Q2 2020 Grupo Televisa SAB Earnings Call
Morning.
Everyone. It and it's a good Lisa second quarter 2020, Conferece call before we begin I like to draw your attention to the press release, which explains the use of forward looking statements and applies to everything we discussed on today's call and in the earnings release.
During the call management will be was referencing the presentation available in the company's Investor Relations website.
Www Dot, Lisa hi, or Dot com.
Now I'll turn the call Orchard myself on so they're going to yet co chief Executive officer, a bit about that Lisa. Please go ahead Sir.
Thank you Ed good morning, everyone and thanks for joining me today.
With me today before we deal with cable and expand not CEO of Sky.
But these are will kind of Televisa studios and got it was gonna NATO and do not a corporate Vice President Finance and administration respectively.
Starting with our consolidated financial results.
With the financial results in their content segment, then I will turn it over to but they feel started being on next we will then use the time of eight remaining to answer your question.
Go we would be continues to be a significant disruptor of the Mexican economy and to People's lives. The number go with cases in Mexico has continued to grow over the past few weeks and unfortunately, we do not seem to have reached a big yeah.
And the economic level, they impact has been very dramatic.
The survey conducted by by the Goodbye, Mexico Central Bank Bunker image equal shows that the expectation is where they're going to me to contract by 8.8% in 22.
Throughout this period protecting our people has been our priority.
For that reason, we continue to take all necessary measures to predict our employees such as those in the front lines, who are managing our networks and ensuring that people mundane connectivity. During this critical time, where are those in our content operation, we're making sure that people stay in.
And entertained.
Just as an example, I'd like to mentioned that we visit to Sky and easy around 18000 combs everyday throughout.
Our country.
In this environment the result on their various businesses.
He is very different we have a strong portfolios complimentary best in class assets and this has proven to be an important differentiator.
On the positive side as you can see on slide two.
In cable we posted record addition, some broadband customers and the total revenue generating units for RG use and double digit top line growth.
Sky added both video and broadband customers boasting, it's fastest pace of top line growth in over three years.
Yeah. The Gordon our programming was very strong in Mexico ratings were the highest over the last five years in the United States our content this allowing univision to lead the industry in ratings growth.
On the other can in line with experience some other media and entertainment companies around the world Our AD sales business, what's substantially impacted by the shutdown of the economy.
Also as expected our other businesses segment was affected by the closure of our gaming sites, the retail outlets, where we sell learn magazines and the CMS that showcase the movies with distributors and by the suspension sporting events.
Moving on to slide three let me now address our consolidated second quarter results.
Revenues were down 7.8%, reaching 22.4 billion pencils and operating segment income was down 12.4%, reaching 8.6 billion best.
During the border we put together cost reduction plan across the company and the most dramatic measures were implemented in our content Division.
At the net income level, we reported an increase of 57.5% mainly due to the decline in financial expenses, mostly coming from the appreciation of the Mexican best.
Moving onto our balance sheet.
We maintained our privileged precision of liquidity as shown on slide four we closed the quarter with a liquid position of close to 55 billion pesos and a net leverage ratio of 2.9 times I believe that the they're very few companies in Mexico that.
These type of liquidity.
We have no significant maturities until 2024 and the weighted average life. Our dollar debt is 20 years. Another vessel that is seven years.
The rating agencies have been supportive of our business strategy and capital structure and last month, both S&P and Fitch comparisons are investment grade.
In their review after that he said, there's two agencies highlighted our strong liquidity position diversified business model comfortable debt maturity schedule and solid credit profile.
Moving on to our Condon segment on slide seven the need let me briefly address the financial results.
Revenues were down 16.3%.
As expected due to the overall macroeconomic weakness, which was exacerbated by cold.
Daisy revenue was affected the greatest dropping 33%.
The contraction in advertising spend was across the board.
On the other cats that work subscription revenue was up 16.1%. This was in part the result of an increase in the price of repeated television networks across all our affiliate distributors.
Also the depreciation of the bed. So helped given that a portion of revenues are dollar denominated.
Finally licensing and syndication revenue dropped marginally by 2.3%.
