Q4 2024 Grupo Televisa SAB Earnings Call
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 Star key followed by zero. Please note. This event is being recorded before we begin I would like to.
Speaker Change: 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. Alfonzo, Dan Dan Gorey tier co.
Speaker Change: Co Chief Executive Officer of Grupo Televisa. Please go ahead, sir thank.
Speaker Change: Thank you Elsa good morning, everyone and thank you for joining us.
Speaker Change: With me today, he's called El Limn C E O S cable and Sky and Carlos Phillips CFO of Grupo Televisa.
Speaker Change: Last year was marked by several milestones both at Grupo Televisa, and Televisa, and Univision, which but I'm out of the and I are confident will allow us to create greater value for our shareholders.
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.
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 increase free cash flow generation and position us well to achieve sustainable revenue growth over the coming years.
Speaker Change: <unk> 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.
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.
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.
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.
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 around 43%.
Speaker Change: Third on February 20th 'twenty 'twenty, four we concluded the spinoff Amaya money and its listing on the Mexican stock exchange.
Speaker Change: These spin offs, 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: And 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 the third quarter of 'twenty 'twenty four.
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 of a 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 big.
Speaker Change: 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 and the second reason, we have material advantages with regards to original.
Speaker Change: 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.
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 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.
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.
Speaker Change: Thank you all sponsor 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 a year on year decrease of 7.5% mainly driven by.
Speaker Change: Lower revenue at Sky.
Speaker Change: 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 or in year on year 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.
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.
Speaker Change: However, so far this year, we have already seen that uptick in gross adds while we keep working on churn reduction.
This should contribute to a stabilizing and potentially growing slightly or a cable subscriber base going forward.
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 2.3% year on year, mainly because we lost revenue given the cancellation of a fixed tornadoes 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 2% 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.
Speaker Change: 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.
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 tenure twenty-three.
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.
Speaker Change: 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.
Speaker Change: 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%.
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 daily.
Speaker Change: Televisa Univision net debt declined by around $400 million.
Speaker Change: Moving on consolidated capital expenditures for Grupo Televisa were $493 million during 'twenty 'twenty four significantly below our initial guidance of $793 million due to a more efficient capex deployment.
Speaker Change: Inventory management and because of the Mexican peso was stronger than initially expected.
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 a matter of and I are confident that our focus on value customers and efficiencies and ongoing integration between easy 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 and so could you. Please provide instructions for the Q&A.
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 speaker phone. Please pick up your handset before pressing the keys if at anytime. Your question has been addressed and you'd like to withdraw. Your question. Please press Star then two at this.
Speaker Change: Time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Carlos like Errata with Italian. Please go ahead.
Speaker Change: Thank you good morning, Sandeep well first one is can you provide color on the lower than expected.
Speaker Change: Allocation.
Speaker Change: Similar level going forward you did mentioned that you expect to deal with.
Speaker Change: Yeah.
Speaker Change: So I just want to understand how that plays out.
Speaker Change: And the second one is can you.
Speaker Change: Share your thoughts on M&A.
Speaker Change: At this point in time, thank you.
Carlos Phillips: Hi, Carlos.
Carlos Phillips: As you know after your second question.
Carlos Phillips: We tried for a long time to consolidate the industry. It is an industry that need them.
Carlos Phillips: Market repair.
Carlos Phillips: Four player market in these kind of.
Carlos Phillips: Of industry end markets, such as Mexico is not ideal we.
Carlos Phillips: Have not been successful.
Carlos Phillips: It's public.
Carlos Phillips: We're now focused on operating and improving our.
Carlos Phillips: Our company. After your second question that has to do with Capex.
Carlos Phillips: As we mentioned in 2024.
Carlos Phillips: Consolidated Capex Wes.
Carlos Phillips: $493 million.
<unk> below our initial guidance.
Carlos Phillips: And as I mentioned it is due to a more efficient capex deployment.
Carlos Phillips: Inventory management and also because the Mexican peso was stronger than initially expected.
