Q1 2024 Grupo Televisa SAB Earnings Call
Speaker Change: [music].
Operator: Good morning, everyone, and welcome to Grupo Televisa's first quarter 2024 conference call. All participants will be in listen-only mode.
Good morning, everyone and welcome to Grupo Televisa's first quarter 'twenty 'twenty four conference call.
All participants will be in listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. 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. Please note that this event is being recorded. I will now turn the call over to Mr. Alfonso de Angoya, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
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 in today's call and in the earnings release.
Please note this event is being recorded.
Alfonso de Angoitia Noriega: I will now turn the call over to Mr. Alfonso de and Glacier co Chief Executive Officer of Grupo Televisa. Please go ahead Sir.
Alfonso de Angoitia Noriega: Thank you, Elsa. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky, and Carlos Philips, CFO of Grupo Televisa. As you may recall, one of the strategic pillars approved by our Board of Directors was to streamline Televisa's operations and simplify our asset structure. I am delighted by the progress we have achieved on this front so far this year.
Alfonso de Angoitia Noriega: Thank you Elsa good morning, everyone and thank you for joining US with me today are Francisco believe CEO of cable and Sky and got them as Phillips CFO CFO of Grupo Televisa.
Alfonso de Angoitia Noriega: As you May recall, one of the strategic pillars approved by our board of directors was to streamline Grupo Televisa's operations and simplify our asset structure.
Alfonso de Angoitia Noriega: I am delighted by the progress we have achieved on this front so far this year.
Alfonso de Angoitia Noriega: On February 20th, we concluded the spin-off of Oyamani and its listing on the Mexican Stock Exchange under the ticker symbol Aguilas CPO, unlocking significant value to our shareholders. And on April 3rd, we announced that we reached an agreement with AT&T to acquire its minority stake in Sky Mexico, subject to regulatory approval. Following the conclusion of these two milestones, Grupo Televisa will not only be a pure telecom company from a consolidated standpoint, with massive opportunities to take advantage of Sky's exclusive sporting content rights in our cable segment, and generate significant synergies and efficiencies, through the integration of these two businesses, but also the largest shareholder in Televisa Univision, the world's leading Spanish-language media and streaming company through our unconsolidated 44% stake with huge potential to create value.
Alfonso de Angoitia Noriega: On February 20th we conclude the spin off of or your money and.
Alfonso de Angoitia Noriega: And its listing on the Mexican stock exchange under the ticker symbol AGGY less C. P O unlocking significant value to our shareholders and on April 3rd we announced that we reached an agreement with AT&T to acquire its minority stake in Sky, Mexico subject to regular.
Alfonso de Angoitia Noriega: Tori approvals.
Alfonso de Angoitia Noriega: Following the conclusion of these two milestones Grupo Televisa will not only be a pure telecom company from a consolidated standpoint with massive opportunities to take advantage of Sky's exclusive sporting content rights in our cable segment and generate significant synergies and <unk>.
Alfonso de Angoitia Noriega: Fishing season.
Alfonso de Angoitia Noriega: Through the integration of these two businesses, but also the largest shareholder in Televisa and Univision the worlds, leading Spanish language media and streaming company through our unconsolidated, 44% stake with huge potential to create value.
Alfonso de Angoitia Noriega: Regarding the agreement with AT&T to acquire its minority stake in Sky, Mexico, I would like to ask <unk> to walk you through the plan that we will pursue to fully merge sky with our cable operations materially strengthening the competitive and financial position of the combined company.
Alfonso de Angoitia Noriega: Regarding the agreement with AT&T to acquire its minority stake in Sky Mexico, I would like to ask Valim to walk you through the plan that we will pursue to fully merge Sky with our cable operations, materially strengthening the competitive and financial position of the combined company. Valim's mandate as the recently appointed CEO of Sky, as well as the CEO of our cable operations, is to completely integrate the two companies, benefit from Sky's exclusive sporting content, to improve the competitive position of the combined company, extract as many OPEX and CAPEX synergies as possible, expand free cash flow generation, and therefore increase returns on invested capital. Having said that, I will turn the call over to Valim, as he will elaborate on this restructuring plan.
Speaker Change: My name's mandate as recently appointed CEO of Sky as well as CEO of our cable operations is to completely integrate the two companies benefit from Sky's exclusive sporting content to improve the competitive position of the combined company extract as many opex and capex synergies as possible.
Speaker Change: Will expand free cash flow generation, and therefore increased returns on invested capital.
Speaker Change: Having said that let me turn the call over to Aleem ask he will elaborate on this restructuring plan take all sponsor. Good morning, everyone. We view a lot of integration of Sky with our cable operations is a great opportunity great values for Grupo Televisa shareholders as there are significant synergies and efficiencies to be achieved from a revenue op.
Francisco Valim: Thank you, Alfonso. Good morning, everyone.
Francisco Valim: We view the integration of Sky with our cable operations as a great opportunity to create value for Grupo Televisa's shareholders as there are significant synergies and efficiencies to be achieved from a revenue, OPEX, and COPEX standpoint. The proposed merger is something that we have been analyzing for some time already. Therefore, we have done extensive work to map the integration process and execute it as quickly as possible.
Aleem: And Capex standpoint.
Aleem: The proposed merger is something that we have been analyzing for some time already therefore, we have done extensive work to map the integration process and execute as quickly as possible.
Francisco Valim: So far, we have outlined a new organizational structure for the combined company that will allow us to retain top talent and optimize duplicated roles. We have also identified several areas to implement synergies and efficiencies, including commercial, sales commissions, programming, IT, technology, marketing, and others. The main enablers of savings will be the economies of scale, a wider offering of products and services, reduced overlap of commercial infrastructure and call centers, as well as real estate, and Redundancies of Duplicated Systems and Functions.
Aleem: So far we have outlined a new organization structure for the combined company that will allow us to retain top talent and optimize the applicator rose. We have also identified several areas to implement synergies and efficiencies, including commercial sales commissions programming I T technology marketing and others.
Aleem: The main enablers of savings will be the economies of scale, a wider offering of products and service reduced overlap of commercial infrastructure and call centers as well as real real estate.
Aleem: Though this is a duplicate systems and functions. This integration will also allow us to extend the rise regions sales channels and commission schemes have a better customer base management increase productivity Achieva cross selling and Upselling improved penetration of Triple play services, we discharge and leverage on Sky's exclusive sporting content in.
Francisco Valim: This integration will also allow us to standardize regions, sales channels, and commission schemes, have better customer base management, increase productivity, achieve cross-selling and upselling, improve penetration of triple-pay services, reduce churn, and leverage on Sky's exclusive sporting content and cable further, differentiating our video packages from those of our competitors. All in all, after full implementation of our structure and integration, most of which is expected to occur in the second quarter of 2024, we estimate potential savings of around 15% of SCIE's combined annual OPEX and CAPEX. We project these synergies will gradually be more evident beginning in the third quarter of 2024 when we estimate OPEC savings of approximately 400 million pesos.