We estimate that Univisions royalty will be down my close to 20% during the quarter to $80 million, partially compensated by the depreciation of the best.
As most other media platforms globally, Univisions advertising revenue will be negatively impacted like always during the second quarter.
On the other can univisions successful the renegotiation last year of key distribution agreements has provided a resilient source of revenue given the increase in subscriber fees.
Now, let me talk about our cost reduction program, we were very aggressive in doing.
This and implementing the reduction program in our content Division.
Which resulted in savings of approximately 462 million vessels during the quarter.
For the full year, we anticipate that these measures will result in cost and expense savings.
Between 2.1, and 2.4 billion vessels when compared to 2019.
In some operating segment income for our content Division reached 2.1 billion pesos and the margin was 30.9%.
Now, let me turn it over to but they do.
CAD of Televisa studio.
Thank you I phone so.
During the quarter that production of our newscast certainly shows on some sports programming continued on interrupted throughout the pandemic on the streets Anita.
Oh, sorry, I think there was some technical problem, but this is in Miami.
And the rest of the team I like Saudi regardless and I are here in a in our offices in Mexico City. So.
Before we got the up by three tobacco turn it over to Sandy.
Thank you all phones.
On there are several operational challenges, we remained focused on customer service and business continuity.
We were able to de lever strong results and reach important milestones during the farm.
We closed a second quarter, we more than five median broadband subscribers.
As shown on slide 12.
Total argues reached 13.4 million, we brought by representing 38% of the total.
Net broadband additions were 252000 and net additions for the three services were 494000.
Both of these figures are the highest unbreak worked for a single quarter.
In terms of video are usually we grew 27000 subscribers during the quarter.
I wouldn't bungling I'm confident strengthening strategy is delivering good results.
With social isolation measures in place.
Reliable broadband services are in high demand.
As shown in slide 13.
Total data usage averaged close to 257 gigs per month per customer, which we sense and I know growth of more than 35%.
Over the last few years, we have made very important investment in our network.
So we were able to cope with increased profit needs.
We are confident that I've weren't high quality network, we will allow us to attract additional customers overtime.
In terms of financial results as per slide 14 revenue was all 10.7%, reaching 11.3 billion ESL.
And operating segment income was up 4.1%, reaching 4.7 billion.
We do not worried cable operations I were in Misos business group.
In terms of revenue, 7.7%, while our weren't enterprise business revenues grew 26.6%.
Oh elections have remained strong and we expect that Charnwood remained stable.
The slow them not to get economy May put a board then on household income in the second half of the year. So we will keep an eye on collections and remain very focused on customer retention.
Capital expenditures reach $136 million or 27% low work and year over year.
As a percentage of revenue capital expenditures also came down we ching 27.4% during the second water down from 34% a year ago.
Also in June we launched an M.B. I know.
Really v., we believe that there is an opportunity for us leverage on weren't brand name and infrastructure, while at the same time, helping us to reduce churn.
The strategy is similar to what cable companies have done in the U.S.
I would probably.
And our limited postpaid service.
Reasonable only to our customer base in certain markets.
We are using the network off I I'm ordered I'd be that which allows us to participate in the market in a capital like manner.
In the area, where attached network does not have coverage.
Customers are roaming weve they said.
Okay. Thank you Sandy.
So we got but these are back so but these are please go ahead. Thank you.
Second we got problems.
I'm here.
During the quarter that production newscast certain shells and some sports programming.
Continuing on interrupted throughout the pandemic on the streak sanitary conditions.
We have continued to that anybody strong ratings across all the time slots.
Our frac sheep net losses could a four week ratings growth was.
Tim tariffs and duties.
During the weekend it was even stronger 30, there said.
His more than twice to grow out of free.
<unk>.
This strong performance of our programming was evident across all key genres.
Our dramas and comedies deleveraging very solid audiences for example.
That's episodes of our new Primetime drama Ruby well just sat malls watch it for me Airport I did I must say is 2018, reaching 24 person fall Mexican households.
Even our late afternoon that I'm going to be wrong.