Speaker Change: For 2025, our Capex budget is 665 and as you mentioned in your question, we are going to as close to a 1 million homes with fiber and I'll ask Felipe to expand on these so.
Carlos Phillips: So I think that Ah.
Carlos Phillips: To clarify a what I'll also just add a little bit more detail is the fact that we have.
Carlos Phillips: 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 Phillips: 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 Phillips: Plus obviously, we had a little less.
Carlos Phillips: Gross ads and reorder planning on having which also reduced capex.
Carlos Phillips: Bye bye.
Carlos Phillips: Well all in all plus besides that we also in our <unk> business, we are focusing on more higher return clients. So capex was more adjusted denim, where also we were planning and with the $655 million.
Carlos Phillips: Plan for 'twenty to 'twenty, five we will keep on growing our subscriber base.
Carlos Phillips: Enhancing the network, just like you're describing with more homes fast and obviously improving the network the quality that the clients the map.
Carlos Phillips: Yeah.
Carlos Phillips: Yeah.
Carlos Phillips: Thank you thank you I.
Speaker Change: Would it be possible to know what kind of exchange.
Carlos Phillips: Exchange rates are you putting.
Carlos Phillips: Putting 35.
Speaker Change: 21 five.
Speaker Change: Great.
Speaker Change: Great. Thank you and good luck.
Speaker Change: Bye.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: The next question comes from Alejandro Azar with G. P. M. Please go ahead.
Alejandro Azar: Hi, Hi, everyone and good morning, and thank you for taking my questions.
Alejandro Azar: The first one is on if you can give more color on the competitive landscape in the cable segment.
Alejandro Azar: Especially on the Disconnections you had in the fourth quarter and and on that same front I was amazed that how are.
Alejandro Azar: 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.
Alejandro Azar: And the other what I would I would save the other questions on Televisa innovation.
Alejandro Azar: Thanks.
Speaker Change: Hey, Jeff first question. Thank you cant go parcel so I think that to your point, we are focusing on higher value customers. We are the ones that were more establishing.
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 we're chart.
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 competitive subscriber base.
Speaker Change: And I think that to your point.
Speaker Change: We think we can improve our.
Speaker Change: Our graph.
Speaker Change: This 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 and the improvement and we anticipate that we will have an inaugural stuff.
Speaker Change: Little girls.
Speaker Change: Oh, 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 reliable in terms of how we manage to increase cash flow generation. Despite the fact that we have Jordan.
Speaker Change: Therefore revenue decline.
Speaker Change: Cause 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 yeah.
Speaker Change: Again to your point, we think we need to go back to grow our 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 oh the company.
Speaker Change: The short, but also in the long run.
Speaker Change: But on on that front.
Speaker Change: 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.
Speaker Change: You had a really good years in terms of free cash flow generation in 2020 for your announced savings how.
Speaker Change: How should we think about the de leverage base off of that maybe you said your Navy shining in 2025 are in dams overnight.
Speaker Change: In that range.
And with that in mind in terms of monetization of this asset with with very little inflation in the U S would you analyze perhaps that 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.
Speaker Change: So I'll finish up the cable discussion first so the reason why we did reduce their working capital is just basically because of 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.
Speaker Change: When compared to the existing one.
Speaker Change: And as to your second question.
Speaker Change: Activity pursuing ways of deleveraging Televisa and Univision as you saw in 2024.
Speaker Change: It is our one of our top priorities, we have no maturities in 2026.
Speaker Change: We refinanced both maturities so that gives us space.
Televisa and Univision is a very attractive business.
Speaker Change: We are crystallizing that attractiveness of the business when you see the success 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 may use in terms of engagement in terms of.
Speaker Change: Growing our advertising sales on the platform. So we're very happy with.
Speaker Change: The prospects of our.
Speaker Change: Streaming service.
Speaker Change: You would add this is this is now a profitable business and it will become more profitable this year.