Aleem: Cable further differentiating our video packages from those of our competitors all in all after full implementation of our restructuring and integration most of which is expected to occur in the second quarter of 'twenty 'twenty four we estimate potential savings of around 50% of Sky's combined annual Opex and Capex We project.
Aleem: These synergies will gradually be more evident beginning in the third quarter of 2024, when we estimate opex savings of approximately 400 million vessels.
Francisco Valim: Moving on to the operation and financial performance of our cable operations, we ended March with a network of 19.7 million homes after passing around 137,000 new homes during the quarter. In the first quarter, we continue to execute our strategies to focus on value customers rather than price, while improving customer retention and satisfaction. This contributes to achieving a sequential reduction in churn of around 5%.
Aleem: Moving onto the operation and financial performance of our cable operations. We ended March with a network of $19 7 million homes after passing around 137000, new homes during the quarter.
Aleem: In the first quarter, we continued to execute our strategy to focus on value customers, rather than volume, while improving customer retention and satisfaction.
Aleem: This contributed to achieving a sequential reduction in churn of around 5% as a result, our first quarter net adds accelerated to 10.7 thousand and broadband and 2.8 thousand new video compared to 601 hundred net ads, respectively in the fourth quarter of 2023.
Francisco Valim: As a result, our first quarter net ads accelerated to 10.7 thousand in broadband and 2.8 thousand in video, compared to 600 and 100 net ads, respectively, in the fourth quarter of 2023. As we keep working on further churn reduction, we project to gradually deliver stronger net adds over the coming quarters. During the quarter, net revenue from our residential operations decreased by 2.3% year-on-year, as our subscriber base was 6.7% lower due to the cleanup that we did in the third quarter of 2023. And because of the ongoing negative impact from Hurricane Otis in Acapulco, given that an important amount of our customers are not paying their bills yet.
We keep working on further churn reduction we project to gradually deliver stronger net adds over the coming quarters.
Aleem: During the quarter net revenue from our reservation operations decreased by two 3% year on year as our subscriber base was six 7% lower due to the cleanup that we did in the third quarter to any territory and because of the ongoing negative impact from hurricane and art using a couple of calls given done an important amount of our customers are not paying their bills.
Aleem: Yet on the other hand net revenue for our enterprise operations increased by four 1% year on year.
Francisco Valim: On the other hand, net revenue from our enterprise operations increased by 4.1% year-on-year. To sum up, net revenue from our cable segment of $11.9 billion fell by 1.8% year-on-year, while operating segment income of $4.7 billion declined by 8.7%. Our cable segment margin of 39.2% contracted by 300 basis points year-on-year, mainly driven by inflationary pressures in labor and country-related costs, but it expanded by 60 basis points sequentially due to the ongoing efficiency measures that we have been implementing since the third quarter of 2023.
Aleem: To sum up net revenue from our cable segment of 11.9 billion pesos fell by one 8% year on year, while our operating segment income of $4 7 billion peso declined by eight 7%.
Aleem: Our cable segment margin of 39, 2% contracted by 300 basis points year on year, mainly driven by inflationary pressures in labor and country related costs, but it expanded by 660 basis points sequentially due to the ongoing efficiency measures that we have been implementing since the third quarter 2023.
Aleem: Excluding the negative impact on revenue and EBITDA from the Hurricane at this in a couple of revenue from our cable segment would have declined by one 2% year on year, while operating segment income would have been seven 6% lower solar recurring cable segment margin would have been 39, 5% a better subscriber mix with an increased proportion.
Francisco Valim: Excluding the negative impact on revenue and EBITDA from the hurricane Otis in Acapulco, revenue from our cable segment would have declined by 1.3% year-on-year, while operating segment income would have been 7.6% lower. Thus, our recurring cable segment margin would have been 39.5%. A better subscriber mix with an increased proportion of high-value customers, price increases implemented in April to pass through inflation, and the phase-out of our subscriber-based cleanup should allow us to recoup net revenue growth at our residential operations in the third quarter of 2024, while our cable segment profitability should remain relatively stable at current levels.
Aleem: And of high value customers price increases implemented in April to pass through inflation and the phase out of our subscriber base cleanup should allow us to recoup net revenue growth at origination operations in the third quarter of 2034 Y. Our cable segment profitability should remain relatively stable at current levels with regards to capex our cables.
Aleem: Segment investments of $1 6 billion pesos during the first quarter fell by 47, 7% year on year. So our cable capex to sales ratio of 13, 7% was 12 to 100 basis points lower than that of the first quarter of 2023 finally operating cash flow for.
Aleem: Our cable segment, which is equivalent to EBITDA minus Capex was 3 billion pesos in the first quarter, increasing by 52, 1% year on year and accounting for 25% and a half of our sales.
Aleem: This basically means our cable segment operating cash flow margin increased by 1000 basis points year on year.
Aleem: The 'twenty 'twenty four capex budget for our cable segment remains unchanged at $630 million, including $30 million for directors reconstruction of our network in a couple of which we expect to be reimbursed by the insurance company. However are more efficient capex deployment focus on higher investment returns and a relatively stable profitability.
Francisco Valim: With regard to CAPEX, our cable segment investments of 1.6 billion pesos during the first quarter fell by 47.7% year-on-year. Hence, our cable CAPEX to sales ratio of 13.7% was 1,200 basis points lower than that of the first quarter of 2023. Finally, operating cash flow for our cable segment, which is equivalent to EBITDA minus CAPEX, was 3 billion pesos in the first quarter, increasing by 52.1% year-on-year and accounting for 25.5% of our sales.
Aleem: Current levels lead us to feel confident that organic operating cash flow margin for 'twenty 'twenty four will increase by around 300 basis points compared to that of 23 three.
Speaker Change: Now, let me walk through Sky's operating and financial performance.
Speaker Change: During the first quarter, we lost 251000 revenue generating units, mostly coming from prepaid subscribers that have not been recharging. Their service. However, we expect integration with our cable segment to gradually contribute to reduce churn driven by better customer base management, and cross selling and up selling opportunities as previously.
Francisco Valim: This basically means our cable segment operating cash flow margin increased by 1,000 basis points year-on-year. The 2024 CAPEX budget for our cable segment remains unchanged at $630 million, including $30 million for the reconstruction of our network in Acapulco, which we expect to be reimbursed by the insurance company.
Just.
Speaker Change: Skies first quarter revenue of $4 1 billion peso fell by 12, 3% year on year slowing some from the 15, 2% revenue decline experienced in the fourth quarter of 2023.
Speaker Change: This guy's operating segment income.
Speaker Change: Off 1.2 billion pesos decreased by 24, 4% year on year, while its margin of 29.8% contracted by 370 basis points.
