Q1 2025 Grupo Televisa S.A.B. Earnings Call

Speaker Change: [music].

Operator 2: Good morning, everyone, and welcome to Grupo Televisa's Q1 2025 conference call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we 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.

Good morning, everyone and welcome to Grupo Televisa's first quarter 2025 conference call.

Before we begin I would like to draw your attention to the press release, which explains the use of forward looking statements and applies to everything we discuss in today's call and in the earnings release.

Speaker Change: I will now turn the call over to Mr. Alfonso and Wuxi co Chief Executive Officer of Grupo Televisa. Please.

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. Before discussing our Q1 operating and financial performance, let me remind you of the strategic priorities approved by the board of directors of Grupo Televisa and TelevisaUnivision that we'll pursue this year. At Grupo Televisa, we will continue to focus on attracting and retaining value customers to stabilize and potentially grow our internet subscriber base sequentially throughout this year, execute on the implementation of OpEx and CapEx efficiencies, and conclude the integration between Izzi and Sky to extract further synergies.

Speaker Change: Thank you <unk> good morning, everyone and thank you for joining US with me today are Francisco <unk> CEO of cable and Sky and Carlos Phillips CFO of Grupo Televisa.

Before discussing our first quarter operating and financial performance, Let me remind you of the strategic priorities approved by the board of directors of Grupo Televisa and Televisa and Univision that we'll pursue this year, our Grupo Televisa, we will continue to focus on attracting and retaining value customers to stable license.

Speaker Change: Potentially grow our internet subscriber base sequentially throughout this year.

Speaker Change: Executing on the implementation of Opex.

Speaker Change: And capex efficiencies and conclude the integration between ECM and sky to extract further synergies.

Alfonso de Angoitia: This has already contributed to expanding our consolidated operating segment income margin by around 100 basis points in Q1, driven by a year-on-year OpEx reduction of around 8%, and we would expect this profitability improvement to remain over the coming quarters. At TelevisaUnivision, now that our direct-to-consumer business, ViX, 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 geographies. Despite some challenges and top-line pressure, TelevisaUnivision's Q1 operating performance reflected the underlying strength of our content engine and continued scaling of ViX. The proactive realignment and optimization of our cost base started at the end of 2024, and our DTC profitability more than offset these headwinds and contributed to adjusted EBITDA growth of 5% year-on-year during Q1.

These guys already contributed to expanding our consolidated operating segment income margin by around 100 basis points in the first quarter driven by a year on year opex reduction of around 8%.

Speaker Change: And we would expect this profitability improvement to remain over the coming quarters.

Speaker Change: And I believe you said Univision now that our direct to consumer business, because <unk> has gained scale and achieve profitability. We are confident that additional value can be unlocked.

Speaker Change: Through further integration optimization and unification of both our content business and geographies. Despite some challenges in topline pressure. The Levy says Univision first quarter operating performance reflected the underlying strength of our content engine and continued scaling of that.

Speaker Change: Proactive realignment and optimization of our cost base started at the end of 2024, and our DTC profitability more than offset these headwinds and contributed to adjusted EBITDA growth of 5% year on year during the first quarter.

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

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

Francisco Valim: Thanks, Alfonso. Good morning, everyone. First, let me walk you through the operating financial performance of our cable operations. We ended March with a network of 19.9 million homes after passing around 13,000 new homes during the quarter. In Q1, our monthly churn rate remained in line with our historical average of 2% as we kept executing on our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. Our broadband gross adds improved considerably on a sequential basis, allowing us to deliver disconnections of only around 6,000 subscribers during Q1, compared to a loss of 85,000 in Q4 of last year. Regarding video, we also experienced stronger gross adds than in Q4 of last year.

Aleem: So good morning, everyone first let me walk you through the operating financial performance of our cable operations. We ended March with a network of $19 9 million homes after passing around 13000, new homes during the quarter.

Aleem: In the first quarter, our monthly churn rate remain in line with our historical average of 2% as we kept executing on our stretches to focus on value customers rather than volume, while working on customer reputation and satisfaction.