Speaker Change: And you wanted to ask why and it's because it's based on.
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, where we can produce large quantities of high quality content.
Speaker Change: Gary attractive costs. So we.
Speaker Change: We're moving in the right direction, and we will actively pursue.
Speaker Change: Alternatives 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 company.
Speaker Change: I would highlight that.
Speaker Change: Most important thing that came out of that.
Speaker Change: The election cycle in the United States is that.
Speaker Change: It.
Speaker Change: Made clear that the pie.
Speaker Change: Our of our audience.
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: When it comes up and happens.
Speaker Change: Thank you both.
Speaker Change: The next question comes from Gustavo Perez with UBS. Please go ahead.
Speaker Change: Oh, hi, everyone. Thanks for taking questions.
Speaker Change: Two from my end.
Speaker Change: The first one.
Speaker Change: You could call them.
Speaker Change: What you see is you shouldn't.
Speaker Change: Yes.
Speaker Change: Some synergy.
Speaker Change: Opex and Capex savings from Sky operation.
Speaker Change: How much.
Speaker Change: Five.
Speaker Change: And my second question.
Speaker Change: Could comment regarding.
Speaker Change: On the DTC business.
Speaker Change: Bob.
Speaker Change:
Speaker Change: Cheap.
Speaker Change: She breakeven them.
Speaker Change: Q3.
She ran its course.
Speaker Change: Thanks.
Speaker Change: Sure.
Speaker Change: Going forward. Thanks.
Speaker Change: Yeah, Alaska.
Speaker Change: To take your question about synergies and what has to do with the Sky and the integration of Sky with.
Speaker Change: And then I will take the second question about Televisa and Univision.
Speaker Change: So we will see 'twenty 'twenty, four or five but the full impact of the synergies, we're able to generate with sky and also Grupo Televisa in terms of the back office and I think that that will be materialized in both EBITDA and cash flow. Obviously, we are impacted by the.
The.
Speaker Change: The industry decline of Dth directed 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.
Speaker Change: We weren't in 2024.
Speaker Change: Given the synergies that we are implementing will have implemented and they still are in the process of implementing.
Speaker Change: And it 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.
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.
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: Has become a billion dollar business.
Speaker Change: In its second year of operations so.
Speaker Change: We're very happy with that and also with the fact that in this second year of operation and became an.
Speaker Change: And EBIT positive business, where it's profitable now.
Speaker Change: We ended the year with over 20% growth in terms of MH.
Speaker Change: <unk>.
Speaker Change: And.
Speaker Change: So we're growing in terms of total streaming hours.
Speaker Change: And.
Speaker Change: We're monetizing those.
Speaker Change: Streaming hours through the sale of advertising, we also grew our.
Speaker Change: So in general I would say that.
Speaker Change: We're very very happy with.
Speaker Change: VIX.
Speaker Change:
Speaker Change: I would say that you will see a more profitable.
Speaker Change: In 2025.
Thanks, guys.
Speaker Change: Yeah.
Speaker Change: The next question comes from Eduardo <unk> with J P. Morgan. Please go ahead.
Eduardo: Good morning, Thanks for taking my question I just have a quick one.
Eduardo: Seem to have a pretty large cash position at this moment you generate a healthy cash flows just wondering if you plan to use that for debt reduction I was on a gross basis leverage is quite high at the moment or anything you guys care as to what your priorities are for the deployment of this cash, particularly given that you have bond maturities in 2025.
Eduardo: Thank you.
Eduardo: Yeah. Thank you for.
Eduardo: <unk> for your question and there's a lot of overlap.
Eduardo: <unk> got enough to answer that one yes, I got it.
Eduardo: As you mentioned, we have a pretty strong liquidity position and our balance sheet, we have approximately $2 3 billion equivalent in cash.
Eduardo: As you mentioned our debt maturities pre pretty long dated the average weighted life of around 15 years, but we do have some dollar debt that's maturing this year and next year.
