Q4 2023 Grupo Televisa SAB Earnings Call
[music].
Good morning, everyone and welcome to Grupo Televisa fourth quarter and full year 2023 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 discussed in today's call and in the earnings release.
I'll now turn the call over to Mr. Alfonzo day and weekend.
Oh, Chief Executive Officer of Grupo Televisa. Please go ahead Sir.
Thank you Elsa good morning, everyone and thank you for joining us.
With me today are Francisco <unk> CEO of cable reasonable vivo CEO of Sky and got them as Phillips CFO of Grupo Televisa.
Last year was marked by a more challenging global macro backdrop than initially expected. We also faced some operating issues, but achieved several milestones both at Grupo Televisa and Televisa and Univision.
Bernardo and I are confident will allow us to improve free cash flow generation in 2024.
Ah Grupo Televisa, we reorganized easiest management structure appointing new hires to our senior leadership team with extensive experience in our industry, including Francisco Aleem CEO, one vehicle our CFO.
And we've shown a CMO and regarding the wholesale as head of our enterprise operations.
We also implemented a corporate restructuring process at EC, including a head count reduction with savings of around 14% of our payroll.
We redefined our business strategy prioritizing free cash flow over an ongoing aggressive cable footprint expansion, particularly considering that we have the largest network in Mexico, excluding the incumbent.
Ending last year with almost 20 million homes passed or a coverage of over 55% of total homes in the country.
Under this new strategy, we intend to improve the quality and lifecycle of our subscriber base and enhance profitability.
Optimized capex deployment.
Expand free cash flow generation.
And as such increase returns on invested capital.
At Sky, we allowance our array of disruptive new products, including Sky plus.
That we are gradually gaining traction in the market. This innovative portfolio not only underscores our commitment to innovation and our efforts to enhance our competitiveness, but also reflect our dedication to deliver.
The best to our customers our digital transformation strategy is underway and is intended to help us gradually stabilize our revenue base at Sky.
In addition, we achieved significant progress in spinning off our other businesses, including the soccer team <unk> got the stake a stadium the gaming operations and the publishing and distribution of magazines.
This allowed us to conclude the listing of our new controlling company called or yeah money under the ticker symbol IV less on the Mexican stock exchange on February 20th.
We also delivered progress on our corporate optimization process, including savings in corporate expenses of almost 280 million pesos for the full year contributing to a year on year decline in corporate expenses of around 18%. Moreover, we continue to explore.
Alternatives to keep reducing corporate expenses at Grupo Televisa on an ongoing basis lastly.
We decreased our total leverage by around $340 million, allowing us to have savings related to net interest expenses.
At Televisa and Univision.
We've been showing that our strategy our assets and our execution against a differentiated market opportunity can yield superior operation and financial results on a consistent basis in the U S. We continue to outperform growth of the broader advertising market in 2023.
Around 850 basis points, even against the backdrop of.
AD market and macroeconomic softness in Mexico, our AD business had another extraordinary year driven by the combination of our strong and growing economy, and then excellent execution by our sales team.
This is the first time following a world Cup year that we have been able to deliver absolute year on year growth above and beyond the huge World Cup comp.
In a market, where we represent more than half of both primetime viewership and linear advertising dollars. Our sales team continued to onboard new clients and find innovative ways to work with our advertising partners.
Moving onto our direct to consumer business, our service is building and wrestling meeting with our audience.
And they use on the free Eva tier continued to grow and in December we exceeded 7 million subscribers on our premium as about Dear.
But perhaps most importantly, as we continue to rapidly scale M. A use we have increased the engagement of our audience. In 2023, we doubled the amount of total streamed hours and have been consistently increasing consumption per user which grew 20% sequentially during the fourth quarter.
As a result in our direct to consumer business, we have essentially built from scratch in less than two years, we closed 2023 with more than $700 million in revenue.
<unk> towards near term profitability.
And this was the first full year of operations of VIX.
When we deliver a profitable streaming service in the second half of 'twenty 'twenty four we will achieve the fastest horizon to profitability of any major streaming service.
In history.
A testament to the power of our library, our content engine promotional power and disciplined execution.
2023 was a critical year for VIX as we saw huge improvements across all major areas of the business.
Content performance.
Alex stability and features marketing efficiency and distribution.
We exited 2023 with a distribution footprint that is nearly complete in our core markets with a handful of significant partnership spending and in the later stages of execution.
