Q4 2024 Grupo Televisa SAB Earnings Call
Operator 2: Hello everybody. This is the conference operator. I am just coming in to let you know that we are waiting for more participants to dial in and that we will be starting in a couple of minutes. Please stay on the line. Good morning, everyone, and welcome to Grupo Televisa's Q4 2024 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.
Speaker Change: [music].
Good morning, everyone and welcome to Grupo Televisa's fourth quarter 2024 conference call all participants will be in listen only mode should you need assistance. Please see my conference specialist by pressing that Starkey followed by zero. Please note. This event is being recorded before we begin I would like to do.
Speaker Change: Call your attention to the press release, which explains the use of forward looking statements and applies to everything we discuss in today's call and in the earnings release I will now turn the call over to Mr. Alfonzo, Dan Dan Gorey tier.
Speaker Change: Co Chief Executive Officer of Grupo Televisa. Please go ahead Sir.
Alfonso de Angoitia: 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. Last year was marked by several milestones, both at Grupo Televisa and TelevisaUnivision, which Bernardo and I are confident will allow us to create greater value for our shareholders. In 2024, we focused primarily on 4 key goals. The first goal was to streamline the OpEx structure and to rationalize CapEx deployment at our cable company to improve our free cash flow generation. Our second goal was buying the AT&T minority stake in Sky to integrate it with izzi and attain material synergies through cost-cutting initiatives. Our third goal was to spin off our non-core sports and gaming businesses, creating a newly publicly listed company in Mexico to unlock value for our shareholders.
Speaker Change: <unk> good morning, everyone and thank you for joining us.
Speaker Change: With me today are Francisco, <unk>, CEO of cable and Sky and got them as Phillips CFO of Grupo Televisa.
Speaker Change: Last year was marked by several milestones both at Grupo Televisa, and Televisa and Univision, which Bernardo and I are confident will allow us to create greater value for our shareholders in.
Speaker Change: In 2024, and we focused primarily on four key goals.
Speaker Change: The first goal was to streamline the opex structure and to rationalize capex deployment or a cable company to improve our free cash flow generation.
Speaker Change: Our second goal was buying the AT&T minority stake in Sky to integrated with E C and obtained material synergies through cost cutting initiatives.
Speaker Change: Our third goal was to spin off our noncore sports and gaming businesses, creating a newly publicly listed company in Mexico to unlock value for our shareholders.
Alfonso de Angoitia: Our fourth goal was scaling and turning profitable our DTC business at TelevisaUnivision, while identifying opportunities to materially reduce the company's OpEx in 2025 to improve profitability and enhance its free cash flow generation. We believe we accomplished all these goals. Let me touch on each of them. First, we implemented a corporate restructuring process at our cable segment to improve profitability, optimize CapEx, increase free cash flow generation, and position us well to achieve sustainable revenue growth over the coming years. Valim is doing an amazing job at our cable company and at Sky. The measures carried out so far allowed us to improve profitability by over 300 basis points to 39% in 2024 relative to Q3 2023, and we are confident that our cable EBITDA margin will continue to expand gradually over the coming years due to ongoing efficiencies.
Speaker Change: And our fourth goal, we're scaling and turning profitable our DTC business.
Speaker Change: You said, Univision, while identifying opportunities to materially reduce the company's opex in 2025 to improve profitability and enhance its free cash flow generation.
Speaker Change: We believe we accomplished all of these goals.
Speaker Change: Let me touch on each of them first we implemented a corporate restructuring process at our cable segment to improve profitability optimize capex increased free cash flow generation and position us well to achieve sustainable revenue growth over the coming years.
Speaker Change: My name is doing an amazing job at our cable company and are at Sky.
Speaker Change: The measures carried out so far allowed us to improve profitability by over 300 basis points to 39% in 2024 relative to the third quarter of 2023, and we are confident that our cable EBITDA margin will continue to expand gradually over the coming years.
Speaker Change: Due to ongoing efficiencies.
Alfonso de Angoitia: Regarding CapEx, our cable investments were optimized by 37% to almost MXN 400 million in 2024. While our cable CapEx to sales ratio of 15.6% was 740 basis points lower than that of 2023. This streamlining in cable investments has been driven by a more disciplined subscription acquisition approach focused on value customers and a more efficient and rational expansion of our fiber network. In 2024, operating cash flow for our Cable segment, which is equivalent to EBITDA minus CapEx, was over MXN 11 billion, growing by almost 38% year-on-year and accounting for more than 23% of sales. This implies that operating cash flow margin of our Cable segment increased by around 700 basis points. Second, we integrated Sky with our Cable segment to strengthen our competitive and financial position. On this front, we reorganized the structure of the combined company, allowing us to retain top talent and optimize duplicated roles.
Speaker Change: Regarding capex, our cable investments or optimized by 37% to almost $400 million in 2024, while our cable capex to sales ratio of 15, 6% was 705th 40 basis points lower than that of 2023.
Speaker Change: This streamlining and cable investments has been driven by a more disciplined subscription acquisition approach focused on value customers and a more efficient and rational expansion of our fiber network.
Speaker Change: In 2020 for operating cash flow for our cable segment, which is equivalent to EBITDA minus Capex was over 11 billion pesos growing by almost 38% year on year and accounting for more than 23% of sales.
Speaker Change: This implies that operating cash flow margin of our cable segment increased by around 700 basis points.
Speaker Change: Second we integrated Sky with our cable segment to strengthen our competitive and financial position.
Speaker Change: On this front, we reorganized the structure of the combined company, allowing us to retain top talent and optimize duplicated roles. We also implemented synergies and efficiencies across several areas, including commercial sales commissions programming.
Alfonso de Angoitia: We also implemented synergies and efficiencies across several areas, including commercial, sales commissions, programming, IT, technology, finance, and marketing, among others. This integration has allowed us to standardize regions, sales channels, and commissions, have better customer base management, increase productivity, achieve cross-selling and upselling, improve penetration of triple-play services, and gradually reduce churn. The Sky restructuring and integration process allowed us to cut OpEx by around 10% year-on-year in 2024, while allowing our CapEx deployment of MXN 83 million decline by 44%. Sky's operating cash flow of around MXN 3.2 billion increased by 3% year-on-year and accounted for almost 21% of sales. This means that the operating cash flow margin for Sky expanded by 300 basis points year-on-year.
Speaker Change: I T technology finance and marketing among others.
Speaker Change: This integration has allowed us to standardize regions sales channels and commissions have better customer base management increase productivity at cheap cross selling and upselling improve penetration of triple play services and gradually reduce churn.
Speaker Change: The sky restructuring and integration process allowed us to cut opex by around 10% year on year in 2024, while allowing our capex deployment of $83 million declined by 44%. Therefore skies operating cash flow of our own three 2 billion pesos increased by.
Speaker Change: 3% year on year and accounted for almost 21% of sales. This means that the operating cash flow margin for sky expanded by 300 basis points year on year.
Alfonso de Angoitia: All in all, Grupo Televisa's consolidated operating cash flow was MXN 14.3 billion in 2024, growing by over 28% year-on-year and accounting for almost 23% of sales. This implies that our consolidated operating cash flow margin increased by 600 basis points year-on-year. In 2024, the OpEx and CapEx efficiencies obtained in our two consolidated businesses and a leaner corporate structure allowed Grupo Televisa to generate over MXN 10.1 billion in free cash flow. We view this as a great achievement as it represents a free cash flow yield for our consolidated operations of around 43%. Third, on 20 February 2024, we concluded the spin-off of Ollamani and its listing on the Mexican Stock Exchange. This spin-off not only streamlined Grupo Televisa's operations and simplified our asset structure, but also unlocked value for our shareholders through this new company that currently has a market cap of around $270 million.
