Q2 2024 Grupo Televisa SAB Earnings Call

July 24, 2024

Operator: Pardon me. This is the operator. We are just waiting for participants to join, and we'll start the call in two to three minutes.

Operator: Pardon me, this is the operator. We are just waiting for participants to join and will start the call in two to three minutes.

Speaker Change: Pardon me, this is the operator. We are just waiting for participants to join and we'll start the call in two to three minutes.

unknown: Produced by the U.S. Embassy in the U.S.A. Produced by the U.S. Embassy in the U.S.A. ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ???

Alfonso Day: Let's get started. Good morning, everyone, and welcome to Grupo Televisa's second quarter 2024 conference call.

Speaker Change: ?? ??

Speaker Change: © BF-WATCH TV 2021

unknown: Good morning, everyone, and welcome to Grupo Televisa's second quarter 2024 conference call. Before we begin, I would like to draw your attention to the press release, which explains the use of netting statements and applies to everything that we discussed in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Ambrosia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.

Speaker Change: Good morning, everyone, and welcome to Grupo Televisa's second quarter 2024 conference call.

Unknown Executive: Before we begin, I would like to draw your attention, the press release, let's explain the use of forward-looking statements, and apply to the public.

Speaker Change: Before we begin, I would like to draw your attention to the press release, which explains the use of overlooking statements and applies to everything that we discussed in today's call and in the earnings release.

Speaker Change: I will now turn the call over to Mr. Alfonso de Ambrosia, School Chief Executive Officer of Grupo Televisa. Please go ahead, sir.

Unknown Executive: Thank you, Elsa.

Unknown Executive: Thank you, Elsa. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable & Sky, and Carlos Phillips, CFO of Grupo Televisa. Before discussing our second quarter operating and financial performance, let me remind you the key corporate goals and strategic pillars Bernardo and I outlined for Televisa and Televisa Univision at the beginning of the year and the progress we have achieved so far. First, the corporate restructuring process at our cable segment, led by Francisco Valim, intended to improve profitability, optimize CAPEX, increase free cash flow generation, and position us well to achieve sustainable revenue growth over the coming years.

Alfonso Day: Good morning, everyone, and thank you for joining us. With me today are Francesco Valim, CEO of Cable in Sky, and Carlos Phillips, CFO of Grupo Televisa. Before discussing our second quarter operating and financial performance, let me remind you of the key corporate goals and strategic pillars Bernardo and I outlined for Grupo Televisa and Televisa Univision since the beginning of the year, and the progress we have achieved so far. First, the corporate restructuring process at our cable segment led by Francisco Valim intended to improve profitability, optimize capex, increase free cash flow generation, and position us well to achieve sustainable revenue growth over the coming years.

Speaker Change: 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 Phillips, CFO of Grupo Televisa.

Speaker Change: Before discussing our second quarter operating and financial performance, let me remind you the key corporate goals and strategic pillars Bernardo and I outlined for Grupo Televisa and Televisa Univision since the beginning of the year and the progress we have achieved so far.

Speaker Change: First, the corporate restructuring process at our cable segment, led by Francisco Valim, intended to improve profitability, optimize CAPEX,

Speaker Change: increased free cash flow generation, and positioning us well to achieve sustainable revenue growth over the coming years.

Alfonso Day: The key measures implemented so far have already allowed us to improve profitability by almost 400 basis points relative to the third quarter of 2023, and we are confident that our EBITDA margin will continue to expand gradually over the coming quarters due to ongoing efficiencies. Moreover, during the first half of the year, operating cash flow for our cable segment, which is equivalent to EBITDA minus capex, was over 6.4 billion pesos, growing by almost 50% year on year and accounting for around 27% of sales. This implies that the operating cash flow margin of our cable segment has increased by close to a thousand basis points so far this year.

Unknown Executive: The key measures implemented so far have already allowed us to improve profitability by almost 400 basis points relative to the third quarter of 2023, and we are confident that our EBITDA margin will continue to expand gradually over the coming quarters due to ongoing efficiency.

Speaker Change: The key measures implemented so far have already allowed us to improve profitability by almost 400 basis points relative to the third quarter of 2023.

Speaker Change: And we are confident that our EBITDA margin will continue to expand gradually over the coming quarters due to ongoing efficiencies.

Unknown Executive: Moreover, during the first half of the year, operating cash flow for our cable segment, which is equivalent to EBITDA minus CAPEX, was over 6.4 billion pesos, growing by almost 50% year on year, and accounting for around 27% of sales. This implies that the operating cash flow margin of our cable segment has increased by close to a thousand basis points so far this year. The second half of the year is expected to be heavier in terms of CAPEX deployment, but we are cutting our 2024 CAPEX budget for our cable segment to $590 million, including $30 million for the reconstruction of our network in Acapulco, which we expect to be reimbursed by the insurance company. Therefore, we estimate that the organic operating cash flow for our cable segment will increase by around 16% year-on-year in 2024.

Speaker Change: Moreover, during the first half of the year, operating cash flow for our cable segment

Speaker Change: which is equivalent to EBITDA minus CAPEX was over 6.4 billion pesos growing by almost 50% year on year and accounting for around 27% of sales.

Speaker Change: This implies that the operating cash flow margin of our cable segment has increased by close to a thousand basis points so far this year.

Alfonso Day: The second half of the year is expected to be heavier in terms of capex deployment, but we are cutting our 2024 capex budget for our cable segment to $590 million, including $30 million for the reconstruction of our network in Agapulco, which we expect to be reimbursed by the insurance company. Therefore, we estimate that the organic operating cash flow for our cable segment will increase by around 16% year on year in 2024.

Speaker Change: The second half of the year is expected to be heavier in terms of CAPEX deployment.

Speaker Change: But we're cutting our 2024 CapEx budget.

Speaker Change: for our cable segment to 590 million dollars.

Speaker Change: including $30 million for the reconstruction of our network in Acapulco, which we expect to be reimbursed by the insurance company.

Speaker Change: Therefore, we estimate that the organic operating cash flow for our cable segment will increase by around 16% year-on-year in 2024.

Alfonso Day: The second pillar is the acquisition of AT&T's minority stake in Sky, which we accomplished at very attractive terms to integrate it with our cable segment and materially strengthen our competitive and financial position of the combined company. On this front, we have already implemented a new organizational structure for the combined company that allowed us to retain top talent and optimize duplicated roles. We have also started to implement synergies and efficiencies across several areas, including commercial, sales commissions, programming, IT, technology, finance, and marketing, among others. This integration will also allow us to standardize regions, sales channels, and commissions, have better customer-based management, increased productivity, achieved cross-selling and upselling, improved penetration of triple-play services, and reduced turn.

Unknown Executive: The second pillar is the acquisition of AT&T's minority stake in Sky, which we accomplished at very attractive terms, to integrate it with our cable segment and materially strengthen our competitive and financial position of the combined company. On this front, we have already implemented a new organizational structure for the combined company that allowed us to retain top talent and optimize duplicated roles. We have also started to implement synergies and efficiencies across several areas, including commercial, sales commissions, programming, IT, technology, finance, and marketing, among others.

Speaker Change: The second pillar is the acquisition of AT&T's minority stake in Sky, which we accomplished at very attractive terms to integrate it with our cable segment and materially strengthen our competitive and financial position of the combined company.

Speaker Change: On this front, we have already implemented a new organizational structure for the combined company that allowed us to retain top talent and optimize duplicated roles.

Speaker Change: We have also started to implement synergies and efficiencies across several areas, including commercial, sales commissions, programming, IT, technology, finance, and marketing, among others.

Unknown Executive: This integration will also allow us to standardize regions, sales channels, and commissions, have better customer-based management, increase productivity, achieve cross-selling and up-selling, improve penetration of triple-play services, and reduce churn. It will also allow us to leverage Sky's exclusive sporting content in cable, further differentiating our video package from those of our competitors. Evidence of this is that, for the first time, we have already offered Eurocup 2024 to both our Sky and Easy video customers.

Speaker Change: This integration will also allow us to standardize regions.

Speaker Change: sales channels and commissions, have better customer-based management, increase productivity, achieve cross-selling and upselling, improve penetration of triple-play services, and reduce churn.

Alfonso Day: It will also allow us to leverage Skype's exclusive sporting content in cable, further differentiating our video package from those of our competitors. Evidence of this is that for the first time we already offered the Euro Cup 2024 to both our Skype and easy video customers. All in, we are confident that our restructuring and integration process, most of which already occurred in the second quarter of this year, will allow us to deliver up savings of approximately 400 million pesos in the third quarter relative to the first quarter of 2024. Longer term, we continue to forecast savings of around 15% of Skype's combined annual optics and capics.

Speaker Change: It will also allow us to leverage Sky's exclusive sporting content in cable, further differentiating our video package from those of our competitors.

Speaker Change: Evidence of this is that for the first time, we already offered the EuroCup 2024 to both our Sky and Easy video customers.

Unknown Executive: All in, we are confident that our restructuring and integration process, most of which already occurred in the second quarter of this year, will allow us to deliver OPEC savings of approximately 400 million pesos in the third quarter relative to the first quarter of 2024. In the longer term, we continue to forecast savings of around 15% of Sky's combined annual OPEX end capital. The third pillar is related to the conclusion of the spinoff of Ollamani and its listing on the Mexican Stock Exchange under the ticker symbol Aguilas.

Speaker Change: All in, we are confident that our restructuring and integration process, most of which

Speaker Change: already occurred in the second quarter of this year.

Speaker Change: will allow us to deliver OPEC savings of approximately 400 million pesos in the third quarter relative to the first quarter of 2024.

Speaker Change: Longer term, we continue to forecast savings of around 15% of Sky's combined annual OPEX and CAPEX.

Alfonso Day: The third pillar is related to the conclusion of the spin-off of Oryamani and its listing on the Mexican Stock Exchange under the ticker symbol Agilas.CPO on February 20th. This spin-off was not only intended to streamline group of television operations and simplify our asset structure but also to unlock value for our shareholders through this new company that currently has a market cap of around $330 million. Under the group of television umbrella, we estimate the value assigned to the Oryamani assets was significantly lower.

