Q3 2022 Grupo Televisa SAB Earnings Call
[music].
Good morning, everyone and welcome to the Grupo Televisa third quarter 2022 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 discussed in today's call and in the earnings release I would now I'll turn the call over to Michelle phones and go with your co Chief Executive.
Grupo Televisa. Please go ahead Sir.
Thank you Paul.
Good morning, everyone and thank you for joining us with me.
So they are running them on.
Your cable this might be the CEO of Sky and Carlos Phillips CFO .
During the third quarter Grupo Televisa's consolidated revenue.
$19 3 million vessels, representing year on year growth of three 6%.
While operating segment income reached <unk> 7 billion vessels, we would like to have year on year decline of six 7%.
Mainly driven by the amortization of costs related to the transmission rights of the world.
Adjusting for these portable televisa's consolidated operating segment income fall.
Only by $3 one.
Revenue growth in cable.
The other business segments was partially offset by declining revenue at Sky.
As we discussed in our previous earnings calls this is a transformational year for sky.
And then the next year.
We experienced a strong rebound, especially I think you got that.
Moreover, our expansion plan in cable and it's working very well.
Allowing us to gain market share and margin youth, while keeping R. R.
Do you expect the solid argue your net add momentum to continue going forward.
Daniela unreasonable elaborate on the operating and financial performance.
Core consolidated segments in their remarks.
Let me say that even though global financial condition.
Economic activity in the U S and Mexico remained relatively healthy.
Sure.
However, the global economic environment is likely to deteriorate.
The hiking cycle continues with interest rates perpetually meeting at some point in 2023.
We mentioned three months ago.
<unk> to monitor the evolution.
Variables and we'll not Chesapeake.
Besides taking necessary measures to preserve free cash flow as cash.
In the case of previous macroeconomic downturn.
As a reminder, during the Covid recession in 2020, excluding the other businesses segment as most of them.
So where a significant portion of the year.
Segment revenue and operating segment income.
Our three core operations grew by 2%.
1% year on year, respectively.
Yes he is.
Resilient operating and financial performance by implementing an aggressive cost reduction plan.
Translated to point 2 billion peso can savings or the equivalent to almost 4% of our opex structure.
While the global economic outlook remains uncertain, but another one and I are confident that we're better positioned than ever after the merger of our media content and production assets with Univision I'll start screaming portfolio is fully complete and very well positioned to capture the massive global streaming opportunity.
And because both of them.
Lastly, let me say a much stronger balance sheets.
Global economic downturn.
Leverage ratio to two times five seven times, respectively.
Moreover, we have been taking advantage of market trends.
Pay down debt.
More convenient.
So far this year, we have reduced our total leverage by around $800 million with cash on hand.
In addition, we firmly believe that will continue to deliver strong revenue growth.
And resilient operating performance.
During the fourth quarter.
By several factors such as the monetization of the World Cup rights.
Advertising spending in Mexico to rectify World Cup.
Mid term elections in the U S and so all these are doing that at the remainder of the year.
Now, let me walk you through Televisa and Univision third quarter results released yesterday morning.
The company delivered another solid quarter with revenue of $1 2 billion.
Growing 5% year on year on a pro forma basis, while EBITDA four.
$411 million declined by 4%.
Streaming investments ramped up following the launch of Avon Service March 31, and the Big plus asphalt service on July 21st. Moreover, during the first nine months of the year.
Univision revenue has increased by 9%, while EBITDA is justified by around 2%.
A remarkable achievement, considering the amount of VIX, and VIX, plus which illustrates the power and uniqueness of our combined assets as well.
Focus and discipline of our execution.
During the quarter revenue growth was driven by a solid increase in consolidated advertising and subscription and licensing revenue of 6% and 8% respectively in.
In the U S advertising revenue growth slowed to 5% year on year.
So a 12% increase in the first half of the year.
The relocation of advertising budgets from the third to fourth quarter.
Lack of major soccer tournament.
It sounds to me.
Steel is a must.
Partially offset by record political advertising to set up a critical midterm election during the fourth quarter.
In Mexico advertising revenue rose, 8% year on year also slowed compared to a decrease of 11% in the fourth.
First half of the year science flourished advertising spending in the fourth quarter to benefit from the World Cup.
[music] subscription and licensing revenue increased by 8% driven by growth in both the U S and Mexico.
This growth was primarily driven by the contract.
In the U S.
Right.
September 2021.
<unk> TV subscriber growth in Mexico.
Higher prices also in Mexico.
Good thing portion of fixed plus subscriber revenue for the first time.
Regarding our digital transformation strategy, and we continue to make significant progress.