Speaker Change: All in all Grupo Televisa's consolidated operating cash flow was 14.3 billion pesos in 'twenty 'twenty four growing by over 28% year on year and accounting for almost 23% of sales.
Speaker Change: This implies that our consolidated operating cash flow margin increased by 600 basis points year on year.
Speaker Change: In 2020 for the Opex and Capex efficiencies obtained in our two consolidated businesses and a leaner corporate structure allowed Grupo Televisa to generate over 10.1 billion peso seen free cash flow.
Speaker Change: We view this as a great achievement as it represents a free cash flow yield for our consolidated operations of our round 43%.
Speaker Change: Third on February 20th 'twenty 'twenty four we concluded the spinoff of ammonia money and its listing on the Mexican stock exchange.
Speaker Change: This spin off not only streamlined Grupo televisa's operations and simplified our asset structure, but also unlocked value for our shareholders through this new company that currently has a market cap of around $270 million.
Alfonso de Angoitia: Our fourth major milestone was to turn ViX, our streaming platform, into a $1 billion direct-to-consumer business from a revenue standpoint and turn it profitable during Q3 2024. Our DTC business is growing and scaling with our most important metrics trending in the right direction, with most of them ahead of plan. We added users and subscribers by more than 20% during the year, grew engagement, reduced churn, and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier. During H2 of the year, we already delivered the major milestones of a profitable direct-to-consumer business only 2 years after launching the service, compared to 4 to 5 years for our peers. This was only possible because of 2 main reasons.
Speaker Change: And our fourth major milestone was to turn VIX, our streaming platform into a $1 billion of direct to consumer business from a revenue standpoint, and turn it profitable during the third quarter of 'twenty 'twenty four.
Speaker Change: Our DTC business is growing and scaling with our most important metrics trending in the right direction with most of them ahead of plan.
Speaker Change: We added users and subscribers by more than 20% during the year grew engagement reduced churn and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier.
Speaker Change: Therefore during the second half of the year, we already have delivered the major milestones how about profitable direct to consumer business only two years after lounging the service compared to four to five years for our peers.
Speaker Change: This was only possible be.
Because of two main reasons the first one being we own the rights to the largest long form video library in the world in any language with over 300000 hours of durables scripted entertainment.
Alfonso de Angoitia: The first one being we own the rights to the largest long-form video library in the world in any language with over 300,000 hours of durable scripted entertainment. The second reason, we have material advantages with regards to original content cost production, as we have a fully vertically integrated system in a very efficient location. We have a great and very efficient factory of content in Spanish. Each year, we produce around 100,000 hours of long-form video content across news, sports, and scripted entertainment. Achieving this milestone was an essential step in our transformational phase of TelevisaUnivision. Now, the next big opportunity for value creation is to build on this foundation through further integration and operational optimization of the business. On this front, I'm glad to share with you that we have already laid the foundation for further integration and efficiencies within TelevisaUnivision.
Speaker Change: And the second reason, we have material advantages with regards to original content cost production as we have a fully vertically integrated system in a very efficient location, we have a great and very efficient factory of content in Spanish each.
Speaker Change: Each year, we produce around 100000 hours of long form video content across news sports and scripted entertainment.
Speaker Change: Achieving this milestone was an essential step in our transformational phase of Televisa and Univision.
Speaker Change: Now the next big opportunity for value creation is to build on this foundation through further integration and operational optimization of the business.
Speaker Change: On this front I'm glad to share with you that we have already laid the foundation for further integration and efficiencies within Televisa and Univision.
Alfonso de Angoitia: In late December, we executed an optimization program, reducing our headcount by around 1,000 employees or about 8% of global workforce. Combined with other efficiency measures, this will reduce our 2025 operating expenses at TelevisaUnivision by over $400 million. 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: In late December we executed and optimization program, reducing our head count by around 9000 employees or about 8% of global workforce combined with other efficiency measures. This will reduce our 2025 operating expenses at Televisa and Univision.
Speaker Change: By over $400 million.
Speaker Change: Having said that let me turn the call over to Aleem as he will discuss the operating and financial performance of our consolidated assets. Thank.
Francisco Valim: Thank you, Alfonso. Good morning, everyone. In 2024, Grupo Televisa's consolidated revenue reached MXN 62.3 billion, representing a year-on-year decline of 6%, while operating segment income reached MXN 23.2 billion, equivalent to a year-on-year decrease of 7.5%, mainly driven by lower revenue at Sky. Turning to our Q4 results, consolidated revenue reached MXN 15.2 billion, representing a year-on-year decrease of 6.9%, while operating segment income reached MXN 5.6 billion, equivalent to a year-on-year contraction of 4.4%, also caused primarily by the factor that I have mentioned. Now, let me walk you through the operating and financial performance of our cable operations. We ended December with a network of 19.9 million homes after passing around 73,000 new homes during the quarter or over 365,000 new homes during the year.
Aleem: Thank you Alfonso good morning, everyone in 'twenty 'twenty four Grupo Televisa's consolidated revenue reached $62 3 billion pesos, representing an year on year decline of 6%. While operating segment income reached to $23 2 billion pesos equivalent to an year on year decrease of 7.5% mainly driven by.
Speaker Change: Lower revenue at Sky.
Turning to our fourth quarter results consolidated revenue reached 15.2 billion pesos representing year on year on year decrease of six 9%. While operating segment income reached $5 6 billion pesos equivalent to a neuro neuro contraction of 4.4% also caused primarily by the fact that I have mentioned.
Speaker Change: Now, let me walk you through the operating and financial performance of our cable operations. We ended December with a network of $19 9 million homes. After passing around 73000, new homes during the quarter were over 365000, new homes during the year.
Francisco Valim: During Q4, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate in line with our historical average of 2% per month, which we view as solid. However, more intense promotional activity by some of our competitors led us to deliver lower than expected gross adds. As a result, we lost 859,000 broadband subscribers and 95,000 video subscribers in Q4. However, so far this year, we have already seen an uptick in gross adds while we keep working on churn reduction. This should contribute to stabilizing and potentially growing slightly our cable subscriber base going forward.
Speaker Change: During the quarter, we continued to execute our strategy to focus on value customers rather than volume, while you're working on customer retention and satisfaction.
Speaker Change: This contributed to achieving our monthly churn rate in line with our historical average of 2% per month.
Speaker Change: <unk>, which we view as solid however, more intense promotional activity by some of our competitors led us to deliver lower than expected gross adds as a result, we last night 85, 9000 broadband subscribers in the 95000 video subscribers in the fourth quarter.
However, so far this year, we have already seen that uptick in gross adds while we keep working on churn reduction.
Speaker Change: This should contribute to a stabilizing and potentially growing slightly or a cable subscriber base going forward.
Francisco Valim: During the quarter, net revenue from our television operations of MXN 10.6 billion, which accounted for around 89% of total cable revenue, decreased by 2.3% year-on-year, mainly because we lost revenue given the cancellation of Aficionados' video package during Q2 2024. Net revenue from our enterprise operations of MXN 1.3 billion, which accounted for around 11% of total cable revenue declined by 6.3% year-on-year, as in Q4 2023, we were concluding an important government contract, which translated into higher revenue streams. Moving on to Sky's operating financial performance. During Q4, we lost 270,000 revenue-generating units at Sky, mostly coming from prepaid subscribers that had not been recharging their service. Sky's Q4 revenue of MXN 3.7 billion fell by 12.4% year-on-year, mainly driven by a lower subscriber base.
Speaker Change: During the quarter net revenue from our aviation operations of 10.6 billion pesos, which accounted for around eight 9% of total cable revenue decreased by two 3% year on year, mainly because we lost revenue given the cancellation of a fixed fernando's video package during the second quarter of 2024.