Speaker Change: The third pillar is related to the conclusion of the spin-off of Ollamani and its listing on the Mexican Stock Exchange under the ticker symbol Aguilas.CPO on February 20th.

Unknown Executive: CPO on February 20th. This spin-off was not only intended to streamline Grupo Televisa's operations and simplify our asset structure, but also to unlock value for our shareholders through this new company that currently has a market cap of around $330 million. However, under the Televisa umbrella, we estimate the value assigned to the Ollamani assets was significantly lower.

Speaker Change: This spin-off was not only intended to streamline Grupo Televisa's operations and simplify our asset structure, but also to unlock value for our shareholders through this new company that currently has a market cap of around $330 million.

Speaker Change: Under the Grupo Televisa's umbrella, we estimate the value assigned to the Ollamani assets was significantly lower.

Alfonso Day: And our fourth pillar is to turn our direct to consumer business, Dix, profitable during the second half of this year. Our DTC business is growing and scaling, and our most important metrics kept trending in the right direction, with most of them ahead of plan. We added users and subscribers, grew engagement, reduced turn, and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier. Therefore, we are confident that we are on track to deliver the major milestone of a profitable DTC business in the second half of this year, only two years after launching the service compared to four to five years from our peers.

Unknown Executive: And our fourth pillar is to turn our direct-to-consumer business VIX profitable during the second half of this year. Our DTC business is growing and scaling, and our most important metrics kept trending in the right direction, with most of them ahead of plan. We added users and subscribers, grew engagement, reduced churn, and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier. Therefore, we are confident that we're on track to deliver the major milestone of a profitable DTC business in the second half of this year, only two years after launching the service compared to four to five years from our peers. Having said that, I will turn the call over to Valim, who will discuss the operating and financial performance of our consolidated assets. Thank you, Alfonso.

Speaker Change: And our fourth pillar is to turn a direct-to-consumer business VIX

Speaker Change: profitable during the second half of this year. Our DTC business is growing and scaling and our most important metrics kept trending in the right direction with most of them ahead of plan.

Speaker Change: We added users and subscribers, grew engagement, reduced churn, and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier.

Speaker Change: Therefore, we are confident that we are on track to deliver the major milestone of a profitable DTC business in the second half of this year, only two years after launching the service compared to four to five years from our peers.

Alfonso Day: Having said that, let me turn the call over to Valim as he will discuss the operating and financial performance of our consolidated assets.

Speaker Change: Having said that, let me turn the call over to Valim as he will discuss the operating and financial performance of our consolidated assets.

Francisco Valim: Thank you, Alfonso. Good morning, everyone.

Unknown Executive: Thank you all so.

Francisco Valim: Good morning, everyone. First, let me walk you through the operating performance of our cable operations. We ended June with a network of 20 million homes after passing around 71,000 new homes during the quarter. In the second quarter, we continue to execute our strategy to focus on value customers rather than volume, while working on customer rotation and satisfaction. However, price increases implemented in the month of April led us to experience a short-lived increase in churn, leading our second quarter broadband ads to remain sequentially stable at 10.7 thousand. In video, we disconnected 65.6 thousand subscribers during the quarter, as in April we canceled a video package called a fictional.

Francisco Valim: First, let me walk you through the operating performance of our cable operation. We ended June with a network of 20 million homes after passing around 71,000 new homes during the quarter. In the second quarter, we continue to execute our strategy to focus on value customers rather than volume while working on customer retention and satisfaction. However, price increases implemented in the month of April led us to experience a short-lived increase in churn, leading our second quarter broadband ads to remain sequentially stable at 10.7 thousand. In video, we disconnected 65.6 thousand subscribers during the quarter, as in April, we cancelled the video package called Aficionados.

Valim: Thank you, Alfonso. Good morning, everyone. First, let me walk you through the operating performance of our cable operations.

Valim: We ended June with a network of 20 million homes, after passing around 71,000 new homes during the quarter. In the second quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction.

Valim: However, price increases implemented in the month of April led us to experience a short-lived increase in churn, leading our second quarter broadband ads to remain sequentially stable at 10.7 thousand.

Valim: In video, we disconnected 65.6 thousand subscribers during the quarter as in April we canceled the video package called Aficionados. Over the coming quarters, we expect to gradually deliver stronger net ads as we keep focusing on churn reduction.

Francisco Valim: Over the coming quarters, we expect to gradually deliver stronger net ads as we keep focusing on churn reduction. During the quarter, net revenue from our residential operations decreased by 3.8% year on year. As our subscriber base was 5.7% lower due to the cleanup that we did in the third quarter of 2023. We lost some revenue given to the cancellations of the fixed analysis video package and because of the ongoing negative impact from Hurricane Autism in Acapulco, given that a still relevant amount of our customers are not paying their bills yet.

Francisco Valim: Over the coming quarters, we expect to gradually deliver stronger net ads as we keep focusing on churn reduction. During the quarter, net revenue from our residential operations decreased by 3.8% year-on-year, as our subscriber base was 5.7% lower due to the cleanup that we did in the third quarter of 2023. We lost some revenue given the cancellation of the Aficionados video package and because of the ongoing negative impact from Hurricane Otis in Acapulco, given that a still relevant amount of our customers are not paying their bills yet. On the other hand, net revenue from our enterprise operations increased by 4.4% year on year. Now, let me walk you through Sky's operating performance.

Valim: During the quarter, net revenue from our residential operations decreased by 3.8% year-on-year.

Valim: as our subscriber base was 5.7% lower due to the cleanup that we did in the third quarter of 2023.

Valim: We lost some revenue given to the cancellations of the Aficionados video package and because of the ongoing negative impact from Hurricane Otis in Acapulco, given that a still relevant amount of our customers are not paying their bills yet.

Francisco Valim: On the other hand, net revenue from our enterprise operations increased by 4.4% year-on-year.

Valim: On the other hand, net revenue from our enterprise operations increased by 4.4% year-on-year.

Francisco Valim: Now let me walk you through Skies operating performance. During the second quarter, Skies product portfolio was under review from the content and pricing standpoint, translating into a softer commercial activity. Therefore, we lost 262,000 revenue generating units, mostly coming from prepaid subscribers that had not been recharging their service.

Valim: Now let me walk you through Sky's operating performance.

Francisco Valim: During the second quarter, Sky's product portfolio was under review from the content and pricing standpoint, translating into softer commercial activity. Therefore, we lost 262,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their service. However, we expect integration with our cable segment to gradually contribute to reduce churn driven by having a better customer base management and cross-selling and up-selling opportunities.

Valim: During the second quarter, Sky's product portfolio was under review from a content and pricing standpoint, translating into a softer commercial activity.

Valim: Therefore, we lost 262,000 revenue generating units, mostly coming from prepaid subscribers that had not been recharging their service.

Francisco Valim: However, we expect integration with our cable segment to gradually contribute to reduce churn, driven by having a better customer base management and cross-selling and upselling opportunities. Sky second quarter revenue of 3.9 billion pesos fell by 13.3% year on year. Accelerating from the 12.3% revenue decline experience in the first quarter, mainly driven by the softer commercial activity.

Valim: However, we expect integration with our cable segment to gradually contribute to reduce churn driven by having a better customer base management and cross-selling and up-selling opportunities.

Francisco Valim: Sky's second quarter revenue of 3.9 billion pesos fell by 13.3% year-on-year, accelerating from the 12.3% revenue decline experienced in the first quarter, mainly driven by softer commercial activity. However, during the second half of the year, we are looking to reactivate our commercial strategy, particularly after integrating our product portfolio, commercial regions, and sales channels. To sum up, segment revenue of 15.8 billion pesos fell by 5.8% year-on-year, while operating segment income of 6.0 billion pesos declined by 7.7%.

Valim: SCAI's second quarter revenue of 3.9 billion pesos fell by 13.3% year-on-year.

Valim: Accelerating from the 12.3% revenue decline experienced in the first quarter, mainly driven by the softer commercial activity.

Francisco Valim: Still, during the second half of the year, we are looking to reactivate our commercial strategy, particularly after integrating our product portfolio, commercial regions, and sales channels.

Valim: Still, during the second half of the year, we are looking to reactivate our commercial strategy, particularly after integrating our product portfolio, commercial regions and sales channels.

Francisco Valim: To sum up, segment revenue of 15.8 billion pesos fell by 5.8% year on year, while operating segment income of 6.0 billion pesos declined by 7.7%. Our operating segment income margin of 37.7% contracted by 80 basis points year on year, mainly driven by inflationary pressures in labor and content related costs, but expanded by 90 basis points sequentially due to the ongoing efficiency measures that we have been implementing since the third quarter of 2023.

Speaker Change: To sum up, segment revenue of 15.8 billion pesos fell by 5.8% year-on-year, while operating segment income of 6.0 billion pesos declined by 7.7%.

Francisco Valim: Our operating segment income margin of 37.7% contracted by 80 basis points, year on year, mainly driven by inflationary pressures in labor and content-related costs but expanded by 90 basis points sequentially due to the ongoing efficiency measures that we have been implementing since the third quarter of 2023. Regarding CapEx deployment, our total investments of 1.8 billion pesos during the second quarter fell by 51.1% year-on-year. So our capex to sales ratio of 11.2% was over a thousand basis points lower than that in the second quarter of 2023.

Speaker Change: Our operating segment income margin of 37.7% contracted by 80 basis points year-on-year, mainly driven by inflationary pressures in labor and content-related costs.

Speaker Change: but expanded by 90 basis points sequentially due to the ongoing efficiency measures that we have been implementing since the third quarter of 2023.