Well we.
We are still active.
Early days of screening.
The ground running and are producing tangible results already.
As of July launch of our subscription tier of fixed plus we have now completed our comprehensive library screening platform with two tiers.
One.
Having two peers inside the same path.
Huge benefits to both our users and to us.
Our users can have access to differentiated content in both years streamlining their experience.
Our hybrid hybrid platform provides a structurally lower subscription acquisition cost.
Promotional capacity and churn management.
These strategies are already providing.
The free AD supported tier has been a funnel to acquire customers is about half of the current fixed plus subscriber base coming from higher Biggs gave us users.
<unk> already been in the market for two quarters, and we are very encouraged as user and engagement metrics have been exceeding our initial expectations.
There are two main factors driving that impressive content consumption.
First our massive library and putting some of the most powerful and culturally relevant content Spanish language audience.
He has been driving 75% of all engaged with the Olympics.
<unk> allows us to monetize these faults and for the first time and released new window second we're producing more than 12 hours a day of live news and sports content to drive average daily viewing.
Turning to fixed plus while he's very early on.
High quality original content slate is resonating with our originals.
The larger driver for engagement.
Our new subscription or the platform specifically three of our original movies.
Two of our original series.
Liam sports content is a huge differentiator.
Also been a strong driver of growth.
Less than three months, we have are about 3000 hours of livestock.
That's been a huge driver of new subscriber acquisition and consumption.
The breadth of our sports offering also provides huge value to advertisers can reach incremental volumes as she takes less.
Most of our sports cards.
I know the distribution of fixed plus is critical.
With our extensive and comprehensive distribution agreements are fixed plus what's immediately available on all major platforms from mobile and connected Tvs to Rachel Mvpds.
Mobile.
And its exclusive offer to a discussed in risk free of charge and in Mexico easy as an.
Exclusive M B P D distributor.
Offshore facilities cash payments at any.
There are 20000 retail locations this.
This quarter, we expanded our global distribution to Eagle and Central America, We continue to grow these relationships and expect to add more partners.
The last point I'll make on streaming is on the economics of the business. We believe ours is fundamentally different and better than any other major streaming service in the market.
Structural cost advantages come from two things content and marketing.
Our content costs are just a fraction of comparable quality services, we own the largest and highest quality Spanish language library, which exceeds 300000 hours insights.
Regarding marketing top on the benefits of the two tier application. We also have an advantage with our reached more.
More than 60% share of Spanish language market in the U S.
Altogether, we believe this creates a superior economic model.
On the fastest path to procure the profitability when compared to any other major streaming services, we expect to turn on our streaming service profitable by the end of 'twenty two 'twenty three.
To sum up we had another great quarter that puts us on track to deliver our full year goals in the near term despite macro headwinds we have a fantastic set up into the fourth quarter.
While it's early days, we're demonstrating our ability to deliver a high growth streaming service alongside our core business. This is a significant long term opportunity ahead, and we believe we have the right team the right assets and the right strategy to succeed.
Now, let me turn the call over to Daniel CEO of cable.
Thank you Ed Purcell.
In the third quarter.
Eventual operation.
Our cable segment continued their solid turnaround and strong growth in operating metrics for our full year.
Let me provide some highlights for the third quarter.
Net adds grew by 320000 fixed revenue generating units argues the highest quarter of the year and the third consecutive quarter over 300000, Nike use. This compares well to an average of 110000 per quarter in 2021.
Gross ads were $1 2 million IV use the highest figure in the history of the company even exceeding the lockdown months during the pandemic.
We added 71000 video argue yields a full year with positive and record levels of net out.
Video continues to be a success story. Moreover, our distribution agreement with big plus is gaining traction.
Broke down the RG use continues to accelerate to 96000, the strongest quarter of the year and 2018 levels.
Product mix remained stable triple play packages account for close to two thirds of ourselves.
But what you're saying it's stocking packages also continued to grow underpinning our broadband data. This is our highest margin service or we continue to enhance its product offering.
We added 71 thousands describe.
The fourth consecutive positive quarter, and the highest quarter of the year.
To sum up the strategies implemented around the re alignment and simplification of our product suite the improvement in the quality of service and customer experience in our homes passed expansion plan have translated into almost all operating metric reaching record levels and are the highest since 2018.
Despite the economic headwinds.
Now, let me turn to some significant developments during the quarter.
We implemented a bottoms up simplification of our product design system. The new building block modules allow allow us to first quickly create and modifying products and second I just prices at a more granular level rather than complete metropolitan areas.