Francisco Valim: However, a more efficient CapEx deployment focused on higher investment returns and relatively stable profitability at current levels have led us to feel confident that our organic operating cash flow margin for 2024 will increase by around 300 basis points compared to that of 2023. Now, let me walk you through Sky's operating and financial performance. During the first quarter, we lost 251,000 revenue-generating units, mostly coming from prepaid subscribers that have not been recharging their service. However, we expect integration with our cable segment to gradually contribute to reduce churn, driven by better customer-based management and cross-selling and up-selling opportunities, as previously discussed.
Speaker Change: <unk> first quarter operating income continued to be affected by the cost and expenses related to the launch of Sky Moss.
Speaker Change: Including the advertising campaign. Nevertheless, we experienced a sequential expansion of profitability of 250 basis points.
Speaker Change: Regard capex deployment Sky's investments.
Speaker Change: Point 4 billion pesos in the first quarter fell by 48, 9% year on year, Therefore, sky Capex to sales ratio of 10% was 720 basis points below that of the first quarter of 2023.
Speaker Change: Lastly, the Sky's operating cash flow was flat year on year at 0.8 billion pesos in the first quarter, representing 19, 8% of sales so with Sky's operating cash flow margin expanded by 250 basis points year on year or 'twenty 'twenty four capex budget for Sky was $145 million.
Speaker Change: Evelyn to over 16% of sales however, given our restructuring integration plan now we think that sky Capex to sales is more likely to be below 14%. This year. Thank you believe youre doing a great job give.
Francisco Valim: Sky's first quarter revenue of 4.1 billion pesos fell by 12.3% year-on-year, slowing some from the 15.3% revenue decline experienced in the fourth quarter of 2023. Sky's Operating Segment revenue of 1.2 billion pesos decreased by 24.4% year-on-year, while its margin of 29.8% contracted by 370 basis points. Sky's first-quarter operating income continues to be affected by the costs and expenses related to the launch of SkyMaster, including the advertising campaign. Nevertheless, we experienced a sequential expansion of profitability of 250 basis points.
Speaker Change: Given the operating and financial performance of our two consolidated businesses Grupo Televisa's consolidated revenue reached 16 billion pesos, representing a decline of 4.8% year on year, while operating segment income reached $5 9 billion pesos equivalent to a year on year the.
Speaker Change: Kris of 12.5%, mainly driven by the lower revenue and inflationary pressures.
Speaker Change: Now, let me walk you through Televisa and Univision first quarter results released yesterday morning.
Speaker Change: The company delivered another solid quarter from a topline perspective with revenue of over $1.1 billion growing by seven 3% year on year. However, EBITDA of $329 million fell by eight 9% due to continued streaming investments for Vic.
Alfonso de Angoitia Noriega: Regarding CAPEX deployment, Sky's investment of 0.4 billion pesos in the first quarter fell by 48.9% year-on-year. Therefore, Sky's CAPEX-to-sales ratio of 10% was 720 basis points below that of the first quarter of 2023. Lastly, Sky's operating cash flow was flat year-on-year at 0.8 billion pesos in the first quarter, representing 19.8% of sales. Hence its operating cash flow margin expanded by 250 basis points year-on-year. Our 2034 CAPEX budget for Sky was $145 million, equivalent to over 16% of sales. However, given our restructured integration plan, now we think that Sky's CAPEX to sales is more likely to be below 14% this year.
Speaker Change: <unk>.
Speaker Change: And the comp of a nonrecurring bad debt expense reversal.
Speaker Change: Excluding the bad debt expense reversal, Televisa and Univision EBITDA would have only declined by 5%.
It is important to highlight that Televisa and Univision direct to consumer losses continue to decline this quarter and that we are on track to deliver our goal of profitability in the second half of this year.
Speaker Change: During the quarter revenue growth at Televisa and Univision was driven by solid increases in consolidated advertising and subscription and licensing revenue of 7% and 9% respectively.
Speaker Change: While consolidated advertising revenue increased by 7% year on year in the U S. Advertising revenue was flat as growth in direct to consumer was offset by some softness in our linear networks in DTC, we delivered exceptional growth.
Alfonso de Angoitia Noriega: Thank you, Valim. You're doing a great job. Given the operating and financial performance of our two consolidated businesses, Grupo Televisa's consolidated revenue reached 16 billion pesos, representing a decline of 4.8% year-on-year, while operating segment income reached 5.9 billion pesos, equivalent to a year-on-year decrease of 12.5%, mainly driven by lower revenue and inflationary pressure. Now, let me walk you through Televisa Univision's first-quarter results The company delivered another solid quarter from a top-line perspective, with revenue of over $1.1 billion growing by 7.3% year-on-year.
Speaker Change: As we were very effective in monetizing the increased engagement on VIX with strong sell through rates of over 80% and significant CPM premiums to linear.
Speaker Change: At our linear networks business. Our results were mixed we saw strength in sports in certain categories, where we have traditionally had low penetration such as financial and pharma that contributed to solid scatter volume. However, we experienced softness in the CPG retail.
Speaker Change: And tech categories, along with some pressure from ratings declines that were not fully offset by price.
Speaker Change: In Mexico advertising revenue growth up 19% year on year was driven by the appreciation of the Mexican peso and because starting this quarter. We acquired some third party AD inventory, which contributed with 500 basis points of growth that will be accretive to bottomline.
Alfonso de Angoitia Noriega: However, EBITDA of $329 million fell by 8.9% due to continued streaming investments for VIX and the comp of a non-recurring bad debt expense reversal. Without the bad debt expense reversal, Televisa Univision's EBITDA would have only declined by 5%. It is important to highlight that Televisa Univision's direct-to-consumer losses continue to decline this quarter and that we are on track to deliver our goal of profitability in the second half of this year.
Speaker Change: In Mexico, the public sector was impacted by advertising restrictions ahead of presidential elections in June still this was offset by strength of private sector advertising as we kept adding new clients through the scatter market.
Speaker Change: In addition, we experienced strong advertising growth in our DTC business FX neutral advertising revenue in Mexico increased by 9% year on year.
Alfonso de Angoitia Noriega: During the quarter, revenue growth at Televisa Univision was driven by solid increases in consolidated advertising and subscription and licensing revenue of 7% and 9%, respectively. However, while consolidated advertising revenue increased by 7% year-on-year, in the U.S., advertising revenue was flat, as growth in direct-to-consumer was offset by some softness in our linear network. In DTC, we delivered exceptional growth, as we were very effective in monetizing the increased engagement on VIX with strong sell-through rates of over 80% and significant CPM premiums to linear.
Speaker Change: Consolidated subscription and licensing revenue increased by 9%, primarily driven by VIX is premium subscription streaming tier.
Speaker Change: In the U S revenue was flat as growth from VIX was offset by linear subscription revenue declines in Mexico growth of 34% was driven by the appreciation of the Mexican peso and by solid revenue increases from VIX and content licensing F.