Aleem: Our broadband gross adds improved considerably on a sequential basis, allowing us to deliver disconnections of only around 6000 subscribers during the first quarter compared to a loss of 85000 in the fourth quarter of last year regarding video. We also experienced a stronger gross adds than in the fourth quarter of last year. Therefore.

Francisco Valim: Therefore, we lost about 73,000 video subscribers in Q1 compared to the 95,000 disconnections in Q4 of 2024. Of note, our mobile net adds were solid at 36,000 subscribers during Q1 compared to a full-year net adds of 26,000 in 2024. We were able to achieve this because late last year, we relaunched a new and innovative MVNO service developed by ZTE, offering enhanced user experience. We are confident that this new service will make our bundles more competitive while allowing us to increase the share of wallet from our existing customers.

Aleem: We lost about 73000 video subscribers in the first quarter compared to the 95000 disconnections in the fourthquarter often is pretty far.

Aleem: Off note our mobile net adds were solid at 46000 subscribers during the first quarter compared to our full year net adds of 26000 in 2024.

Aleem: We were able to achieve this because late last year, we relaunched our new and innovative N V. I know service developed by Z D. R.

Aleem: Offering enhanced user experience, we are confident that this new service will make our bundles more competitive while allowing us to increase the share of wallet from our existing customers.

Francisco Valim: During the quarter, net revenue from our residential operations of MXN 10.5 billion, which accounted for around 91% of total cable revenue, decreased by 3% year-on-year, mainly because we lost some revenue given the cancellation of the Afizzionados video package during Q2 2024 and as we had a slightly lower subscriber base. Net revenue from our enterprise operations of MXN 1 billion, which accounted for around 9% of total cable revenue, declined by 4.5% year-on-year, as in Q1 2024, we are concluding an important government contract, which translated into higher revenue streams. Moving on to Sky's operating and financial performance. During Q1, we lost 331,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. Sky Q1 revenue of MXN 3.5 billion fell by 13.2% year-on-year, mainly driven by a lower subscriber base.

Aleem: During the quarter net revenue from the origination operations of $10 5 billion pesos, which accounted for about 91% of total cable revenue decreased by 3% year on year, mainly because we lost some revenue given the cancellation of their fixed another video package during the second quarter, Australia, 34, and as we had a slightly lower subscriber base.

Aleem: Net revenue from our enterprise operations of 1 billion pesos, which are accounted for around 9% of total cable revenue declined by four 5% year on year as in the first quarter 'twenty four we're concluding on important government contract, which translated into higher revenue streams.

Aleem: Moving on to Sky, <unk> operating and financial performance through the first quarter. We lost 231000 revenue generating units, mostly coming from prepaid subscribers that had not been recharging their services.

Aleem: Sky first quarter revenue of $2 5 billion pesos fell by 13, 2% year on year, mainly driven by a lower subscriber base to sum up segment revenue of $15 1 billion pesos fell by 5.7 year on year, while operating segment income of $5 7 billion peso declined by three 1%.

Francisco Valim: To sum up, segment revenue of MXN 15.1 billion fell by 5.7% year-on-year, while operating segment income of MXN 5.7 billion declined by 3.1%. Our operating segment income margin of 37.8% expanded by 100 basis points year-on-year, mainly driven by the efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky. On a sequential basis, our operating segment income for Q1 already marked a turning point as it increased by 1.6% quarter-on-quarter, while our operating segment income margin expanded by 180 basis points. Regarding CapEx deployment, our total investment of MXN 1.8 billion during Q1 fell by around 13% year-on-year.

Aleem: Our operating segment income margin of 37, 8% expanded by 100 basis points year on year, mainly driven by the efficiency measures that we have been implementing and synergies from the ongoing integration between Aegean Sky.

Aleem: On a sequential basis, our operating segment income for the first quarter already marked a turning point as it increased by one 6% quarter on quarter, while our operating segment income margin expanded by 180 basis points.