Speaker Change: Net revenue from our enterprise operations of $1 3 billion pesos, which accounted for around 11% of total cable revenue declined by six 3% year on year as in the fourth quarter of 2023, we're concluding an important government contract, which translated into higher revenue streams.
Speaker Change: Moving on to Sky is operating and financial performance.
Speaker Change: During the fourth quarter, we lost 270000 revenue generating units at Sky, mostly coming from prepaid subscribers that had not been recharging their service.
Sky's fourth quarter revenue of $3 7 billion pesos fell by 12.4% year on year, mainly driven by a lower subscriber base to sum up segment revenue of $15 6 billion pesos fell by five 2% year on year, while operating segment income of $5 6 million pairs was declined by 4.4% are.
Francisco Valim: To sum up, segment revenue of MXN 15.6 billion fell by 5.2% year-on-year, while operating segment income of MXN 5.6 billion declined by 4.4%. Our operating segment income margin of 36% expanded by 30 basis points year-on-year, mainly driven by the efficiency measures that we have been implementing since Q3 2023. Regarding CapEx deployment, our total investment of MXN 2.7 billion during Q4 fell by more than 27% year-on-year. Our CapEx to sales ratio of 17.3% was over 500 basis points lower than that of Q4 2023. Finally, operating cash flow for Cable and SKY, which is equivalent to EBITDA minus CapEx, was MXN 2.9 billion in Q4, increasing by 34% year-on-year and accounting for 18.7% of sales. This basically means that our operating cash flow margin increased by 540 basis points year-on-year.
Speaker Change: Operating segment income margin of 36% expanded by 30 basis points year on year, mainly driven by the efficiency measures that we have you been implementing since the third quarter of 2023.
Speaker Change: Regarding capex deployment, our total investment of $2 7 billion pesos during the fourth quarter fell by more than 27% year on year. So our capex to sales ratio of 17, 3% was over 500 basis points lower than that of the fourth quarter of 420, 23, finally operating cash flow for cable and Sky, which is.
Equivalent to EBITDA minus Capex was $2 9 billion pesos in the fourth quarter decreasing by 34% year on year and accounting for 18, 7% of sales. This basically means that our operating cash flow margin increased by 540 basis points year on year. Thank you volume as I mentioned Youre doing an amazing.
Alfonso de Angoitia: Thank you, Valim. As I mentioned, you're doing an amazing job at izzi and Sky. Now let me walk you through TelevisaUnivision's 2024 results released yesterday morning. The company's full-year revenue increased by 3% year-on-year to $5.1 billion, for a fourth consecutive year of top-line growth. Excluding the impact from the depreciation of the Mexican peso, TelevisaUnivision's full-year revenue increased by 4%, with revenue in the US growing by 2% and revenue in Mexico increasing by 8%. Full-year adjusted EBITDA of $1.6 billion, declined by 3% year-on-year, but very importantly reflected a profitable direct-to-consumer business in ViX's second full year of operations. Excluding the impact from the depreciation of the Mexican peso, TelevisaUnivision's full-year adjusted EBITDA fell by 1%.
Job at easy and Sky.
Speaker Change: Now, let me walk you through Televisa and Univision <unk> 'twenty 'twenty four results released yesterday morning Nik.
Speaker Change: The company's full year revenue increased by 3% year on year to $5.1 billion for a fourth consecutive year of topline growth.
Speaker Change: Excluding the impact from the depreciation of the Mexican peso. The Levy said Univision full year revenue increased by 4% with revenue in the U S growing by 2% and revenue in Mexico, increasing by 8%.
Speaker Change: Full year, adjusted EBITDA of $1.6 billion and declined by 3% year on year, but very importantly reflected a profitable direct to consumer business in VIX. This second full year of operations.
Speaker Change: Excluding the impact from the depreciation of the Mexican peso Televisa Univision <unk> full year adjusted EBITDA fell by 1%.
Alfonso de Angoitia: The slight decline in adjusted EBITDA was driven primarily by investments in the expansion of our third-party advertising sales business in Mexico and higher sports-related costs with the Copa América tournament in the US and Mexico, the Olympic Games in Mexico, and the Super Bowl in the US. Daniel Alegre, our new CEO at TelevisaUnivision, is doing an amazing job. We're convinced that he will deliver great results in 2025. In 2024, TelevisaUnivision refinanced $2.1 billion of debt maturing in 2026 and paid down $150 million in debt using proceeds from the sale of non-core assets. TelevisaUnivision's net debt declined by around $400 million. Moving on, consolidated capital expenditures for Grupo Televisa were $493 million during 2024, significantly below our initial guidance of $793 million due to a more efficient CapEx deployment, inventory management, and because the Mexican peso was stronger than initially expected.
Speaker Change: The slight decline in adjusted EBITDA was driven primarily by investments in the expansion of our third party advertising sales business in Mexico, and higher sports related costs with the Copa America tournament in the U S and Mexico, the Olympic games in Mexico, and the Super Bowl in the U S.
Speaker Change: Yes.
Speaker Change: Neil <unk>, our new CEO at Televisa Univision is doing an amazing job with.
Speaker Change: We're convinced that he will deliver great results in 2025.
Speaker Change: In 2020 for Televisa and Univision refinanced $2.1 billion of debt maturing in 2026 and paid down $150 million in debt using proceeds from the sale of noncore assets delivered.
Speaker Change: Televisa and Univision net debt declined by around $400 million.
Speaker Change: Moving.
Speaker Change: Being on consolidated capital expenditures for Grupo Televisa were $493 million during 'twenty 'twenty four significantly below our initial guidance of $793 million.
Speaker Change: Due to a more efficient capex deployment inventory management and because of the Mexican peso was stronger than initially expected.
Alfonso de Angoitia: For 2025, our CapEx budget of MXN 665 million considers growing our network footprint by passing close to 1 million homes, increasing our subscriber base, and supporting growth. To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies, and ongoing integration between izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision will allow us to create greater value for our shareholders. At TelevisaUnivision, now that our direct-to-consumer business has gained scale and achieved profitability, we are confident that additional value can be unlocked through further integration, optimization, and unification of both our content business and our geographies. Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A?
Speaker Change: For 2025, our Capex budget of $665 million considers growing our network footprint by passing close to 1 million homes, increasing our subscriber base and supporting growth.
Speaker Change: To wrap up but none of them and I am confident that our focus on value customers efficiencies and ongoing integration between easier and sky at Grupo Televisa and further integration and operational optimization that Televisa and Univision will allow us to create greater value.
Speaker Change: For our shareholders.
Speaker Change: At Televisa and Univision now that our direct to consumer business has gained scale and achieved profitability. We are confident that additional value can be unlocked through further integration optimization and unification of both our content business and our geographies.
Speaker Change: Now we're ready to take your questions is how could you. Please provide instructions for the Q&A.
Operator: The first question comes from Carlos de Legarreta with Itaú. Please go ahead.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you'd like to withdraw. Your question. Please press Star then two at this.
Speaker Change: Time, we'll pause momentarily to assemble our roster.
Speaker Change: The first question comes from Carlos like Hirata with Italian. Please go ahead.
Carlos de Legarreta: Thank you. Good morning, Alfonso and team. The first one is, can you provide color on the lower than expected CapEx allocation, and should we expect a similar level going forward? You did mention that you expect to be a 1 million homes passed in 2025, so I just want to understand how that plays out.
Speaker Change: Thank you good morning.
Speaker Change: Well first one is can you provide color on the lower than expected capital allocation each week.
Speaker Change: Naval going forward. Thank you.