Our closest competitor deleveraging 1.8 times more eyeballs.
Primetime programming.
In addition, our nightly news gas continued to be the main source of information for the Mexican audience, David already two times a more.
Than those of our closest competitor during the quarter.
We have continued to adjust our production to study by adopting new protocols.
However, we feel that production not news programming I live shows on the streets highly touted image.
You know Watson I can facility, we started producing three that almost nine daily shows in Mexico Soccer Retarded don't do right floor with a sharp tournament and the regular soccer tournament when is that in July 24.
Consumption of our content in Mexico on through Univision in the U.S.
The Baldwin in multi colored different menu when compared to the consumption of English language content.
Show on <unk> number one.
Rating for most English language and do it into 2019 2020, <unk> season down yeah Yeah.
You need be she on has delivered double digit growth and dealership.
With the help of our canton only these young continues to be honest beauty that either in the Spanish language television into U.S.
Our new product then drama lobby that you sell didn't even into them on those primetime that I'm always approximately 40 cents said more viewers.
The last nine weeks.
Similarly, our new romantic comedy <unk> <unk> dose is Univision highest rated Tempe.
Oh, the last three yes.
In May suites is probably about house, a triple digits advantage, although telemundo medical drama in the same sounds a lot.
When you see on market share lead over Telemundo has to be expanding since last year.
Try and continue into the second quarter.
Thank you, but they do a now let me turn it over to Alex Thank your for us.
The strong demand for skies video and broadband services continued into the second quarter.
As shown on slide 16.
Oh, a broadband dog food went to grow even adding 72000, our genes in the quarter.
We're now have reaches more than 500000 broadband to use.
The large majority of which have been though we'll speak to you.
Also our video services added close to 20000, new feed you RG use.
As a result of strong sales I'm retention airports throughout the quarter.
Disease that fit growth so good to water of growing the number of video customers.
In addition, we saw an increasing the recharge raised up our brief they do package.
Moving on to slide seven pm.
Revenue grew 3.1% to 5.5 billion Vince.
Diseases strongest stopped aligning made workers.
And then fastest pace of growth and third Jim waters.
Operating segment income, reaching 2.3 billion basis.
Let's see on margin or 42.1%.
Finally, the majority of our customers subscribe to briefly video package.
So they are highly sensitive to changes in household income.
So from a demand has been a strong and recharge raised the their video service has gone up.
Given the expectation for a slower mako in the second half books here.
We will remain very watchful or fan and changing trends.
Thank you Alex let me now move on to Univision.
This quarter Univision took advantage of favorable market conditions to extend its amortization schedule at very attractive rates significantly reducing its financing risk.
Univision use issued $1 billion of bonds do 2027 to refinance bonds maturing in 2023. In addition, Univision executed an amend and extend transaction to increase the maturity of $2 billion of their term loan to 2026 and.
The majority of the revolving credit facility to 2025.
The fact that Univision had access to the capital markets under such attractive terms shows the strength of its business model and the reach they have in Hispanic media.
He is a vote of confidence in the company.
We are also extremely happy with our relationship with Ericsson to offer and with Wade Davis.
And their vision for the future of Univision.
It will be great a great partnership and you will see a very different Univision when the deal closes.
I'd say mentioned before we're very happy to see the results of our structural restructuring and revamping our content division and the success that I know productions are coming.
Univision ranked the number one network for six consecutive weeks in the key demographic 18 to 34 on prime time.
This is like historical performance since 1992.
In closing it is difficult to predict the shape of recover in Mexico since a lot depends on how the pandemic of all however in terms of our AD sales operation June was already better than me, we had the strongest ratings since 2016 in Mexico and the saw.
Its strategy to continue delivering strong audiences.
In the meantime, but another one I believe that sky in cable will remain resilient cable penetration within its own footprint, it's still only 40%.
Sky is just getting started with his brother and offer and broadband penetration in Mexico remains low at less than 60%.
With that.
I'd like to turn the call back to the operator to take your questions.
And then lineups asked a question when its press star one on your telephone.
Good question press the pound key.