Aleem: Regarding capex deployment, our total investment of $1 8 billion pesos during the first quarter fell by around 13% year on year. So our capex to sales ratio of 11, 8% was around 100 basis point lower than that of the first quarter of 2024.

Francisco Valim: Our CapEx to sales ratio of 11.8% was around 100 basis points lower than that of Q1 2024. Finally, operating cash flow of Cable and Sky, which is equivalent to EBITDA minus CapEx, was MXN 3.9 billion in Q1, increasing by 2% year-on-year and accounting for 26% of sales. This basically means that our operating cash flow margin increased by 200 basis points year-on-year.

Aleem: Finally, operating cash flow cable and Sky, which is equivalent to EBITDA minus Capex was $3 9 billion pesos in the first quarter, increasing by 2% year on year and accounted for 26% of sales. This basically means that our operating cash flow margin increased by 200 basis points year on year.

Alfonso de Angoitia: Thank you, Valim. Now let me walk you through TelevisaUnivision's first quarter results released last week. The company's first quarter revenue of MXN 1 billion declined by 11% year-on-year, while adjusted EBITDA of MXN 345 million increased by 5%. Excluding the impact from the depreciation of the Mexican peso, TelevisaUnivision's first quarter revenue decreased by 6% year-on-year due to the absence of the prior year's broadcast of the Super Bowl in the US, and the impact of the renewal cycle with key distribution partners in Mexico. On the other hand, adjusted EBITDA increased by 10% year-on-year, reflecting margin expansion driven by the operational optimization plan we implemented in December of last year and continued DTC profitability. Moving on to the details of our revenue performance during the quarter, consolidated advertising revenue decreased by 13% year-on-year, or 3% excluding the Super Bowl in the US and the FX impact.

Aleem: Thank you well now let me walk you through each Televisa and Univision first quarter results released last week now.

Aleem: The company's first quarter revenue of $1 billion declined by 11% year on year, while adjusted EBITDA of $345 million increased by 5%.

Aleem: Excluding the impact from the depreciation of the Mexican peso Televisa and Univision first quarter revenue decreased by 6% year on year due to the absence of the prior year's broadcast of the Super Bowl in the U S and the impact of the renewal cycle with key distribution pardon.

Aleem: In Mexico.

Aleem: On the other can adjusted EBITDA increased by 10% year on year, reflecting margin expansion driven by the operational optimization plan, we implemented in December of last year and continued DTC profitability.

Aleem: Moving onto the details of our revenue performance during the quarter consolidated advertising revenue decreased by 13% year on year or 3%.

Aleem: Excluding the Super Bowl in the U S and the FX impact in.

Alfonso de Angoitia: In the US, advertising revenue was 11% lower as growth in DTC advertising revenue was offset by linear softness and the absence of the prior year's broadcast of the Super Bowl. Excluding the Super Bowl, US advertising revenue declined by 6%. In Mexico, advertising revenue declined by 16% year-on-year, driven by the depreciation of the Mexican peso. FX neutral advertising revenue in Mexico increased by 1%, reflecting private sector growth across both linear and DTC, and the strong performance of sports content, including Liga MX and the Super Bowl. During the quarter, consolidated subscription and licensing revenue fell by 7% year-on-year, but grew 1% excluding the FX impact and the previously mentioned distribution renewal cycle in Mexico. In the US, subscription and licensing revenue increased by 5%, driven by ViX's premium tier.

Aleem: In the U S advertising revenue was 11% lower as growth in DTC advertising revenue was offset by linear softness and the absence of the prior year's broadcast of the Super Bowl.

Aleem: Excluding the Super Bowl U S advertising revenue declined by 6%.

Aleem: In Mexico advertising revenue declined by 16% year on year, driven by the depreciation of the Mexican peso.

Aleem: The FX neutral advertising revenue in Mexico increased by 1%, reflecting private sector growth across both linear and DTC and the strong performance of sports content, including League IMAX and the Super Bowl.

Aleem: During the quarter consolidated subscription and licensing revenue fell by 7% year on year, but grew 1%, excluding the FX impact and the previously mentioned distribution renewal cycle in Mexico.