Speaker Change: Did mentioned that you expect to be a 1 million.
Speaker Change: So I just want to understand how that plays out.
Carlos de Legarreta: The second one, can you share your thoughts on M&A within the cable space at this point in time? Thank you.
Speaker Change: And the second one is can you.
Speaker Change: Your thoughts on M&A.
Speaker Change: At this point in time, thank you.
Alfonso de Angoitia: Hi, Carlos. As to your second question, as you know, we tried for a long time to consolidate the industry. It is an industry that needs a market repair. A four-player market in this kind of industry and in a market such as Mexico is not ideal. We have not been successful, as is public, and we're now focused on operating and improving our companies. As to your second question that has to do with CapEx, as we mentioned, 2024, our consolidated CapEx was MXN 493 million. It was significantly below our initial guidance. As I mentioned, it is due to a more efficient CapEx deployment, inventory management, and also because the Mexican peso was stronger than initially expected.
Carlos Hirata: Hi, Carlos.
Carlos Hirata: No. After your second question is no.
Speaker Change: We tried for a long time to consolidate the industry. It is an industry that need.
Carlos Hirata: The market repair.
Carlos Hirata: A four player market in this kind of.
Carlos Hirata: Of industry in new markets, such as Mexico is not ideal.
Carlos Hirata: We have not been successful.
Carlos Hirata: Is public.
Carlos Hirata: We're now focused on operating and improving our outcomes.
Carlos Hirata: Our company. After your second question that has to do with Capex.
Carlos Hirata: As we mentioned 2024.
Carlos Hirata: Consolidated Capex was.
Carlos Hirata: $493 million.
Carlos Hirata: Significantly below our initial guidance.
Carlos Hirata: And as I mentioned it is due to a more efficient capex deployment.
Carlos Hirata: Inventory management and also because of the Mexican peso was stronger than initially expected.
Alfonso de Angoitia: For 2025, our CapEx budget is MXN 665. As you mentioned in your question, we are going to pass close to 1 million homes with fiber. I'll ask Valim to expand on this.
For 2025, our Capex budget is 665 and as you mentioned in your question we are going to.
Carlos Hirata: Close to 1 million homes with fiber and I will ask Felipe to expand on this.
Francisco Valim: I think that just to clarify what Alfonso just said, a little bit more detail is the fact that we have used a lot of the inventory that we had accumulated over the past in this 2024. We have not done anything that was absolutely essential to keep on growing the company. Most of the reduction came from the opportunity that we saw in synergies with Grupo Televisa and Sky in combining all of the infrastructure that we had. Plus, obviously, we had a little less gross add than we were planning on having, which also reduced the CapEx by some. All in all, plus besides that, we also, in our B2B business, we are focusing on more higher return clients. CapEx was more adjusted than also we were planning.
Speaker Change: So I think that.
Carlos Hirata: To quantify.
Carlos Hirata: What I'll also just add a little bit more detail is the fact that we have.
Carlos Hirata: Used a lot of the inventory, though we had accumulated over the past in this trade and tariff war, we haven't that we have not done.
Carlos Hirata: There was absolutely essential to keep on growing the company, but most of the reduction came from the opportunity that we saw in synergies with Grupo Televisa and sky and combining all of the infrastructure that we had.
Carlos Hirata: Plus obviously, we had a little less gross adds than we were planning on having which also reduced capex.
Carlos Hirata: Bye bye.
Carlos Hirata: Well all in all a plus besides that we also in our B to B business, we are focusing on more higher return clients. So capex was more adjusted denim. We're also youre planning and with the $655 million.
Francisco Valim: With the MXN 665 million plan for 2025, we will keep on growing our subscriber base and enhancing the network, just like we were describing, with more homes passed and obviously improving the network to the quality that the clients demand.
Carlos Hirata: Plan for 2020 five we will keep on growing our subscriber base.
Carlos Hirata: Enhancing the network just like we're describing with more homes fast and obviously improving the network the quality that the clients are the map.
Carlos Hirata: Okay.
Carlos de Legarreta: Thank you, Alfonso and Valim. Would it be possible to know what kind of exchange rate are you forecasting for 2025?
Carlos Hirata: Thank you. Thank you all for example in.
Carlos Hirata: Would it be possible to know what kind of a.
Carlos Hirata: Exchange rates are you putting.
Carlos Hirata: 35.
Alfonso de Angoitia: 21.5. Pardon? Sorry. 20.5.
Carlos Hirata: 21 five.
Carlos Hirata: Great.
Francisco Valim: 20.5.
Great. Thank you and good luck.
Carlos de Legarreta: 20.5. Okay.
Okay.
Francisco Valim: Yeah.
Carlos de Legarreta: Yeah. Makes sense. Thank you.
Okay.
Carlos Hirata: Thank you.
Operator: The next question comes from Alejandro Azar with GBM. Please go ahead.
Speaker Change: The next question comes from Alejandro Azar with G. P. M. Please go ahead.
Alejandro Azar: Hi, everyone. Good morning. Thank you for taking my questions. The first one is if you can give more color on the competitive landscape in the cable segment, especially on the disconnections you had in Q4. On that same front, I was amazed that how your clients are lower, but you are expanding your free cash flow. My question on that is how do you balance the user base, I mean, between quality clients with lower churn and the ones that are more sensitive to price? I would save the other questions on TelevisaUnivision. Thanks.
Alejandro Azar: Hi, Hi, everyone and good morning, and thank you for taking my questions. The the first one is on if you can give more color on the competitive landscape in the cable segment are especially on the Disconnections you had in the fourth quarter and and on that same front.
Speaker Change: I was amazed that how.
Speaker Change: You are low how your clients are lower but you are expanding your free cash flow. So my question on that is how do you balance the user base I mean between quality clients with lower churn and the ones that are more sensitive sensitive to price and on.
Speaker Change: And the other what I would I would save the other questions on the legacy of innovation.
Speaker Change: Thanks.
Alfonso de Angoitia: Francisco Valim, can you take the first question?
Speaker Change: Hey, Jeff first question. Thank you cant go parcel so I think that the two year quite a we are focusing on higher value customers. We are the ones that are we're more establishing.
Francisco Valim: Thank you. Thank you, Alfonso. I think that to your point, we are focusing on higher value customers. We are the ones that were more established in the market from the very beginning, and we have a significant amount of customers that are very loyal to us and where churn is very low. Now, obviously, with new acquisitions comes a little bit more churn, and we see that happen in our subscriber base but also in our competitors' subscriber base. I think that to your point, we think we can improve our gross adds in this Q1 and Q2 2025 by some changes we've made internally. We think we needed a little trimming on how our sales channels were operating and the improvement.
Speaker Change: Established in the market from the very beginning and we have significant a significant amount of customers that are very very loyal to us and where churn.
Speaker Change: Very very low.
Speaker Change: New acquisitions comes a little bit more churn and we see that happening in our subscriber base, but also in our in our competitive subscriber base.
Speaker Change: And I think that to your point.
Speaker Change: We think we can improve our.
Speaker Change: Our gross ads in this.
Speaker Change: First quarter and second quarter of 2025 by by some changes we've made internally, we think we needed the little training on how our sales channels were operating.
Speaker Change: And the improvement and we anticipate that we will have.
Francisco Valim: We anticipate that we'll have just a little growth to more growth towards the end of the year 2025 because of the changes we have implemented internally. We build on top of the existing subscriber base that, like I said, is very loyal. In terms of how we've managed to increase cash flow generation despite the fact that we have a churn and therefore revenue decline, is because we are optimizing internally all of our processes. We were able to integrate and synergize with Sky and Grupo Televisa's infrastructure. All of those things, they are reflected on the amount of cash flow we were able to generate this year. Again, to your point, we think we need to go back to grow subscriber base, but always having in mind that we are not willing to just sacrifice growth at any cost.