Eduardo: Pension and our focus as we've mentioned in previous calls have been to focus on free cash flow generation and deleveraging. So we are intending to use a part of our cash flow to reduce our gross leverage our net leverage is two five times, which is which is still.
Eduardo: Pretty pretty strong and we have a very high commitment to maintain our investment grade ratings. So we will use the excess cash flow we generated in 2024 to address these upcoming maturities.
Eduardo: Can you touch.
Eduardo: Okay can you also expand on our strategy a strategy that we followed last year in terms of hedging.
Eduardo: That's a very good point.
Eduardo: These maturity that we have due 2025 and 2026.
Speaker Change: Your bonds.
Eduardo: We hedge them into peso exposure last year.
Speaker Change: We did that before the election so.
Speaker Change: The average exchange rate in which we have those dollar exposures is around $18 three.
So that's also an important point, though we will be using baseless from our cash balance to pay down.
Speaker Change: The <unk> bonds and maintain our dollar balance in cash.
Speaker Change: 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 went to high yield.
Speaker Change: It's a grow with you said medium to long term strategy anything you got here as to what your conversations have been with agencies.
Speaker Change: Yeah, I mean as you've seen from recent reports and in particular from Fitch and Moody's.
Speaker Change: Are there concerns is being for example, the operating trends in Sky, which is.
Speaker Change: <unk> touched on in his remarks.
Speaker Change: There's a technological declines Aragon, where we're addressing them, but from from our and really be the.
Speaker Change: What we're trying to focus on it as we were mentioning is doing all that we can do it to maintain our investment grade rating that starts with obviously with cash flow generation as we as we've been mentioning in previous calls.
Speaker Change: The whole the whole company from top to bottom is laser focused on generating cash and operating in an efficient matter.
Speaker Change: We deliver that in 2024 as you can see from our from our cash flow trends and that's what we're going to continue to do in order to focus on cash flow generation for the agencies and the other one which is we think a pretty.
Speaker Change: Conservative positioning liquidity, we hope today.
Speaker Change: Hold a significant amount of cash.
Speaker Change: An important percentage of that cash is in dollars and we also have other liquidity.
Speaker Change: <unk>.
Speaker Change: Then our CFO, we have them. So it's those two factors are the ones who were focusing more and.
Speaker Change: As mentioned before with my iPhone Forever I mean, obviously the operating aspect in terms of the top things that is important as well.
Speaker Change: Got it understood. Thank you very much.
Speaker Change: Yes.
Speaker Change: The next question comes from tore Tomita with Goldman Sachs. Please go ahead.
Tore Tomita: Hello, Good morning, all and thanks for taking our classrooms sure. What's your question for my side.
Speaker Change: First of all and on the broadband market you feel you cited some abreast of and also on some promotional activity from competitors.
Speaker Change: If you could give us a bit more color on that progression that you are seeing from home.
Speaker Change: In broadband 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: Macro potential macroeconomic headwinds in Mexico deceleration consumption of brands.
Speaker Change: I know, it's relatively status yet, but do you see any particular strength at TVT in a context like that that you've seen which got pressure on churn rates are I bet on or any other measures that you can take on that front. Thank you.
Speaker Change: Yes.
Speaker Change: Second question the macro question I would say that.
Speaker Change: Cable and especially the broadband.
Speaker Change: Offerings that we have a pretty resilient in terms of 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 Uh huh.
Speaker Change: 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 arc.
Speaker Change: <unk> is mostly due to <unk>.
Speaker Change: More recently, our clients than it is due to the existing subscriber base.
Speaker Change: So we want to keep on increasing and improving our 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.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Speaker Change: The next question comes from Marcellus Santos with JP Morgan. Please go ahead.
Marcellus Santos: Hi, good morning, a whole suite of.
Speaker Change: Carlos Thanks for taking the questions I have two the first one is about the pricing environment in Mexico, How do you see the outlook for potential increase in.
Speaker Change: Broadband prices given that AML complain.
