Q4 2020 Grupo Televisa SAB Earnings Call
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Ladies and gentlemen, todays conference is scheduled to begin shortly please continue the standby. Thank you for your patience, ladies and gentlemen, todays conference is scheduled to begin shortly please continue the standby. Thank you for your patience.
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Good morning, everyone and welcome to of Grupo Televisa on fourth quarter and full year 2020 conference call before we begin I would like to draw your attention to the press release, which explains the use of forward looking statements and applies to everything we discuss on today's call and in the earnings release on.
We'll now turn the call over to Mr. Alfonso.
The envoy Elsa co Chief Executive Officer of Grupo Televisa. Please go ahead Sir.
Thank you Gigi good morning, everyone and thanks for joining us today with.
With me today on some of the fluke CEO of cable and expand the CEO of <unk>.
The pace of will schedule of Televisa Studios.
So the the gentleman said later on.
On one line on corporate Vice President of the announcing of administration perspective.
Last year. It was one of the most challenging and uncertain period than any of us can remember not only because of COVID-19, but also because of the dramatic contraction of the Mexican economy.
David on the pass.
The words drawn the normal 90 years.
Total plenty of also highlighted the importance of.
Of the services we provide for.
On their entertainment content to our new skies.
Two our broadband and pay TV services.
On a constant business continued operating without.
The interruption entertaining and informing our audiences and he played a critical role in the education of print.
And Mexico continues to be mostly remote also on cable infrastructure, what's able to cope with the needs of our customers who have to switch to a work from home environment.
2020, and demonstrated the strength of our core businesses throughout the year net amount of the way.
Did not lose sight of our strategic initiatives and continue to focus on execution.
More specifically in cable we reached the milestone of $14 million RG use for revenue generator.
The units and delivered a growth in broadband subscribers up 16%.
We also achieved high single digit growth in revenue and operating segment income.
In the case of Sky, we continued adding broadband and video customers and the company posted a top line growth of three seven.
Percentage.
During 2020 Sky contributed with $3 8 billion in operating cash flow and maintain strong levels of profitability.
I mean content, we were able to substantially compensate for the decline in advertising revenues with the <unk>.
Growth in other sources of content revenue.
So with a dramatic reduction in costs and expenses were.
We are happy to say that we delivered on the savings we promised of two 2 billion pesos.
Finally in our other business. The segment was severely impacted by the closing of the economy and posted a drop in operating segment income of 92.
Year over year.
Unfortunately, due to the social distancing measures mandated by the authorities, we had to close our gaming sites.
Pick up the aging also the large majority of the points of sale for our magazines were not open and.
And not operating and are moving.
The two preservation business was put on hold due to the closure of movie theaters all of these being circumstances outside of our control.
As a result full year revenue operating and operating segment income for the company dropped three 7% and one 3% respectively and the margin.
On the district was relatively flat.
However, excluding.
The result of our other business the segment revenues from our three combined core businesses expanded by 2% and operating segment income grew by two 1%.
In terms of our balance.
LNG from close to the year with a solid cash position of $1 $8 billion without relative on short term maturities and where the net debt leverage ratio of two and half times.
But the matter of nine are pleased that our portfolio of core assets delivered growth in 2020, the most challenging environment the company.
Company has faced in many decades.
In terms of our consolidated fourth quarter results revenues were practically flat and operating segment income was up by 14%. This was driven by solid performance in cable the resilient operations on the sky and material Opex savings.
In the content.
Now, let me address the fourth quarter results.
In the content Division.
Advertising revenue was relatively flat. This is a remarkable result, considering the contraction of these business in the first three quarters of the year and the fact that a relevant part of the economy remains closed.
Private sector advertising revenues were strong growing mid single digits sequentially. There was a significant improvement across all sectors.
On the other 10 government advertising revenues dropped double digits and this was driven by the ongoing austerity initiatives.
From the beginning of the New administration, the government implemented a number of public policy measures to release funds for other projects.
One of these measures with the reduction of its overall investment in advertising, which continues to the state.
The royalties from Univision increased by eight eight.
In dollar terms, reaching $110 million, which is a record high for a single quarter the.
This was achieved in spite of the impact of the pandemic on west helped by political AD spending in.
In sum during the quarter content revenue was down by half of a percent but operating.