Speaker Change: A little girl.
Speaker Change: Two more girl and towards the end of the year 2025, because of the changes we have implemented internally and we build on top of the existing subscriber base.
Speaker Change: Like I said, it's very reliant in terms of how we manage to increase cash flow generation. Despite the fact that we have Jordan.
Speaker Change: Therefore revenue decline is because we are optimizing internally all of our processes, we were able to integrate and synergize with sky in Grupo Televisa infrastructure. So all of those things. They are reflected on the amount of cash flow, we were able to generate this year and but.
Speaker Change: To your point, we think we need to go back to growing subscriber base, but always have any mine that we are not willing to just sacrifice growth at any cost we think that growing at any cost not only hurts the company in the short but also in the long run.
Francisco Valim: We think that growing at any cost not only hurts the company in the short but also in the long run.
Alejandro Azar: Valim, on that front, you had a strong recovery of working capital, but now that you are planning to grow again, how should we think about that? My other question would be on TelevisaUnivision. You had really good years in terms of free cash flow generation in 2024. You announced savings. How should we think about the deleverage base of TelevisaUnivision in 2025, in terms of an acceleration? With that in mind, in terms of monetization of this asset with the regulation in the US, would you analyze perhaps a team up with other players instead of an IPO, or you guys still prefer the IPO route? Thank you, and I'm sorry for the several questions.
Speaker Change: But on on that front, you know you had a a recovery a strong recovery of working capital, but now that you are planning to grow again, how should we think about that and my other question would be on Televisa and Univision you had a I.
Speaker Change: Really good years in terms of free cash flow generation in 2020 for your announced savings AR, how should we think about the deleverage base off of that maybe you said your Navy shining in 2025 are in dams overnight.
Speaker Change: Okay.
Speaker Change: And with that in mind in terms of monetization of this asset with with very good relation in the U S would you analyze perhaps at team up with other players instead of an IPO or or are you guys still prefer the IPO route. Thank you and I'm sorry for the several questions.
Francisco Valim: I'll finish up the cable discussion first. The reason why we reduced the working capital is just basically because of, like I said, inventory and some working capital that we had that was in process. It shouldn't impact at all the growth, and working capital should be basically flattish when compared to the existing one.
Speaker Change: So I'll finish up.
Speaker Change: Cable discussion first so the reason why we did reduce their working capital is just basically because of a like I said inventory and some and some working capital that we had that was in process, but it shouldn't impact at all the growth in working capital should be basically flattish when compared to the existing one.
Alfonso de Angoitia: As to your second question, we're actively pursuing ways of deleveraging TelevisaUnivision, as you saw in 2024. It is one of our top priorities. We have no maturities in 2026 as we refinanced those maturities, so that gives us space. TelevisaUnivision is a very attractive business. We are crystallizing that attractiveness of the business when you see the success of ViX, of our streaming service, which is gaining ground. It's EBITDA positive, so it's profitable starting in Q2 of last year. We have gained ground in terms of subscribers. We have also made improvements in terms of MAUs, in terms of engagement, in terms of growing our advertising sales on the platform. We're very happy with the prospects of our streaming service. You would add, this is now a profitable business, and it will become more profitable this year.
Speaker Change: And as to your second question, we're actively pursuing ways of deleveraging Televisa and Univision as you saw in 2024.
Speaker Change: Yes.
Speaker Change: One of our top priorities, we have no maturities in 2026.
Speaker Change: We refinanced both maturities so that gives us space.
Speaker Change: At Televisa and Univision is a very attractive business.
Speaker Change: We are crystallizing that.
Speaker Change: And this is a business when you see the success of <unk> of our streaming service.
Speaker Change: Which is gaining ground.
Speaker Change: Yes.
Speaker Change: It's EBITDA positive so it's profitable starting in the second quarter of last year. We have gained ground in terms of subscribers. We have also made improvements in terms of and.
Speaker Change: You may use in terms of engagement in terms.
Speaker Change: <unk>.
Speaker Change: Growing our advertising sales on the platform. So we're very happy.
Speaker Change: With the prospects of our streaming service.
Speaker Change: This is this is now a profitable business and it will be more profitable this year.
Alfonso de Angoitia: You would ask why, and it's because it's based on our library. As you know, we have the largest library of Spanish-speaking content in the world, more than 300,000 hours. Also we have the largest and most successful factory of content in Spanish in the world, based in Mexico, where we can produce large quantities of high-quality content at very attractive costs. We're moving in the right direction, and we will actively pursue alternatives in terms of deleveraging the company. As to consolidation of the industry, this is a very attractive asset for anybody, for any media company or other company. I would highlight that the most important thing that came out of the election cycle in the United States is that it made clear the power of our audience.
Speaker Change: I wanted to ask why and it's because it's based on our.
Speaker Change: Our library as you know we have the largest library of Spanish speaking content in the world more than 300000 hours.
Speaker Change: And also we have the largest and most successful factory of content in Spanish in the world based in Mexico.
Speaker Change: Where are we can produce large quantities of high quality content.
Speaker Change: Gary attractive costs.
Speaker Change: Sure.
Speaker Change: We are moving in the right direction, and we will actively pursue.
Speaker Change: In terms of deleveraging the company.
Speaker Change: As to consolidation of the industry. I mean, this is a very attractive asset for anybody or any media company or other companies.
Speaker Change: I would highlight that the most important thing that came out of <unk>.
Speaker Change: Election cycle in the United States is that.
Speaker Change: It.
Speaker Change: Made clear that the.
Speaker Change: Our of our audience.
Alfonso de Angoitia: Hispanics were widely credited with determining the outcome of the election, and that becomes a very attractive asset for anybody in the United States and elsewhere. It's a very attractive asset, and let's see in the near future what comes up and happens.
Speaker Change: Hispanics were widely credited with determining the outcome of the election and.
Speaker Change: That becomes a very attractive.
Speaker Change: Asset for antibody.
Speaker Change: In the United States and elsewhere, so, it's a very attractive asset and let's see.
Speaker Change: In the near future what.
Speaker Change: What comes out of the App and happens.
Alejandro Azar: Thank you both.
Thank you both.
Operator 2: The next question comes from Gustavo Farias with UBS. Please go ahead.
Speaker Change: The next question comes from Gustavo Perez with UBS. Please go ahead.
Gustavo Farias: Hi, everyone. Thanks for taking questions. Two from my end. The first one, if you could comment, if you see additional room for synergies in OpEx and CapEx savings from Sky operation, and how much of it you expect for 2025? My second question, if you could comment regarding TelevisaUnivision on the DTC business. Now that the business achieved breakeven on Q3, how do you see growth perspectives versus profitability going forward? Thanks.
Gustavo Perez: Hi, everyone. Thanks for taking my questions.
Speaker Change: Two from my end.
The first one.
Gustavo Perez: You could call them.
Gustavo Perez: What you see.
Gustavo Perez: See additional room.
Gustavo Perez: From synergy.
Gustavo Perez: Opex and Capex savings from Sky operation.
Gustavo Perez: How much of that.
Gustavo Perez: Fortunately fives.
Gustavo Perez: And my second question.
Gustavo Perez: The comment regarding.
Gustavo Perez: On the DTC business.
Gustavo Perez: Bob.
Gustavo Perez:
Gustavo Perez: Hum.
Gustavo Perez: Hum.
Gustavo Perez: Q3.
Gustavo Perez: Well first of all.
Gustavo Perez: Awesome.
Gustavo Perez: Going forward. Thanks.
Gustavo Perez: Yeah.
