, weak guidance and you're right, we've been performing above the bracket in the Q1 and Q2. Now we what we are foreseeing for the following quarters is something that it's already happened in the previous year.

Speaker 2

So a sort of slowdown in the pace of revenue growth. And there are a number of reasons that we need to be considering that. First of all, we got a less favorable comp versus last year, so we got quite strong 2nd semester last year. The second one is the fact that when you look at the price of postpaid, this year was less intense versus last year. And so you tend to see the results in the Q2 and going forward.

Speaker 2

So if you look at our postpaid revenue growth on a historical trend, you generally see a strong second quarter and then the effect of the price up tend to stabilize in the following quarters and so the revenues are slowing down a bit. And so this is we expect the same effect this year. We need to see at the prepaid. So you see that on prepaid, we got a slightly negative revenue growth in this quarter, also because we are migrating prepaid to control plans. This is going to happen in the next quarters.

Speaker 2

And so we are fine tuning our value proposition and go to market approach. And so we need to see how this will play out in the following quarters. And last but not least, we got the Ultra, Team Ultra. So the broadband that we imagine that is going to stay fairly stable. So all in all, what we are likely to see in the 2nd semester is a slowdown of the revenue growth and this will put ourselves in the position to achieve fully our guidance, which is the bracket from 5% to 7%.

Speaker 3

Hi, Marcelo. Related to the leases, this quarter, we have still the impact of the decommission. But as we mentioned before, we ended the major part of the fiscal decommission. So we still have some positive impact in the decommission side, but we also have the inflation. We have a lot of contracts that have the inflation adjustment in this quarter.

Speaker 3

So, we have the lease in the same level of the Q1. But from now on, the trend is to increase a little bit. We still have some renegotiations with the towers company that is continuous for us. And related to the panels, we will also have some panels in the second quarter because we still have around 200 sites that we are ended the final discharge of the contract. So the trend is to increase a little bit in the least in the second half of the year.

Speaker 5

Thank you very much. Thank you.

Operator

Our next question comes from Vitor Tomita with Goldman Sachs. You can open your microphone.

Speaker 6

Hello. Good morning, all, and thanks for taking our questions. We have 2 questions from our side. The first one is, since you cited some, AI initiatives on the cost side and some other sides, Do you believe those could be major enough to support some upsides to long term EBITDA guidance assumptions depending on how they play out? And our second question would be, you mentioned just now also a change in make versus buy approach.

Speaker 6

Could you give some more color on that? Thank you very much.

Speaker 2

Okay. So, Vico, let me take the first one and then we'll interact with Andre on the second one. So when it comes to the artificial intelligence, we are following a quite pragmatic approach. So we are deploying it, we are measuring the results. If the results are there, we are going to scale this up in the coming years.

Speaker 2

So we organize ourselves since 2023 with an organizational structure that is quite transversal between the among the company that select the case studies and the one with the most potential economic potential and the one that are closer to our strategy. So this process led us to select something like 100 use cases where artificial intelligence can be applied. Now of this 100 potential use cases, we went down to a number which is around 10 that are the most promising in terms of alignment with the strategic fit and potential benefits. And there are 2 clusters of these use cases that we are actually in the phase of implementing. One is related to the customer care and the other one is related to the network maintenance.

Speaker 2

Why these 2? Because these are in line with our strategic objectives that is to increase the quality of services that we are providing to our customers and at the same time increase productivity. So where do we stand now with these use cases? We are rolling them out. As a matter of fact, we are rolling the artificial intelligence use case to all our internal service attendance for the call center.

Speaker 2

So we are moving from the piloting to the rollout and we are doing this, this month. And the same we are doing with the predictive maintenance of network. So we already we've got 3 main vendors and with one of these vendor we already engaged in rolling out predictive maintenance based on artificial intelligence for field services. So what does it mean that starting from now we will be in the position to see the impact of those use cases on a large scale. And we will be able to see if our initial hypothesis of increase of productivity and quality of services stands.