The percentage of income grew 23, 7%, mainly driven by $1 1 billion pesos in savings.
Moving on to the full year content revenue declined 7%. This is primarily explained by the decline in advertising sales in the first three quarters of the year due to.
The COVID-19.
Throughout the year on a call.
The division was extremely disciplined with cost and expenses.
We're able to reduce them as I mentioned before by $2 2 billion visits.
This is a substantial reduction in our cost structure, particularly considering that most of it was.
The secondary trade it in the second half of the year.
From the beginning of the pandemic, but a novel and I've made it a company wide mandate to examine every single cost and expense line to eliminate any unnecessary expenses canceled many contracts with service providers and renegotiated terms with many.
The others.
As a result during 2020 operating segment income in our content business was only two 3% lower when compared to 2019 and the margin reached 37, 9%.
This is an increase of 180 basis points from 2019 and the.
Wisconsin margin since 2016.
In terms of our upfront I am glad to say that our negotiations with our.
The Mers has practically concluded and upfront of deposits are expected to grow mid single digits.
We're optimistic that these will contribute to reach an inflection point.
Highest advertising revenue during 2021.
In addition in spite of all of the fact that many social distancing measures remain in place we see that many of our advertising clients are better prepared to operating in this complex and complex environment and have been more active since the beginning of the year.
I will now turn it over to potential for a discussion of the progress we made during the year and our content offering.
Thank you for it.
Zone.
The nations.
One of the Mexico. According to Nielsen during the last year of viewership of free to air television.
The three points.
In the sense here of this year and we were the main contributors to that growth.
Our flagship channel that's as of today is posted a year over year of growth and with day the ship of 21% doing the combined entity on primetime slot leaking of five zero rating.
Okay.
Our new cash well less strong.
The star ratings, and our 19th parallel remains volume almost doubling those of our closest competitor.
The success of our 2020 production was Edison, even before the beginning of social distancing measures.
The recognition pattern.
When the ratings war, we're already reaching levels not seen since 2016.
Of the output of the gullies on them for a period of time, we have to replace much of our early absolute comp the library programs given the temporary closing of our production facilities.
Even then our absolutely growth delivering over 50% more viewers that the.
The time line content of our closest competitor.
Have a very valuable library.
We will continue to build all of the time.
So let me set of content continued to support Univision the strong ratings.
And one of them.
The unusual was the R&D network portfolio to grow when the ratings year over year, allowing it to increase in viewership share and the Spanish language programming.
The eight perfect.
Thank you Patricio now moving on to cable, let me turn it over to Sam.
Yeah.
Thank you Alfonso.
In spite of the challenges we faced during 2020, we're very happy with our results.
We posted double digit growth in Nike Jews, surpassing the milestone of 14 knee.
Broadband customers drove most.
Of the growth, but voice was also a contributor.
The weighted performance on video was mostly attributed to the difficult economic environment.
Additionally, our customers are prioritizing connectivity as there are more options in the training services.
Our network responded well.
Average monthly traffic per user went up by approximately 30% during the year.
And our number of users increased by about 16%.
This is a very relevant increase in the demand on our network.
The build to satisfy it.
The investments that we made over the years are paying off and now, allowing us to keep up with increasing demand for high speed profit.
As a matter of fact over the last five months Netflix has placed us.
At the top broadband service provider in Mexico, According to the or speeding up.
Yeah.
He loves the year innovation was an important component of our strategy.
During 2020, we launched multiple initiatives.
Including.
As of <unk> mobile service, which closed the year with over 75000 customers.
Our <unk> smart offer based on an Android TV set of box, which includes voice control and allows us to offer all of the relevant OTT alternatives.
Our new linear <unk> feature which allows our customers to take their fixed line number with them wherever they go.
And at least your novels.
Our exports on the network, which now includes important sports content on an exclusive basis.
This finally, we continue positioning our sales as the leading aggregator of OTT services in Mexico.
And we now carry many of the main participants, including blame Netflix. These net clause Prime video HBO Max stars and others.
And so the results were also strong day.
During the quarter, our revenues grew seven 3% while operating segment income grew at 9%, reaching a margin of 41, 9%.
For the full year revenue growth was eight 8% and operating.
Segment income grew six 2% in the margin of 41, 7%.
While the NSO business contributes with most of the revenues of our segment.
Our enterprise business continued to build scale.
During.