Francisco Valim: Regarding CAPEX deployment in our total investment on 1.8 billion pesos during the second quarter fell by 51.1% year on year. So our CAPEX to sales ratio of 11.2% was over a thousand basis points lower than that of the second quarter of 2023. Finally, operating cash flow for Cable and Sky, which is equivalent to a bidar minus copax, was 4.2 billion pesos in the second quarter, increasing by 37.8% year-on-year and accounting for 26.6% of sales. This basically means that our operating cash flow margin increased by 840 basis points year-on-year. We have invested around $120 million equivalent to a capex to sales ratio of 12%.

Speaker Change: Regarding CapEx deployment, our total investments of 1.8 billion pesos during the second quarter fell by 51.1% year-on-year.

Speaker Change: So our capex to sales ratio of 11.2% was over 1,000 basis points lower than that of the second quarter of 2023.

Francisco Valim: Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CAPEX, was 4.2 billion pesos in the second quarter, increasing by 37.8 percent year-on-year and accounting for 26.6 percent of sales. This basically means that our operating cash flow margin increased by 840 basis points year-on-year. During the first half of 2024, we invested around $220 million, equivalent to a capex to sales ratio of 12%. This amount represents less than 28% of our 2024 CapEx budget disclosed at the beginning of the year.

Speaker Change: Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CAPEX, was 4.2 billion pesos in the second quarter, increasing by 37.8% year-on-year and accounting for 26.6% of sales.

Speaker Change: This basically means that our operating cash flow margin increased by 840 basis points year-on-year.

Speaker Change: During the first half of 2024, we have invested around $220 million, equivalent to a capex to sales ratio of 12%.

Francisco Valim: This amount represents less than 28% of our 2024 capex budget disclosed at the beginning of the year. A more efficient capex deployment focus on higher investment returns leads us to few confidence that our capex requirements for the full year will be significantly lower.

Speaker Change: This amount represents less than 28% of our 2024 CapEx budget disclosed at the beginning of the year.

Francisco Valim: A more efficient CapEx deployment focused on higher investment returns leads us to feel confident that our CapEx requirements for the full year will be significantly lower. So we are cutting our 2024 CapEx budget to $720 million, including $590 million in cable, with $30 million for the reconstruction of the network in Acapulco, which we expect to be reimbursed by the insurance company, $120 million in Sky, and $10 million for corporate purposes.

Speaker Change: A more efficient CapEx deployment focused on higher investment returns leads us to feel confident that our CapEx requirements for the full year will be significantly lower.

Francisco Valim: So we are cutting our 2024 capex budget to $720 million, including $590 million in cable, with $30 million for the reconstruction of the network in Agapuco, which we expect to be reimbursed by the insurance company, $120 million in Sky, and $10 million of proper purposes.

Speaker Change: So, we are cutting our 2024 CapEx budget to $720 million dollars, including...

Speaker Change: $590 million in cable, with $30 million for the reconstruction of the network in Acapulco, which we expect to be reimbursed by the insurance company, $120 million in sky, and $10 million of proper purposes.

Alfonso Day: Thank you, Valim. Valim has been with us for less than a year and is doing an amazing job.

Unknown Executive: Thank you, Valim. Valim has been with us for less than a year and is doing an amazing job. Now let me walk you through Televisa Univision's second quarter results released yesterday morning. The company delivered another quarter of top-line growth with revenue of around $1.3 billion, increasing by 3% year-on-year, while EBITDA of $362 million declined by 3%, but showing a solid improvement over the first quarter as we move towards consolidated EBITDA growth, including profitability in our direct-to-consumer business in the second half of this

Speaker Change: Thank you, Valim. Valim has been with us for less than a year and is doing an amazing job.

Alfonso Day: Now, let me walk you through Televisa Univision's second quarter results released yesterday morning. The company delivered another quarter of top-line growth, with revenue of around $1.3 billion increasing by 3% year-on-year. While EBITDA of $362 million declining by 3%, but showing a solid improvement over the first quarter as we move towards consolidated EBITDA growth, including profitability in our direct to consumer business in the second half of this year.

Speaker Change: Now let me walk you through Televisa Univision's second quarter results released yesterday morning.

Speaker Change: The company delivered another quarter of top-line growth with revenue of around $1.3 billion, increasing by 3% year on year.

Speaker Change: while EBITDA of $362 million declining by 3%, but showing a solid improvement over the first quarter as we move towards consolidated EBITDA growth, including profitability in our direct-to-consumer business in the second half of this year.

Alfonso Day: From an operating standpoint, we achieved several milestones during the second quarter. First, in the second part of the quarter, we improved our competitive position on linear in the US as we aired two major international soccer tournaments: Copa Medica and Euro Cup. Second, we made progress bringing new advertisers to our platform in the US, helping them understand and embrace the power of our massive and overlooked audience and unique reach. Third, our programmatic and product placement capabilities tied to our leading share of audience in Mexico have been allowing us to consistently outperform the market in terms of advertising revenue growth.

Unknown Executive: From an operating standpoint, we achieved several milestones during the second quarter. First, in the second part of the quarter, we improved our competitive position on Linear in the U.S. as we aired two major international soccer tournaments, Copa America and Eurocup. Second, we made progress bringing new advertisers to our platform in the U.S., helping them understand and embrace the power of our massive and overlooked audience and unique reach. Third, our programmatic and product placement capabilities tied to our leading share of audience in Mexico have been allowing us to consistently outperform the market in terms of advertising revenue growth.

Speaker Change: From an operating standpoint, we achieved several milestones during the second quarter.

Speaker Change: First, in the second part of the quarter, we improved our competitive position on linear in the U.S. as we aired two major international soccer tournaments, Copa America and EuroCup.

Speaker Change: Second, we made progress bringing new advertisers to our platform in the U.S., helping them understand and embrace the power of our massive and overlooked audience and unique reach.

Speaker Change: Third, our programmatic and product placement capabilities, tied to our leading share of audience in Mexico, have been allowing us to consistently outperform the market in terms of advertising revenue growth.

Alfonso Day: And fourth, in our DTC business, all our major KPIs are trending in the right direction, with most of them ahead of plan, positioning us extremely well to deliver sustainable DTC profitability in the second half of this year, an unprecedented timeline for only two years after launching the service driven by a superior economic model and relentless execution.

Unknown Executive: And fourth, in our DTC business, all our major KPIs are trending in the right direction, with most of them ahead of plan, positioning us extremely well to deliver sustainable DTC profitability in the second half of this year, an unprecedented timeline for only two years after launching the service, driven by a superior economic model and relentless execution.

Speaker Change: And fourth, in our DTC business, all our major KPIs are trending in the right direction, with most of them ahead of plan, positioning us extremely well to deliver sustainable DTC profitability in the second half of this year.

Speaker Change: An unprecedented timeline for only two years after launching the service driven by a superior economic model and relentless execution.

Alfonso Day: Moving on to the details of our revenue performance during the quarter, revenue growth at Televisa Univision was driven by a solid increase in consolidated advertising revenue of 6%, partially offset by a slight decline in consolidated subscription and licensing revenue of 2%. Consolidated advertising revenue increased by 6% year on year, mainly driven by the strengths of our DTC business and our solid performance in Mexico. Our audience for VIXX's advertising video on demand or evo tier continued to grow, exceeding the 50 million monthly active users milestone while generating nearly 50% growth in total streaming hours, far outpacing the growth in users.

Unknown Executive: Moving on to the details of our revenue performance, during the quarter, revenue growth at Televisa Univision was driven by a solid increase in consolidated advertising revenue of 6%, partially offset by a slight decline in consolidated subscription and licensing revenue of 2%. Consolidated advertising revenue increased by 6% year-on-year, mainly driven by the strength of our DTC business and our solid performance in Mexico. Our audience for VIX's advertising video-on-demand, or AVOT, tier continued to grow, exceeding the 50 million monthly active users milestone while generating nearly 50% growth in total streaming hours, far outpacing the growth of users.

Speaker Change: Moving on to the details of our revenue performance. During the quarter, revenue growth at Televisa Univision was driven by a solid increase in consolidated advertising revenue of 6%.

Speaker Change: partially offset by a slight decline in Consolidated Subscription and Licensing Revenue of 2%.

Speaker Change: Consolidated advertising revenue increased by 6% year-on-year, mainly driven by the strength of our DTC business and our solid performance in Mexico.

Speaker Change: Our audience for VIX's advertising video-on-demand, or AVOT, tier continued to grow, exceeding the 50 million monthly active users milestone, while generating nearly 50% growth in total streaming hours.

Alfonso Day: While we are already monetizing these users through ads, we also have a cost-effective funnel to upsell VIXX's subscription video on demand tier, which is great and has a much lower sac. In the US, advertising revenue was 2% higher as very strong growth in DTC was offset by some softness in our linear networks. In DTC, we delivered remarkable growth as we were very efficient in monetizing the significantly higher monthly active user base and engagement on VIX, with strong sell-through rates of around 90% and material CPM premiums to linear.

Unknown Executive: While we are already monetizing these users through ads, we also have a cost-effective funnel to upsell VIX's subscription video on demand tier, which is great and has a much lower SAC. In the U.S., advertising revenue was 2% higher as very strong growth in DTC was offset by some softness in our linear networks. In DTC, we delivered remarkable growth as we were very efficient in monetizing the significantly higher monthly active user base and engagement on VIX, with strong sell-through rates of around 90% and material CPM premiums to linear.

Speaker Change: for outpacing the growth in users.

Speaker Change: While we are already monetizing these users through ads, we also have a cost-effective funnel to upsell VIX's subscription video on demand tier, which is great and has a much lower SAC.

Speaker Change: In the U.S., advertising revenue was 2% higher as very strong growth in DTC was offset by some softness in our linear networks.

Speaker Change: In DTC, we delivered remarkable growth as we were very efficient in monetizing the significantly higher monthly active user base and engagement on VIX.

Speaker Change: with strong sell-through rates of around 90% and material CPM premiums to linear.