Speaker 2

If this is the case, if this is proved on this rollout, then we are talking about double digit reduction roughly in terms of cost to do these activities and at the same time a potential benefits in increased NPS or network availability for the network side. So we are pragmatic. So we need to see if it works and we are in the process to prove this in 2 specific larger use cases for call centers and Netto maintenance. In the meantime, we are scaling up also the others that we selected, but the 2 main ones are these 2 that I've been mentioning. Don't know if it's clear for you, Victor, this year.

Speaker 2

If yes, we move to Andrea for the second question.

Speaker 6

Very clear.

Speaker 3

Related to the makeover, we are always looking for another ratio increase our productivity. So we are always making this kind of studies about make or buy. For example, now we are studying about the one part of the maintenance of our network, the operation of the network. Maybe we can have a BPO in this area. We are studying another area, some administrative areas that maybe we can also do outside of the company with better productivity.

Speaker 3

So this is kind of this kind of makeup that we are studying now.

Speaker 6

Very clear, very pragmatic as well. Thank you.

Operator

Next question from Gustavo Farrias with UBS. You can open your microphone.

Speaker 7

Hi, everyone. Thank you for taking my questions. I have 2 as well. The first one is regarding the prepaid operation. If you could put more color on what you guys expect on revenues going forward?

Speaker 7

And the second one, regarding the fiber operation, As we have seen limited growth and other players in the market considering selling their operations, What's your strategy on the fiber operation as a whole? Thank you.

Speaker 2

Okay, Gustavo. So let's start with the prepaid. When it comes to prepaid, I think that there are 2 main dynamics determining how revenues is performing and is going to perform in the future. 1 is in our hand and is the prepaid to control migration. And this is something that we are fine tuning quarter on quarter.

Speaker 2

We discussed this in the last quarter. As a matter of fact, we are accelerating a bit, keeping control of the overall effect that is positive for the company, which is accretion on revenue growth. So this trend is there and is there to stay. And so this will impact the revenues as we're going forward as it is impacting it today. The other element is more related to the let's put this way, the elasticity of the demand versus the price adjustment that we've been doing in the over the last quarters.

Speaker 2

So when you look at prepaid, prepaid is a mixture of a number of segments or sub segments. So there are in this structure, you find people that have a limitation on available income and so their ability to commit a specific amount of money to that specific month. So let's say low level lower income segments, whereby at the same time you have people that have the availability to put recharge and it could be also postpaid customers, but they prefer to be prepaid please. And what we saw when we applied the adjustment over the last quarters is that the elasticity response is different in different segments. And it's sort of obvious if you are lower income, your response is not that great.

Speaker 2

If you are higher income, the response is better. So what we are doing is to fine tune our value proposition and the go to market strategy to be able to segment our operation to address in a more efficient way these different sub segments of prepaid customers. And so the extent that we'll be successful implement our strategy and the time required for strategy to pay off will determine together with the prepaid to control migration our prepaid performance in the next quarters. And when it comes to the broadband, so you're right, as we've been mentioning over the last quarters, we have a selective approach in terms of broadband growth and this doesn't change, meaning that we consider the market to be extremely competitive and keeping competitive and therefore we are controlling the pace of growth to ensure profitability. As part of this process, we decided to restructure a bit our sales and commercial machine in order to depend less on what we call push channels that generally tends to have a lower quality of acquisitions.

Speaker 2

And this of course requires a resetting of the commercial machine because we closed down these channels and the first effect that you lose a bit of gross additions, whereby the churn level tends to stay constant for 6 months because of what enter in the previous growth campaigns. This is impacting the pace of growth on FTTH, but we are getting to the normalization for the next quarters. Plus we had expanded the footprint, so we're likely to accelerate a bit versus where we stand today. At the same time, we decided to close the sale of FTTC, so copper, so we don't sell any more copper. And so we lost the gross additions of this operation, whereby the churn level continue to be there.

Speaker 2

If you combine these two things, you see a bit of a slowdown. We are working to invert this trend and going back to growth that is not going to be very different from a high single digit growth because this is the space that we consider to be good for this moment of the market. In the meantime, we are you're right that there are a number of players in the market that they are willing to consolidate. So we are looking at it to find the right move for us. We are not in a hurry because our exposure to broadband is limited.

Speaker 2

And so we are waiting for the right conditions and the right player to appear in our screen.