At same time, the simplification provides more flexibility for our customers to pick their preferred combination in a sense, we're going back to basics with easy it's easy to choose your package.
The year long strategy to improve the quality of our survey that included.
The digitalization of our customer experience five or training for our technicians, well focused investments to improve our network and strengthening of our best in class client call Center is starting to pay off.
Our net promoter score our net satisfaction score have improved in the last quarters and we continue to consistently remain at the top in the Netflix speed index.
More importantly, the IFC and the federal telecommunications sensitivity in Mexico, just published a report on customer complaint overall east to have the lowest complaints per 100000 customers in all services versus our cable competitor and our average response time is the best by far and has remained so for the <unk>.
Two and a half years.
We plan to surpass our original 700000, New home pass go for 2022 and finished with 850000 without adjusting our Capex. This is on top of the 2 million. We built last year I'm glad to report that by the end of the year, we are going to reach 12% penetration.
In a major city and close to 20% in a medium.
The goal, we set a year ago in our residential operations plus the regain IV use and subscriber growth to solidify our market share while keeping our stable.
We have achieved that going forward. These strong operating metrics in the residential segment will begin to translate into gradual revenue growth starting in the quarter.
Additionally, we're in the process of a major re launching of our mobile strategy.
Eliminates restrictions on mobile device compatibility and incorporate new more competitive products. This will be offered to our $6 5 million subscriber base, providing additional revenue increasing client loyalty and lowering churn.
Having said that the residential segment financials in the third quarter faced tough comparisons because of the price increase we implemented last year.
However, while we did not raise prices. This year are two has remained stable year on year, while that while that of our some of our peers have suffered significant pressure.
Residential segment revenue growth was 2.0% for the quarter, we continue implementing cost efficiency projects in order to improve our editor.
Enterprise operations, which account for around 13% of total cable revenue show the effect of a very tough comparative base last year in which we have to read Politico project revenue grew 3.8 <unk>.
Excluding this effect revenue would have grown 22, 8% EBITDA figures have also been affected by this.
Over the coming quarters, we expect first residential <unk> net adds to remain solid.
At similar levels to those of the last few quarters.
Our put to remain stable, while residential set risk segment revenue growth will continue to gradually improve.
There are still some challenges with the growth in the enterprise segment webbing, although we would expect to begin to incorporate new projects going forward.
Before turning the call back to Alfonso Let me say that we are confident that the expansion plan to selective location last year as well as the expansion of 850000 home passed this year.
It has allowed us to deliver solid operating results and she continued to diesel in the remainder of the year.
Now, let me turn the call over to reasonable with the CEO of Sky.
Sure.
You know where previous call I introduce the key highlights of our strategic program and today, we'll share with you the progress although describe initiatives as well as an overview of the third quarter operating and financial results.
I was explaining that cool the most significant opportunity for sky come from improving service quality by rebalancing China's makes and redefining Soc Commission model to discern during second quarter. We look we took control of all digital channels efforts previously mostly led by our dealers we.
Introduced artificial intelligence tools to optimize digital advertising investment and increased sales, while improving overall customer experience.
Five months of operations, we manage to.
Continued delivering on expectations by increasing sales volumes by 75%, while improving postpaid mix by six.
And reducing average subscriber acquisition costs by 19%.
So regarding the sales channels. During Q3, we radically changed Sky Shelves Commission model in September we went from up from payment model to a new customer revenue share model that creates incentives for dealers to enhanced product mix, whilst improving customer tenure.
Initial results are encouraging I suspect it total gross asset went down by 12%, but with a significant improvement in postpaid additions, we went from 11% to 23% postpaid share in October and we expect Q4 to be the first quarter in two years to be phosphate in there that's positive.
In terms of his strategic alliances to increase Sky Telecom revenue stream you know what.
A previous call I mentioned that in second half of this year, we would be launching a new mobile service B. The AT&T network like a M. B N O model <unk>.
AT&T has a robust and reliable network with competitive five G coverage and is a leading player in the mobile industry.
As I mentioned that our initial addressable market would be sky postpaid on high value prepaid customers and we plan to offer a competitive individual family plans with attractive cross product benefits leveraging on our video content.
Today I'm happy to report that as of last week. These services life and our customers are reacting very positively to this new bundle offer.
Focus on enhancing our value proposition with high quality content last month, we launched a.
And no other times he campaign aiming to take advantage of it being the only pay TV operator in Mexico to offer their 64 matches of the FIFA World Cup Qatar 2022.
We decided to leverage on this exclusive content to reinforce sky's position as an innovative brand being the first event to be broadcast it in four K.