The fourth quarter was critical in their distribution journey.
In Mexico, we launched with a number one e-commerce platform Mcadow Libre and expanded our cash payment network in the U S. After finalizing and lounging distribution on all major CTV platforms, we launched our fast channel strategy with Samsung.
Roku and Amazon.
And the pending major are expected to follow soon.
Our fast channel strategy, not only provides incremental reach and monetization might it expands the top of the free funnel, which we have used so efficiently to drive down subscriber acquisition costs from the asphalt service.
On the content side, we now have sufficient audience scale and consumption data to scientifically redefine our content offering.
In the fourth quarter, our new original series and the value of the auto was the strongest premier to date in terms of U S user engagement and <unk>.
One of our biggest original films radical became the highest earning Spanish language movie in the United States in nearly four years, winning 11 awards, including the festival favorite at Sundance.
Our 2020 for content slate informed by our data will be the strongest yet.
We have successfully concluded upfront negotiations with our customers in Mexico with the upfront plan, reaching the highest level in absolute terms in our history.
We see this as a great base for the year. Moreover, with this being an election year in Mexico, we expect advertisers to hold some of their AD spend for the scatter market, which therefore, it should be higher than normal.
Finally, looking more closely at Televisa and Univision debt. The company now has no maturities until March 'twenty 'twenty six.
Management has done an extraordinary job in refinancing one and a half billion dollars of debt during 2023, and an additional $341 million in January 2024.
Moving onto Grupo Televisa's consolidated financial performance in 2023 consolidated revenue reached 73.8 billion vessels, representing a year on year decline of two 3% while operating segment income reached 26, and a half billion peso.
Is equivalent to a year on year decrease of 5.4%, mainly driven by lower revenue at Sky.
And inflationary pressures in labor and content related costs.
Turning to our fourth quarter results consolidated revenue reached 18.4 billion pesos, representing a year on year decrease of three 8%. While operating segment income reached $6 3 billion pesos equivalent to a year on year contraction of 6% also cost primarily.
By the factors mentioned before.
By Lehman Reese will elaborate on the operating and financial performance of each of our core consolidated segments in their remarks.
Now, let me walk you through Televisa and Univision 2023 results released last week.
The company's full year revenue increased by 5% year on year to $4.9 billion, excluding nonrecurring revenue of around $200 million in 2022 related to the sub licensing of the World Cup rights in Mexico, and Latin America, and political advertising IRA.
The midterm elections in the United States, Televisa and Univision <unk> full year revenue grew by 9%.
Full year adjusted EBITDA of $1.6 billion declined by 4% year on year, excluding the contribution from the $200 million of non recurring revenue in 2022 the Levy says Univision full year adjusted EBITDA grew by three P.
Sent reflecting a reduction in losses related to our direct to consumer business.
Moving onto the fourth quarter, excluding nonrecurring revenue in 2020 to Televisa and Univision delivered solid operating performance with revenue of $1.4 billion growing by 6% year on year, while adjusted EBITDA of $468 million increase.
By 16%.
On a reported basis, both revenue and adjusted EBITDA for Televisa and Univision declined by 7% year on year due to tough comps on nonrecurring revenue during the fourth quarter of 2022.
During the quarter, excluding political and advocacy and the impact of divested radio stations consolidated advertising revenue increased by 7% in.
In the U S recurring advertising revenue increased by 4% year on year, mainly driven by direct to consumer as we continue to see strong demand for VIX in Mexico advertising revenue increased by 10% year on year driven by growth in both linear and direct to.
<unk> across all sectors.
Despite accounting for around 60% of the entire linear advertising market. Our sales team continued to onboard new clients throughout the year.
During the quarter, excluding revenue associated with sub licensing the World Cup rights consolidated subscription and licensing revenue increased by 8% in.
In the U S growth of 8% was driven by big Sis subscription tier while linear subscription revenues decreased low single digits because of subscriber declines that were partially offset by contractual rate increases in.
In Mexico growth of 11% benefited from VIX is subscription tier and linear subscription price increases partially offset by modest subscriber declines.
For the full year, Capex was $168 million, including some elevated integration related costs in.
In 'twenty 'twenty four capex, he suspected to decline to more normalized levels of around $125 million.
To sum up 2023 was a great year for Televisa and Univision, we outperformed the industry accomplished many important milestones set new records and consolidated many aspects of our business for the future.