Aleem: In the U S subscription and licensing revenue increased by 5% driven by Big Sis premium tier.

Alfonso de Angoitia: In Mexico, subscription and licensing revenue fell by 36%, mainly due to the distribution renewal cycle and the depreciation of the Mexican peso. FX neutral subscription and licensing revenue in Mexico decreased by 26%, partially supported by the subscription growth in ViX's premium tier. Turning to ViX, we delivered another quarter of solid growth and profitability and reinforced the strength of our DTC strategy. Our advertising video on-demand tier continued to scale, with double-digit growth in reach relative to last year. At the same time, our subscription video-on-demand tier also achieved double-digit subscriber growth even after a recent price increase in the US, underscoring the value of our unique offering. All in all, ViX remains well-positioned, delivering consistent performance across key metrics while reinforcing our leadership in Spanish language streaming.

Aleem: In Mexico subscription and licensing revenue fell by 36%, mainly due to the distribution renewal cycle and the depreciation of the Mexican peso.

Aleem: FX neutral subscription and licensing revenue in Mexico decreased by 26%, partially supported by the subscription growth Invictus premium tier.

Aleem: Turning to VIX, we delivered another quarter of solid growth and profitability and reinforced the strength of our DTC strategy.

Aleem: Our advertising video on demand tier continued to scale with double digit growth in reach relative to last year at the same time, our subscription video on demand tier also achieved double digit subscriber growth even after a recent price increase in the U S.

Aleem: Underscoring the value of our unique offering.

Aleem: All in all mix remains well positioned delivering consistent performance across key metrics, while reinforcing our leadership in Spanish language streaming.

Alfonso de Angoitia: Finally, at the end of Q1, TelevisaUnivision's leverage ratio was 5.8x EBITDA, compared to 5.9x by the end of 2024, due to a combination of free cash flow generation and EBITDA growth. Moving on, let me remind you that on 18 March, we used part of the free cash flow generated last year by Grupo Televisa to pay the remaining $219 million principal amount of our senior notes maturing this year. This payment was hedged at an exchange rate of MXN 17.8 per dollar. Moreover, at the end of Q1, Grupo Televisa's leverage ratio of 2.4x EBITDA compared to 2.5x by the end of 2024, due to our free cash flow generation of around MXN 2.2 billion during the quarter.

Aleem: Finally at the end of the first quarter, Televisa and Univision <unk> leverage ratio was five eight times EBITDA compared to five nine times by the end of 'twenty 'twenty four due to a combination of free cash flow generation and EBIT growth.

Aleem: Moving on let me remind you that on March 18, we used part of the free cash flow generated last year by Grupo Televisa to pay the remaining $219 million principal amount of senior notes maturing this year.

Aleem: This payment was hedged at an exchange rate of 17.8 vessels per dollar. Moreover, at the end of the first quarter Grupo Televisa <unk> leverage ratio of 2.4 times EBITDA compared to 2.5 times by the end of 2024 due to our free cash flow generation of our round two.

Aleem: One 2 billion pesos during the quarter.

Alfonso de Angoitia: 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 now that our DTC business has gained scale and achieved profitability, will allow us to create greater value for our shareholders throughout this year. Now we are ready to take your questions. Operator, can you please provide us with instructions for the Q&A?

Aleem: To wrap up Bernardo and I are confident that our focus on value customers and efficiencies and ongoing integration between ECM sky at Grupo Televisa and further integration and operational optimization at Televisa and Univision now that our DTC business has gained scale and achieve profitability.

Will allow us to create greater value for our shareholders. Throughout this year now we are ready to take your questions. Operator can you. Please provide us with instructions for the Q&A.

Operator 2: The first question comes from Liziya Mizubata with J.P. Morgan. Please go ahead.

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

Aleem: To ask a question you May press Star then one on your telephone keypad.

Aleem: If you are using a speakerphone please pick up your handset before pressing the keys.

Aleem: If at any time. Your question has been addressed and you would like to withdraw your question. Please.

Aleem: Please press Star then two.