Alfonso Day: At our linear networks business, our results were mixed. We saw strength in sports as we aired the two major international soccer tournaments I mentioned before, which delivered very strong ratings in the second part of the quarter. Still, we experienced softness in the CPG, tech, and pharma categories, along with some pressure from ratings to declines during the first part of the quarter that were not fully offset by price. In Mexico, advertising revenue growth of 13% year on year was partially driven by the appreciation of the Mexican peso and because starting this year we acquired some third party ad inventory, which contributed with 500 basis points of growth that will be a creative to bottom line.

Unknown Executive: At our linear networks business, our results were mixed. We saw strength in sports as we aired the two major international soccer tournaments I mentioned before, which delivered very strong ratings in the second part of the quarter. But still, we experienced softness in the CPG, tech, and pharma categories, along with some pressure from ratings declines during the first part of the quarter that were not fully offset by price.

Speaker Change: At our Linear Networks business, our results were mixed.

Speaker Change: We saw strength in sports as we aired the two major international soccer tournaments I mentioned before, which delivered very strong ratings in the second part of the quarter.

Speaker Change: Still, we experienced softness in the CPG, tech, and pharma categories, along with some pressure from ratings declines during the first part of the quarter that were not fully offset by price.

Unknown Executive: In Mexico, advertising revenue growth of 13% year-on-year was partially driven by the appreciation of the Mexican peso. And because, starting this year, 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 continued to be impacted by advertising restrictions ahead of the presidential elections in June.

Speaker Change: In Mexico, advertising revenue growth of 13% year-on-year was partially driven by the appreciation of the Mexican peso, and because starting this year, we acquired some third-party ad inventory, which contributed with 500 basis points of growth.

Alfonso Day: In Mexico, the public sector continued to be impacted by advertising restrictions ahead of the presidential elections in June. However, this was offset by strength from private sector advertising, as recurring clients increased spending. Moreover, we delivered strong advertising revenue growth in our DTC business, supported by the material increase in our monthly active user base and engagement on VIX, as well as our programmatic capabilities. FX neutral advertising revenue in Mexico increased by 10% year on year, which is an amazing result.

Speaker Change: that will be accretive to bottom line.

Speaker Change: In Mexico, the public sector continued to be impacted by advertising restrictions ahead of the presidential elections in June .

Unknown Executive: However, this was offset by strength from private sector advertising as recurring clients increased spending. Moreover, we delivered strong advertising revenue growth in our DTC business, supported by a material increase in our monthly active user base and engagement on VIX, as well as our programmatic capabilities. FX Neutral advertising revenue in Mexico increased by 10% year-on-year, which is an amazing result. Consolidated subscription and licensing revenue decreased by 2 percent as very robust growth from VIX's subscription video on demand tier was offset by linear subscription revenue declines both in Mexico and in the U.S. VIX's subscription video on demand tier performed exceptionally well this quarter and was a strong growth contributor.

Speaker Change: However, this was offset by strength from private sector advertising as recurring clients increased spending.

Speaker Change: Moreover, we delivered strong advertising revenue growth in our DTC business, supported by the material increase in our monthly active user base and engagement on VIX, as well as our programmatic capabilities.

Speaker Change: FX Neutral advertising revenue in Mexico increased by 10% year-on-year, which is an amazing result.

Alfonso Day: Consolidated subscription and licensing revenue decreased by 2% as very robust growth from VIX's subscription video on demand tier was offset by linear subscription revenue declines both in Mexico and in the US. VIX's subscription video-on-demand tier performed exceptionally well this quarter and was a strong growth contributor. The increase in subscribers accelerated and was driven by the direct sales channels, which are higher ARPU subs coming to us with high intent given the appeal of the content we're producing. We closed the second quarter with 8.4 million subscribers. In the US, subscription and licensing revenue fell by 1%, while in Mexico the decline of 3% was partially offset by the appreciation of the Mexican peso.

Speaker Change: Consolidated subscription and licensing revenue decreased by 2% as very robust growth from VIX's subscription video on demand tier was offset by linear subscription revenue declines both in Mexico and in the U.S.

Speaker Change: VIX's subscription video on demand tier performed exceptionally well this quarter and was a strong growth contributor.

Unknown Executive: The increase in subscribers accelerated and was driven by the direct sales channels, which are higher ARPU subs coming to us with high intent... given the appeal of the content we're producing. We close the second quarter with 8.4 million subscribers. In the U.S., subscription and licensing revenue fell by 1%, while in Mexico, the decline of 3% was partially offset by the appreciation of the Mexican peso. FX Neutro, Subscription, and Licensing Revenue in Mexico decreased by 5% year on year.

Speaker Change: The increase in subscribers accelerated and was driven by the direct sales channels, which are higher ARPU subs coming to us with high intent.

Speaker Change: given the appeal of the content we're producing.

Speaker Change: We closed the second quarter with 8.4 million subscribers. In the U.S., subscription and licensing revenue fell by 1%, while in Mexico, the decline of 3% was partially offset by the appreciation of the Mexican peso.

Alfonso Day: FX neutral, subscription and licensing revenue in Mexico decreased by 5% year on year.

Speaker Change: FX Neutro, Subscription and Licensing Revenue in Mexico decreased by 5% year on year.

Alfonso Day: Looking ahead, we're making progress towards closing our US upfront at a pace in line with the industry. Early data indicates that this could be the fourth consecutive year in which we outperformed the industry and captured market share from English language broadcasters. Going into this year's upfront, our main strategic priority was to transition advertisers to Nielsen's panel plus big data measurement methodology. Moving in this direction is very important for us strategically, not only because its benefits will permeate throughout our businesses over time, impacting both the current scatter market and our future upfronts, but because it is the right way to appropriately measure all audiences.

Unknown Executive: Looking ahead, we're making progress towards closing our U.S. upfront at a pace in line with the industry. Early data indicates that this could be the fourth consecutive year in which we outperform the industry and capture market share from English-language broadcasts. Going into this year's upfront, our main strategic priority was to transition advertisers to Nielsen's panel plus big data measurement methodology. Moving in this direction is very important for us strategically, not only because its benefits will permeate throughout our businesses over time, impacting both the current scatter market and our future upfronts, but because it is the right way to appropriately measure all audiences.

Speaker Change: Looking ahead, we're making progress towards closing our U.S. upfront at a pace in line with the industry.

Speaker Change: Early data indicates that this could be the fourth consecutive year in which we outperform the industry and capture market share from English-language broadcasters.

Speaker Change: Going into this year's upfront, our main strategic priority was to transition advertisers to Nielsen's panel plus big data measurement methodology.

Speaker Change: Moving in this direction is very important for us strategically, not only because its benefits will permeate throughout our businesses over time, impacting both the current scatter market and our future upfronts,

Speaker Change: but because it is the right way to appropriately measure all audiences.

Alfonso Day: To sum up, the strong KPI performance achieved at our DTC business has allowed us to deliver robust revenue growth and has positioned us extremely well to deliver sustainable DTC profitability in the second half of this year. Moreover, we are confident that our record political year from an ad sales perspective will materially boost our top line growth during the second half of this year. This should then return our company back to consolidate the data 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 out our maturities.

Unknown Executive: To sum up, the strong KPI performance achieved in our DTC business has allowed us to deliver robust revenue growth and has positioned us extremely well to deliver sustainable DTC profitability in the second half of this year. Moreover, we are confident that a record political year from an ad sales perspective will materially boost our top-line growth during the second half of this year.

Speaker Change: To sum up, the strong KPI performance achieved at our DTC business has allowed us to deliver robust revenue growth and has positioned us extremely well to deliver sustainable DTC profitability in the second half of this year.

Speaker Change: Moreover, we are confident that a record political year from an ad sales perspective will materially boost our top-line growth during the second half of this year.

Unknown Executive: This should then return our company back to consolidated 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 out 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 2024.

Speaker Change: This should then return our company back to consolidated 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 out our maturities.

Alfonso Day: 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 2024. At Grupo Televisa, we are glad that we unlocked significant value to our shareholders through a spin-off of Ojamani, and now we are laser-focused on integrating Sky with our cable segment. Streamlining our combined operations, strengthening our competitive position, and enhancing free cash flow generation. So far this year, our free cash flow conversion has improved considerably, and a more efficient capital deployment focused on higher investment returns leads us to feel confident that free cash flow generation for the full year will be pretty good.

Speaker Change: 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 2024.

Unknown Executive: At Grupo Televisa, we're glad that we unlocked significant value for our shareholders through a spin-off of Ollamani, and now we're laser-focused on integrating Sky with our cable segment and streamlining our combined operations. Strengthening our competitive position and enhancing free cash flow generation. So far this year, our free cash flow conversion has improved considerably, and a more efficient CapEx deployment focused on higher investment returns leads us to feel confident that free cash flow generation for the full year will be pretty good.

Speaker Change: At Grupo Televisa, we're glad that we unlocked significant value to our shareholders through a spin-off of Ollamani, and now we're laser-focused on integrating Sky with our cable segment.

Speaker Change: Streamlining our combined operations, strengthening our competitive position, and enhancing free cash flow generation.

Speaker Change: So far this year, our free cash flow conversion has improved considerably, and a more efficient CapEx deployment focused on higher investment returns leads us to feel confident that free cash flow generation for the full year will be pretty good.

Unknown Executive: And at Televisa Univision, we're very excited about the prospects for the second half of 2024. Our DTC business is growing and scaling, and our most important metrics kept trending in the right direction, with most of them ahead of plan. We added users and subscribers, grew engagement, reduced churn, and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier. We also expect to get a fair share of political advertising in this cycle.

Alfonso Day: And at Televisa Univision, we are very excited about the prospects for the second half of 2024. Our DTC business is growing and scaling, and our most important metrics kept trending in the right direction, with most of them ahead of plan. We added users and subscribers, grew engagement, reduced turn, and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier. We also expect to get a fair share of political advertising in this cycle. Looking forward, we have very clear objectives in place, a profitable DTC business in the half of the year, and to end 2024 with a reduction in leverage.

Speaker Change: And at Televisa Univision, we're very excited about the prospects for the second half of 2024. Our DTC business is growing and scaling, and our most important metrics kept trending in the right direction, with most of them ahead of plan.