We continue to benefit from our leading position in a massive an attractive market, where the demographic and economic tailwind are intensifying and the alignment between our two core markets. The U S and Mexico is increasing.
While we are very encouraged by our operating and financial performance of 2023, we are even more excited about what is ahead in 2024.
We're positioned to deliver a record political year from the AD sales perspective, and a profitable streaming business in the second half of the year faster than any other major streaming service in history.
Which should then return our company back to overall EBITDA growth and allow us to continue to focus on strengthening our balance sheet through organic deleveraging and by extending and smoothing our maturities.
Now, let me turn the call over to <unk> CEO of cable.
Thank you Ofer.
During the fourth quarter, we continued to implement and execute our strategy to create value by focus of focusing on customer retention and high satisfaction sales quality with higher speeds and competitive packages subscriber base management to maximize ARPA enhancing our video offerings to improve our value proposition efficiently grow our S.
Semi business and a full turnaround of our enterprise operations through our organizational restructuring a revamped commercial strategy and the renewed segmentation of our client base.
The implementation of our strategy will gradually bear fruit, but I'm glad to share with you that we have achieved significant developers on several fronts for example.
Churn already came back to our historical levels after experiencing a short lived increased during the second and third floors of 2023.
<unk> already experienced low single digit sequential improvement due to the better subscriber mix, we relaunched the VIX premium offer in our broadband packages with internet speeds of 50, megabits per second or more contributing to increase loyalty from our subscriber base and they continue to deliver competitive of gross adds.
And the headcount reduction implemented in the third quarter allowed us to expand our reservation operations margin by 320 basis points sequentially in the fourth quarter. This was significantly better than the 200 basis points expansion that we initially expected despite the negative impact on revenue and EBITDA from the hurricane at just in Acapulco adjusting for this.
This origination operations margin would have been 370 basis points higher quarter on quarter.
Moving onto our operating and financial results. We ended December with the network of 19.6 million homes. After passing almost 60000, new homes during the fourth quarter or over 840000, new homes passed during the year.
Our net ads for the fourth quarter were modest despite having decent gross ads as we need to keep working on further churn reduction to achieve our goals. This will allow us to gradually deliver a strong net adds over the coming quarters.
During the quarter revenue from our reservation operations decreased by 0.3% year on year, while operating segment income fell by six 7% a reservation operations margin of 41, 1% contracted by 290 basis points year on year, mainly driven by inflationary pressures in labor and <unk>.
Content related costs, however, that headcount reduction implemented in the third quarter allowed us to expand our reservation operations margin by 220 basis points sequentially in the fourth quarter.
Excluding the negative impact on revenue and EBITDA for the Hurricane artists in a couple of good revenue from residential operations would have increased by 0.5% year on year why operating segment income would have been four 9% lower Moreover, our restoration operations margin of 41, 6%.
Have expanded by 370 basis points quarter on quarter.
Our enterprise operations accounting for roughly 13, 6% of our cable segment revenue and operating segment income respectively continued to face challenges during the quarter revenue fell by 16.1%, while our enterprise operations margin of 17, 8% contracted 140 basis points year on year.
Still the enterprise operations reorganization on implementation will position us well to stabilize and grow revenue and operating segment income from 'twenty to 'twenty four onwards.
To sum up revenue from our cable segment of 12.2 billion pesos fell by one 8% year on year, while operating income of $4 7 billion peso declined by seven 1% dollar cable segment margin of 38, 4% contracted by 220 basis points year on year it expanded by.
280 points sequentially due to the headcount reduction implemented in the third quarter excluding.
Excluding the negative impact on revenue and EBITDA from Hurricane Artisan a couple revenue for our cable segment would have declined by one 1% year on year, while operating segment income would have been $5, 3% lower. Moreover, our cable segment margin of 38, 9% would have expanded by 330 point.
Basis points quarter on quarter.
Thank you Aleem youre doing a great job in the turnaround of our EC.
Now, let me turn the call over to <unk> CEO of Sky.
Thank god for them. So I am pleased to present, an update on Sky's fourth quarter and full year operating and financial performance, but before getting into the numbers allow me to provide an overview of our business transformation in.
In 2022 Sky initiated a transformative journey guided by a new vision structure across three key stages.