Please stand by all the composite can a roster.
My first question comes on line, a little bit evolve in whatever Televisa you may begin.
Thank you and good morning, Oh from something like this.
From Bank of America.
My first questions related to advertising I was wondering if there wasn't any change in advertising the balance sheets.
Oh.
You disclosed.
During the last conference call.
And in case, there's no change.
Say that these 15 beyond.
I can deposits could be perceived as a a floor.
Full year advertising revenue 2020.
The second question is related to cable and I was wondering if you could please provide more color regarding such strong revenue growth.
Oh for almost 30% on did.
She shops, we didn't cable.
Do you expect.
New revenue to be sustainable thank you.
Yes. Thank you really do you have to on your first question there has to do with.
Apprenda policy I mean of course, we have seen seen oh.
A collection of more the policies as as time goes by and the time based they are in respect to the agreements that are that they have executed.
Of course, as a result of the pandemic sometimes.
Have lost most of their revenue and therefore are not using their upfront commitments or have rescheduled. The payments for example, the tourism industry or movies that have been shut down or have been severely affected those industry I mean, those clients in those industries.
Pep talk to us for.
Basically our rescheduling of of the payments.
Just logical considering what has happened to those clients. So when I mean, we have been in constant.
Contact with them and of course talking to them and seeing how we can be helpful and how we can restructure some of the payment in such instances.
As to cable, we're very happy with the results 5 million.
Broadband subscribers and the pickup in terms of net adds were very very happy with with what happened.
In that company and I left side to be to go into further detail and give you more color.
Yes, Hi, pro video well regarding the quite at the end of the grow on enterprise hearing the water.
The gross explained mainly by certain projects that we are building broadband infrastructure.
For some state government.
We do see a great up or do you need deals continue growing on the enterprise that segment I, where market share on that business is a limited and we do see a potential oh I'm getting additional projects. So I think that this is.
Sustainable sport for some quarters.
And we continue trying to a win more contract bolt on the private segment and the government side I think that the pandemic has brought a additional need on chronic DVD and in our front and we will try to tackle the.
For do you need the and to continue focusing on customer service both for our Red Sea then shows a small business medium business an enterprise segment. So I think that's we got a I could roll not I Kato Pos err on the interim.
By segment as well.
Understood. Thank you very much.
Thank you. Our next question comes online young adults and some of the point may begin.
Hi, everyone. Thanks for answering the questions.
Just wanted to ask on the cost reduction program at the content segment. I think you said, you're targeting 2.1 to 2.4 billion pesos such savings for the year relative to last year any additional comments on where these savings are coming from and should we think about this as a.
You know a pole.
As a permanent savings, which will be hours they cost base beyond 2020, or so so could this could do we have some margin expansion and the content segment looking out beyond 2020. Thank you.
Hi, John Thank you for your question, Yeah, the cost and expense reduction was a comprehensive so it was across the board. We basically reviewed each and every single line item as you can imagine so in effect as you mentioned.
This will result in savings between 2.1, and 2.4 billion vessels this year.
And we believe that are around 32, I would say 35% of these savings will be kept in 2021 and the balance will be a function of how the economy a evolves.
We will only produce certain shows.
Mostly a live shows are mostly reality shows if there's demand for them.
So of course, it will depend if there is the man will produce more and you will see the the cost next year, but of course, it will be associated to sales.
However, what I can tell you is that the cost reduction plan was.
Harsh and we intend to remain as lean as we can in.
2021.
Thank you.
Thank you. Our next question comes the line of Gordon leave from BTG.
They began.
Hi, good morning, Thanks, very much for the call couple of questions. One just a follow up on the on the cost reduction initiatives.
Do you guys I see we're concentrating on the content Division I was wondering whether you've done similar exercises in the cable and then sky as well.
The second question was on Capex I think after the first quarter numbers, you said capex would be around 750 $800 million for the year is that still more or less the the target range and then just finally on Univision when would you expect that deal to close what what exactly are waiting for still thank you.
Hi, Gordon Yeah as to the first question costs caused a reduction.
We will see an 800 million vessel reduction of costs and expenses.