Speaker Change: We also expect to get a fair share of political advertising in this cycle.

Operator: 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 a reduction in leverage. Now, we are ready to take your questions. Elsa, could you please provide instructions for the Q&A?

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 a reduction in leverage.

Unknown Executive: Now we are ready to take your questions.

Elsa: Elsa, could you please provide instructions for the Q&A? We will now begin the question and answer session. To ask a question, you may first start on your touch phone.

Speaker Change: Now we are ready to take your questions. Elsa, could you please provide instructions for the Q&A?

Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing any key. If at any time your question has been answered and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble a roster. The first question comes from Vitor Tomita of Goldman Sachs. Please go ahead.

Elsa: We will now begin the question and answer session.

Elsa: To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing any key.

Elsa: If you are using a speakerphone, please pick up your handsets before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please first start and choose.

Elsa: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble a roster.

Unknown Executive: At this time, we will call momentarily to assemble a roster.

Vitor Tomita: The first question comes from Vitor Tomita with Goldman Sachs. Please go ahead. Hello and morning, and thanks for taking our questions. Two questions from our side. The first one is if you could give us some more detail on how much the efficiency and other discontinuation and the capital situation impacted MSO revenue this quarter.

Speaker Change: The first question comes from Vitor Tomita with Goldman Sachs. Please go ahead.

Vitor Tomita: Hello and good morning. Thanks for taking our questions. Two questions from our side. The first one is if you could give us some more detail on how much the Aficionados discontinuation and the Acapulco situation impacted MSO revenue this quarter. And our second question would be more on the debt. If you could give us some color on how you think about your debt exposure to the U.S. dollar from a strategic standpoint and how you think about your hedging strategy around that debt. Thank you.

Vitor Tomita: Hello and good morning and thanks for taking our questions.

Vitor Tomita: Two questions from our side. The first one is, if you could give us...

Vitor Tomita: Some more detail on how much the Aficionados discontinuation and the Acapulco situation impacted MSO revenue this quarter.

Vitor Tomita: Our second question would be more on the debt. If you could give us some color on how you think about your debt exposure to the US dollar from a strategic standpoint and how you think about hedging strategy around that debt. Thank you.

Vitor Tomita: And our second question would be more on the debt. If you could give us some color on how you think about your debt exposure to the U.S. dollar from a strategic standpoint and how you think about hedging strategy around that debt. Thank you.

Alaska: Thank you, Victor, for your questions. Alaska from Ithcovalin to answer your first question that has to do with aficionados and a Capulco. Alaska Carlos Phillips to answer the second one that is related to our hedging strategy. So Vitor, I think Sonados was a product that we had and generated maybe 1% of our revenues, but it was generating significant negative EBITDA. We discontinued the product, and we also had no sports rights anymore.

Unknown Executive: Thank you, Victor, for your questions. I'll ask Francisco Valim to answer your first question that has to do with aficionados in Acapulco, and I'll ask Carlos Phillips to answer the second one that is related to our hedging strategy.

Speaker Change: Thank you Victor for your questions. I'll ask Francisco Valim to answer your first question that has to do with aficionados en Acapulco. And I'll ask Carlos Philips to answer the second one that is related to our hedging strategy.

Francisco Valim: So, Aficionados was a product that we had and generated, in a short amount of time, maybe 1% of our revenues, but it was generating a significantly negative EBITDA. We discontinued the product, and we also had no sports rights anymore. So Aficionados, starting now in July, would only become a cost with very little content, especially because our deal with VIX provides all the content that we had at Aficionados and much more. So that was the decision about discontinuing. So it was marginally creative, but obviously it impacted revenues a bit.

Francisco Valim: So, Aficionados was a product that we had and generated in Oshawa.

Francisco Valim: Maybe 1% of our revenues, but it was generating a significant negative EBITDA.

Francisco Valim: We discontinued the product.

Francisco Valim: And we also had, we had no sports rights anymore, so aficionados starting now in July would only become a cost with very little content, and especially because our...

Alaska: So aficionados is starting now in July; will only become a cost with very little content. And especially because our deal with VIX provides us with all the content that we had aficionados and much more. So that was the decision about this continue. So it was a margin at rate, but obviously impact that the revenue was a bit.

Francisco Valim: or deal with VIX.

Francisco Valim: provides with all the content that we had at Aficionados and much more. So that was the decision about this continuum. So it was margin-aggravated.

Francisco Valim: But obviously it impacted revenues a bit.

Alaska: As far as Acapulco is concerned, what we have done over the last six months after the hurricane, we have built a full five on network covering 100% of our Acapulco. And obviously, as you go there and you see that the city is not back to its full potential, especially in the wealthiest area, which you call Puntalia Maltese. Those buildings are all being rebuilt, and there are thousands of subscribers there that we are maintaining them with, charging them just a little, just to make sure that we keep charging full charge because the buildings themselves are being remodeled and reconstructed.

Francisco Valim: As far as Acapulco is concerned, what we have done over the last six months after the hurricane, we have built a full fiber network covering 100% of Acapulco, which is called Punta Diamante. Those buildings are all being rebuilt, and there are thousands of subscribers there that we are maintaining by charging them just a little, just to make sure that we keep our relationship, but we cannot charge them full price because the buildings themselves are being remodeled and reconstructed, so they are not; there's no one living there at this moment.

Speaker Change: As far as Acapulco is concerned, what we have done over the last six months after the hurricane, we have built a full fiber network covering 100% of Acapulco.

Speaker Change: And obviously, as you go there and you see that the city is not back to its full potential, especially in the wealthiest areas.

Speaker Change: which is called Punta Diamante.

Speaker Change: Those buildings are all being rebuilt.

Speaker Change: And there are thousands of subscribers there, that we are maintaining them, charging them just a little, just to make sure that we keep our relationship, but we cannot charge them full charge, because the buildings themselves...

Alaska: So they are not. There's no, there's no one leading there at this moment. So we have introduced several thousand clients in a Capulco that we have done that. Our estimations is that over the end of this year, we'll see more movement towards having more clients in a Capulco due to the fact that the buildings are being being built together.

Speaker Change: are being remodeled and reconstructed. They are not, there's no one living there at this moment.

Francisco Valim: So we have several thousand clients in Acapulco that we have done that. Our estimation is that toward the end of this year, we'll see more movement toward having more clients in Acapulco due to the fact that the buildings are being rebuilt.

Speaker Change: We have several thousand clients in Acapulco that we have done that. Our estimation is that towards the end of this year, we'll see more movement towards having more clients in Acapulco due to the fact that the buildings are being rebuilt.

Carlos Phillips: And Carlos will answer the second question that has to do with our catching strategy.

Carlos Phillips Margain: And Carlos will answer the second question that has to do with our hedging strategy.

Speaker Change: And Carlos will answer the second question that has to do with our hedging strategy.

Carlos Phillips Margain: And Vitor, in terms of your question about how we view our exposure to U.S. dollars and our debt, as you probably know, a little over 60% of our debt is dollar-denominated at its fixed rate. And from a balance sheet perspective, what we have is a large cash balance, which we also keep in the majority in dollars. More than 60% of our cash is dollar-denominated. And from the balance sheet exposure perspective, you always have to consider our investment in Televisa Univision, which is, from our perspective, a very large, valuable dollar-denominated asset that we also use from a balance sheet exposure perspective.

Carlos Phillips: And if you're in terms of your question about how we view our exposure to US dollars and our debt, as you probably know, a little over 60% of our debt is dollar denominated, it sticks, right. And from a balance sheet perspective, what we have is a large cash balance, which we also keep in its majority in dollars. More than 60% of our cash is dollar denominated.

Carlos: And Vitor, in terms of your question about how we view our exposure to U.S. dollars and our debt, as you probably know, a little over 60% of our debt is dollar-denominated at its fixed rate.

Carlos: And from a balance sheet perspective, what we have is...

Speaker Change: A large cash balance, which we also keep in its majority in dollars, more than 60% of our cash is dollar denominated. And from the balance sheet exposure as well, you always have to consider our investment in Televisa Univision, which is...

Carlos Phillips: And from the balance sheet exposure as well, you always have to consider our investment in Televisa Univision, which is, from our perspective, a very large value, will dollar denominated asset; they will also use, from a balance sheet exposure perspective. In terms of the cash flow exposure, what we do is, on a rolling basis, using very plain vanilla hedging instruments, we try to cover our dollar exposure. To give an example, our dollar exposure for this year is 100% covered. We are covered up to about half of 2025's dollar exposure, which we not only consider our coupon and interest payments from our dollar debt, but we also consider a portion of our dollar denominated capital when we think about our exposure.

Carlos: From our perspective, a very large, valuable, dollar-denominated asset, they will also use from a balance sheet exposure perspective.

Carlos Phillips Margain: In terms of the cash flow exposure, what we do is, on a rolling basis, using very plain vanilla hedging instruments, we try to cover our dollar exposure. To give you an example, our dollar exposures for this year are 100% covered. And we are covered up to almost half of 2025's dollar exposure, which we not only consider our coupon interest payments from our dollar debt, but we also consider a portion of our dollar-denominated CAPEX when we think about our exposure.

Carlos: In terms of the cash flow exposure, what we do is, on a rolling basis, using very plain vanilla hedging instruments, we try to cover our dollar exposure. To give you an example, our dollar exposures for this year are 100% covered, and we are covered up to almost half of 2025's dollar exposure, which we not only consider our coupon and interest payments from our dollar debt, but we also consider a portion of our dollar denominated capex when we think about our exposure.

Carlos Phillips Margain: The other thing just to mention in terms of the coverage that we've done is our closest maturities in terms of dollar-denominated bonds, which are 2025 and 2026 bonds, those have been fully hedged into pesos. So that's our view in terms of the balance sheet and the cash flow exposure to dollars.

Carlos Phillips: The other thing just to mention in terms of the coverage that we've done is our closest materials in terms of dollar denominated bonds, which are 2025 and 2026 bond. Those are being fully hedged into pesos. So that's our view in terms of the balance sheet and the cash flow exposure to dollars.