Alfonso de Angoitia: Yeah. I'll ask Valim to take your question about synergies, and what has to do with Sky and the integration of Sky with izzi, and then I'll take the second question about TelevisaUnivision.
Gustavo Perez: Yeah, Alaska.
Speaker Change: To take your question about synergies and what has to do with the Sky and the integration of Sky win.
Speaker Change: And then I will take the second question about Televisa and Univision. So we will see 'twenty 'twenty four or five.
Francisco Valim: We will see in 2025 the full impact of the synergies we're able to generate with Sky and also Grupo Televisa in terms of a back office. I think that will be materialized in both EBITDA and cash flow. Obviously, we are impacted by the industry decline of DTH or the satellite business, which always is an issue. In terms of the cost structure, we will be linear in 2025 than we were in 2024, given the synergies that we have implemented and still are in the process of implementing.
Speaker Change: Full impact of the synergies, we're able to generate with Sky and also group with Televisa in terms of our back office and I think that then will be materializing in both EBITDA and cash flow. Obviously, we are impacted by the <unk>.
Speaker Change: An industry decline of Dth.
Speaker Change: Or are the satellite business.
Speaker Change: Which always always is an issue but in terms of the cost structure, we will be linear in 2025, and we didn't do what we were in 2024.
Given the synergies that we are implemented we will have implemented and they still are in the process of implementing.
Alfonso de Angoitia: Gustavo, to your second question that has to do with ViX, with our streaming service, with our direct-to-consumer business. As I mentioned, we're very happy with what we have seen in terms of the development of that business. It has evolved into a healthy, growing, profitable business. It leads us to improve in the efficiencies between linear and streaming. What we see in 2024 is that ViX, in the second year of operations, produced $1 billion of revenue. This is a pretty new business for us. It was the top priority for us to launch the streaming service. It has become a billion-dollar business in its second year of operations. We're very happy with that and also with the fact that in this second year of operation, it became an EBITDA positive business. It's profitable now.
Speaker Change: And I will start with your second question that has to do with.
Speaker Change: VIX with our streaming service with our direct to consumer business as I mentioned, we're very happy with what we have seen in terms of the development of that business.
Speaker Change: It has evolved into a healthy growing profitable business.
Speaker Change: So we were.
Speaker Change: It leads us to improving efficiencies.
Speaker Change: Between linear and streaming so.
Speaker Change: What do we see in 'twenty 'twenty four is that the.
Speaker Change: In our <unk> in the second year of operations.
Speaker Change: Reduced $1 billion of revenue. So this is creating new business for us it was the top priority for us to manage the streaming service.
Speaker Change: And.
Speaker Change: It has become a billion dollar business.
Speaker Change: In its second year of operations so that.
Speaker Change: We're very happy with that and also with the fact that in this second year of operation and became.
Speaker Change: And EBIT positive business, who is profitable now.
Alfonso de Angoitia: We ended the year with over 20% growth in terms of MAUs. We're growing in terms of total streaming hours. We're monetizing those streaming hours through the sale of advertising. We also grew ARPU. In general, I would say that we're very happy with ViX. I would say that you will see a more profitable ViX in 2025.
Speaker Change: We ended the year with over 20% growth in terms of.
Speaker Change: They use.
Speaker Change: And.
Speaker Change: So we're growing in terms of total streaming hours.
Speaker Change: And we're.
Speaker Change: We're monetizing those.
Speaker Change: Streaming hours through the same.
Speaker Change: Advertising, we also grew our.
Speaker Change: So in general I would say that.
Speaker Change: We're very very happy with.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: I would say that you will see them more profitable.
Speaker Change: In 2025.
Gustavo Farias: Thanks, guys.
Thanks, guys.
Speaker Change: Okay.
Speaker Change: Yeah.
Operator: The next question comes from Eduardo Nieto with JP Morgan. Please go ahead.
Eduardo: The next question comes from Eduardo <unk> with J P. Morgan. Please go ahead.
Eduardo Nieto: Good morning. Thanks for taking my question. I just have a quick one. You seem to have a pretty large cash position at this moment. You generated healthy cash flows. Just wondering if you plan to use that for debt reduction, as on a gross basis, leverage is quite high at the moment, or anything you can share as to what your priorities are for the deployment of this cash, particularly given that you have bond maturities in 2025 and 2026. Thank you.
Eduardo: Good morning, Thanks for taking my question I just have a quick one.
Eduardo: You seem to have a pretty large cash position at the at this moment you generate a healthy cash flows just wondering if you plan to use that for debt reduction on a gross basis leverage is quite high at the moment or and if you guys care as to what your priorities are for the deployment of this cash, particularly given that you have bond maturities in 2020.
Speaker Change: In 2026.
Alfonso de Angoitia: Yeah. Thank you for your question, Eduardo. I'll ask Carlos to answer that one.
Yeah.
Speaker Change: Yeah. Thank you for.
Carlos Hirata: For your question, there's a lot of the Alaska Carlos to answer that one yes.
Carlos Phillips Margain: Eduardo. As you mentioned, we have a pretty strong liquidity position in our balance sheet. We have approximately MXN 2.3 billion equivalent in cash. As you mentioned, our debt maturity is pretty long dated. The average weighted life is around 15 years. We do have some dollar debt that's maturing this year and next year. Our intention and our focus, as we've mentioned in previous calls, has been to focus on free cash flow generation and deleveraging. We are intending to use part of our cash to reduce the gross leverage. Our net leverage is 2.5x, which is still pretty strong. We have a very high commitment to maintain our investment-grade ratings. We will use the excess cash that we generated in 2024 to address these upcoming maturities.
Speaker Change: Mentioned, we have a pretty strong liquidity position and our balance sheet. We have approximately $2 3 billion equivalent in cash as you mentioned our debt maturities three pretty long dated the average weighted life is around 15 years, but we do have some dollars.
Carlos Hirata: During this year and next year.
Carlos Hirata: Our intention and our focus as we've mentioned in previous calls have been to focus on free cash flow generation and deleveraging. So so we are intending to use a part of our cash flow to reduce our gross leverage.
Carlos Hirata: Net leverage is two five times, which is which is still pretty.
Carlos Hirata: Pretty pretty strong we have a very high commitment to maintain our investment grade ratings. So we will use the excess cash that we generated in 2024 to address these upcoming maturities.
Alfonso de Angoitia: Can you touch, Carlos?
Carlos Hirata: Can you touch.
Eduardo Nieto: Thank you.
Alfonso de Angoitia: Can you also expand on our strategy or the strategy that we followed last year in terms of hedging?
Carlos Hirata: Okay can you also expand on our strategy is a strategy that we followed last year in terms of hedging.
Carlos Phillips Margain: Yes, that's a very good point, Alfonso. These maturities that we have due 2025 and 2026, Eduardo, these are dollar bonds, but we hedged them into peso exposure last year. We did that before the election, so the average exchange rate at which we have those dollar exposures is around MXN 18.3. That's also an important point. We'll be using pesos from our cash balance to pay down these bonds and maintain our dollar balance in cash.
Carlos Hirata: That's a very good point.
Carlos Hirata: These maturity that we have due 2025 and 'twenty 'twenty six.
Carlos Hirata: Bonds.
Carlos Hirata: But we hedge them into peso exposure last year.
Carlos Hirata: Did that before the election, so the average exchange rate at which we have those dollar exposures is around $18 three.
Carlos Hirata: Thanks, Ross. So so that's also an important point, though we will be using baseless from our cash balance to pay down.
Carlos Hirata: The bonds and maintain our another balancing cash.
Eduardo Nieto: Thank you. Just one quick follow-up on your point on rating agencies. Is there anything you can share around what they're focused on? What do you think is the bigger risk for the ratings going to high yield? Is it growth? Is it medium to long-term strategy? Anything you can share as to what your conversations have been with agencies?