The initial face focus on strengthening the core business involve initiatives such as streamlining the product portfolio now under the unified strong bran modernizing the I T infrastructure to mitigate risks and transition to the cloud enhancing the customer journey through digital technology utilization diversifying our sales channels.
By revamping the sales commission model and implementing value based customer management approach to boost lifetime value.
All this while embarking on an ambitious efficiency and simplification program aimed at improving return on investment.
And the second phase of our transformation journey with focus on evolving the core business, while persistently enhancing our operational foundation.
In October 23, we launched Sky mass natural based streaming platform that seamlessly integrates big premium Universal plus HBO, Max Disney plus top class Prime video on Fox, along with our exclusive Sky sports featuring highly demanding content such as <unk>.
Liga Bundesliga and this year with our Euro 2024, among many others.
It also includes all linear channels and our partners libraries into a unified view and experience on a single screen. All these vast content curated by our experts and our cutting edge recommendation engine based on artificial intelligence sky.
Sky Mass also stands out as the market sold platform offering the live sports events in authentic Paul K quality with the added flexibility to extend these premium customer experience to any mobile device, including cell phones tablets and laptops.
Today I'm pleased to report that as of yesterday, we have added 77000 as Kai mass customers and the momentum in sales remain robust.
Also as part of the second stage early this year, we launched Sky Internet, a new high speed broadband offering in collaboration with EC Mexico's leading internet provider. So this partnership Sky can now provide customers with a bundled offering that combines the most advanced home entertainment.
<unk> platform with a reliable uncompetitive high speed broadband service.
And third last phase of this strategic plan starts each year.
In this stage, we capitalize on our new portfolio customer.
Customer experience enhancement and process digitalization to strategically leverage our entry into the broadband market.
This shift will not only gradually offset the decline of the product facing competitive challenges like dth, but also position us to meet households, evolving needs by delivering entertainment and high speed broadband access to affordable prices.
Now in terms of trading we experienced a decrease of 161000 revenue generating units during the quarter, mostly coming from prepaid.
I would this decline was partially offset by the growth of Sky mass customer base, which reached 60000 by the end of 2023.
Along with two consecutive quarters of net gain in Central America.
Moving to our financial results compared to last year fourth quarter revenues declined 15, 3% to $4 2 billion pesos and EBITDA decreased by less than 1% fourth quarter EBITDA was particularly affected by the cost of it and the expenses related to the launch of Sky mass including of course, the other tightening campaign.
For the full year revenues declined 13, 5% and EBITDA at 10, 7% compared to 2022 and EBITDA margin reached 32, 4%.
We expect revenues to gradually stabilize over the coming quarters as our new products gain momentum.
Regarding our capital expenditures, we invested $149 million in 2023.
This marks at 23% decline compared to the previous year, and 39% decrease compared to 2021.
This reduction in capital intensity can be attribute it to the measures we implemented to enhance return on investment along with the implementation of the efficiency and simplification program, which yield more than 800 million pesos in Opex and Capex savings during two entered into three.
Over four percentage points on revenues as.
As a result full year EBITDA minus capex increased by over 500 million pesos, reaching a 21% growth compared to the previous year and now turning back the call to Alfonso Thank you very much.
Thank you Luis moving on consolidated capital expenditures were $829 million during 'twenty to 'twenty three mostly in line with our guidance, even though the Mexican peso was more than 20% stronger than what we used to set our 'twenty to 'twenty three capex target.
For 2024, our Capex budget of $790 million includes.
$630 million in cable, including the reconstruction our network in Acapulco after the hurricane, which we expect to be reimbursed by the insurance company to pass close to 400000 homes with fiber.
Grade our network increase our subscriber base and support growth.
We also are including a $145 million deployed in sky and $15 million for corporate purposes.
Finally regarding share repurchases, we invested more than $65 million to buy back shares in 2023.
To wrap up Bernardo and I are confident that execution of our digital transformation strategy of Televisa and Univision and full implementation of our new value focused strategy of Grupo Televisa will allow us to improve our operating and financial performance in 2024.
At Televisa and Univision, we are very excited about the prospects for 'twenty 'twenty four.
We are positioned to deliver a record political year from an AD sales perspective, and a profitable streaming business in the second half of the year faster than any other major streaming service.
Which should then return our company back to overall EBIT growth and allow us to continue to focus on strengthening our balance sheet through organic deleveraging and by extending and smoothing our maturities.