The quarter, we posted revenue growth of 9% and for the full year of 15, 5%.
This is the fastest pace of growth since 2016.
During the <unk> capital expenditures reached $663 million.
One of 231% of revenue.
The majority of the two of our Capex in 2020 was directed at increasing our subscriber base and that supporting growth.
Which was the stronger than anticipated.
In addition, we expanded our network by over five.
For the thousand homes.
As a result, we close 2020 with close to 16 million homes passed of which more than 60% art path either by fiber to the node or fiber to the home.
Over the last decade, our market share of fixed broadband.
The contacts expanded from 8% for about 25%.
We expect to continue with the positive trend.
Thank you Sandy.
Now moving on to Sky, Let me turn it over to Alex Penna CEO of Sky.
All forms of.
Glen.
It was a very solid year for us.
Broadband for continue building the scale.
The way of managed to add the video customers in every single quarter of the year.
Combined net additions in Venezuela.
The strongest.
For any sales line of 16.
The we closed the year with $7 5 million video views and 666000 broadband sales.
We now have become relevant participant in broadband.
The strong competitor.
In terms of our financial results.
Revenue growth during the fourth quarter was for 4%.
Operating segment income growth was one six percentage for the full year.
Revenue was up.
And the three 7%.
Operating segment income was in line with last year.
Richard the margin of 31, 3%.
For 2021.
We have a number of initiatives to maintain our standard phase of growth.
Like for example.
Last month, we allowance of the package of Sky's sports.
This is the prepaid offer.
With the exclusive sports content.
Such as the Spanish League the English Premier League of man.
Any other.
Other key sports properties.
Sky Sports also includes all free to air of Chairman's and Televisa suite of.
The.
The bridge on us.
This package is on effort to further monetize on the Sky's the investment.
It excludes.
<unk>.
Sports content.
It is being positioned as a must have for her for sports fans that are satisfied with the current providers of broadband service.
We will continue developing and testing are.
The ATB telecom offers to maintain the resilience and profitability of our business.
Thank you Alex.
Now in terms of Univision on December 29th Searchlight and for its light concluded the acquisition of the majority.
The other ownership interest in the company and as part of the transaction, we converted our warrants into common stock.
The management transition took place in the Swift and successful manner.
Soon as Wade Davis assumed the role of CEO, he set out to revamp of the company's strategy and incorporate.
The last talent to the team. In addition, as announced previously Univision named for very accomplished Hispanic business leaders as its new independent directors.
Marcel of cloud CEO of Softbank group International growth kind of Munoz executive chairman of the United Airlines.
MTV on Silas Senior Vice President of Global Public Affairs of Este, Lauder and Dsos of 26 year veteran of the Walmart. Most recently she served as Chief operating officer of Sams Club.
This impressive group of individuals and appreciate the Univision extraordinary potential.
They bring a very unique understanding of the Hispanic market and substantial strategic and operational expertise.
On the Televisa side the novel a million of Knight will also serve as board members.
The implementation of aggressive cost actions at the beginning of the pandemic.
All of the Univision to benefit from the sequential recovery in advertising in the second half of the year.
During 2020, Univision was also able to refinance over $4 billion for debt extending its maturity profile.
Earlier, this year, Univision announced but in the FTE.
How long of a streaming service designed exclusively for the U S. Hispanic audience with free premium Spanish language programming to be launched in the next few weeks new service with the allow Univision to kind of a leadership position in the Spanish language streaming space just like it does in Spanish language linear TV.
Today, the another night of the closest working relationship with ever had with the Univision and I'm looking forward to supporting weighed on his team with all of the initiatives they have in the pipeline.
Moving on to capital expenditures.
The last year they were 930.
$9 million lower than our guidance of $970 million and lower than our capex in 2019 of close to $1 billion.
For 2021, our Capex will be slightly higher than last year, and we take advantage of as we take advantage of growth opportunities, particularly.
On the cable side.
Finally, I am happy to report that our board of directors approved yesterday, the payment of a regular dividend in 2021, and this will be presented for approval at our annual shareholders meeting.
In closing 2020 took us followed by sort of price.
But we were caught in a very solid footing.
Producing strong and attractive content and with very robust video voice and data on all three.
In this environment, we were able to increase ratings in our content on free to air television to levels not seen since 2016.