Speaker Change: FX neutral subscription and licensing revenue in Mexico grew by 24% year on year.
Speaker Change: Looking ahead, we're very well positioned to deliver a record political year from an AD sales perspective, and a profitable streaming business in the second half of the year.
Alfonso de Angoitia Noriega: At our linear networks business, our results were mixed. We saw strength in sports and certain categories where we have traditionally had low penetration, such as finance and pharma, that contributed to solid scatter volume. However, we experienced softness in the CPG, retail, and tech categories, along with some pressure from ratings declines that were not fully offset by price.
This should then returned our company back to overall EBITDA growth for the full year and allow us to continue to focus on strengthening our balance sheet through organic deleveraging and by extending and smoothing our maturities.
To wrap up we had an out of the and I are confident that the strategy to streamline our operations and simplify our asset structure at Grupo Televisa and the execution of our digital transformation strategy at Televisa and Univision will allow us to improve our operating and financial performance in 2024.
Alfonso de Angoitia Noriega: In Mexico, advertising revenue growth of 19% year-on-year was driven by the appreciation of the Mexican peso and because, starting this quarter, we acquired some third-party ad inventory which contributed 500 basis points of growth that will be accretive to the bottom line. In Mexico, the public sector was impacted by advertising restrictions ahead of presidential elections in June. Still, this was offset by the strength of private sector advertising as we kept adding new clients through the scatter market.
Speaker Change: At Grupo Televisa, we're putting a lot of effort into rethinking, our corporate structure to unlock value, including the integration and restructuring of our consolidated businesses to come out stronger from the current environment.
Speaker Change: This strategy is focused on strengthening our competitive position extracting as many opex and capex synergies as possible and then catching free cash flow generation.
Alfonso de Angoitia Noriega: In addition, we experienced strong advertising growth in our DTC business. FX Neutral advertising revenue in Mexico increased by 9% year-on-year. Consolidated subscription and licensing revenue increased by 9%, primarily driven by VIX's premium subscription streaming tier. In the U.S., revenue was flat as growth from VIX was offset by linear subscription revenue decline; in Mexico, growth of 34% was driven by the appreciation of the Mexican peso and by solid revenue increases from VIX and content licensing. FX Neutral Subscription and Licensing Revenue in Mexico grew by 24% year on year.
Speaker Change: The preliminary assessment of the Sky integration with our cable operations looks promising and is expected to be concluded very quickly to start benefiting from significant synergies during the second half of this year.
And at Televisa and Univision, we continue to be very excited about the prospects for 2024.
Speaker Change: Our DTC business is growing and scaling and our most important metrics.
Speaker Change: Kept trending in the right direction.
We added users grew engagement reduced churn and generated significant marketing savings as a result of our efficient customer acquisition funnel through our free tier looking.
Alfonso de Angoitia Noriega: Looking ahead, we're very well positioned to deliver a record year from an ad sales perspective and a profitable streaming business in the second half of the year. This should then return our company back to overall EBITDA growth for the full year and allow us to continue to focus on strengthening our balance sheet through organic deleveraging and by extending and smoothing our maturity. To wrap up, Bernardo and I are confident that the strategy to streamline our operations and simplify our asset structure at Grupo Televisa and the execution of our digital transformation strategy at Televisa Univision will allow us to improve our operating and financial performance in 2021.
Speaker Change: Looking forward, we have very clear objectives in place a profitable DTC business in the second half of the year and to end 2024 with an organic reduction in leverage.
Speaker Change: Now we are ready to take your questions Elsa could you. Please provide instructions for the Q&A.
Elsa: We will now begin the question and answer session.
Elsa: To ask a question you May press Star then one on your telephone keypad.
Elsa: If you were using a speakerphone please pick up your handset before pressing the keys.
Elsa: To withdraw your question. Please press Star then two.
Alfonso de Angoitia Noriega: At Grupo Televisa, we're putting a lot of effort into rethinking our corporate structure to unlock value, including the integration and restructuring of our consolidated businesses to come out stronger from the current environment. This strategy is focused on strengthening our competitive position, extracting as many OPEX and CAPEX synergies as possible, and enhancing free cash flow generation. The preliminary assessment of the sky integration with our cable operations looks promising and is expected to be concluded very quickly so that we start benefiting from significant synergies during the second half of this year.
Elsa: At this time, we will pause momentarily to assemble our roster.
Elsa: Our first question today comes from Marcelo Santos with JP Morgan. Please go ahead.
Marcelo Santos: Hi, good morning, Thanks for the opportunity for making questions I have two the first one is to valley regarding cable what was the average price increase that you executed in April when and how much of the base and do you expect a spiky churn because of that that's the first question. The second question is 12 forceful regarding Televisa and Univision.
Marcelo Santos: Oh for sure you had the biggest decline in EBITDA at Televisa in infusion and the highest leverage since the merger could you. Please tell us what you expect going forward give a little bit more detail. Thank you very much.
Alfonso de Angoitia Noriega: And at Televisa Univision, we continue to be very excited about the prospects for 2024. Our DTC business is growing and scaling, and our most important metrics... kept trending in the right direction. We added users, grew engagement, reduced churn, and generated significant marketing savings as a result of our efficient customer acquisition funnel through our free tier. Looking forward, we have very clear objectives in place, a profitable DTC business in the second half of the year and to end 2024 with an organic reduction in leverage. Now we are ready to take your questions. Elsa, could you please provide instructions for the Q&A? We will now begin.
Speaker Change: Thank you Marty So let me take your first question.
Speaker Change: On average we have increased.
Speaker Change: 4%.
Speaker Change: And it will impact almost.
Speaker Change: The customer base.
There are a few exceptions people that have done that.
Several days later.
Speaker Change: Yes.
Speaker Change: The promotion so obviously both.
Speaker Change: I'm not going to have.
Speaker Change: A change in price.
Speaker Change: Well that would be an exception.
Speaker Change: In terms of charge, obviously, we started announcing.
Speaker Change: These positive regulation here in Mexico, we announced the price increase in March.
Speaker Change: And so we had some some fluctuation around March.
Speaker Change: Tyler trade, but we think that is still under control.
Speaker Change: Germany.
Speaker Change: Historical levels, so we don't see that.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Marcelo Santos with J.P. Morgan. Please go ahead.
Speaker Change: Any big.
Speaker Change: Give me that.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: As to your second question can.
Speaker Change: Can you hear clearly.
Speaker Change: Yes.
Speaker Change: I can hear you. Thank you.
Speaker Change: Okay. So for your second question.
Speaker Change: As to deal with the decline in need of Televisa and Univision I would say first of all there is an accounting issue.
Speaker Change: The first quarter because we are.
Speaker Change: Comparing.
Speaker Change: Bad debt reversal that we had a year ago. So excluding that benefit that took place in the first quarter of 2023, our EBITDA declined 5% and improved 7% decline that we had in the fourth quarter of 'twenty three.