And that Grupo Televisa, we have been putting a lot of effort into rethinking our corporate structure to unlock value and restructuring our consolidated businesses to come out stronger from the current environment. This structural reforms are focused on protecting profitability optimizing <unk>.
Capex and enhancing free cash flow generation.
Initial results have been encouraging and we expect a positive sequential trend to continue throughout 'twenty 'twenty four.
Now we are ready to take your questions Elisa could you. Please provide instructions for the Q&A.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Your first question comes from Dandruff, Sally with UBS. Please go ahead.
Hi, Good morning, everyone. Thanks for the time and for taking my question I have two on my end could you. Please elaborate on the company's expectations involving the competitive landscaping Mexican broad bench hydro how do you see our pool and net adds evolving throughout 2024.
And the second question is about the margins up the company. We saw some sequential improvement what measures are you taking to keep this momentum going forward.
<unk>.
Hi, Andre I'll ask.
I need to answer.
Question has to do with the competitive landscape in the broadband industry.
So.
The competitive landscape as we have been seen as very rational.
And by that we Havent seen any.
Significant price.
Promotion.
And the market actually while we have seen yeah.
Uh huh.
Last year the promotions have.
Being more rational the discounts have been a lot less and the aggressive.
The market with price related.
Promotion.
Also we have seen our competitors.
Competitors, increasing prices, we saw Mega copy your total acreage in breakfast and in October we already have an announcement for Mega cab increasing prices. My remark, we think that that just shows that the market is very.
And in terms of how we should go about growing this market. It is a market that has it.
Significant.
And the different competitors are being very position.
Positioning ourselves themselves.
A brief war, but more as a third of it.
Yeah.
The quality of our <unk>.
Service offered so.
We don't see the market deteriorating in terms of price.
Right.
She is very very good news for all of them.
And in terms of margin.
Say that we're working on.
The cost and expense side.
All front and of course, we're working to become more efficient and reduce those costs and expenses.
Yeah.
Yeah, well, it's very clear thank you.
Thank you.
The next question comes from Alexandra <unk> with BBVA. Please go ahead.
Hi, good morning, good morning, everyone.
It's been three years since you announced the merger of colony CEB should now.
So could you please share your thoughts on the integration between these two working cultures and management teams. Please.
B the interesting to hear that from you.
And the second question, that's probably put a aleem.
As part of the new cables topic, he that you're implementing.
Are you changing the city economic level of customers that you're targeting now or how do you plan to decrease.
Keep the churn rates at low levels.
Yeah.
Thank you Alejandro.
Basically our culture and management depth.
Let me say I can tell you that.
That weighed them rather than I have been working diligently.
A lot of hours in the integration of <unk>.
The two companies, they're two very different cultures and management style.
And Univision.
We have moved in the right.
Direction.
In this year's.
I believe that the production audiences networks.
And revenue.
And both cut.
Countries in both companies.
Both markets are for me or they need it.
Where it gets a team.
Where we focus on our differentiated offerings.
Thanks.
So I feel proud about.
Accomplishing that.
Wave has done a great job in meeting I believe you said, Univision basically and leading into the future with the language in your books, which as I mentioned.
Has become a meaningful business with a revenue run rate of around $700 million in the first full year of operations and it's a company that now has reached more than 7 million subscribers and 40 million in maintenance. So that's.
That's the future and.
We're working towards integrating the companies more but we have moved a long way.
Your second question I'll ask <unk> to answer.
Awesome.
What we have been seeing is that because we are for bushel kind of be more focus on more value added.
More service related we have.
To extract from the market, what we think are the best customers.
Out there so with the speed that we offer with the content that we offer the service that we provide we have been able to have better clients. Since we have changed the way we promote ourselves in terms of subs.
Regarding chart, we while we have been seeing since we had the spike in churn in the second.
Q3 quarters of last year.
Able to bring it down to historical levels. So as we see the churn the churn level that we are offering operating gain in December January they are.
Vertical levels back when it was back in 2021. So we are managing the acquisition of subscribers better and we are managing and improving the retention of our existing clients in a very significant way.
Yeah.
Excellent I think of your match proposal. Thank you.
The next question comes from the tour Tomorrow with Goldman Sachs. Please go ahead.
Good morning, all and thanks for taking our question two questions from our side. The first one is if you're following up on one of the previous questions. If you could give us some more color on the expected pace of margin improvement for NSO over the next few quarters could we see continue its quarter on quarter.