To strengthen our relationship with all our customers by offering the entire determine tournament.
And the Blue to go mobile App for free with the only requirement for customers are being reduced.
During the third quarter.
We implemented several initiatives to improve sales quality, which had an impact on gross outflow in July we introduced sky silver HD only in the single play version today these packages.
Generation, 60% of postpaid shells. In addition in September we discontinue black HD Sky prepaid plus four new customers to simplify sky product portfolio.
In broadband as Tom financial struggles continue to affect churn in sales due to the congestion and lack of available areas to promote this service as I mentioned before Altai region recently completed his financial restructuring process, which will allow us time to gradually improve its service.
Our network footprint, which in turn should allow us to continue expanding our fixed wireless business.
The cancellation side.
In this third quarter churn stabilize after a negative trend as a result of low quality additions, mostly in H two 'twenty 'twenty. One however in July we discontinued one of our prepay reactivation promotions, because it's no longer covering its operating and content costs. This added 205.
Thousand cancellations in the quarter. This decision I saw you already mentioned.
Had no impact on revenues or EBITDA.
As a result, we lost 412000 RG use half of that.
Coming from this promotional we cancelled.
During the second quarter.
In our attempt to a financial performance revenue declined eight 7% compared to last year third quarter, driven primarily by lower prepaid recharges on a decline in our postpaid customer base in Mexico and more importantly in Central America operating segment income fell 20.
$4 seven due to lower revenue and an increase in cost on expenses due primarily to the amortization of 268 million pesos you World Cup rights. Excluding these rights operating segment income would have fell by 12, 9% on.
On the Capex side, we expect to close the year with a total capex of around $190 million, representing a decrease of 21% compared to previous year.
This result is mainly due to the measures we have taken along the year to improve sales quality and return on investments, which will have a full year impact before turning.
Uh huh.
<unk> next year.
And before turning back to Alfonso let me emphasize that this is a transformational year for sky.
The implementation of our strategic program together with the nonrecurring costs and expenses related to the World Cup would make this year look, particularly challenging steel we have confidence that the next year Sky will experience a strong rebound at EBITDA level, and Capex, which show an additional double digit drop.
Yeah.
Thank you Luis before wrapping up I wanted to share with you that yesterday, our board of directors approved a proposal to spinoff all businesses that are part of our other business segments, except for the broad pricing concessions and infrastructure, which will remain at Televisa given the to Televisa and Univision.
Richard.
These businesses include our soccer team America. The study a sticker the gaming operations and publishing and distribution of magazines.
Through the spinoff, we would create a new controlling entity that would be listed on the Mexican stock exchange and that would have the same shareholding structure of Televisa <unk>.
Distribution of the stock of that entity.
This plan will allow both Televisa and the new entity, resulting from the spin off to focus on their respective business models and growth opportunities enhancing their ability to generate better conditions for access to capital financing sources and investors that are aligned with each of those businesses.
We expect that the reorganization would be completed by the first half of next year, which would be subject to several conditions, including obtaining all required corporate and regulatory authorizations and the approval of the spinoff by Televisa shareholders' meeting.
Year to date, the spun off businesses account for around seven 4% of our consolidated revenue and approximately three 4% of EBITDA.
In closing despite a more challenging macroeconomic environment that initially expected, but another one I continue to be laser focused on the execution of our strategies to achieve our medium term goals and create shareholders value both at Televisa and Univision and Grupo Televisa.
Televisa and Univision solid operating and financial performance during the first nine months of 2022 with year on year revenue growth of 9% midterm elections in the U S.
Qatar World Cup and the successful launch of our global streaming platform should allow us to deliver double digit revenue growth for the second consecutive year.
Which has allowed us to finance, our digital transformation strategy and the launch of our two tier global streaming platform.
And at Grupo Televisa the ongoing strong <unk> net adds momentum driven by our expansion plan should contribute to accelerated residential revenue growth at cable over the coming quarters.
Wild Sky and the enterprise segment of cables have been facing challenges. We are convinced that the strategies under implementation will contribute to improve their operating and financial performance in 2023.
Now we're ready to take your questions go please provide us with a with instructions certainly and we will now begin the question and answer session to ask a question you May Press Star then one and you touched on the phone.
Youre using a speakerphone please pick up your handset before pressing the keys.
Your question. Please press Star then two.
This time, we'll pause momentarily to assemble the roster.
And our first question today will come from David Joyce with Barclays. Please go ahead.
Thank you first on the cable business. If you could please provide some more color of.
Where you are in terms of your network upgrades you know how much more do you expect to do this year and next year and related to that.