Marcelo Santos: Hi, good morning. Thanks for the opportunity to ask questions. I have two.
This is really a function of.
Speaker Change: Continued narrowing.
Marcelo Santos: The first one is to Valim regarding cable. What was the average price increase that you executed in April and how much of the base? And do you expect a spike in churn because of that? That's the first question. The second question is for Alfonso regarding Televisa Univision. Alfonso, you had the biggest decline in EBITDA at Televisa and the highest leverage since the merger. Could you please tell us what you expect going forward and give a little bit more detail? Thank you very much.
Speaker Change: Direct to consumer losses, as we move forward that business towards profitability.
Speaker Change: So I can tell you that in 2020 for EBIT.
Speaker Change: Therefore leverage will really be a tale of two parents.
Speaker Change: The second half should be dramatically better than the Christiana.
Speaker Change: Going into this year, we plan for it so we saw it.
Speaker Change: In the first half and we expect EBIT to remain under pressure.
Speaker Change: Against a year ago, which contributes to higher leverage of course.
Speaker Change: In the second half, particularly the fourth quarter.
Speaker Change: EBITDA growth and leverage reduction to below six times.
Alfonso de Angoitia Noriega: Thank you, Marcelo. So, Valim, we'll take your first question.
Speaker Change: Perfect. Thank you very much.
Speaker Change: Thank you Mike.
Speaker Change: The next question is from Carlos <unk> with Ito. Please go ahead.
Francisco Valim: So, Marcelo, on average, we have increased the price by around 4%, and it will impact almost all the customer base. There are quite a few exceptions, people that have joined the subscriber base later, so they're still under some sort of promotion. So, obviously, those are not going to have a changing price. But that's the exception; that's not the rule.
Carlos: Thank you Alfonso.
Carlos: Two quick questions on my side.
Carlos: Just wondering if you can please go over your Capex.
Carlos: Capex guidance I understood the allocation that can be great but.
Carlos: The amount of by how much and on the <unk>.
Francisco Valim: In terms of CHERD, obviously, we started announcing because of regulation here in Mexico, we announced the price increase early in March. And so we had some fluctuation around the March, early April timeframe, but we think that it's still under control; its churn is at historical levels. So we don't see that having a big negative impact. And as to your second question, Marcelo, can you hear me clearly? Because apparently, there's an echo. I can hear you. Thank you.
Carlos: I would love to hear firsthand the opportunity to read.
Kai acquisition.
Carlos: And the timeline for those thank you.
Speaker Change: Yes, Thank you <unk>.
Speaker Change: Our capex for 2024.
Speaker Change: Mr rates, basically investing $630 million and cadence.
Speaker Change: Including the reconstruction of our network in a cool that basically was destroyed.
Speaker Change: Good morning.
Alfonso de Angoitia Noriega: Okay, so as to your second question that has to do with the decline in EBITDA at Televisa Univision, I would say, first of all, there's an accounting issue in the first quarter because we are comparing a bad debt reversal that we had a year ago. So, excluding that benefit that took place in the first quarter of 2023, our EBITDA declined 5% and improved from the 7% decline that we had in the fourth quarter of 2023.
Speaker Change: We expect to be reimbursed by the insurance company with respect to that reconstruction.
Speaker Change: So excluding this reconstruction and our cable capex will be closer to 600 million of batteries.
Speaker Change: As you know most of our Capex is sales related and therefore, we are able to keep describing your gross additions at a reasonable level, which we expect.
Speaker Change: We further reduce churn we shouldn't be in a position to comment.
Speaker Change: Low single digit subscriber base growth in the medium term with less capex intensity. So we believe the capex to sales should be in the low <unk> going forward.
Alfonso de Angoitia Noriega: So, this is really a function of continued narrowing of our direct-to-consumer losses as we move forward that business towards profitability. So, I can say that in 2024, EBITDA and, therefore, leverage will really be a tale of two halves. For us, the second half should be dramatically better than the first half. Going into this year, we planned for this, and we saw it. In the first half, we expect ILEDA to remain under pressure compared with a year ago, which contributes to higher leverage, of course. And in the second half, and particularly the fourth quarter, we expect ILEDA growth and leverage reduction to below six times.
Speaker Change: And then 'twenty three capex to sales has already declined to 23% driven almost 27% in 2022.
Speaker Change: As to.
Speaker Change: Your second question.
Speaker Change: That has to do with Sky Capex of Sky.
Speaker Change: Its deployment Skype investment.
Speaker Change: Basically.
Speaker Change: Sure.
400 million pesos in the first quarter down 48, almost 49% year on year. Therefore, you guys capex to sales ratio.
Speaker Change: 10% and with 720 basis points below that of the first quarter of 2023, so our capex.
Speaker Change: <unk> 24, a budget for this guy with $145 million.
Speaker Change: This is equivalent to over 16% of sales.
Speaker Change: However.
Speaker Change: Touch on the details, but given our restructuring and integration plan now we think that the sky is capex to sales is more likely to be below 14%. This year.
Speaker Change: And I'm.
Speaker Change: I'm sorry for your second question has to do with.
Speaker Change: Application of AT&T, but can you talk.
Marcelo Santos: Perfect. Thank you very much.
Carlos Antonio de Legarreta Diaz: The next question is from Carlos Legreta with Ita. Please go ahead.
Speaker Change: Talk about it so.
Speaker Change: It also adds to our corporate just to add.
Speaker Change: There are several systems for example, there are now the applicators, we can optimize that.
Carlos Antonio de Legarreta Diaz: Thank you, Alfonso and Tim. Two quick questions on my side. The first one is if you can please go over your revisited CAPEX guidance. I understood the allocation guide could decrease, but it missed the amount by how much. And on the second, I would love to hear firsthand the opportunities to reap with the sky acquisition and the timeline for those. Thank you.
Speaker Change: Catherine.
Speaker Change: Capex in terms of licenses.
Speaker Change: And operating costs, we see lots of opportunities we see.
Speaker Change: Sure.
Speaker Change: The big opportunity in revenue increase so we can now match the subscriber basis.
Speaker Change: The more aggressive and at the same time more.
Speaker Change: Targeted.
Alfonso de Angoitia Noriega: Thank you, Carlos. To add to our context, for 2024, we reiterate basically investments of $630 million in cable. This includes the reconstruction of our network in Acapulco that was basically destroyed as a result of Hurricane Otis. We expect to be reimbursed by the insurance company in respect to that reconstruction.
Speaker Change: And how we approach the market with both technologies.
Speaker Change: We have network when there are we do not have a network. So we can we can optimize our efforts in terms of our approach in the market.
Speaker Change: We see great value in Stillwater, Dth brought up, especially the prepayment product that we have here in Mexico that has a big.
Speaker Change: Great.
Speaker Change: Obviously, there are back office.
Speaker Change: Because there's a lot of overlap.