Aleem: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from lithium is a button.

Speaker Change: With J P. Morgan. Please go ahead.

Liziya Mizubata: Hi. Good morning. Thank you for taking my questions. I have two from my side. We saw an improvement in margins. Can you give us some color on how much more we could see in expansions coming from these ongoing efficiencies? That would be great. The second one, if you could give us some color on the guidance of 1 million home passed for fiber in 2025. How should be this curve given the Q1? Is there a risk of downside revision following the low number of homes passed? Can you give us an update on your CapEx budget for the year? That is from my side. Thank you.

Speaker Change: Hi, Good morning. Thank you for taking my questions I have two from my side, sorry, we saw an improvement in margins can you give us some color on how much more we could see you next patients coming from is ongoing efficiencies that will be great and the second one if you could give us some color on the guidance of one.

Speaker Change: Home passed for fiber in 2025, how should be disclosed given the first quarter is there a risk of downside revision following a long number of homes passed.

Speaker Change: And can you give us an update on your Capex budget for the year. That's it from my side. Thank you.

Alfonso de Angoitia: Thank you, Livia. Valim, can you answer these questions please?

Olivia: Thank you Olivia.

Linda: Linda you answered these questions.

Francisco Valim: Sure, Alfonso. Livia, I think that the first question is, we are still finalizing some synergies with Sky, but we have a constant effort on margin improvement. Obviously we're not forecasting further increments, but we are always focusing on improving margins. That's a recurring theme amongst ourselves. Regarding the 1 million homes passed, typically Q1 is a slow quarter, but by the end of the year we should reach our target. In terms of our CapEx budget, we are in the 665. We should not deviate much from that in any way. You should anticipate us doing that. Obviously, like I said, Q1 is a little slower, so there is seasonality and obviously Q4 tends to be the heaviest one in terms of CapEx deployment.

Olivia: Neil.

Olivia: Yes, I think that the first question, yes, we.

Olivia: We are still.

Olivia: The license.

Olivia: Synergies are with Sky, but we have a constant effort on margin improvement. So obviously, we're not forecasting further increments, but we are always focusing on improving and improving margins and that's a recurring theme amongst amongst ourselves regarding the.

Olivia: 1 million homes passed.

Olivia: Typically the first quarter is a slow quarter, but by the end of the year, we should reach our target in terms of our capex.

Olivia: The budget we are in the 665, we are we should not deviate much Mike from from that.

Olivia: And anyway, so we shouldn't anticipate doing that obviously like I said the first quarter is a little slower. So there is there is seasonality and obviously the last quarter tends to be the the heaviest one in terms of our capex deployment.

Liziya Mizubata: Thank you very much.

Olivia: Thank you very much.

Operator 2: Our next question is from Carlos de Legarreta with Itaú. Please go ahead.

Carlos: Our next question is from Carlos <unk> with <unk>. Please go ahead.

Carlos de Legarreta: Thank you, gentlemen. Good morning, and thank you for taking the question. I have two on my end. The first one is I wanted to hear your thoughts on cash allocation at this point in time. Particularly seems like reactivating buyback activity could be interesting. The second one, I just wanted to hear your thoughts on the recent downgrade by Moody's of TelevisaUnivision's debt rating. Also would be interested in your thoughts. Thank you.

Speaker Change: Thank you gentlemen, good morning, and thank you for taking the question.

Carlos: I have two on my end. The first one is I wanted to hear your thoughts on cash allocation at this point in time, particularly seems like reactivating buyback activity could be interesting.

Carlos: The second one just wanted to hear your thoughts on the recent downgrade by Moody's of the needs of your divisions.

Speaker Change: Debt rating.

Carlos: Also we'll be interested in your thoughts thank you.

Alfonso de Angoitia: Thank you, Carlos. I'll take the second one, and then I'll ask Carlos Phillips to take the first one. As to the Moody's rating downgrade, I can say that, as you could see, since the end of last year, of 2024, we have been implementing OpEx efficiencies at TelevisaUnivision, and that is to grow EBITDA this year and reduce leverage, despite the expected headwinds to grow revenue. You can see this, that during the Q1, as we managed to grow TelevisaUnivision's EBITDA by 5% year-on-year, and this is despite the revenue decline of 11%. We also managed to reduce leverage from 5.9x EBITDA by the end of last year to 5.8x by the end of the Q1.