Speaker 7

Thank you.

Operator

Our next question comes from Daniel Federli with Bradesco BBI. You can open your microphone.

Speaker 8

Hi, good morning everyone. My first question is more like a follow-up on Marcelo's question. Your 3 year guidance also implies deceleration in the upcoming years versus 2024. So my question is why the mobile industry should grow less in 2025 than this year, which are the drivers for a deceleration. And the second question related to selling expenses, they are growing in line with revenue.

Speaker 8

And we were not expected to see some like efficiency gains with lower churn, right? So churn close to all time lows, selling expenses could be benefiting from that. Thank you very much.

Speaker 2

Okay. Daniel, let me take the first one and then we'll pass to Andrea for the second one. In terms of the first one, I would say that the rationale is sort of pretty simple. So when you look at the revenue growth and you look at the performance of the sector over the last 10 years, you will see that been if you take away 2022 and 2023, where the sector grew above inflation because the market rationality and market repair was already in place. In the last previous years, we have been growing below inflation.

Speaker 2

So the thesis of the more for more approach is that is the one that we discussed in our Investor Day. So you have a situation where the market is shifting from volume to volume. So more importance of quality of service versus price. This is confirmed by all research that we are running. At the same time, on the demand side, you see that we got in our hands a pretty essential services with, let's put this way, a low usage and low prices because of the competitive dynamics of the previous years.

Speaker 2

And so the opportunity to catch up this gap that has been growing over the last years and the at the same time, you got the macroeconomic environment where inflation was, now it's a bit less going down over time, but it's still going down over time. And so when you put what is the growth rate, it's 1.5% topp above inflation. And this is basically what we put in our guidance at that time. A stronger growth at the beginning because we have some ground to catch and then a growth that slowed down to something above inflation. And this is, by the way, subject to the firm the fact that a rational environment will keep staying in place for the next years and the ability to have a positive demand elasticity response, we're implementing the More for More strategy.

Speaker 2

And that it is basically behind our assumption for the guidance. So 5% to 7% for the bracket for 2024 and 5% to 6% on a longer time horizon as inflation goes down and our therefore, the inflation plus goes down as well. Was it clear, Daniel?

Speaker 8

Very clear, Roberto. Thank you.

Speaker 3

Okay. Hi, Daniel. In relation to the selling expenses, if we are increasing them below the revenue because, remember, last year, we have the fixed sale credit. When we incorporated Oi, we recognized a credit of fixed sale. When we took this value from last year, you see that our increase in selling expenses is below revenue.

Speaker 3

We have also productivity these expenses. The same expenses are increased based related to the expenses with the revenue, with the project revenue where we have a solid seed and also the bad debt. But the bad debt have the same rationale on revenue. So we consider that we have a very good results in the all sensitive expenses. And we will continue to grow this one.

Speaker 3

For example, the Q2, we have more integrated sites. We have Joaquin Hill and other we will launch other products. So we have increased in this part. But related to the go on on revenue, we have a very good ratio in this and expenses. I don't know if I answered your question.

Speaker 3

No, that

Speaker 8

was perfect. Thank you, Andrea. Congratulations.

Speaker 3

Thank you.

Operator

Our next question comes from Fauci Serafin with Navi. When do we must expect dividend guidance revision since the company is generating much more cash than predicted?

Speaker 2

Well, we have some formal moments in our governance where we update our guidance. And that would be the guidance for next year that are going to be released in February next year. So far, we gave a guidance for 3 years already. That is was a big, put it away, positive novelty and respond to a demand of you guys to have a more long term view. So we move to the €12,000,000,000 overall 3 years guidance for 2024,000,000,000 And so the number is in place.

Speaker 2

It covers already 3 years. As we said many times, we want to have some flexibility on our side for potential inorganic activities. And the update, I would say, at this point in time, it's going to be next year when we update the D3 annual industrial plan.

Operator

Thank you. If your question is answered, you can exit the queue by clicking on the same button. Our next question comes from Gustavo Farrias with UBS. You can open your microphone.

Speaker 7

Hi, everyone. One additional question regarding the bad debt. Do you believe in an increase in bad debt given a higher mix in postpaid in the for going forward? Thank you. Hugo?