Speaker Change: And we think that when you compound that we think that we should come closer to the second half the 400 million.
Speaker Change: Savings are Cunard.
Alfonso de Angoitia Noriega: So, excluding this reconstruction, our cable capex will be closer to $600 million. As you know, most of our CAPEX is sales-related, and therefore, if we are able to keep subscriber growth submissions at a reasonable level, which we expect, and we further reduce churn, we should be in a position to have low single-digit subscriber-based growth in the medium term with less CAPEX intensity. So we believe CAPEX-to-sales should be in the low 20s going forward, and in 23, CAPEX-to-sales had already declined to 23% from almost 27% in 2022.
Speaker Change: Yes, so so that's more or less the number that we were anticipating by the end of the year.
Speaker Change: Per quarter, Okay, I mentioned bylines mandate is to completely integrate the two companies and.
Of course, we are going to benefit on the easy side from Sky exclusive sporting content.
Speaker Change: To give you a competitive decision of the combined company.
Speaker Change: And if you will as we have demonstrated at <unk> in the very short term extract is mainly opex and capex synergies as possible and this will mean, an expansion that free cash flow generation.
And of course pattern will result in.
Speaker Change: Increases in returns on invested capital.
Speaker Change: Thank you ballpark feedback.
Speaker Change: Yeah.
Speaker Change: The next question is from Vitor Tomita with Goldman Sachs. Please go ahead.
Vitor Tomita: Hello, Good morning, all and thanks for taking our questions. We have two questions from our side the first.
Alfonso de Angoitia Noriega: As to your second question that has to do with Sky, with CAPEX-to-sky and its deployment, Sky's investment of basically 400 million pesos in the first quarter fell almost 49% year-on-year. Therefore, Sky's CAPEX-to-sales ratio was 10%, and it was 720 basis points below that of the first quarter of 2023. So our CAPEX for 2024 budget for Sky was $145 million.
Vitor Tomita: First one you.
Vitor Tomita: You touched on it a bit but if you could give us some more color on the Hollywood keen commercial dynamics and sales performance in cable under your new strategy that would be our first question and our second question would be on TV. Sony began how you are seeing how are you seeing the evolution.
Francisco Valim: However, and Marlene can touch on the details, but given our restructuring and integration plan, now we think that Sky's CAPEX-to-sales is more likely to be below 14% this year. And I'm sorry, your second question has to do with the acquisition of AT&T. Valim, can you talk about this?
Vitor Tomita: And profitability far straining at Visteon.
Vitor Tomita: Visteon streaming business and how confident are you in this training business, reaching profitability in the second half of this year. Thank you.
Vitor Tomita: Okay.
Speaker Change: Victor Thank you for your questions <unk> will take the first one is do a commercial dynamics in cable and I'll take the second.
Alfonso de Angoitia Noriega: So, it also adds to what Alfonso just said. There are several systems, for example, that are now duplicated that we can optimize, and that reduces traffic in terms of licenses and operating costs. We see lots of opportunities. We see a big opportunity for revenue increase, so we can now match the two subscriber bases and be more aggressive and, at the same time, more targeted in how we approach the market with both technologies in areas where we have a network and in areas where we do not have a network, so we can optimize our efforts in terms of approaching the market.
So Peter.
Speaker Change: In the back in those days when we had a very aggressive promotions, we're scaling between 400 to 800 450.
Speaker Change: No.
Speaker Change: Gross adds for the quarter we are.
Speaker Change: We are already at 400000 or rate.
Speaker Change: So that has not obviously, we have to retrain the sales force.
Speaker Change: It has had some bullishness.
Speaker Change: Zero.
Let's take a step down.
Ms Baker: Ms Baker.
Ms Baker: Took place in the fourth quarter of last year, so as Youre seeing this quarter.
Ms Baker: Current quarter.
Ms Baker: We are seeing our sales activity.
Ms Baker: 400 to 450.
Got that.
Ms Baker: For the quarter.
Ms Baker: Even with a very aggressive promotion so the sugar market.
Ms Baker: Still active in that regard.
Alfonso de Angoitia Noriega: We see great value in stealing the DTH products, especially the prepaid products that we have here in New Mexico that have a big, big rate. So, and obviously, there are back office synergies because there's a lot of overlap. And we think that when you compound that, we think that we should come closer to, you know, the second half of 400 million pesos of savings and synergies. Yeah, so that's more or less the number that we're anticipating by the end of the year.
Ms Baker: We've seen no deterioration in the variety of other than the one that we just mentioned.
Ms Baker: But the flip side for that.
Ms Baker: Regardless, we have.
Ms Baker: Shorter promotions.
Ms Baker: <unk> has been increasing consistently.
Ms Baker: And we have seen the retention of the clients that we have been fairly now much higher than the one we used to sell them with that so when you combine the two we are very optimistic about how we should be growing the subscriber base.
Ms Baker: In Mexico, Despite the fact that we do not understand exactly.
Ms Baker: When we add some of the numbers that we have seen we have a hard time understanding some of the numbers we have seen.
Alfonso de Angoitia Noriega: As I mentioned, Valim's mandate is to completely integrate the two companies, and of course we're going to benefit on the easy side from Sky's exclusive sporting content to improve the competitive position of the combined company, and he will, as he has demonstrated at EASY in the very short term, extract as many optics and capex synergies as possible, and this will mean an expansion of free cash flow generation, and of course that will result in increases in returns on invested capital.
Ms Baker: The very high volume we are still.
Ms Baker: Looking around to see where those those.
Ms Baker: Net adds come from to some of our competitors.
Speaker Change: Yes, we don't know is there a net additions are there Jeff.
Speaker Change: A consequence of transferring.
Speaker Change: Old network subscribers to the new networks in their cases, but numbers don't really add up could you.
Speaker Change: If you sum all the.
Speaker Change: Net additions of all the companies. So that's an interesting thing we're going to focus on.
Speaker Change: If we do that math.
Speaker Change: We would come up with the $2 5 million.
Carlos Antonio de Legarreta Diaz: Thank you all for your feedback.
Speaker Change: Net.
Vitor Tomita: The next question is from Vitor Tomita with Goldman Sachs. Please go ahead.
74, which is higher than what the industry had during that time, which was the highest ever.
Vitor Tomita: Hello, good morning, all, and thanks for taking our questions. We have two questions from our side. The first one, you touched on it a bit, but if you could give us some more color on how you are seeing commercial dynamics and sales performance in cable under your new strategy, that would be our first question. And our second question would be about Televisa Univision. How are you seeing the evolution in profitability for streaming at Televisa Univision's streaming business? And how confident are you in the streaming business reaching profitability in the second half of this year? Thank you.
Speaker Change: Terms of net adds in telecom worldwide. So that's why.
Speaker Change: Thanks Richard.
Speaker Change: If you have them.
Speaker Change: <unk>.