We also protect our margins in our content business as a result of the aggressive cost actions that we took throughout the year.
We continued gaining market share in the telecom services, adding over one 7 million of RG using broadband voice and mobile.
In cable and Sky This is our.
This pace of organic growth on record.
On every moment, we maintain sufficient sources of liquidity and solid balance sheet and strict financial discipline.
Finally in an economy of that contracted based on the 5% we delivered growth in revenue and operating.
The fast and income for our three combined core operations.
2021, we will continue to be a challenging year, but we will remain focused on delivering solid results for all our stakeholders.
The amount of and I are optimistic about 2021.
The segment connectivity has become very important in every household and we are benefiting from this trend. So we will continue to invest and grow in our broadband operations also as a result of the positive outcome of our upfront negotiations. We believe that we will see in 2021 the inflection.
For the month for our AD sales business.
Before we close sadly I would like to say to inform to you that the our friends Carlos Mike Russell will be leaving us after many many years of dedication and hard work.
Thank you Carlos we wish you all of the best.
Actions or activities.
We will be announcing the new IR head in the following weeks.
Thank you very much for your attention and we're now ready to take your questions.
As a reminder to ask a question for you will need the press star one on your telephone.
And you make your question press the pound key.
Standby, while we compile the Q&A roster.
Our first question comes from the line of box of what Orlando from Ita BBA. Your line is now open.
Hi, Thank you for taking my question good morning, everyone for.
First question.
Net charge offs.
So you mentioned the new.
Total of being incorporated into the innovation and I'm not the.
We were also named chairman of the board from Univision I was wondering what's going on.
Rajeev for Televisa for Univision.
Would love to share your thoughts on debt.
And then the second is.
The.
Some of that savings on the content side.
Were very impressive and I know you've talked about some of that.
Being more or less permanent for itself.
Some of them 21, but I was just wondering if COVID-19.
That has changed.
After the fourth quarter results, considering you're seeing more of an inflection point on the on the.
Advertising growth revenue.
The conference also like the.
Very well thank you for problems for all of the health He's given me over the past years for long.
B all on my side.
Thank you for total.
<unk> for your first question about the Univision.
It's a very interesting.
And then for you.
Let me give you some color in the background.
As I mentioned before Emilio of that amount of on I will serve us members of the board of Univision.
And.
What happened there was that after the closing of the acquisition of controlling new our new controlling.
Same store guidance originally offered the position to to the amount of the and I as co chairman.
And now the basically decided not to take it if he would rather stay focused on the execution of our strategic plan in the very turbulent times. So then it ended up with new and neither on.
Volume growth of study was a very good idea, but I accept.
So it's not because of any person on the merit of mine, obviously, it's because of my role at Televisa.
It's interesting, but none of the nine operated the levies as co Ceos working on so tight knit team I.
Net.
Under what I can characterize on some very successful partnership.
All of the decisions are made together and we leverage on the strength of each other.
It has worked well for us it's a different style, but I can tell you that it has worked well for us.
I would say I believe for Televisa and that's period I will serve as chairman of the Univision for on initial term and then we will be of rotating and none of them will take over.
As to the level of collaboration between Televisa and the innovation has been increasing over the last few months.
And the personal relationship that the amount of of Knight have with Wade Davis and his management team.
Is the best we've ever had with Univision.
Wade.
Is doing the great job and has re energized the company.
I believe Univision was kind of a sleeping giant.
We are now fully aligned and understand that the closing of that we work together the better for both companies.
We will do many things jointly as we evolve into the digital transformation of <unk>.
Both on the visa on Univision with the view of taking advantage of our combined scale.
This means a lot.
Together the laser in the division.
Our by far the largest media company in the Spanish speaking world and also by far the largest producers of content the Spanish among many many other things.
So we're very happy with this relationship and with all the things that we will work.
Work on as as partners.
As to your second question.
There are many costs and expenses that were permanently eliminated.
Having said that we think that in 2021, which we believe will be a more normal year costs.
On expenses will be similar to those in 2019 in nominal terms.
However, I mean, we have a lot of uncertainty.
As to Amy for example, we don't know.
Whether we will produce and transmit the Olympic games.
Happened in the Tokyo, which is the big thing.
In the big.
A line item for us in terms of cost and expenses so.
We could not.
I mean, we do not kind of on precise figure of at this moment, but.