Given you've had some very strong net adds and some of your new passing.
How have the competitors.
Responding like where are they in your markets in terms of their upgrades can be at American mobile total play Omega cob leg.
And then secondly on Sky I was just wondering when you would be done with cleaning up the subscriber base or is that one prepaid model that you shut down earlier this summer.
But mostly take care of that for you. Thank you.
Thank you David we'll ask to your last question or Alaska Lewis to answer it but.
Before as to your first question Don you can go into further detail but.
We're very happy with our expansion strategy I would say that it's.
It's starting to pay off as you.
You saw we had record gross additions and.
We are experiencing high penetrations in the new cities so.
But Don you mentioned just as an example penetration in a very large new city will reach 12% this year and will reach 20% another medium size cities, which is great.
And we have accomplished this.
Maintaining our booth flat.
Which has not been the case of our competitors. So our baton you can expand on this and then we can take your last question.
Thank you.
Thank you Alfonso.
As he said our expansion plan is on is on track.
Who is stable.
The goal, we set a year ago.
To increase and solidify our market share.
In the markets as you saw the operating metrics are very very strong gross adds are at record levels, which means we're near our sweet spot in pricing and in product off in product offering.
Regarding our Rx our expansion to selective locations are our philosophy is when we're going into new areas were going with fiber and that has that has been going well on our penetration numbers are increasing healthily in the numbers, we had last year and our expanded expansion plans.
Speak for this year. So we are we are very happy with that.
And we are.
In our in our areas, where some of our competitors are responding we're upgrading quickly as you know.
All of our new investments are in fiber, but in our HFC network. We're expanding most of our network is fiber deep and we're expanding to DOCSIS three one to allow us to go into one giga in speed to make sure that we can compete with anybody who comes along and we have been doing.
This for quite a few years now so we think we are ready and we feel confident that this is working well.
So I take your second question.
Let me go a little bit Liberty buzzwords to to answer your question directly so in.
At the beginning of the year around 90% of eyewear gross adds were coming from door to door channel, our master dealers and distributors.
Probably this channel with a with an incentive based on the upfront payment was appropriate for a growth period, but since.
The last couple of years, where we stopped growing and we are protecting our base.
This was bringing more churn than than growth. So we needed to replace this.
As Commission scheme, and we believe that with the change in channel mix that I already mentioned on top of that the change in the in the commission scheme, we would be bringing healthier customers higher airport customers stay longer with US. This is very important because our outlook.
For next year is churn going down significantly down not only in postpaid, but also in prepaid.
And at the same time, we will be saving significant amount of capex as I mentioned going down over 20% or two they jittery a high two digit in Capex for next year.
So.
To your question.
We are we will have.
Steal some churn coming from prepaid in the first half of the year because of <unk>.
You know that prepay it takes over 200 days to be considered churn.
After a customer start stop topping up.
But focusing on one of these customers that were on the last call it promotion.
I mentioned in previous calls that they were around 250000, we expect to finish the cleanup of this customers.
Customers by the end of this year that means during Q4.
And I will repeat.
Even though we have cleaned it up this 450000 customers. This year it will have no impact on first underlying churn in second.
EBITDA or revenues.
Yeah.
Great. Thank you very much.
And our next question will come from Carlos.
Her with Ito. Please go ahead.
Hi, gentlemen, good morning, Thanks for taking the questions I have two brief ones actually.
The first one regarding <unk>.
Yeah.
Turning to the share buyback program. We noted you started the shrimp.
Buying back stock, but at the end of the wallet.
I'm just wondering how.
Rest of you are willing to be in this regard given where the share is.
Currently trading at.
Secondly, with the spin off.
If we could if it would be reasonable to expect continue.
The decrease in corporate expenses.
In other businesses.
Not relatively vague in the at the consolidated level, but perhaps what you said Alfonso.
Little under 10%.
Just wondering if that something reasonable.
Yes, Thank you Carlos as to our buybacks have stocks of our own stock as you have seen we have been doing it.
Believe that its a great opportunity for us so we.
We have been doing two things, reducing our leverage and taking advantage of.
Market opportunities in terms of the debt and as I mentioned in my remarks, we have reduced our leverage with cash on hand by $800 million.
Advantage of those opportunities.
And.
And buying back stock, we will continue to.
Look at the at both of them and continue to do are doing both of them.
As to the spin off I guess.
Conceptually as a result of the Televisa and Univision merger.
And after that it didn't make a lot of sense to keep.
The other businesses under the <unk> umbrella, so we want to simplify the Grupo Televisa.
Story and simplify.
Basically Grupo and its a cable and telecom operator.