Speaker Change: If I may.
Speaker Change: Yes.
Speaker Change: And as to your second question that has to do with our streaming service with the VIX.
Speaker Change: What I can say is that we feel great about it.
Speaker Change: With a quarter of the year, having passed we see continued narrowing of direct to consumer losses.
Speaker Change: We remain confident in our ability to reach profitability in the second half of this year.
Speaker Change: Our DTC business had a great start of the year, all major kpis and the trends.
Alfonso de Angoitia Noriega: Victor, thank you for your question. Valim will take the first one on the commercial dynamics of cable, and I'll take the second.
Speaker Change: And in the right direction.
Francisco Valim: So, Vitor, back in those days when we had the very aggressive promotions, we were selling between 450,000 new Gross Ads per quarter. Now, we are already at 400,000. So that has not, obviously, we had to retrain the sales force, and that has had some little, let's say, step down that basically took place in the fourth quarter of last year. So as we've seen this quarter and the coming quarter, we are seeing... our sales activity in the $400 to $450 gross debt per quarter as we were, even with the very aggressive promotions.
Speaker Change: Many of which exceeded our expectations I can say.
Speaker Change: Some of them and users we continue to grow both among us and subscribers.
Speaker Change: Engagement.
Speaker Change: I can tell you that is a three tiered where it directly correlates with the monetization total streaming hours grew more than 50% versus the prior year to a new record high.
Speaker Change: On monetization in the U S. Our AD sales team is doing a fantastic job basically maintaining significant CPM premiums to linear.
Francisco Valim: So we see the market still active in that regard, and we see no deterioration of the volume other than the one I've just mentioned. But the flip side to that is, because we have shorter promotions, our ARPU has been increasing consistently, and we have seen the retention of the clients that we have been selling now much higher than the ones we used to sell in the past. So when you combine the two, we are very optimistic about how we should be growing the subscriber base.
Speaker Change: With sellouts above 80%.
Speaker Change: Churn also reduced significantly in the quarter to a record low.
So with more data as a service H agents, we are doing a better job of creating content.
Speaker Change: Resonates with our audience. This quarter, we saw an increase in terms of engagement among our audience, which led us to a better retention and lower churn.
Francisco Valim: [inaudible] that has come from some of our competitors. Yeah, to that point, we don't know if they're net additions or they're just a consequence of transferring old network subscribers to the new networks in their cases. But the numbers don't really add up if you sum all the net additions of all the companies. So that's an interesting thing we need to focus on. If we do the math, we would come up with 2.4, 2.5 million net ads in 2024, which is higher than what the industry had during the pandemic, which was the highest ever in terms of net ads in telecom worldwide. So that's why, you know, what Alfonso is saying. What he's saying is just to give them some food for thought, if I may.
Speaker Change: We are also seeing the benefits from our two tier ecosystem.
Speaker Change: Is bearing fruit in terms of both churn and.
About a quarter of our gross net subscribers were re acquired users.
Speaker Change: The free tier contributed a record high percentage of our gross and net subscribers at nearly 70% in the quarter.
Speaker Change: So as you can imagine this translates into significant marketing savings as we are using that funnel and.
Speaker Change: Loud us to again narrow R&D teaching losses, so what I can say, we feel great about VIX, we're moving towards the.
Speaker Change: Profitable scale streaming service.
Speaker Change: Very clear thank you very much for the reply.
Alfonso de Angoitia Noriega: Yeah. And as to your second question, it has to do with our streaming service with Vix. What I can say is that, with a quarter of the year having passed, we see continued narrowing of direct-to-consumer losses, and we remain confident in our ability to reach profitability in the second half of this year. Our DTC business had a great start to the year. All major KPIs and trends are moving in the right direction, many of which have exceeded our expectations. I can say some of them.
Speaker Change: Thank you.
Speaker Change: The next question is from Alejandro Azar with GBM. Please go ahead.
Alejandro Gallostra de Arnedo: Hi, good morning on thank you for taking my questions.
Alejandro Gallostra de Arnedo: Three quick ones.
Alejandro Gallostra de Arnedo: The first one is E billing if you can talk about more about the sooner you saw on on on Sky on the Capex side. If you could elaborate on those on and just to clarify you mentioned 15, one 5%.
Alfonso de Angoitia Noriega: On users, we continue to grow both MAUs and subscribers. On engagement, I can say that, in the three years where it directly correlates with monetization, total streaming hours grew more than 50% versus the prior year to a new record high. On monetization, in the U.S., our ad sales team is doing a fantastic job, basically maintaining significant CPM premiums to linear, with sell-outs above 80%. Churn also reduced significantly in the quarter to a record low.
Alejandro Gallostra de Arnedo: Savings on the Opex that would be the other one on how how does profitability looks like when you merge both companies, let's say 2025 or <unk> in the third quarter and the last one would be on your asset sale. If you can elaborate on we charted the did you say.
Alfonso de Angoitia Noriega: So, with more data as the service ages, we are doing a better job at creating content that resonates with our audience. This quarter, we saw an increase in terms of engagement among our audience, which led us to better retention and lower churn. We're also seeing the benefits from our two-tier ecosystem, and this is very true in terms of both churn and SAC. About a quarter of our gross net subscribers were reacquired users, and the free tier contributed a record high percentage of our gross net subscribers at nearly 70% in the quarter.
Alejandro Gallostra de Arnedo: You know the gain above 2 million berth 2 billion peso. Thank you.
Thank you Alejandro.
Speaker Change: I'll take your first question and then Carlos Phillips.
Speaker Change: Your question that has to do with asset sales.
Speaker Change: So we are anticipating sky.
Speaker Change: From 16% to 14% Capex to sales ratio, Okay, and Thats our estimate at this point.
Speaker Change: They may be higher than that but we are being conservative at this point.
Alfonso de Angoitia Noriega: So, as you can imagine, this translates into significant marketing savings as we're using that funnel and allows us to, again, narrow our DTC losses. So, what I can say is, we feel great about VIX. We're moving towards a profitable scale streaming service.
Speaker Change: In terms of profitability, we are estimating high 30, the combined entity to be at high doses by the budget. When we finalize the senior is which should be towards the end of the year end or beginning of next year. So we get like a.
Vitor Tomita: It's very clear. Thank you very much for the reply.
Speaker Change: As mentioned before there are lots of things that we can synergize both on the cost side Capex side, but also on the revenue side, which we are addressing all of that as soon as we have a regulatory approval.
Alejandro Gallostra de Arnedo: The next question is from Alejandro Azar with GBM. Please go ahead.
Alejandro Gallostra de Arnedo: Hi, good morning, and thank you for taking my questions. Three quick ones.
Speaker Change: And Carlos.