You can be sure that.
I mean as you saw.
All of them have the might have been on.
The <unk>.
On top of all of the costs and expenses and we will continue to do so.
Great.
Thank you. Our next question comes from the line of got lost in the got it though from GBM. Your line is now open.
Thank you good morning, and I hope, you're all safe on healthy.
My first question is about the follow up on Union mission.
Liberty Global to come on in R&D investment during the quarter could you. Please elaborate on what does this mean for such pizza on diversity of transient with UBS.
Yeah.
Yes. Thank you Carlos for your question.
We're very happy CEO of Liberty Global actually made on investments in Univision.
Through preferred type of instrument.
This was together with search light for the site and of course as a result of that the became.
Partners of ours.
I think I mean, they saw this is of great investment opportunity considering the potential of Univision.
The especially if you look at the growing Hispanic market demographics and also the great prospects that we have on the digital transformation type.
They also have told us that the AC.
Great value that our content delivers and of the huge library of thousands and thousands of hours of Univision can have access to.
What Mike Chris.
As mentioned to both the novel and <unk>.
Is that he made the investment to strengthen the.
So between our two companies.
Of course.
Day in the us wed like to do many more things together.
And we really appreciate.
Mike doing making these investments.
Mike has been on Amazing Board member we're on.
Also proud and happy.
Relation fee that a company controlled by John Malone, one of the smartest and most admired the investors decided to bet on the future of of Univision. So we're very happy with the relationship with Liberty and we're very happy with their investment and becoming partners.
Okay.
Thank you. Our next question comes from the line of Gordon Lee from <unk>. Your line is now open.
Hi, Good morning, everybody. Thank you very much for for the call and I'd like to to.
The join out of taught us congratulations on from software, you're naming as chairman and important for them.
So the chairmanship, you'll eventually have with the amount of those well and all sorts of think catalog.
For his many years of help and support.
I I have a couple of questions. One is just I guess a follow up on the two last questions on thinking about the that the levies on relationship with Univision.
The comment you made on costs for 2021, I would assume that that the.
The expectation on the cost will be somewhere in about the 2019 in nominal terms.
The.
Does not assume any sort of additional ramp up in potential joint initiatives with Univision that.
It could benefit the cost side, the I guess if that were to happen.
It would probably materialized later on it would probably be incremental to that and on the second question I had on your upfront I was wondering if you could.
Maybe.
Terms all of a little bit maybe qualitatively of whether you feel that your customers are now sort of approaching their AD spend in a more normalized way in the sense of the sort of adapted to Covid and second when you look at your upfront deposits are there any sort of shifts in terms of the industry or sector composition.
Composition debt that you could detect.
Yes.
Hi, Gordon. Thank you for your question I guess in terms of costs and expenses.
All of the Ava product project that we have in Mexico has been considered in the in the budget and this will be very.
Very important for us.
The launching date.
The platform to blame so thats captured there.
We were basically mentioned in debt.
I mean, we haven't finalized the figure because of.
The events such as for the Olympic games, whether they will happen or not in others.
In terms of doing more with Univision I think I mean, the ones that we have identified the things that we'll do together and are part of the plan have been captured.
In those costs and expenses, if we do something in addition to that.
Those will be growth opportunities and.
They will be of course on top.
Part of what I mentioned.
Yes, I mean.
As to the upfront we are basically seeing.
But our advertising clients.
Living a better environment.
Basically we are seeing an increase across the board with some industry is growing more than others for example of advertising.
The spending food and beverage.
By basically mid single digits year over year. This is last year with the retail telecom service of sales because.
Medics.
The double digits.
Our clients have realized I think that the.
Slowdown in that spend in the first nine months of the year, we're starting to erode their brands and discuss both the picked up in 2021 of them as part of the plan.
As an advertising client even.
And in this environment, it's important to get the message across and to start to get your revenue back in place from selling your products. So.
With our very strong ratings, we have shown that we continue to provide the most cost effective way of.
Of promoting.
Their brand.
From their product so we feel optimistic about the what the Liza is offering in terms of products and the capacity that we have to basically promote.
Those brands and products.
We're optimistic about the.
2021.
That's very clear thank.
Thank you. Our next question comes from the line of Marcelo Santos from JP Morgan. Your line is now open.