And then what about a matter when I saw is that.
Those businesses.
It made more sense.
Two I mean in terms of having them as a separate company.
And that will.
We'll allow them.
To have a more strategic focus and flexibility being a separate and independent company.
Of course.
This group will have a dedicated management team.
So I think.
This will be a smaller company, but it'll be a very nice sports.
And gaming company, which which makes sense it will be traded on the.
Mexican stock exchange, so it'll be a public company. So that's the rationale behind.
Behind that.
And of course, I mean, as we mentioned it's around seven 4% of consolidated revenue and approximately three 4% of EBITDA.
Thank you.
It makes a lot of sense.
Do you think you could make sense to assume.
A reduction in the corporate.
From the pro forma level ex content.
We expect a further reduction in corporate expense given that it's been up I think you're safe to assume that yes.
Thank you so much.
And our next question will come from Alejandro <unk> with Credit Suisse. Please go ahead.
Hi.
Thanks for taking my question I think following up on Carlos his question I was wondering if you can share more about perhaps at least new spun off company will receive any debt.
Theres peanuts.
In fact, the Ed mentioned, if it would have any but.
You can share on that front would be useful.
And perhaps a little bit more on the strategic rationale why or why not keep it keep it sky.
Routine day that Televisa umbrella.
Thanks.
Thank you Alejandro so the spun off company will not have a debt originally or as part of the spinoff.
Yeah.
And as to I mean.
I mentioned that we're trying to simplify the Televisa.
Story.
Grupo Televisa story.
It will remain as a cable and telecom operator and.
In that.
Simplification and that streamlining of Grupo.
Throughput Televisa story, we're talking basically about the ECS, a cable operator and sky as a telecommunications.
And video Dth operators. So so that makes sense to have that as part of these two companies as part of the group and it also as I mentioned before makes sense too.
Create a gaming and sports company that will be traded separately and will be considered just a distribution of the shares of a dividend in essence.
That's very clear thanks, a lot.
And our next question will come from Sumit Datta with New Street Research. Please go ahead.
Hi, there thanks very much couple of questions. Please.
First of all on on cable.
You talked about some shifts in the.
Pricing model I think.
More granularity in terms of pricing a bit more modular.
Which sounds sounds interesting I guess in broad terms, how are you thinking about price increases.
Going forward.
You know that does does this new model allow you to do that but in a in a sort of less kind of nationwide fashion.
Are you still keen to kind of increase prices you talked about finding a sweet spot in terms of gross adds so I'm interested in your.
<unk>.
Please.
And then a second one if I could please on Televisa and Univision on the content business.
I appreciate you're not in a position to give any subscriber numbers, yet, but I'm just interested.
Way, you've had take up from VIX plus users so the.
The subscription service what has been the kind of behavior. All response. So you you talked about 50% of customers.
Leaving from the kind of Evo platform and then moving onto fixed plus are they staying on the VIX plus.
<unk> signing up for.
One O three months and then churning off but they also using kind of a bold waldo on VIX plus be just interested in any kind of qualitative comments you can make around that behavioral usage. Thanks very much.
Thank you Sumit.
What I can say in the pattern you can.
<unk> on your first question that has to do with pricing.
On cable is that there's there's not a.
National market of cable, nor nor national pricing of cable and that's why we have restructured the company to gain flexibility in terms of <unk>.
Local pricing.
So competition has intensified as we have all seen and it's really important to have flexibility.
In terms of determining the prices on a regional basis, and then being able to to move in that sense, a quickly and efficiently.
What I can say also I mean.
Is that a are.
Expansion in our growth.
<unk> has not been at the close of prices as I mentioned before <unk> has remained flat.
Which has been great and Alaska, but doing it to expand.
On this question and then I'll go to your question that has to do with Televisa and Univision.
Yeah, well. Thank you as Alfonso mentioned, what we did this on a modular basis.
It's a way to create products before the products were created from the beginning to end and this was very cumbersome and time consuming and now the way we create our product is very intuitive in which you have a module for broadband and module for video a module for screening and you can add the different modules and combine them. So this gives us.
Flexibility in our product offering.
But also we're able to change price, we are able to adjust our offers at the hub level instead of on a city level and you know when you think of a city that would make sense, but.
Citi will include Mexico City, which is.
A large share of our market. So we're very happy with this new increase our flexibility.
We haven't moved our prices. This year are Oracle has remained stable and moving forward. We will continue to look as we have at marking the market dynamics that operate our operating metrics are performing what our competitors are doing as you know inflation in Mexico has been increasing by about 9%.