Improvement in the first water and how might wage readjustments in the other intra.
Intra year factors affect performance across quarters and the second question on our side would also be a follow up on one of the previous questions regarding our pool far MSL cable how are you changing the strategy far price readjustments far annual readjustment this year compared to last year given all the high.
Sure and we saw both readjustments in the second quarter of 'twenty three but also these more benign competitive environment as Joe mentioned for 2024. Thank you.
Thank you Victoria, Alaska volume to answer about your.
Your questions are very good about the pace of margin improvement.
Arco.
So we.
We are seeing anticipating margin improvement sequentially quarter over quarter over the next several quarters. We have several initiatives in place you know from optimizing processes rebuilt skiing.
We negotiated the contract so all of those are taking place as we speak and so we are anticipating.
My margin expansion over the quarters coming forward.
On the how we manage that.
The environment if I may so we are also planning to increase prices or the way. We are doing that is giving clients more for more so we are giving them more services. We are adjusting prices. So that we can have a better arc, while we havent been seen in the market.
Is that every player basically doing the same or in other word.
The churn on average has been increasing quarter over quarter from all four players so.
So I think that's a trend that we have seen in the market and the trend that we have seen in the other markets that it's now being reflected here in new Mexico, as well as well and the other thing that we're doing like I mentioned before strongly managing that subscribe with existing subscriber base and making sure that they have the.
The value for the money that we're paying.
Therefore, with this insurance like I just mentioned before.
Speaker Change: Very clear thank you very much.
The next question comes from Marcelo Santos with JP Morgan. Please go ahead.
Hi, good morning, Thank a critical I have two questions on the cable front as well just wanted to.
Double click on the broadband net adds and the churn.
You said that the churn already returned to historical levels, but that's at the end of the quarter and beginning of the next quarter. So in the middle of the quarter was too high.
Or is it the case that your graph that they're also a bit lower just wanted to understand.
Why net adds where were almost flat and we still plan to increase sales afterwards to bring drugs that might be done or is just churn management.
You need to do just want to understand that and the second question is regarding the network, where construction that you mentioned that youre going to try to collect from insurance company. How much could you received back from insurance companies there how much could we actually see the capex falling on this thank you.
Thank you Marcelo CFO.
I will answer both questions about broadband net adds and churn and also the reconstruction and the lack of political and the insurance payments.
So marcelo in terms of the market before.
Used to be the most aggressive players in terms of price positioning for our promotion.
We changed that in Denver.
Position ourselves more value.
For money and better services and more services to our clients.
What we have seen is obviously there is a slight decrease in gross adds.
We are we are.
Well, we are less focused on price and more focus on volume.
Services and content.
Our subscribers and obviously there was a little decrease in terms of our gross adds but it was compensated so we adjusted that and obviously it comes very quickly the reduction on sales because all the salesforce, we use the sell price and now they have to sell.
Okay a product.
As part of the product, but it's not the only thing before it was just Brian. So there was a little reduction in terms of about that.
But we were able to compensate all of that reduction.
With that can you share.
That made the net of those two effects close close to zero so the reduction.
The graph at driven by less.
Speaker Change: Right price oriented promotions gave us less sales, but compensated by by lower chart.
And we have been seeing churn.
You just mentioned it has decreased from the September rates through October to November to December and December and January has been stabilized around historical ratios just like I have mentioned.
In terms of the a couple of core network. We are we think that there will be recovering 100% of the new deployment of fiber.
Fiber network that we are doing in Mexico, and so that should cover for 100% of the of the new construction, but obviously as you as you account for that you have the capex and the reimbursement it doesn't cause on Capex. So you don't have the capex out.
Other.
Below the EBITDA level.
In terms of where does it come back to us so youre not going to be able to see a reduction in capex because of that but youre going to be seen.
Nonrecurring income coming from insurance companies.
And can you just just a follow up on the first question going forward.
More ton reduction or more gross adds on the cable I mean oh.
From now on.
Thank them.
We are anticipating increasing gross adds and we have been seeing Roth as increasing from every month.
October November December.
Speaker Change: January and February we've seen.
The daily rate of new broth at increasing almost on a weekly basis. So we anticipate going back to levels that are.
Maybe not equal to what it used to be but a closer to what it used to be and Sean laterally at historical levels.