Hi, Good morning, Thanks for taking my question I, just wanted to kind of a little bit more clarification on the phone. So on the front of the previous year was everything spent in 'twenty.
And if.
At the Upfronts growing mid single digits, and you have clients that buy outside of the upfront. So it's kind.
The reasonable to expect the higher growth in advertising revenues in 2021 been dismissed two of them.
That's the first question and the second question is on the broadband growth.
If everything is the two of the collection.
We thank you for doing very well with churn.
Oh are you were seeing some impacts of the weak economic environment.
And the numbers. Thank you.
Thank you Marcello.
After your first question, considering the Covid and.
The dramatic drop in GDP. Some clients were not that we're not operating fully or we're not operating at all.
During 2020 canceled some of the upfront plans.
While the others decided to to push their commitments to 2000.
'twenty one so of course as a result of other than not being able to operate for example.
In total in the tourism sector of airlines et cetera.
Then we're facing severe if.
The financial distress, just as an example of one industry.
Of course, they decided in.
Some cases to cancel their plans.
The other cases, we were able to negotiate pushing their commitments to do this year.
As for your second question of Alaska Saturday to answer.
Hi, Matt.
We are very happy with the broadband growth.
Julien the Orange.
In 2020, there is no doubt that connectivity is very very important for our customers and we provide an attractive offer.
As you saw on on where we saw there was a slowdown in the fourth quarter right, but.
I think that it's going to be industry wide, we still have to see the results of some of our competitors, but when you see telmex editions on the first on the fourth quarter. They were also.
The lower down on the prior quarters.
There's no doubt that the economic environment has been challenging.
GDP had a relevant contraction and disposable income for many of our customers has declined but they have been providing or priority pricing.
Broadband collections.
Collections remain.
Solid and we are happy end of the use of.
For cash increased so.
We have very competitive bundled.
Some of our customers are doing.
The canceling Vin.
Video, mainly that's why we had a slowdown on video, but I think of that on the offers that we have on broadband.
<unk>.
This allows us to remain very competitive.
And the mantle of just.
To clarify zone.
The upfront the plan when we talked about the mid single digits.
When comparing last year of subsequent plan with this one.
Okay perfect. Thank you.
Thank you. Our next question comes from the line of the tour flow Nida from Goldman Sachs. Your line is now open.
Hello, Good morning, everyone of all used to always true in your families on correctly smart glass.
So.
The two questions on our side.
The folks on the east if you could give us enough of based on how the other business the second half.
Awesome. Thank you on so far.
How much of the fact that COVID-19 older Chipotle of implants in the classroom and also from flash.
We saw.
The other.
Hockey for context, the slaughter sorry.
Most of the nickel and if you see any room for margin.
Marching scheme of our margin gains from other segments of the drops which we should expect that from some of our cost cutting guidance. Thank you.
Thank you Peter as I reported the other businesses.
And that segment was severely impacted by basically the closing of the economy as a result of Covid.
In terms of operating segment income, we lost 92% year over year.
On the I mean it will.
It will all depend on what happens with the <unk>.
Covid and the relaxation of the measures of the sanitary measures and the explanation. So we believe it will be a better year.
However, it so it all depends on that for example, I believe we can open the stick of stadium and have.
Public going to that stadium again.
If the points of sales sales of the magazines are open or not and especially whether the bingo partners.
The bingo operations or the gaming I'm, sorry of operations can open or not of course.
We shut.
Down 100% of the gaming operations, then towards the end of the year, we were able to reopen some of them, but now they are pretty much.
Shutdown and.
Also when we open than they were at lower capacity then.
Then of course, the 100%.
So so it all depends on the on those on.
The measures in there on the extension of the measures on the effect of Covid and vaccination.
And I'd like Scott on those two to answer your second question had to do with margins.
How do you sort of as you saw margins were very solid across all.
All of our three business segments of.
Cable and sky above 40%.
Neither of those margins can be seen in the in 2021 on.
On the content side the margin of close to 38% was also very.
Solid remark of them, if I could say that we consider the circumstances.
We faced in 2020 as Alfonso mentioned the costs and expenses will be similar to 2019.
But we will maintain strict control over costs and expenses to make sure that we protect the margins.
In 2021 was west.
Yeah.
Alright, the there in terms of products for all of the heart.
Yeah.
Thank you. Our next question comes from the line of getting better of our Sam from Barclays. Your line is now open.