In the cable company and.
Sky.
To.
Your last question has to do with the Univision closing.
It's basically subject to regulatory approvals in the United States will that that is.
Deal, Jay and FCC approval.
And as soon as to your respect your second question. We believe that we will meet the capex guidance or the Capex guidance, where a 420 20, he's in the range of 750 million to $800 million.
No its growth NRG use.
At Sky and ER cable exceeds our expectations, then I will we'll see higher capex, but it's like a I would say good and bad cholesterol right. If we.
We expect to meet our expectation of 750 300 million Buddies Capex is good cholesterol in the sense that it's driven by more subscribers more RG use then you would be great news and.
You will see additional capex.
That makes sense, thanks very much.
Thank you. Our next question on cost line of Fred Mendez from Bradesco you may begin.
Hello, a lot of want I think it's hard to call. It had two questions here as well in both niches cable segment I mean, the first one are there some that adds to once you get no one of the high speed data. That's floors. So just want you to better understand you guys.
Need which approach and you get more clients for the competition. He believed that you know that let's see home office.
Thank you see more people jumping in and maybe.
So just trying to understand the by getting you get on it should be getting fines from the competition there will be the first one.
And then on the second one more closely strategy you need to long term or you know I do understand that youre. Yeah. The capacity you have no net you worked his way above become man.
In terms of the usage of needed that you've had should be but what it looks like.
The real you think it makes sense.
So left to teach deployments, let's say the main Cds are the most competitive reasons I think that you know people should remain a you know I was very high quality at least for next year's producing doesn't make sense to change.
Now, let's say they didnt them. Thank you very much.
Thank you Fred for your questions, Alaska Sunday to answer.
Oh, Thanks, Fred Port for both questions.
They were rather than a well the first one I believe that the pandemic brought additional need for chronic DB and I find fossil point that out penetration of broadband in Mexico is still low below 60% and there were additional needs for every.
And for education for working from home from Entertainment.
So I believe that aim this for good cooler water the industry group overall I I do think that we will see I'm. The results that there's going to be a faster pace of growth on this quarter that what we saw last year that.
Really I have slowed down and I worry embezzlement visiting cable if that penetration we continue to grow and we will gain market share both coming from the growth of the penetration and taking a wait customers from some of our competitors rent.
I do think that what will happen in Mexico, I wouldn't say merit to what's happening now have happened with other countries where.
Uh huh.
At cable.
Networks, NFC ph takes away market share, especially from DSL.
Offers right. So I think that will work and that leads me to your second question. The capacity that I would never have allows us for.
I would say that in the medium term, we feel comfortable because.
We we DOCSIS 3.0 allows us to give faster speed, but being bad wins that we may make that are very wouldn't portion of our network and especially in the largest TD is DOCSIS 3.1 ready so basically the investments that we have.
I have to make our to go to two gigabit speed I basically on a terminal devices.
Well, that's when demand or comps right.
On the new areas, where we build right that seems prices. So if SPT age have come down. We are we are building some of the new area. We've we left the age.
I bet, but it's basically not something that we have to substitute all eyewear networks for FTP age because we have a strong and reliable network the became demand of data, especially in the in April.
April and May they there was more demand on those months I into mid came a little bit them shows that our network is prepared for higher demand something.
Perfect perfect Savi I know most likely thank you.
Thank you.
Thank you. Our next question on cost line Marcelo Santos from JP Morgan you may begin.
Hi, Good morning, Thanks for taking my question first question is about.
So just wanted to Tonight, you could provide them to be more color on Holly behave during the quarter. You mentioned the June was was already better than me.
How better and what would you do you already see the clients demanding more into is beginning off of third quarter or is it something that should have going more forward and a second questions about sky. So you'd skus lots you back to dismiss faster speeds broadband I wanted to understand how is.
Uh huh.
The structural separation how is your your.
Relationship would be a max on the on the structural separation are you being you are you being able to advance using their network or so far.
These are the two questions. Thank you.
Yeah, I must say well. Thank you for the for your question what I can tell you basically during the second quarter. The contraction announcement was across the board.