We think will put us back into positive net net.
And they're in every quarter update had been before.
That's very carefully thank you.
Our next question comes from Fred Mendes with Bank of America. Please go ahead.
Hello, everyone. Good morning, and thanks for the call I have two questions here as well the first one.
It's a quick one on VIX.
Fred Mendes: Even if they call off of TVN.
They were not a they're not giving at least what you don't understand if you guys would give me the breakdown of of subscription and advertising for the $700 million recurring revenue, which seems seems interesting.
Interesting for the first year of operation of the company. So basically a breakdown here. If you have this number if you'll give it to the market.
And are any trends that you could share and then on the second one just a.
Repurchase program $65 million you find their suits correct correctly is this a company a repurchase program or that's also related to the sort of management buying back shares I remember that.
Ah the company disclosed that manage to be buying back some shares. So just wondering if this already quota here or not and if they're managed by bike backed was already concluded as well. Thank you.
Yeah.
Thank you Brian as to your second question.
It's the 65 million was repurchased by the company itself.
Tom.
What we are seeing.
Spot personally.
So the 65 million is just what the company repurchased.
After your second question, we're not breaking.
Down streaming.
On the streaming side on the big side between.
Subscription and advertising however.
However, as a total.
The last.
Part of your question I would say that.
In December <unk>, we surpassed 40 million in the U S and the free.
Tier.
Fred Mendes: And as I mentioned before we exceeded 7 million subscribers on the premium tier.
But perhaps most importantly, as we continue to rapidly scale and maybe we.
We have increased the engagement of our audience and this is really really important and we feel very happy and proud about it.
In 2003, we doubled the amount of total streamed hours and have been consistently increasing consumption per user.
With around 20% sequentially during the fourth quarter so far.
Result.
As I also mentioned before and direct to consumer.
Isn't it.
That business, we have essentially built from scratch in less than three years, and we close 2023 with more than $700 million in revenue.
Habit towards profitability in the second half of 2024, so that is the future of our company and we move we're moving in the right direction.
You mentioned wave and the team has done a great job.
We are very proud of what we're doing there, especially.
We have a tremendous advantage being vertically integrated.
Having launched the platform, but also owning the largest driver.
<unk> content in the world.
Owning the IP to produce more content specific for our markets.
Of course owning the factory in Mexico, which is the largest and most prolific factory of content in Spanish.
In the world, where we produce large quantities of content with a very high quality at a very very attractive costs. So all of those advantages, including also cross promotion upticks on all of our platforms.
It makes it a unique opportunity for us.
Perfect.
Herself wholesale thank you.
Thank you.
Our next question comes from Ernesto Gonzalez with Morgan Stanley. Please go ahead.
Hi, Thank you for taking my question. It's just one can you provide some color on the trends you're seeing so far in the first quarter and your expectations for the quarter.
Especially on enterprise cable and Sky since you already provided.
Provided good details on residential cable thank you.
Yeah, Alaska really to talk about the <unk>.
Trends in the first quarter.
Yeah. Thank you for the question.
One eight.
Is it a problem from others on.
Why haven't we.
We continue to deploy.
To deploy.
Matt.
Catherine nothing.
Everything together.
Completely different product from what it is.
Fred Mendes: Turning to market on top of that can be can play over any any brooklyn metric.
An agnostic agnostic platform, which gave us an opportunity to sell through.
Got it.
Fred Mendes: Customers for example.
And on top of that.
How about this month or this quarter is that because we have just launched sky Internet Internet is based on is it network.
And it's going very fast and it's growing very rapidly.
With a marketing campaign, which just launched in February.
Fred Mendes: We are offering bundle of.
Sky have an internet, but also we are offering sky.
It's guy.
Stand alone so it didn't work or we have.
The market and we are seeing that as we saw in the last six months that prepay recharging prepaid.
Revenue.
Our stable has been flat for six months and we see the same trend at least in the first two months of the.
These are this year.
They said this is a.
I can start for the year.
Very importantly, it from the product perspective, but also from revenues coming from from prepay, we struggled last year to protect especially in Q2.
Thank you Louise.
The next question comes from Matthew <unk> with Citi. Please go ahead.
Yeah.
Hi, good morning, and thanks for taking my question I have two more on the table right.
Uh huh.
We discussed in our last call.
It was mentioned a 200 basis points improvement sequentially into the workforce reduction and it came up for me.