Year on year like in the rest of World is the world is an inflationary year, but.
We will remain and we will follow our competitors to see what we do in the future.
And I assume it is to Vicki <unk> plus in VIX, what I can say is.
The Eva part, which is VIX has been live for two full quarters and as I mentioned before we're seeing a substantial success.
With our AD sales efforts on that side of the business and Onboarding new streaming online advertisers.
In Mexico, specifically it was an educational process with the agencies and.
And with the advertisers because nobody.
We're selling this kind of advertising with the volume that we're offering.
So so that is picking up and we were happy with it.
We're very excited also about the early results we have seen.
At <unk>, we set some very aggressive.
Aggressive goals in terms of users and engagement.
Both of those have been performing better than expected.
So we have great momentum, but as to your question. We believe that it is early to draw conclusions on trends from these results.
We're just into two quarters into this journey. So we're not sharing more specific numbers regarding monthly average users right now as.
As we work.
To keep to keep growing.
Nor we have shared.
The numbers that have to do with big splash in the subscribers, which is a more recent type of offering what I can say is that the idea and the concept that we established.
Stablish for the two platforms, which is having a single app has turned out to be amazing in the sense that it allows us to use VIX.
The Ey about service as a funnel as I mentioned.
And you got the numbers right, 50% of the VIX plus subscribers are coming from the Abel funnel and also it allows us to have a better churn management.
Having everybody in the same app so.
We're very happy with having a determined that and we're very happy with the early results.
Yeah.
Alright. Thanks.
And our next question will come from Marcelo Santos with JP Morgan. Please go ahead.
Hi, good morning, Thanks for taking my questions. The first question would be about the assets to be spun off. So this would be basically those assets all the assets that fall under the all your businesses could you just give us an idea of like kind of considered those margin levels as normalized levels going forward, what are kind of a capex levels.
Anything you could help us to shape those assets and the second question is about the Capex outlook for 2023. So you said that sky Capex is going to have a high double digit decline what about the other capex levels what what.
Thank you.
Thank you Marcello, yes as to the spinoff it includes.
The other businesses segment, except.
For the concession and transmission business, which is tied to the Televisa and Univision deal.
So it includes the asked the stake of stadium.
The global medical team the publishing division.
And gaming.
The most important component of their businesses is gaming.
I can say that those businesses very specifically the stadium the soccer team and gaming have not fully recovered yet from.
Colby.
And.
We expect to of course that spun off company to have a better.
Numbers in terms of revenue and better margins as this normalizes in terms of Capex I could say that the only one of those businesses that requires.
Additional capex of magnitude would be the stadium as it has commitments that have to do with the next World Cup, but that will take place in Canada, the United States and Mexico, One of the places where that World Cup will be hosted is stick a stadium and.
It requires.
Substantial capex going forward to modernize the stadium, but aside from that we.
We don't require.
Capex of any magnitude as to the other businesses.
And as to your second question on Alaska leads to to answer it.
Okay.
So in terms of Capex I mentioned, we are dropping year on year.
And we started this year because of our change in our model and I'm, excluding those we consider about sales.
And we're really lowered 20% from previous year, and we expect to have two digit drop additional two digit drop for 2023.
This is for Scott.
Thank you I wanted to know the Capex for the orders as well like for capital you can talk about the Capex, where KBR I wanted a little hole capex outlook for 'twenty two through its possible.
Yeah, what I can tell you my salary is that we will continue to to expand on the EC side as you saw.
We have had great results in terms of net additions record results, we're very happy with that.
As I have mentioned I think twice, we have been able to do that maintaining our boule, which has not been the case with our competitors of ours on that side and but it's too early to say and to talk about the capex for 2023 were finalizing our budget.
Budgets.
And of course, we're analyzing each of those markets that I mentioned and we'll be ready to to share Capex with you at the beginning of the year.
Yeah.
Perfect. Thank you very much.
And our next question will come from Luca Brendan with Bank of America. Please go ahead.
Hi, Good morning, everyone and thank you for taking my question. So two questions from my side.
First of all looking at the enterprise business, what should we expect in terms of the profile of the projects you are taking a should we continue to see projects at a lower margin at least in the short term.
And secondly, if you could give us an update on how our operation by growing in Central America.
Pension plan you had for the region. Thank you.
Thank you Luca Alaska.
To.
Answer to your first question and I guess, you referred to Central America and in terms of our Sky.
Yes, yes.
Okay, So and Louis will answer.
Im sorry, your second question.
Yeah. Thank you. Thank you Luca well, what we're trying to do and what we have done. This year is we partially and I emphasize the pipe partially replaced.