Speaker 3

Gustavo, what we are seeing now is that our bad debt, even with our increase in the net adds and increase in the revenue, is still under control. We are not seeing any kind of increase in bad debt. Our collection is still the same. Our collection curves for the future is still the same. So we are seeing very good results in this way, even with the increase in our base of phosphate base.

Speaker 3

So, so far so good.

Speaker 7

Okay. Thank you.

Operator

Next question from Felipe Chang with Santander. You can open your microphone.

Speaker 9

Hi, thank you so much for taking my questions. 2 on my side. If you guys could provide a little bit more detail as to what stage we are in the infrastructure sharing agreement with VIVO, right? If this has already been an important driver here for OpEx and CapEx, what to expect in the upcoming years, right, for this infrastructure sharing agreement, that would be great. And my second question is related to the B2B business, right, the IoT solutions, how this has been evolving?

Speaker 9

If you could provide also a little bit more detail, if it has been running ahead of expectations or not? So these are my two questions. Thank you very much.

Speaker 2

So, Pepe, let me start with the second one and I will pass Wanda for the first one. On the second one, on the B2B, we are on track according to our plan. So we have quite an ambitious plan by the way. And this is something that is going to, in our view, contribute to revenue growth in the medium term is already contributing to the but so far it's an asset business. Nonetheless, over the last 2 years, basically we increased by 10 the revenues, contracted revenues of this sector.

Speaker 2

So we keep closing contracts in the 3 main verticals where we're operating. That would be the agribusiness, that would be the logistic business and the utilities business. So on both these verticals, we are making a steady progress and consistent progress And the pipeline of the contracts that the cycle to close this contract is pretty long. It's something that it takes from 6 months to 18 months to close. So the pipeline is pretty strong.

Speaker 2

And our positioning is pretty strong. And so the answer is we are in line with our plan and we are moving forward and we see a number of tailings appearing in the next quarters in terms of commercial wins and potentially new verticals that we are going to open. We got the priority to expand our customer base from one side and also to increase our portfolio on the second one. So finding partners to enrich the portfolio and provide additional services on our customers. So we are I'm satisfied with the progress to date.

Speaker 2

And the last but not least, we are also looking at non organic activities And when we have some news, of course, we're going to share it with you.

Speaker 3

Hi, Felipe. Earlier to say the infrastructure agreed FIFO, we still own in this project. We mentioned in our presentation, we have an update on some cities.

Speaker 9

We have the 2 fronts,

Speaker 3

1 single grids, another one is to shut down the 2 gs network. We are moving forward in this, and we are looking for another cities inside what we have approved with the CADE and NATEL. But it's a complex project, not very fast like we want, but we are continuous in this project. And we think that until the end of the year or Q1 of next year, we are completing this project.

Speaker 2

Maybe it's worth remembering that when you Felipe, when you look at this, the one that is the 2 gs shutdown is basically energy saving. Yes. But that's the main driver whereby when you look at the single grid, we shared the entire infrastructure. And so there is some cost avoidance in terms of energy maintenance and natural cost. And it's clearly much more complex to implement.

Speaker 2

And when you move forward, what it could be, that would be CapEx avoidance if we decide to extend this to 5 gs at some point in time. But for this weapon, of course, the 2 gs and the single grid needs to work and the process needs to work and this is something that we are proceeding with Vivo at this stage.

Speaker 3

And just remember that it's only for cities with 30,000 people less than 30,000 people.

Speaker 9

Perfect. Very clear. Thank you so much and congratulations on the great results.

Speaker 2

Thank you.

Operator

Ladies and gentlemen, without any more questions, I am returning to Mr. Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Speaker 2

Thank you, everyone, for staying with us. We are delivering a very strong first semester for this year. So first half of the job is done and we're fully focused on the second half. I would like to thank the entire team for the hard work that allowed us to deliver another great quarter. And I look forward to meet you guys on the one to call in the coming days weeks.

Speaker 2

Thank you, everybody.

Operator

Thus, we conclude the Q2 of 2024 conference Call of TIMSA. For further information and details of the company, please access our website, team.com. Br/ir. You can disconnect from now on. Thank you once again.

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