Fred Mendes: Better than that.
It would be attributed to cost burden like digital.
Hum.
Excellent.
And also maybe give some color as to how much head way you still have to improve margins.
We'll see.
2023 and was any of that impacted by some cool so above the EBITDA line affected both expenses due to the consumption from the hurricane or was that all booked on.
The other operators.
My second question.
Actually it's not on cable so what can explain the 215 million positive all the operational income.
Considering that you had also expenses related to the hurricane reconstruction, but also before our call.
Adding to the platform.
Yeah.
Yeah. Thank you Matthew.
To answer your question.
Okay.
Speaker Change: Well I mean, you have been seeing as well we are working on cost reductions all across the board we have already implemented the bulk of the head count reduction in September, but we are still seeing opportunities for improvement in that area also we have been optimizing processes so that.
We can be more efficient and working with the different providers to reduce costs. So it is not.
Something that was a one shot this is something that we have been very diligently trying to find better opportunities.
The decrease.
In terms of the impact we have had from.
Okay.
We have a significant.
Important portion of the rapidly.
Really we start we stopped the only clients for October November December.
Yeah.
Here, so that was the revenue has been impacted.
Because of that but we were able to compensate that with other efforts and cost efforts.
We revamped our the network in the region.
Yeah.
We integrate customers into their network.
We should see a lot of that recovery.
Speaker Change: And so.
The impact impacted fully accounted for already in the fourth quarter most of the impact for a cup of coffee.
With already.
<unk> reported on the fourth quarter, so we should be seeing some improvement going forward.
Regarding that.
The facts regarding it.
The building has been paid or accretion income will critical powder, because you want to explain that.
Correct me, if I'm wrong, but I think your question is regarding the other income and expense leveraging our income statement and year over year as we have mentioned before.
The main the main factors within the severance expenses that you can give.
Speaker Change: The.
The reduction.
Speaker Change: Our team has carried out and the damages.
Sure.
There have been some offsetting.
Well part of it has to do with interest income from a recovery.
Speaker Change: Okay.
And then particularly in this quarter.
<unk> income.
Liquidation of certain of our subsidiaries and it really took on accounting factor and we've been doing some efficiency and incorporate in terms of reducing our subsidiaries and cleaning up and that's a nonrecurring income.
It also helped during the quarter.
Turning to some of the losses from the Hurricane.
Cost.
Okay.
Thank you very much.
Our next question comes from Carlos La Garza with I T. A year. Please go ahead.
Good morning, gentlemen.
My question is regarding until they're beating Univision as you know during the quarter. The company renewed carriage deal with one of the leading U S. Cable company. So I was wondering if you can please elaborate on the types of different 'twenty return and if there are any other pending deals like this either in the U S or Mexico. Thank you.
Yeah.
Thank you Cosmos I think it's a great question.
It allows me to <unk>.
<unk> on our new deal with with charter, we feel really good about the partnership that we have.
With charter I think it's reflective of where the pay TV ecosystem.
Likely to head over time.
The pay TV ecosystem to stabilize and grow consumers need to see a better value proposition.
That will only happen.
And that's what our new <unk> partnership is all about innovation in the product innovation and the interface platform availability packaging pricing et cetera.
Charging charters pushing this forward.
Our new partnership enables this offering in a number of fronts that I described.
First the re bundling of streaming packages with the basic package.
<unk>.
Neil.
Obviously improves the value proposition for customers, but only to the extent that the content in the streaming service is not redundant to the content linear package.
I can tell you that the second example is <unk>.
It's providing a linear.
As the cornerstone of charters upcoming lounge at a lower price.
Spanish only otp product.
The new packaging and pricing creates a valuable choice for price and platform sensitive customers.
So this is really important this is a big change.
This is a new product lower price products, which we believe will be very successful.
And lastly.
Turning to our convention.
This renewed at this renewal with charter happened earlier.
Pension between programmers and distributors. So we're very happy about having been able to.
To close the deal in a new expanded partnership with.
With charter.
This is a clear recognition of the uniqueness and value of our of our service and the ways. We can work together with a company of the size and scope.
Charter.
So we're very happy about this.
An extended partnership.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Mr. Alfonzo day, and going to you for any closing remarks.
Thank you very much for participating in our call and we're always ready to answer any questions you might have.
If you haven't please give me a call.
Enjoy the weekend.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.