Speaker Change: Complain that they do not of course see school core pricing, Cleveland, New York, Germany.
Speaker Change: The second one is regarding a bit of your behavior.
Speaker Change: Did you say, 2%.
Speaker Change: Hum.
Speaker Change: That's been trending how long is it before like just trying to.
Speaker Change: Two O the window going down were going up.
Speaker Change: Just wanted some more color on that behavior. Thank you very much.
Speaker Change: Thank you Marcelo.
Speaker Change: So like I said amex. They they have said that there won't be a lot of our price increases here and we are not anticipating any adjustments or price wise like like you see in other countries like Brazil for example, where we do have our annual inflation related price adjustments.
Speaker Change: We don't anticipate that happening here in Mexico, the way, we see ARPA growing goodbye up Sally where more of the same anymore is more content and new products like mobile phones and things like that so that's that's how we see revenue growth growing on the existing subscriber base plus new <unk>.
Speaker Change: <unk>.
Speaker Change: Subscribers.
Speaker Change: On the churn behavior we.
Speaker Change: We can easily split the discussion into two the subscriber base that we have has a very low churn.
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%.
Speaker Change: While we reported so there are two.
Speaker Change: <unk> behaviour 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 of we have been very aggressive in 'twenty to 'twenty two 2023 in terms of sales.
Speaker Change: And promotions those clients they we had to deal with with the price.
Speaker Change: The uptake uptick that would happen we individually with each one of them.
Speaker Change: <unk>, which we call Bill shock and that's what has.
Speaker Change: Increase the churn event, but well well under control now that all of those clients that have higher potential for John.
Speaker Change: It has turned already.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you very much.
Speaker Change: The next question comes from Matthew Harrigan with benchmark. Please go ahead.
Thank you for taking my questions. Firstly, you still I think have a switch.
Speaker Change: So D C presence in Mexico, It's certainly one of the top five investors I know you're.
Speaker Change: Liberty Global Global Who's CEO was on your board you know they like to fly us their evaluation on their VC portfolio. When they report I think it's around $3 billion.
Speaker Change: Now is there any way to get more profile on that or monetize that further I mean, clearly you're in a very advantaged position.
Speaker Change: TMT Investor in Mexico, and then secondly, we know VIX those big advantages when the library and the programming volume in soccer.
Speaker Change: And news, but some of your competitors, who have different emphases on their business admittedly walk out like Amazon and Netflix you got to be more aggressive.
Tessa Randolph: Tessa Randolph Who's with Patterson, and Schein Bell yesterday, when they announced that programming investment.
Speaker Change: How would you characterize the direction of the Avon and asphalt competition in Mexico, where so many other rather competitors you know really being drawn to what's a very attractive market. Thank you and again. Thank you for taking my questions.
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.
Speaker Change: Welcome.
Speaker Change: Will make us better we're not surprised.
Speaker Change: That they're doing that is Mexico is a great market.
Speaker Change: We are the largest and best producer of content in Spanish in the world.
As I have been saying we own.
Speaker Change: The largest library and Spanish speaking content, which we have assembled.
Speaker Change: Throughout many many years.
Speaker Change: We are the number one producer of that 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: Spanish.
Speaker Change: So we produce very large quantities of high quality content and.
Speaker Change: We're very efficient in terms of producing that content.
Speaker Change: If you look at our costs. So we will continue to do what.
Speaker Change: What we do and competition.
Speaker Change: As welcome it only reinforces our view of that producing content in Mexico makes all the sense in the world.
As to your second question.
Speaker Change: We have done.
Speaker Change: In the last years.
Speaker Change: Media for equity deals.
Speaker Change: At very attractive valuations because we started doing this for five years ago. So we're very happy with.
Speaker Change: We have made.
Speaker Change: We have made those investments in top companies like wrapping I can come back and others.
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.
Speaker Change: Great. Thank you.
Speaker Change: Yeah.
Speaker Change: This concludes 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.