Carlos Hirata: Thank you and just one quick follow up on your point on on rating agency is there anything you can share around what they're focused on what do you think is the bigger risk for the ratings point to high yield as it is.
Carlos Hirata: <unk> growth he said medium to long term strategy anything you got here as to what your conversations have been with agencies.
Carlos Phillips Margain: Yeah. As you've seen from recent reports, in particular from Fitch and Moody's, one of their concerns has been, for example, the operating trends in Sky, which is, as Valim touched on in his remarks. There's a technological decline there that we're addressing. From our end, really, what we're trying to focus on, as we were mentioning, is doing all that we can do to maintain our investment-grade rating. That starts, obviously, with cash flow generation. As we've been mentioning in previous calls, the whole company, from top to bottom, is laser-focused on generating cash and operating in an efficient manner. We delivered that in 2024, as you can see from our cash flow trends, and that's what we're going to continue to do, to focus on cash flow generation for the agencies.
Carlos Hirata: Yeah, I mean as you.
Carlos Hirata: Seen from recent reports in particular from Fitch and Moody's what other concerns has been for example, the operating trends in Sky, which is.
Jim: Jim touched on in his remarks.
Jim: Theres, a technological declined Aragon, where we're addressing them, but from from our and really be the.
Jim: What we're trying to focus on it as we were mentioning is doing all that we can do to maintain our investment grade rating.
<unk> with obviously with cash flow generation.
Jim: As we've been mentioning in previous calls.
Jim: The whole the whole company from top to bottom is laser focused on generating cash and operating in an efficient matter we.
We delivered back in 2024 as you can see from our from our cash flow trends and that's what we're going to continue to do them.
Jim: On cash flow generation for the agencies and the other one which is we think a pretty.
Carlos Phillips Margain: The other one, which is, we think, a pretty conservative position, is the liquidity that we hold today. We hold a significant amount of cash. An important percentage of that cash is in dollars, and we also have other liquidity mechanisms within RCF that we have. Those two factors are the ones that we're focusing more. As mentioned before by Alfonso and Valim, obviously, the operating aspect in terms of the top line is important as well.
Jim: Conservative positioning liquidity, then we hope today.
Jim: Hold a significant amount of cash.
Jim: An important percentage of that cash is in dollars and we also have other liquidity.
Jim: Mechanisms.
Jim: Archie yesterday, we have them. So those two factors are the ones, who we're focusing more and.
Speaker Change: As mentioned before when Mike. Unfortunately, I mean, obviously the operating aspect in terms of top line is important as well.
Eduardo Nieto: Got it. Understood. Thank you very much.
Jim: Got it understood. Thank you very much.
Jim: Yes.
Operator: The next question comes from Vitor Tomita with Goldman Sachs. Please go ahead.
Speaker Change: The next question comes from tore Tomita with Goldman Sachs. Please go ahead.
Vitor Tomita: Hello. Good morning, y'all, and thanks for taking our questions. Two questions from my side. The first one on the broadband market. You cited some aggressiveness and some promotional activity from competitors. If you could give a bit more color on that aggressiveness you are seeing from competitors in broadband. The second question from our side would be on more of the macroeconomic context in Mexico. There has been some concern over some potential macroeconomic headwinds in Mexico, deceleration in consumption trends. I know your business is relatively defensive, but do you see any particular sensitivity in a context like that? Do you see risk of pressure on churn rates, or are there any other measures that you can take on that front? Thank you.
Speaker Change: Hello, Good morning, all and thanks for taking our classrooms chose what's your question for my side.
First of all on the broadband market you feel you cited some aggressive promotional activity from competitors. If you could give us a bit more color on that progression that you are seeing from called back.
Speaker Change: In broadband.
Speaker Change: And the second question from our side would be on <unk>.
Speaker Change: The macroeconomic context in Mexico, there had been some concern over.
Speaker Change: Max potential macroeconomic headwinds in Mexico deceleration consumption branch Oh.
Speaker Change: I know you're basically it's relatively defensive but do you see any particular strength at TVT in a context like that do you see risk of pressure on churn rates are I bet on or any other measures that you can take on that front. Thank you.
Alfonso de Angoitia: Yeah. As to your second question, the macro question, I would say that the cable, and especially the broadband offerings that we have are pretty resilient in terms of service. However, of course, all of our businesses are affected by the macroeconomic things that happen in Mexico. I would say that we're carefully looking every quarter at what's going on. We're able to take the right preventive measures. As to your first question that has to do with promotions, I would ask Valim to answer that one.
Speaker Change: Yes.
Second question the macro question I would say that.
Speaker Change: Cable and especially the broadband.
Speaker Change: Offerings that we have are pretty resilient in terms of our service however of course.
Speaker Change: Any of our businesses are effect or all of our businesses are affected by the macro.
Speaker Change: Economic.
Speaker Change: Things that happened in Mexico, So I would say that.
Speaker Change: We're carefully looking every quarter.
Speaker Change: What's going on.
Speaker Change: So so we're able to take the right.
Speaker Change: Preventive measures as too.
Speaker Change: Your first question that has to do with promotions that are in escrow to answer that I don't think a little better.
Francisco Valim: I don't think, Vitor, that the aggressiveness has changed. I think that we are more selective as to what we want to bring into the company. Churn, in our case, is mostly due to more recent clients than it is due to the existing subscriber base. We want to keep on increasing and improving sales. We have churn very much under control, and I think that those changes that we are implementing internally will allow us to go into positive net adds very soon.
The aggressiveness has has changed I think that we are more selective first of all what we want to bring into the company.
Churn in our case is mostly due to <unk>.
Speaker Change: More recent clients than it is due to the existing subscriber base.
Speaker Change: So we want to keep on increasing and improving sales we have Jordan very much under control and I think that those changes that we are implementing internally will allow us to go into a positive net adds.
Speaker Change: Very soon.
Vitor Tomita: Clear. Thank you very much.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Operator: The next question comes from Marcelo Santos with J.P. Morgan. Please go ahead.
The next question comes from Marcellus Santos with JP Morgan. Please go ahead.
Marcelo Santos: Hi. Good morning, Alfonso, Valen, Carlos. Thanks for taking the questions. I have two. The first one is about pricing environment in Mexico. How do you see the outlook for potentially increasing broadband prices given that AMX is saying that they do not foresee a scope for price increase in the near term, at least? The second is regarding a bit of your churn behavior. Just did you say, Valen, 2% churn? Just want to confirm that. How has this been trending? How was it before? Was it two all the way, or is it going down or going up? I just want some more color on that behavior. Thank you very much.
Marcellus Santos: Hi, good morning, a whole suite of e-commerce.
Speaker Change: Thanks for taking the questions I have two.
Speaker Change: First one is about the pricing environment in Mexico, how do you see the outlook for broadband.
Speaker Change: Broadband prices given that Malcolm claim that they do not foresee scope for price increases near clinically.
Speaker Change: The second one is regarding a bit of your behavior.
Speaker Change: Did you say, 2%.
Speaker Change: How has this been trending how long is it before like just trying to.
Speaker Change: Got it to all the way down were going up.
Speaker Change: Just wanted some more color on that behavior. Thank you very much.
Alfonso de Angoitia: Thank you, Marcelo. Valim?
Marcelo: Thank you Marcelo.
Francisco Valim: Like you said, AMX, they have said that there won't be a lot of price increases here, and we are not anticipating any adjustments price-wise like you see in other countries, like Brazil, for example, where you do have annual inflation-related price adjustments. We don't anticipate that happening here in Mexico. The way we see ARPU growing is by upselling with more of the same, meaning more speeds, more content, and new products like mobile phones and things like that. That's how we see revenue growing on the existing subscriber base plus new additions in terms of subscribers. On the churn behavior, we can easily split this discussion into two. The subscriber base that we have has a very low churn when compared to any company in this business in the world.