There were some sectors in particular, so that's advertise less like ER telecom, which draw up close to 50%.
Retail and food and beverage is worth close to 30%.
And Ah another very important sector for us killed personal hygiene and cosmetics was down mid teens. So so these these industry alone accounted for close to 80% of our advertising sales. So I was pretty severe across the board as I mentioned.
June was already better than me nuts, the color that I can I can give you and what happens.
To that business in the following orders is that there will depend on the evolution I would say of the endemic.
And also the speed up recovery of the of the economy.
But what I would I can tell you that I mean, we're delivering as I mentioned great audiences.
Audiences that we have not seen since 2016, so a those audiences are engaged with our new products the new products that are working.
We're very happy with a that performance. So we have the profit that that is delivering those very good results and we're working hard on monetizing it.
And as to your question has to do with Sky I will ask a Alex to answer it.
Thank you offensive hi myself.
Just to clarify things are.
We have a over a 502000 a broadband subscribers.
Uh huh.
The bulk of it.
Fixed wireless broadband.
What I mean is EUR 19 of 99% of our broadband subscriber base.
He is currently.
Divided very much 70.
7%.
Over the out on network.
And ER, the 22% over the eight the network.
In terms of a fixed.
Broadband.
That Ah, yes, we provide a using the America more view.
Network, it's represents almost nothing 1% of the subscriber base.
And a very much to answer your question, we have not being able to.
Evolve.
Where's the product offer.
You've seen the telmex.
At work.
So we continue having.
Problems and developing that but off the internet business.
Okay. Thank you very much for both matches.
And our next question comes online Diego I know from Goldman Sachs.
Begun.
Yes, I didn't want is about eight cents opinion.
So I would see when somebody so look I was wondering if you can give us some comments on but also from the middle pieces. If you can call them from the main goals.
Segment, I mean, a beach and to be helpful. Also to understand the terms from each utterance regard that we pharmaceutical must be done. Thank you.
Yes, Hi, there will a last Saturday to answer your question.
[noise] well, thanks, Yeah, well well, we launch I were M.B. I know in June so just a month ago.
The strategy similar to what cable companies have donning the U.S. market. Our propping. This on limited postpaid service available only two I were broad customer base, because it's it's not a substitute all the.
Great broadband connection I point that I, I, where customers a fixed broadband use more than 200 feet I'm 50 gig per month, we chased many times more than what our user of mobile usage in Mexico dates about fourq excess per month on the postpaid service.
Providing more limited data Apple none SMS services makes it an attractive offer and we price it at a.
Very competitive price of 250 basis and everything is on limited.
As you know we use our Stan did that allows us to participate in a copy the light model, where there's no coverage I'm not then the Oh, we wrong with that excited so the offered provide very good coverage in the country, while the usage of <unk> and <unk> network.
That has been tested and Alex was referring to its been youth also for a fixed wireless.
We reached about 14000 subscribers at the end of the water. So for the first month 14000 subscribers I think it was a good number a given and given the target that we are aiming at the one of the main challenges it has to do what we'd be basis.
As you know I stand uses the 700 megahertz of spectrum band 28.
I'm not all of the devices are compatible with that fan, but overtime, we believe that that problem Oh, we'll be solved.
So well those are the initial results of our lunch.
Yeah. That's a that's super helpful. Thank you for that and just a follow up question on the data connectivity I guess, it's amazing to see right or the amount of Robin addition, so both cable guys Mexico. This quarter. So I was wondering it's a compelling.
Hi, good customers I know that penetration of broadband stool.
Well, if it's more dependent markets. So you were just common in bathroom or not.
The question. So I wanted to understand the big customers are like like Greek food and dining connection from the first time. Thank you.
Well I I think at a two point that out that I referred to the my previous answer penetration is growing it's not only greenfield. It's people that's probably the not need a broadband at home because most of the I'm day, where I would point they were using.
Thanks, a their model I'm, probably as a substitute bought one they were isolated they need Ed connectivity and that's what I'm, saying that deep condemning pushed that.