Alejandro Gallostra de Arnedo: The first one is, Valim, if you could talk about more of the synergies on Sky on the CapEx side, if you could elaborate on those. And just to clarify, you mentioned 15.15% savings on OPEX. That would be the other one. And how does profitability look when you merge both companies, let's say, in 2025 or in the third quarter? And the last one would be on your asset sale. If you can elaborate on which assets you sold, you know, the gain is about $2 billion. Thank you.
Speaker Change: Great.
Carlos Antonio de Legarreta Diaz: Hey, Alex on the on the game new software from a property sale.
Carlos Antonio de Legarreta Diaz: This is related to the union any spin off as well.
Carlos Antonio de Legarreta Diaz: Organizing the company to execute the spin off we had to do some asset sales from company that we're going to remain in Grupo Televisa from companies that are going to be spun off.
Carlos Antonio de Legarreta Diaz: Since the date.
Carlos Antonio de Legarreta Diaz: Data.
Carlos Antonio de Legarreta Diaz: Spinoff became effective on the 31st of January that's when it became.
Carlos Antonio de Legarreta Diaz: But it's a noncash gain on.
Movement of properties from many companies and group of companies.
Francisco Valim: Thank you, Alejandro. Valim will take your first question and then Carlos Philips will take your question that has to do with acetate. So we are anticipating, you know, a sky rocket from 16 to 14% cutbacks to sales ratio, okay? And that's our estimate at this point. It may be higher than that, but we are being conservative at this point. In terms of profitability, we are estimating the combined entities to be at the high 30s when we finalize the synergies, which should be toward the end of this year and the beginning of next year.
Speaker Change: Okay. Thank you Carlos Humbling.
Speaker Change: The next question is from Luca <unk> with Bank of America. Please go ahead.
Luca: Hi, Good morning. Thank you for taking my questions I have two on my side first.
Luca: First on Sky on the operational front you said you also expect to see some improvement.
Luca: How can we think about the level of pets disconnections should they continue to increase okay.
Luca: Sorry to diminish and then when should it normalize or come close to zero, how youre thinking about that and then second for cable do you still see much room for an improvement in churn or are you already close to the target you have and if there is some room what initiatives and what you still have to do to get closer to this target. Thank you.
Francisco Valim: So, we think we can, like I mentioned before, there are lots of things that we can synergize both on the cost side, the traffic side, but also on the revenue side, which we will address now as soon as we have regulatory approval.
Carlos Antonio de Legarreta Diaz: Hey, Alex. On the gain you saw from property sales, this is related to your Yamani spinoff. As we were organizing the company to execute the spinoff, we had to do some asset sales from companies that were going to remain in Grupo Televisa and from companies that were going to be spun off of Yamani. Since the date when the spinoff became effective was the 31st of January, that's when these gains became, I would say, kind of informal. But it's a non-cash gain on the movement of properties from Yamani companies to Grupo companies.
Luca: Yes.
Luca: Yes.
Luca: So in terms of.
Luca: This connection that BPH, which is basically the technologic technology referred to we think that there is with more emphasis on that product in areas where.
Luca: They include the only solution and understanding that in terms of entertainment.
Luca: Uh huh.
Luca: <unk> is the chief this opportunity that people have in Mexico, especially in areas, where they did not have access to all the technology and so we think with a more focused.
Alejandro Gallostra de Arnedo: Okay. Thank you, Carlos and Valine.
Luca: Sales effort.
Marketing efforts will be able to reduce the speed.
Luca Brainbeam: The next question is from Luca Brainbeam with Bank of America. Please go ahead.
Luca: Cancellations in both prepaid and postpaid as to how much.
Luca Brainbeam: Hi, good morning. Thank you for taking my questions. I have two on my side.
Luca: We are still in the in the making of those understanding then will.
Luca: We'll be launching new new kind of thing.
Luca: Very soon.
Luca Brainbeam: First, Banskai, on the operational front, you said you also expected to see some improvements. So, how can we think about the level of net disconnections? Should they continue to increase, sorry, to diminish? And then, when should it normalize or come close to zero?
Luca: Regarding how loans and jumbo.
Speaker Change: I think that we are owners.
Speaker Change: The mid range, if I may of.
Speaker Change: The chart in terms of how low it can go obviously having.
Speaker Change: Subscriber base.
Speaker Change: Larger dollar churn is always a factor in this.
Francisco Valim: How are you thinking about that? And then second, for Cable, do you still see much room for an improvement in churn? Or are you already close to the target you have? And if there is some room, what initiatives and what do you still have to do to get closer to this target? Thank you.
Speaker Change: Bright effect, sometimes a number percentage wise, it's a smaller number.
Speaker Change: It is a significant number of subscribers, but we think that there are many things that we are drilling and some additional things that we can do what we think we can still work.
Francisco Valim: In terms of this connection at DTH, which is basically the technology we refer to, we think that there is more emphasis on that product in areas where DTH is basically the only solution and an understanding that, in terms of entertainment, DTH is the cheapest opportunity that people have in Mexico, especially in areas where they do not have access to other technologies. So we think with more focused sales efforts and marketing efforts, we'll be able to reduce the speed of cancellations for both prepaid and postpaid.
Speaker Change: Lowering the churn.
Speaker Change: And seeing that.
Speaker Change: Moving forward, we have already done that we have brought down churn.
Speaker Change: All numbers that were very high to start this political number already but we still think we can we can work around churn, especially with some of the things that we have.
Speaker Change: Our pipeline in terms of.
Products and services.
Speaker Change: We will be launching between now and the end of the year.
Speaker Change: Perfect very clear thank you for a dancer.
Speaker Change: This concludes our question and answer session.
Francisco Valim: As to how much, we're still in the making of those understandings, and we will be launching new campaigns very soon. Regarding how low churn can go, I think that we are towards the midrange, if I may, of churn in terms of how low it can go. Obviously, having a subscriber base as large as ours, churn is always a factor. Despite the fact that sometimes the number percent-wise is a smaller number, it is a significant number of subscribers.
Speaker Change: I'd like to turn the conference back over to Alfonzo, Dan Glaser for any closing remarks.
Dan Glaser: Thank you everyone for participating in our call and if you have any additional questions give us a call.
Speaker Change: Great.
Speaker Change: And.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].
Francisco Valim: But we think that with the many things that we are doing and some of the additional things that we can do, we can still work towards lowering the churn and seeing that moving forward. We have brought down churn from numbers that were very high to historical numbers already, but we still think we can work around churn, especially with some of the things that we have in the pipeline in terms of products and services that we will be launching between now and the end of the year.
Luca Brainbeam: Perfect. Very clear. Thank you for the answer.
Alfonso de Angoitia Noriega: This concludes our question and answer session. I would like to turn the conference back over to Alfonso de Angoixia for any closing remarks.
Alfonso de Angoitia Noriega: Thank you everyone for participating in our call, and if you have any additional questions, give us a call. Have a great weekend. The conference is now concluded. Thank you for attending.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
unknown: ?? ?? ?? ?? ?? ?? ?? ??