Speaker Change: Thank you Carlos I will take the second one and then I'll ask Carlos Philips to take the first one.

Carlos: After the download movies.

Speaker Change: Rating downgrade I can say that.

Speaker Change: As you can see since the end of last year of 2024, we have been implementing opex efficiencies.

Speaker Change: Let me say Univision and that is to grow EBITDA this year and reduce leverage.

Speaker Change: The expected headwinds to grow our revenue.

Speaker Change: You can see this.

Speaker Change: During the first quarter as we managed to grow Televisa and Univision EBITDA by 5%.

Speaker Change: Year on year and this is despite the revenue decline of 11%.

Speaker Change: We also managed to reduce leverage from five nine times EBITDA by the end of last year to five eight times by the end of the first quarter.

Alfonso de Angoitia: In the remainder of 2025, we will continue to focus on implementing efficiencies, and we're trying to grow full year EBITDA, generate free cash flow, and our priority is to keep reducing our leverage ratio. If you read Moody's report, unfortunately it appears that they are concerned with the slowing economic growth in the US for 2025. This, as you read there, it's triggered by the potential implementation of tariffs and Mexico's relatively weak economic environment. They have adopted a more cautious view with regard to our advertising business and, as a result, downgraded TelevisaUnivision's credit ratings. We see a better scenario than they do, but that's what I can tell you about the downgrade. Carlos can take your first question.

Speaker Change: So in.

Speaker Change: The remainder of 2025, we will continue to focus on implementing efficiencies.

Speaker Change: We're trying to grow full year EBITDA.

Speaker Change: Generate free cash flow and our.

Speaker Change: Priority is to keep reducing our leverage ratio.

Speaker Change: If you read the Moodys report Unfortunately, it appears that the.

Speaker Change: We are concerned with the slowing economic growth in the U S for 2025.

Speaker Change: And this as you read there it's triggered by the potential implementation of tariffs and Mexico's relatively weak economic environment.

Speaker Change: And they have adopted a more cautious view with regard to our advertising business.

Speaker Change: As a result downgraded Televisa and Univision is credit ratings, but we see.

Speaker Change: I mean, a better scenario than they do.

Speaker Change: But that's what I can tell you about the downgrade.

Speaker Change: Carlos can take your first question Hi, Carlos.

Carlos Phillips: Hi, Carlos. In terms of your question about cash flow, this year we expect to deliver another year of positive cash flow. You have to consider that, as Valim and the team have mentioned, we're going to have higher CapEx requirements compared to last year. In terms of the use of the free cash flow, as we've mentioned in previous calls, our number one priority is to pay down debt. As you saw during the quarter, we paid down our 2025 bond maturity, which was around $219 million. As we mentioned in the past, we had hedged that into peso exposure at a pretty attractive rate. It was 17.8 FX. We expect to continue doing the same. Our leverage fell from 2.5 to 2.4 this quarter. We want to continue strengthening our leverage position, and also continuing to have a very conservative liquidity position.

Speaker Change: In terms of your question about cash flow.

Speaker Change: If you we expect to deliver another year of positive cash flow. However, you have to consider that as one team and the team had mentioned, we're going to have higher capex requirements compared to last year and in terms of the use of a free cash flow as we've mentioned in previous calls there are a number one priority is to pay down debt as.

Speaker Change: As you saw during the quarter, we paid down our 2025.

Speaker Change: <unk> maturity, which was around $219 million as we mentioned that we had hit to that into peso exposure.

Speaker Change: Pretty attractive radio was $17 eight.

Speaker Change: And we expect to continue doing the same.

Speaker Change: Our leverage fell from two five to two point for this this quarter and we want to continue strengthening our leverage position.

Speaker Change: And also continuing to have a very conservative liquidity position as we can.