Speaker Change: So like you said amex or they they have said that there won't be a lot of our price increases here and we are not anticipating any adjustments are pricewise.
Speaker Change: Like you see in other countries like Brazil for example, where we do have our annual inflation related price adjustments. So we don't want dissipate that happening here in Mexico. The way, we see article really goodbye up Sally where more of the same anymore is more content and new products like mobile phones and things.
Speaker Change: So that's that's how we see revenue growth growing an existing subscriber base plus new additions.
Speaker Change: Subscribers.
Speaker Change: The churn behavior we.
Speaker Change: We can easily split this discussion into two the subscriber base that we have has a very low churn in it.
Speaker Change: When compared to any company in this business in the world when we referred to the new acquisition, that's where churn is a little higher and the blended is below 2%.
Francisco Valim: When we refer to the new acquisitions, that's where churn is a little higher, and the blended is below 2%, which what we reported. There are these two behavior approach to churn that we take, and internally, we manage that the same way. We don't see a spike in existing customers in terms of churn whatsoever. What we have seen is that because we have been very aggressive in 2022, 2023 in terms of sales and promotions, those clients, we had to deal with the price uptick that it would happen individually with which one of them, which we call bill shock. That's what has increased the churn a bit, but well under control now that all of those clients that had a higher potential for churn have churned already.
Speaker Change: While we reported so there are two.
Speaker Change: Two behavior approach to the churn that we take and internally we manage that the same way. So we don't see a spike in existing customers in terms of churn whatsoever.
Speaker Change: We have seen is that because we have been very aggressive in 'twenty to 'twenty to 'twenty to 'twenty three in terms of sales.
Speaker Change: Promotions those clients they we had to deal with with the price.
Speaker Change: The uptick that would happen we individually with each one of them.
Speaker Change: Which will call deal chart and that's what has.
Increase the churn event, but well well under control now that all of those clients that have the higher potential for John.
Speaker Change: Have turned already.
Speaker Change: Yeah.
Marcelo Santos: Okay. Thank you very much.
Speaker Change: Okay. Thank you very much.
Francisco Valim: Okay.
Operator: The next question comes from Matthew Harrigan with Benchmark. Please go ahead.
Speaker Change: The next question comes from Matthew Harrigan with benchmark. Please go ahead.
Matthew Harrigan: Thank you for taking my questions. Firstly, you still have a substantial VC presence in Mexico. You're certainly one of the top 5 investors. I know your Liberty Global, whose CEO is on your board, they like to flash their valuation on their VC portfolio when they report. It's around $3 billion right now. Is there any way to get more profile on that or monetize that further? Clearly, you're in a very advantaged position as a TMT investor in Mexico. Secondly-
Matthew Harrigan: Oh, Thank you for taking my questions. Firstly, you still I think have a subsidy.
Speaker Change: So D C.
Speaker Change: In Mexico, It's certainly one of the top five investors I know you're.
Speaker Change: Liberty Global Global Ceos on your board you know they like to.
Speaker Change: Fly us their evaluation on their VC portfolio when they report I think it's around $3 billion.
Speaker Change: Right now is there any way to get more profile on that or monetize that further I mean, clearly you're in a very advantaged.
Speaker Change: As soon as the TMT Investor in Mexico, and then secondly, we we know VIX those big advantages on the library and the programming volume and soccer and news, but some of your competitors who have different emphases on their business admittedly Oclock am like Amazon and Netflix you gotta be more aggressive.
Matthew Harrigan: We know ViX has big advantages in the library and the programming volume in soccer and news, but some of your competitors who have different emphases on their business, admittedly, like Amazon and Netflix, are getting more aggressive. Ted Sarandos was with President Sheinbaum yesterday when they announced that programming investment. How would you characterize the direction of the AVOD and SVOD competition in Mexico with other competitors really being drawn to what's a very attractive market? Thank you. And again, thank you for taking my questions.
Speaker Change: Well.
Speaker Change: Tessa Randell, who's with Patterson and Schein Bell yesterday, when they announced that programming investment.
Speaker Change: Would you characterize the direction of the Avon and asphalt competition in Mexico, where so many other with other competitors you know really being drawn to what's a very attractive market. Thank you and again. Thank you for taking my questions.
Alfonso de Angoitia: Yeah. Thank you, Matthew, for your questions. As to the second question, in what was announced by Netflix yesterday in Mexico, I think it's great. Competition is welcome. It will make us better. We're not surprised that they're doing that, as Mexico is a great market. We're the largest and best producer of content in Spanish in the world. As I have been saying, we own the largest library in Spanish-speaking content, which we have assembled throughout many, many years. We're the number one producer of that content in Spanish. We, through our factory, what we call our factory or our studio in Mexico, I would say are the best and most prolific studio in Spanish. We produce very large quantities of high-quality content, and we're very efficient in terms of producing that content, if you look at our costs.
Speaker Change: Yes. Thank you Matthew for your questions as to the second question.
Speaker Change: And what was announced by Netflix yesterday in Mexico, I think it's great competition.
Welcome.
Speaker Change: It will make us better.
Speaker Change: We're not surprised that.
Speaker Change: That they are doing that is Mexico is a great market.
Speaker Change: We are the largest and best producer of content in Spanish in the world.
Speaker Change: As I have been saying we own.
Speaker Change: The largest library and Spanish speaking content, which we have assembled throughout many many years.
Speaker Change: We are the number one producer of content in Spanish so we through our factory, what we call their factory of our studio in Mexico.
Speaker Change: I would say are the best and most prolific studio.
Speaker Change: In Spanish.
Speaker Change: So we produce very large quantities of high quality content and.
We're very efficient in terms of producing that content.
Speaker Change: If you look at our costs.
Alfonso de Angoitia: We'll continue to do what we do, and competition is welcome. It only reinforces our view that producing content in Mexico makes all the sense in the world. As to your second question, we have done, in the last years, media for equity deals at very attractive valuations because we started doing this 4 or 5 years ago. We're very happy with the investments that we have made. We have made those investments in top companies like Rappi, like Kavak, and others. I believe that we'll start seeing the monetization of those investments in the near future. If we look at our portfolio and the investments that we have made, I think all of them have made sense, and we're very happy with the valuations that we came in originally and with the prospects of those businesses.
Speaker Change: We will continue to do what.
Speaker Change: What we do and competition is.
Speaker Change: Welcome It only reinforces our view of that producing content in Mexico makes all the sense in the world.
Speaker Change: As to your second question.
Speaker Change: We have done.
Speaker Change: In the last years.
Speaker Change: Media for equity yields.
Speaker Change: At very attractive valuations because we started doing this for five years ago. So we're very happy with.
Speaker Change: Once that we have made.
Speaker Change: We have made those investments in top companies like wrapping I can come back and others.
Speaker Change: So I believe that we'll start seeing the monetization of those investments.
Speaker Change: The near future, but if we look at our portfolio and the investments that we have made I think all of them have made sense.
Speaker Change: Already happy with.
Speaker Change: With evaluations that.
Speaker Change: We came in.
Speaker Change: Originally and with the prospects of those businesses.
Matthew Harrigan: Great. Thank you.
Speaker Change: Great. Thank you.
Speaker Change: Yeah.
Operator: This concludes our question and answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: This.
Speaker Change: <unk>, our question and answer session and today's conference call.
Speaker Change: Thank you for attending today's presentation you may now disconnect.
Speaker Change: Yeah.