Carlos: And the other thing just to mention in terms of the coverage that we've done is our closest maturities in terms of dollar denominated bonds, which are 2025 and 2026 bonds, those have been fully hedged into pesos.

Carlos: So that's our view in terms of the balance sheet and the cash flow exposure to dollars.

Unknown Executive: Very clear, thank you both very much.

Vitor Tomita: Very clear. Thank you both very much.

Speaker Change: Very clear. Thank you both very much.

Marcelo Santos: The next question comes from Marcelo Santos with SAP Morgan. Please go ahead. Hi, good morning. Thanks for taking my question. I have two as well.

Marcelo Santos: The next question comes from Marcelo Santos of JP Morgan. Please go ahead.

Speaker Change: and many more.

Speaker Change: The next question comes from Marcelo Santos with J.P. Morgan. Please go ahead.

Marcelo Santos: Hi, good morning. Thanks for taking my question. I have two as well.

Marcelo Santos: The first is a question about the competitive environment. I mean, is the fact that Telmex is not increasing prices going to become a competitive issue? Could this start affecting your net ads in the future?

Marcelo Santos: Hi, good morning. Thanks for taking my question. I have two as well. The first is a question on competitive environment. I mean, is the fact that Telmex is not increasing prices

Marcelo Santos: The first is the question on competitive environment. I mean, is the fact that Telmax is not increasing prices going to become a competitive issue? Could this start affecting your net ads for the future?

Speaker Change: This is going to become a competitive issue.

Marcelo Santos: And the second question is behind the capex cut. I think you also cut capex on Sky and corporate, right? This is the number I had here was higher for both. So, what is the main driver? Is this mostly related to lower subscriber ads? Or are you also reducing something on the maintenance or the deployment? Just wanted to dive a bit more on the capex reduction. Thank you very much.

Marcelo Santos: And the second question is behind the CapEx. I think you also cut CapEx on Sky and corporate, right? This is the number I had here, which was higher for both. So what is the main driver? Is this mostly related to lower subscriber ads, or are you also reducing something on maintenance or deployment? Just wanted to get a bit more into the CapEx reduction. Thank you very much.

Speaker Change: Could this start affecting your net ads for the future?

Speaker Change: And the second question is behind the CapEx script. I think you also cut CapEx on Sky and corporate, right?

Speaker Change: This is the number I had here, which was higher for both. So what is the main driver? Is this mostly related to lower subscriber ads, or you're also reducing something on the maintenance or the deployment? Just wanted to deep dive a bit more on the CapEx reduction. Thank you very much.

Alfonso Day: Thank you, Marcelo. Can you take the shirt? Marcelo, the discussion on Telmax, not increasing prices. What we did is we focused mostly on clients that have also a video offer. Almost 60% of our net ads is composed as comprised of clients that are also by video. And even though they are only by internet, we provide them with VIX to almost 100% of our non-new clients. So when you do the math, the 389 that Telmax charges for what you are offering and what we are charged with for 150, when you put VIX and you add and subtract, that they are very comparable.

Unknown Executive: Thank you, Marcelo. Francisco, can you take the call?

Francisco Valim: Sure. Marcelo, the discussion on Telmex, not increasing prices, what we did is we focused mostly on clients that also have a video offer. Almost 60% of our net ads are comprised of in, and even though they're only on the internet, we provide them with a big to almost 100% of our non-NU clients. So when you do the math, the 389 that Telmex charges for what they're offering and what we are charging is 450. When you put VIX in, and you add and subtract, they're very comparable.

Speaker Change: Thank you, Marcelo. Francisco, can you take the call?

Francisco Valim: The discussion on Telmex, not increasing prices, what we did is we focused mostly on clients that have also a video offer. Almost 60% of our net ads is comprised of video.

Francisco Valim: Clients that also buy video. And even though they only buy internet, we provide them with VIX.

Francisco Valim: to almost 100% of our non-new clients.

Speaker Change: So, when you do the math, the 389 that Telmex charges for what they are offering and what we are charging is $450. When you put VIX and you add and subtract, they are very comparable. So, we don't see that as a major hurdle.

Alfonso Day: So we don't see that as a major hurdle. Fordia existing price range, and we also, you know, very, very aligned, not only terms of promotion, but also the price list with all of the players in the market in that regard.

Francisco Valim: So we don't see that as a major hurdle for the existing price range, and we are also very aligned not only in terms of promotion but also price list with all of the players in the market in that regard. In terms of CAPEX, we'll start with a thank you and not just a yes. We did a great job, thank you so much. But the idea here is that because we're consolidating SCAI and some of the operations at the holding level, we are, yes, diminishing the number of, for example, Oracle licenses, SAP licenses, and things like that, and focusing on migrating all systems into the already existing easy systems, it makes us not pay twice or sometimes three times for the same service.

Francisco Valim: for the existing price range. And we are also very aligned, not only in terms of promotion, but also price list with all of the players in the market in that regard.

Francisco Valim: In terms of our products, we'll start with a thank you. We did a great job; thank you so much. But the idea here is because we're consolidating Sky and some of the operations of the holding level. We are, yes, diminishing the number of, for example, Oracle licenses and safety licenses and things like that. So, by optimizing all of that, and focusing on migrating all systems into the already existing, easy systems, it makes us not paid twice or sometimes three times for the same service. And what you see there, basically, is the reduction we were able to implement over the last six, six months.

Francisco Valim: In terms of a CapEx...

Francisco Valim: We'll start with a thank you, Ernesto. Yes, we did a great job. Thank you so much. But the idea here is, because we're consolidating...

Francisco Valim: [inaudible]

Speaker Change: and focusing on migrating all systems.

Speaker Change: not paid twice or sometimes three times for the same service.

Francisco Valim: And what you see there, basically, is the reductions we were able to implement over the last six months, but more emphasized in the second quarter of those gains that we have obtained. In terms of network deployment, we are keeping a constant network deployment.

Speaker Change: And what you see there basically is the reductions we were able to implement over the last 6 months.

Francisco Valim: But more, more empathize on the second quarter of those, those gains that we have obtained. In terms of network deployment, we are keeping a constant network deployment. We should finish the year with something between 600, 700,000 loose home space. And, therefore, between home space and sales, that represents, you know, just the bulk of our capex. Because we're able to reduce everything else that was less important because of the synergy that we're able to generate. Just to give us, for example, we have, you know, so now, all in all, we have, you know, more than 5000 people left than we have.

Speaker Change: But more, more...

Speaker Change: More emphasized on the second quarter.

Speaker Change: of those gains that we have obtained. In terms of network deployment, we are keeping a constant network deployment. We should finish the year with something between 600,000 and 700,000 new homes passed.

Francisco Valim: We should finish the year with something between 600,000 and 700,000 new homes sold. And therefore, between homes sold and sales, that represents, you know, just the bulk of our CapEx because we're able to reduce everything else that was less important because of the synergies that we're able to generate. Just to give a simple example, we have, you know, just now, all in all, we have more than 5,000 people left than we had in the third quarter of last year. Therefore, fewer Microsoft licenses and et cetera, et cetera, et cetera, and so forth, and so on. Less cars.

Speaker Change: And, therefore, between Home Fest and sales, that represents, you know, just the bulk of our CapEx, because we're able to reduce everything else.

Speaker Change: that was less important because of the synergies they were able to generate. Just to give a simple example, we have now, all in all, we have more than 5,000 people less than we had in the third quarter of last year.

Speaker Change: So, therefore less Microsoft licenses and etc. etc. etc. and so forth and so on. Less cars. It impacts the entire organization. So, I think that's how you should see it. We are not...

Francisco Valim: It impacts the entire organization, so I think that's how you should see it. We are not investing in what needs to be invested in, meaning we keep on investing in new subs. On average, we are targeting between 350,000 and 400,000 new sales per quarter. And that hasn't changed.

Speaker Change: Not investing in what needs to be invested, meaning we keep on investing on new subs. On average, we are targeting between $350,000 and $400,000 new.

Francisco Valim: And in the third quarter of last year. That is, that hasn't changed. We have been implementing, and June, for example, was a good month, and July is working to be a great month. And, and that doesn't change in terms of net ads or the acquisition of new clients. And also the deployment of new home space, like I just mentioned. So, the, we are making sure that we are buying the future of the company. And, everything else, we are optimizing.

Speaker Change: [inaudible]

Unknown Executive: We have been implementing June, for example, was a good month, and July is looking to be a great month. And that doesn't change in terms of net ads or the acquisition of new clients and also the deployment of new homes fast, like I just mentioned. So we are making sure that we are buying the future of the company and everything else we are optimizing. Yeah, so expanding on what Valim is saying, first of all, he has done an amazing job in the year that he has been with us.

Speaker Change: Forum, and so, and that is, that hasn't changed. We have been implementing, in June , for example, was a good month, and July is looking to be a great month. And...

Speaker Change: And that doesn't change in terms of NetApps, or the acquisition of new clients, and also the deployment of new home space like I just mentioned.

Speaker Change: We are making sure that we are buying the future of the company and everything else we are optimizing.

Francisco Valim: Yeah, so, expanding on what Valim is saying. First of all, he has done an amazing job in the year that he has been with us. Second, I would say that most of our capex is sales related, that he was saying. And, therefore, if we maintain subscriber growth additions at a reasonable level, which we are on target of obtaining. And then further reduced turn, we should be able to have a low single digit subscriber based growth in the medium term with less capex intensity. So, having said this, we believe CapEx to sales should be around 20% going forward, and in 2023, CapEx to sales already declined to 23% from almost 27% in 2022.

Speaker Change: So, expanding on what Valim is saying, first of all, he has done an amazing job in the year that he has been with us.

Unknown Executive: Second, I would say that most of our CAPEX is sales-related, as he was saying, and therefore, if we maintain subscriber growth additions at a reasonable level, which we are on target to achieve, and then further reduce churn, we should be able to have low single-digit subscriber-based growth in the medium term with less capital intensity. So, having said this, we believe CapEx to sales should be around 20% going And in 2023, CapEx to sales will already have declined to 23% from almost 27% in 2022. So we're on track of achieving that goal.