I've been a great thing if I were bundling offer is that we offer a great a price because bundling provides a discount opportunity that helped us as you saw and grow and being able to grow in the different Uh huh.
Second I would say that the growth Wes.
Across the country, probably the most challenging areas, where highly dependent on tourism some of our market.
Uh Huh were more challenging like I'd get a my yadkin on what the my data fast but are there was that general demand for an additional services right a lot. So I wouldn't say that Uh huh.
This is a one time I think that that it was the need for connectivity, but those needs will probably remain because I do think that the the work from home will remain the need for connectivity education and.
And I were bundling strategy is working I mean are at the beginning of 2018, 25% of our customer base had triple play offers nowadays is north of 47%. So I think that and that's why I would probably.
It's pretty are robust and very attractive in terms so.
Right.
Thank you very much will be so I really appreciate.
Thank you. Our next question on comfortable I know some made data from newer Street research you may begin.
Hi, a couple of questions from me piece, just I'm going back to and Im everybody. If I could I. Just wanted that is the first of all or any talk it you can share with US I think you suggested you what kind of moving towards the target you were looking for just one of the bolt was and then.
Secondly on the pricing is very aggressive as you say the tuned in 50 pesos among.
Is datsun, partly relates to the first question is that indicative of the other reelected to try to actually go out there and when wireless show is this ostensibly just just kind of churn management and then.
Thirdly could could you maybe talk about the cadence going forward in terms old and you need to be an eight hour and to continue to build out and we know that coverage I'm requirements. All we noted that devices and will the increasingly able to be used.
Using 700 megahertz, how quickly can this whole project kind of pick up pace and become really quite meaningful always like maybe that's not quite the intention.
Yes. So me. Thank you for your question.
As to your first question in Alaska lead to expand but.
It is an effective churn reduction mechanism to have a a quad play.
And that we have seen another cable companies, especially what the Liberty is doing in eastern Europe. So that we believe will be will be helpful.
Going on and however, I mean, it's also a source of revenue, but sadly can expand on that yeah, well I know, we do not want to buy that specific target. Because this is a probable aim I, we're not subscriber base.
Add additional problem reviews turn you saw were only infrastructure because part of the demand can go through our own oh loading of the because customers are broadband customer.
If we see what charter has been able to achieve more Comcast has been able to achieve after a couple of years. It's just a five 7% over their broadband subscribers are the ones that are I've subscribe to mobile, but he becomes a I'm torn reducing mechanism.
It's additional ARPU and things are basically AI ban cannot offer directly to two for the end user well, we have that guaranteed margin enact capex light model by the price it's basically on.
Cost that we have oh from <unk> and.
And and needs.
It's an attractive offer for the Mexican market, but we are not targeting the prepaid market. We're going after the postpaid market that it's a more limited mark can you.
If it's only on certain areas. The reason why is limited to where I'll 10 has a footprint is because outside of five cents footprint.
That I spend has to pay for roaming month, and saying which is more expensive. So that's that's what it's limited.
The expansion of Feinstein, well, they have a commitment of expanding over time and depending on where the areas where they expand is where we will be able to.
Expand that were offer right.
Well I mean, it just providing additional services.
Why weren't customer base, we then attractive attractive offer, but but but I think that you should look more err on the strategy of the cable company.
In the U.S., because we're not going after the prepaid market or or for the Oh for customers that are not on on our footprint for customers that are that are not a part of our customer base Reid.
Yeah. That's that's interesting things like I guess, one one observation would be subject to the they all 10 network in the devices. The difference in Mexico is you've got a very very dominant player, which films kind of right for the picking and when you look at the U.S. market and you look at examples in Europe, but cable operators.
And to mobile you haven't had such a sort of lopsided market structure. So Walt.
Model for cable generally you, though I think it makes a little besides Mexico strikes me is quite unique in that in addition to that you could leverage or what is quite a strange market structure, but what's interesting I take your point. Thank you that's very helpful.
Yeah, you're absolutely right Sumit and that's why we're going to basically after our broadband subscribers to offer.
This service.
But thank you very much requests.
Thank you just.
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