Okay.
Hi, good morning, and thank you for the call.
I had a question on on the purple there on the people.
Performance of tabletop MTB.
Relative to the.
The sky on any I guess on.
Understandable that the economic pressures have impacted.
The impacted the basically the.
Net additions, but then.
Why the what would you attribute the continued resilience.
Uh huh.
In the Sky.
And that's the whole of on on the Sky There was say a.
Decreasing the margin even the restart of the sporting events.
With this margin in the fourth quarter B E.
A reasonable assumption for the margin for.
The beef here. Thank you.
The factors for the medical Alaska, both salary of Alex to take your questions.
Thanks for the better part.
As I just pointed out the the economic environment has been challenging on the disposable income has come.
For down and well our customers are prioritizing connectivity right.
While we're losing some video on customers we are maintaining most of these households as customers we sell through the services and then they can eliminate.
One or.
On the bundle is very competitive price.
T V becomes affordable with the with the bundle, but if they have to reduce some of the cost what we are seeing is that.
They take out of video we call that if the economy improves we will.
Tool to recover some of those triple play customers. Let me remind you that we sell on the postpaid so they have to pay for the services on all kinds of <unk>.
Don't have the option to suspend temporarily the payment of our services as opposed to towards Sky.
Now, they're so sort of shifting preferences from linear channels to OTT. That's why we are including more subscription Vod services and becoming an aggregator.
And we also have to note that we had a price increase in September right.
So.
We had some additional cancellations of specifically of video.
During the quarter. So we are facing.
Headwinds on video as opposed to Sky and Alex can elaborate on the resilience of Sky.
Yes.
Hi.
Yeah.
As you all know.
The bulk of our video customers.
In prepaid packages.
And the deaths are very affordable.
Offer.
And a very flexible.
Well as well as being a rebate the product gets the.
Customers the ability to.
Recharge when they have for the money to do so.
And if they have to skip the following months because they don't have the means to.
On.
They can also do so.
We increased the price for the.
Prepaid brought that back in December.
That obviously.
We'll make some dance on the churn.
Net.
The so far so good Oh, what we had seen.
Since the price increase.
It hasn't affected the business and.
Meaningful way.
With regards to both speed.
We have a very solid.
The broad.
With some of our packages, including all of our exclusive sports content.
And that the is very appreciated by the market.
And we were also able throughout this year.
The income.
The increase in our days of postpaid subscribers with regards to.
All of our broadband offer.
It's all sort of let Valerie.
Competitive losses.
Got the very competitive price.
And.
As you can see in all of the results we have.
At the.
More than 270000 subscribers of broadband the law.
And the brand is.
And the outflow was the six on the the 66000.
And the.
It's also.
We also benefit the.
From a dip on Damian.
As you saw in all of us.
So it's in the stack on end of third quarter and the fourth quarter the.
There was.
Slowdown and all the growth.
Of the broadband compared to the previous two quarters.
As well as in terms of.
Went out debt so for video.
But the.
The reason is the.
There is no doubt that the the eight on the half.
Dropped.
And the growth.
For the Mexican economy and last year.
Uh huh.
And also the inquiries and.
The number of the people that have lost the jobs.
That should have an impact.
For a while the.
Lanny Duane day one.
On.
But I repeat so far so good.
The level of the sales.
Sales of all of video and broadband products.
I've gone to a more normal levels pre COVID-19.
And.
Uh huh.
And then so far the churn has been under control.
Okay.
Okay. Thank you and on the margin side.
Well the I'm.
Amortization of the sport rights that you.
Both of them in the fourth quarter there.
The let's say a normalized level or did you have to on more days in the right that would have occurred in previous quarters.
No. It's a it's a basically the journey.
During the second and third quarters.
There were.
Out of the sports events that were deferred.
And therefore.
We did the amortize down.
And so those debt the word but for the canceled we deal on the Amo.
And the second and third quarter and the we did so in the fourth quarter, So and it's also a cyclical.
The amortization that happens every year weighted.
With regards to our.
Exclusive sports content.
Okay. Thank you.
Thank you at this time I'm showing no further questions I would like to turn the call back over to management for closing remarks.
Well they would like to thank everyone for joining us today as always.
Yeah.
I mean, I would like to thank everyone for joining us today as always feel free to contact us at any time for additional questions.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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