Speaker Change: Second, I would say that most of our CapEx is sales-related, as he was saying, and, therefore, if we maintain subscriber gross additions at a reasonable level, which we do, then we will be able to continue to grow.

Speaker Change: are on target of obtaining and then further reduced churn, we should be able to have low single-digit subscriber base growth in the medium term with less capital intensity.

Speaker Change: So, having said this, we believe CapEx to sales should be around 20% going forward. And in 2023, CapEx to sales already declined to 23% from almost 27% in 2022. So we're on track of achieving that goal.

Francisco Valim: So we're on track of achieving that goal.

Francisco Valim: Perfect. The first half of the year. Yeah, typically, yeah, this is how, you know, telecom company, super cooperate. We approved the budget, and we started going. So it will build up to the end of the year. We already are at that. By the end of this quarter, we should be very close to 300,000.

Marcelo Santos: Perfect. Just a follow-up on the Homes Past Expansion.

Speaker Change: Perfect. Just a follow-up on the Homes Past expansion. I think you added something around less than $200,000 in the first half of the year.

Francisco Valim: Yeah, typically, this is how, you know, telecom companies typically operate. We approve the budget, then we start deploying, so it will build up until the end of the year. We already are at, by the end of this quarter, we should be very close to 300,000.

Speaker Change: Yeah, typically, yeah, this is how, you know, telecom companies typically operate. We approve the budget, then we start deploying, so it will build up until the end of the year.

Speaker Change: We already are at, by the end of this quarter, we should be very close to 300,000.

Unknown Executive: Perfect.

Marcelo Santos: Perfect. Thank you very much.

Unknown Executive: Thank you very much.

Speaker Change: Perfect. Thank you very much.

Carlos Ligerator: The next question comes from Carlos Ligerator, with a tell. Please go ahead. Sorry, sorry, we can't, we can't hear anything then. Yeah, if you need to send a question this, you can text to Rodrigo, and then we can. Yeah, because we couldn't understand a lot of the phone, Carlos. He has better now. Oh, yeah, yeah. Okay, thank you.

Carlos Phillips Margain: The next question comes from Carlos Legareta with Ita.

Speaker Change: The next question comes from Carlos Legareta with Itaú. Please go ahead.

Carlos Phillips Margain: I'm sorry, Carlos. Sorry, we can't.

Speaker Change: [inaudible]

Speaker Change: Sorry, Carlos, sorry, we can't hear anything. Yeah, if you need to send a question, please, you can text it to Rodrigo and then we can... Yeah, because we couldn't understand it on the phone, Carlos. Can you hear better now? Oh, yeah. Yeah.

Operator: Yeah, if you need to send a question, please, you can text it to Rodrigo, and then we can... Yeah, because we couldn't understand the...

Carlos Phillips Margain: [inaudible] Okay, thank you. So after streamlining Sky and Cable, what sort of operating capital margin are you targeting in the medium term? Let's say 2025? And secondly, can you give us a sense as to what proportion of your YouTube subscribers are also VIX viewers?

Carlos Ligerator: So up to three lightening sky and table, what sort of operating castle Marlin are you targeting in the meeting term? We'll take them to five.

Carlos Phillips Margain: Okay, thank you. So after streamlining sky and cable, what sort of operating cash flow margin are you targeting in the medium term, let's say 2025?

Francisco Valim: And secondly, can you give us a chance to do what proportion of your e-tubes and suppliers are also a big deal. Thank you. Yeah, our CapEx. Our operating cash flow margin, we're targeting for 20%. This is our goal. And as I mentioned before, we're on the right trajectory to achieving this goal of 20% operating cash flow margin. And that's your second question. In terms of topics, we're targeting 400 million pesos per quarter. So if you just add four quarters, we are just 1.6, 1.7 billion pesos if you do the 12 months. In terms of a big, what we have today is the vast majority of our clients have a big.

Speaker Change: And secondly, can you give a certain to what proportion of your 80,000 subscribers are also big DLD users? Thank you

Unknown Executive: Yeah, our CapEx, our operating cash flow margin, we're targeting 20%. This is our goal. And as I mentioned before, we're on the right trajectory to achieving this goal of a 20% operating cash flow margin. And as to your second question... In terms of OPEX, we are targeting 400 million pesos per quarter, so if you just add four quarters, we are at just 1.6, 1.7 billion pesos if you do the 12-month... In terms of VIX, what we have today is that the vast majority of our clients have VIX. VIX is being hardbundled in every package with SIGMA.

Speaker Change: Our operating cash flow margin, we're targeting for 20%. This is our goal, and as I mentioned before, we're on the right trajectory to achieving this goal of 20% operating cash flow margin.

Speaker Change: And I'll answer your second question. In terms of OPEX, we are targeting 400 million pesos per quarter. So if you just add four quarters, we are at 1.6, 1.7 billion pesos if you do the 12 months.

Speaker Change: In terms of VIX, what we have today is the vast majority of our clients have VIX. VIX is being hard bundled in every package with 60 megabits per second and above.

Francisco Valim: We are, we are, VIX is, is being hard bundled in every package with 60 megabits per second and about. Yes, we are estimating now for the next couple of quarters, 400 million pesos total quarter. And so if you do the math on the early basis, if you analyze that, it should, it should be seen something between 1.6, 1.7 billion pesos in terms of savings regarding the synergies with Sky. Okay, yeah, I think that's what you said before, so I appreciate that.

Unknown Executive: Oh great, oh great, and can you repeat the comment?

Speaker Change: Okay. Can you repeat the comment, Francisco, on the alt text, please?

Unknown Executive: Yes, we are estimating now for the next couple of quarters 400 million pesos. (Inaudible)

Francisco Valim: Yes, we are estimating now for the next couple of quarters, 400 million pesos.

Speaker Change: So if you do the math on a yearly basis, if you analyze that, you should be seeing something between 1.6 and 1.7 billion pesos in terms of savings regarding the synergies with CAI.

Carlos Phillips Margain: Okay, yeah, okay, I think that's in line with what you said before, so I appreciate that. And just to confirm the capital guidance, if you don't mind, it's $720 million, the whole budget, and the breakdown is $590 per table, including $30 for Acapulco, $125, and $10 for corporate.

Speaker Change: Okay, yeah, okay, I think that's in line with what you said before, so I appreciate that. And just to confirm the capital guidance, if you don't mind, it's $720 million, the whole budget, and the breakdown is $590 for cable, including $30 for Acapulco, $125 and $10 for corporate.

Francisco Valim: And just to confirm that the top of the balance, if you don't mind, if I don't know, 120 million, the whole budget. And by the rest of the five nights of cable, including 30 to like a glucose, 1.5, and 10 quarters.

Carlos Phillips: Let me also, of course, Francisco and the whole company is being much more efficient in terms of the Capix deployment. So, as I mentioned in the initial remarks, our CapEx requirements for the full year will be significantly lower. So we're cutting our 2024 CapEx budget to 720, and you're right, it includes 590 million dollars in cable, with 30 million dollars for the reconstruction of a Capulco, which, as we have mentioned, we expect to be reimbursed by the insurance company, and 120 million dollars in Sky. And finally, 10 million dollars for corporate purposes.

Speaker Change: and many more.

Speaker Change: Let me, so of course Francisco and the whole company is being...

Speaker Change: Much more efficient in terms of the CAPEX deployment, so as I mentioned in the initial remarks.

Speaker Change: are here.

Speaker Change: CAPEX requirements for the full year will be significantly lower.

Unknown Executive: Let me so, of course, Francisco and the whole company is being much more efficient in terms of the CAPEX deployment. As I mentioned in the initial remarks. CAPEX requirements for the full year will be significantly lower, so we're cutting our 2024 CAPEX budget to $720,000, and you're right, it includes $590,000,000 in cable, with $30,000,000 for the reconstruction of Acapulco, which, as we have mentioned, we expect to be reimbursed by the insurance company, and $120,000,000 in sky, and finally, $10,000,000 for corporate purposes.

Speaker Change: So, we're cutting our 2024 CapEx budget to $720 million, and you're right, it includes $590 million in cable.

Speaker Change: with $30 million for the reconstruction of Acapulco, which, as we have mentioned, we expect to be reimbursed by the insurance company, and $120 million in Sky, and finally $10 million for corporate purposes.

Carlos Phillips Margain: Thank you, Alfonso. Just wanted to double check that. I appreciate it. Yeah. Thank you.

Speaker Change: Thank you Alfonso, just wanted to double check that, I appreciate it. Yeah, thank you.

Lucca Brendim: Next question comes from Lucca Brendim, with Bank of America. Please go ahead. Hi, good morning, everyone. Thank you for taking my questions. I have two here. The first one is a follow-up on the competitive environment. So you mentioned that your offer for cable is already in line with competition when you consider weeks and it's evaluated. So now looking for the future, how do you think about the potential for price hikes? Do you think it's likely you will be able to do it in the short term or not if it continues to be hard to have price hikes in the sector.

Lucca R. Brendim: The next question comes from Lucca Brendim with Bank of America. Please go ahead.

Speaker Change: The next question comes from Lucca Brendim with Bank of America. Please go ahead.

Lucca R. Brendim: Hi, good morning, everyone. Thank you for taking my questions. I have two here.

Unknown Executive: Hi, good morning everyone. Thank you for taking my questions. I have two here.

Lucca R. Brendim: The first one is a follow-up on the competitive environment. You mentioned that your offer for cable is already in line with competition when you consider VIX and its value added. So now looking for the future, how do you think about the potential for price hikes? Do you think it's likely you will be able to do it in the short term or not if it continues to be hard to have price hikes in the sector?

Unknown Executive: The first one is a follow-up on the competitive environment.

Unknown Executive: So you mentioned that your offer for a cable is already in line with competition when you consider VIX and its...