Chinese coal project with an expansion of Chinese coal, which is both good news because it means that our project was well received and we were commissioned another project of smaller magnitude to include schools et cetera et cetera. So what we are trying to do is trying to find projects.
That are similar in this in this vein, which remained with high margins, but these you know these are these are hard to come by we were working on that and we should be able to land. One we're working on a few prospectus for those.
But as you rightly said the rest of our portfolio does have a lower margin. So we have to also live with that that's the way we're trying to do and in the process. We are restructuring the company to make sure we can face these challenges.
And to your question on Central America.
Central America Asia is it is a big market 60 million people at least seven countries. We are present in.
60 million people 60 million households, and we are only 3% market share altogether that means it's a big opportunity for us of course being small.
We need to go very careful.
And.
Our plan is to first.
Replace the current channel distribution that we have there based on only two master dealers, we are settling with our own teams in the five markets that we selected.
Of these seven out of the seven we introduced local channels reinforcing our offer are adjusting prices billing in local currency.
More importantly.
We extended the rights for the for La Liga which means.
We have.
A very important content that is very attractive for our for the region doing all this we will.
Sure we would manage to.
Turning around the decline in the business.
We need for this new.
New distribution channels, new repairing and installation.
Our teams and we are building on all that.
By country by country.
Our expectations is to turn around the top line decline.
That has been experiencing we have been experiencing until.
This year.
Growing in the next year year on year, it will be almost flat slight growth of <unk>.
A low double digit, but we expect to grow even in revenues starting next year.
Of course for 2024, the growth will be much more visible.
Very clear thank you.
Okay.
And our next question will come from Alejandro I was struck with BBVA. Please go ahead.
Yeah.
Hi, good morning, everyone.
I would like to go back yeah.
So your rationale of spinning off these other businesses.
What makes you what makes you think that the.
Market well.
We value. These are these these businesses separately given that it won't be a small company conglomerate.
With few synergies you may view.
What do you what would you be better for you to.
Typically sell these businesses to someone else.
Yes.
Thank you Alejandro we have tried to to.
So as you might remember we had.
Our strategic decision to sell most.
Most of the other businesses, we were able to sell our minority position in necessity to live nation, which was a very successful.
Transaction, we also sold our radio assets.
However, we believe that it's quicker for us too.
To do a spin off of these businesses in order for us to focus 100% of our attention into sky.
Easy and our.
Position within Televisa and Univision.
If you look at sports groups in the United States and in Europe , It's ideal to have a soccer team and the stadium put together, which makes a lot of sense and then gaming which is already part of our other businesses.
A large component of that is sports.
Bedding. So if you create a group that has all of those three components.
Yes.
It makes sense.
The synergies of course are more have to do more with the stadium and the soccer team and as to the other components I guess, the new company will have to decide what it wants to do with them with the migration of our print into digital with our magazines and also the distribution company.
The printed magazines, so so that'll be a <unk>.
Strategic decision.
Before for that company.
So I think the market doesn't give in my opinion, a lot of value to other businesses as part of Grupo Televisa and that's why we believe that.
More value can be generated as an independent.
A company with those with those components.
Okay. Thank you. Thank you very much for lunch.
And our next question will come from Gil Mowers with Stratus. Please go ahead.
Hello, Thanks for taking my question I was wondering if the overall slimming down of the business is going to have any other secondary effects. We should be aware of like for example, unlocking significant real estate value that could be monetized.
Yes, I mean.
That has to do with a stake of stadium as I mentioned.
One of the challenges of a.
Of the new company of the spun off company will be to a modern nice stick a stadium.
As part of.
The commitments that are that company has in respect to.
The World Cup and that'd be that it will be hosted in Mexico, The United States and Canada.
So that company will have to finance.
That.
Pretty big Capex.
And develop that land. So so yeah that that that will lock.
Probably that real estate.
And your corporate headquarters.
Sorry, right size and do you still out this massive corporate headquarter campus that you have or do you think it's the right size after becoming a much smaller company.
Yes, we are Grupo Televisa still owns the headquarters in Mexico City in the area of Santa Fe.
And we're of course optimizing that.
Next year easy will move into our the Santa Fe facilities rather than.
Renting space in other in other buildings, so, but yeah of course I mean, we're always.
<unk> options in respect to that real estate.
Okay. Thank you.
And this will conclude our question and answer session I would like to turn the conference back over to Alfonso de I'm going to you for any closing remarks.
Yes call. Thank you for participating in our call and please call us or legal or us with any questions that you might have.
Enjoy the weekend. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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Yeah.
Okay.
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