Unknown Executive: value-added

Speaker Change: So, now looking for the future, how do you think about the potential for price hikes? Do you think it's likely?

Lucca R. Brendim: And then the second one, are there any other product lines that you see that may be discontinued in the coming quarters for aficionados, or was that something, a one-off, and something specific that should not happen anymore? So those are my questions.

Speaker Change: You will be able to do it in the short term.

Speaker Change: or not, if it continues to be hard to have price hikes in the sector. And then the second one...

Lucca Brendim: And then the second one, are there any other product lines that you see that maybe discontinued in the coming quarters, like a Fijanados, or was that something a one-off and something specific that should not happen anymore. So those are my questions. Thank you. Hello. Lucca, are we still with you? Are you still there? Hi, yes, yes, I hear you. Okay, so we got disconnected. You were asking about the competitive environment, and there's where we got disconnected. Okay, yes, so my first question is on the competitive environment, as you mentioned. So you said that considering weeks and the value we had, your offer is already in line with competition in terms of pricing.

Speaker Change: Are there any other product lines that you see that may be discontinued in the coming quarters like aficionados or was that something, a one-off and something specific that should not happen anymore? So, those are my questions.

Operator: Apologies, Lucca, the speaker line just dropped. Just give us a moment to reconnect the speakers.

Operator: Thank you. Apologies, Lucca, the speaker line just dropped. Just give us a moment to reconnect the speaker.

Speaker Change: Apologies, Lucca, the speaker line just dropped. Just give us a moment to reconnect the speakers.

Speaker Change: and many more.

Operator: Lucca, are we still with you, are you still there? Hi, yes, yes, I can hear you. Okay, so we got disconnected. You were asking about the competitive environment, and that's where we got disconnected.

Speaker Change: Hello?

Unknown Executive: Lucca, are we still with you? Are you still there? Hi, yes, yes, I can hear you. Okay, so we got disconnected. You were asking about the competitive environment and there's where we got disconnected.

Lucca R. Brendim: Okay, yeah, so my first question is on the competitive environment, as you mentioned. So you said that considering VIX and the value it adds, your offer is already in line with competition in terms of pricing. But thinking about the future, do you believe there is space for price hikes, or will it continue to be difficult considering how the market is and how competition has been going in the market?

Unknown Executive: Okay, yeah, so my first question is on the competitive environment, as you mentioned, so you said that considering VIX and the value it adds, your offer is already in line with competition in terms of pricing.

Lucca Brendim: But thinking about the future, do you believe there is space for price hikes, or it will continue to be difficult considering how the market is and how competition has been going in the market. And then the second one. If you, to this quarter, you had the discontinuation of Acidionados, so I wanted to know if, with the restructuring you're doing, and the consolidation of businesses, if there are also other products that maybe discontinued or other revenue lines that maybe discontinued in the coming quarters, or if that was something made of a one-off, and we should not see something similar in other quarters.

Speaker Change: but thinking about the future, do you believe there is space for price hikes or it will continue to be difficult considering how the market is and how competition has been going in the market? And then the second one...

Lucca R. Brendim: And then the second one, "inaudible."

Speaker Change: If you, this quarter you had the discontinuation of Aficionados, so I wanted to know if...

Speaker Change: with the restructuring you're doing and the consolidation of businesses if there are also other products that may be discontinued or other revenue lines that may be discontinued in the coming quarters or if that was...

Speaker Change: This is a one-off and we should not see something similar in the other quarters. Thank you.

Lucca Brendim: Thank you.

Francisco Valim: Thank you, Lucca. So, I'll start with the Aficionado question. Aficionado was a channel that was created several years ago because of sports rights for the Mexican soccer team. With the evolution of VIX, VIX now has 100% of the gains on its platform. And because we have this bundle with them, our functionality became irrelevant, and so we had to operate this channel, which has, basically, very little content. So we decided to discontinue that.

Alfonso Day: Thank you, Luca. So, from, I'll start from, from the fix another question. A fix another was a channel that was created several years ago, because of sports rights for the Mexican soccer teams. With the evolution of VIX, VIX now has 100% of the gains on its platform, and because we have this bond with them, our fix another became irrelevant. And so we have to operate this channel, which has been basically, now, very little content. So we decided to discontinue that, and obviously there's a counting impact on revenue, but an equivalent superior adjustment on Navidad. So it was margin of creative, and it didn't impact the client.

Speaker Change: Thank you, Lucca and Francisco. I'll start from the Pixonado question. Pixonado was a channel that was created several years ago because of sports rights for the Mexican soccer teams.

Speaker Change: with the evolution of VIX.

Speaker Change: VIX now has 100% of the games on its platform, and because we have this bundle with them, our functionality became irrelevant, and so we had to upgrade this channel, which has basically now very little content.

Francisco Valim: And obviously, there's a counting impact on revenue, but an equivalent superior adjustment on EBITDA. So it was margin-operated, and it didn't impact the client. So it was something that... We should have done as soon as we lost the right to soccer in Mexico, and we had full coverage using VIX, VIX.com. So, in essence, that channel was not contributing any value, and it was a money-losing type of

Speaker Change: So, we decided to discontinue that, and obviously, there's a counting impact on revenue, but an equivalent, superior adjustment on EBITDA, so it was margin-operated, and it didn't impact the client. So, it was something that...

Alfonso Day: So it was; it was something that we should have done as soon as we lost the rights for soccer in Mexico. And we have full coverage using VIX, VIX's platform. So, in essence, if that channel was not contributing any value, and it was a money-losing type of thing. Yes.

Speaker Change: We should have done as soon as we lost the rights for soccer in Mexico, and we have full coverage using VIX, VIX's platform.

Speaker Change: So in essence if that channel was not contributing any value and it was a money-losing

Francisco Valim: Okay, on the... Competitiveness of the market. So I think that in every telecom market, price is adjusted by inflation. It happens at some rate, okay?

Alfonso Day: Okay, on the competitiveness of the market. So, I think that in every telephone market, prices adjusted by inflation. They happened at some rate, okay. While we haven't been seen here in Mexico for many years, is that we were able to pass through everything along. As markets become more stabilized, you know, typically what we do is we try to upsell and upgrade clients in terms of products, in terms of speeds, in terms of additional products. So we have all of those, all of the above, in place. And that's what we think will generate more value to our customers, but also, more importantly, to, you know, you know, object our objectives to reduce children, make sure our clients have the best possible service in Mexico, the only company that can provide the content and quality of network that we provide.

Speaker Change: Type of thing, yes.

Speaker Change: Okay, on the...

Speaker Change: competitiveness of the market. So in, I think that in every telecom market prices adjusted by inflation, they happen at some rate.

Francisco Valim: What we haven't been seeing here in Mexico for many years is that we were able to pass everything along. As markets become more stabilized, you know, typically, what we do is try to upsell and upgrade clients in terms of products, in terms of speeds, in terms of additional products. So we have all of those, and all of the above in place. And that's what we think will generate more value for our customers.

Speaker Change: Okay, what we haven't been seeing here in Mexico for many years is that we were able to pass through everything along.

Speaker Change: As markets become more stabilized, you know, typically what we do is we try to upsell and upgrade clients in terms of products, in terms of speeds, in terms of additional products. So we have all of those, all of the above in place.

Francisco Valim: But also, more importantly, our objective is to reduce churn and make sure that our clients have the best possible service. In Mexico, the only company that can provide the content and quality of the network that we provide is us. Everybody else has different content, and our network is comparable to most of our competitors in the areas where it matters. So we see this evolving. What I'm saying is, I don't know if we are going to be able to pass through 100% of inflation in the years to come, but what we are aiming for is to increase revenue per consumer, or in other words, increase average output using additional services, more products, and more services.

Speaker Change: And that's what we think will generate more value to our customers, but also more importantly, our objective is to reduce churn and make sure our clients have the best possible service.

Lucca R. Brendim: All very clear; thank you for the answers.

Speaker Change: In Mexico, the only company that can provide the content and quality of network that we provide is us. Everybody else has different content, and our network is comparable to most of our competitors in the areas where it matters.

Alfonso Day: It's all with us. Everybody else has, you know, different content. And our network is comfortable to most of our competitors in the air. Is very mad at us. So we see this evolving. So what I'm saying is, I don't know if we're going to be able to pass through 100% of inflation in the years to come, but what we are aiming to is to increase revenue per consumer. Or in other words, increase average article using additional services, more products, and more services. All very clear. Thank you for the answers.

Speaker Change: So, we see this evolving, so...

Speaker Change: What I'm saying is, I don't know if we are going to be able to pass through 100% of inflation in the years to come, but what we are aiming to is to increase revenue per consumer, or in other words, increase average output.

Speaker Change: using additional services, more products, and more services.

Speaker Change: All very clear, thank you for the answers.

Unknown Executive: This concludes our question-and-answer session.

Unknown Executive: This concludes our question and answer session. I would like to turn the conference back over to Mr. Alfonso de Angocia for any closing remarks. Please go ahead.

Alfonso Day: I would like to turn the conference back over to Mr. Alfonso Day and go share for any closing remarks. Please go ahead. Well, thank you very much for participating in our call. We're very excited about the prospects that we see in the business. We have moved a long way, and we're very happy with what we're seeing for the near future. Enjoy your summer. And if you have any additional questions, please call us.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Alfonso Diagostia for any closing remarks. Please go ahead.

Unknown Executive: Well, thank you very much for participating in our call. We are very excited about the prospects that we see in the business. We've come a long way, and we're very happy with what we're seeing for the near future. Enjoy your summer. And if you have any additional questions, please call us. The conference has now concluded.

Unknown Executive: Well, thank you very much for participating in our call. We're very excited about the prospects that we see in the business. We have moved a long way.

Unknown Executive: And we're very happy with what we're seeing for the near future. Enjoy your summer, and if you have any additional questions, please call us.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: You may now disconnect.

Q2 2024 Grupo Televisa SAB Earnings Call

Request a DemoDemo

Grupo Televisa

Earnings