Carlos Phillips: As we've mentioned before, the idea here is to maintain our investment grade ratings. We're very committed to that.

Speaker Change: Mentioned before the idea here is to to maintain our investment grade.

Speaker Change: Ratings, where we're very committed to that.

Carlos de Legarreta: Thank you both for your comments.

Speaker Change: Thank you both for your comments.

Operator 2: Our next question comes from Gustavo Farias with UBS. Please go ahead.

Speaker Change: Our next question comes from Gustavo <unk> with UBS. Please go ahead.

Gustavo Farias: Oh, hi, everyone. Thanks for taking the questions, also two from my end. The first one, we've seen some lower broadband and video disconnections. I'd like to hear your thoughts on what to expect throughout the year, and what are you seeing in terms of overall competition and pricing environments for broadband specifically. The second one, if you could comment your thoughts around all the new regulation that's going on in Mexico, especially regarding maybe possible restrictions in foreign advertising, maybe impacts that, if any, you foresee for Televisa and Univision. It would be very helpful. Thank you.

Gustavo: Oh, hi, everyone. Thanks for taking my questions also choose from my end.

Speaker Change: So the first one being some.

Speaker Change:

Speaker Change: Nowhere broadband and video connections so.

Speaker Change: It should hear your thoughts on what to expect and how the year.

Speaker Change: What are you seeing in terms of overall competition and pricing environment for broadband specifically.

Speaker Change: And the second one.

Speaker Change: If you could comment.

Speaker Change: Just your thoughts around all of the new regulation.

Speaker Change: What's going on in Mexico, especially regarding maybe a possible restrictions and for an advertising E D.

Speaker Change: Uh huh.

Speaker Change: <unk> for teams Fortunately.

<unk>.

Speaker Change: Uh huh.

Speaker Change: It could be very helpful. Thank you.

Alfonso de Angoitia: Francisco will answer your first question, and I'll take the second one.

Speaker Change: Francisco will answer your first question and I'll take the second.

Francisco Valim: Gustavo, the idea is here, we think this is a mature market, a very rational market, if you ask me. You see competitors behaving rationally. There are not significant discounts in price. In a mature market, if you try to add a lot of gross adds, you end up having a higher churn as well. The way we approach this is, we think this market, we need to grow between 350,000, 400,000 new gross adds per quarter and have a smaller number than that in terms of cancellations. That's the way we see this moving forward, and that we have done, obviously, many things in terms of churn reduction and also in how to acquire customers that are of better quality, because we think that's the way moving forward.

Speaker Change: So we thought about the idea is here. We think this is a mature market a very rational market used to ask me.

Speaker Change: You see competitors behaving rationally there are not significant discounting price.

Speaker Change: And in a mature market if you try to.

Speaker Change: A lot of gross adds.

Speaker Change: Ended up having a higher churn as well so the way we approached it.

Speaker Change: We think this is mark that we need to grow between 350 400000, new gross adds per quarter.

Speaker Change: And have a smaller number than that in terms of our cancellations. So that that's the way we see this moving forward and that we have done obviously, many things in terms of churn reduction and also how to acquire customers that are of better quality, because because we think that.

Speaker Change: That's the way moving forward.

Francisco Valim: We have a very robust and reliable subscriber base, and we are working very hard to maintain that subscriber base in the long run. The gross adds minus the churn is mostly driven by new acquisitions as opposed to the more longer-term subscribers. That's the way we see this moving forward and quarter after quarter, starting with Q2, if I may.

Speaker Change: We have a very robust and reliable subscriber base and we are working.

Speaker Change: We're working very hard to maintain that subscriber base and in the long run and so the gross adds minus the churn is mostly driven by new acquisitions as opposed to the more longer term subscribers. So you should have.

Speaker Change: That's the way, we see this moving forward and quarter after quarter.

Speaker Change: Starting with the second quarter, if I may.

Alfonso de Angoitia: Gustavo, to your first question or second question, I'm sorry. We're still analyzing the proposed telecommunications reform. As far as we understand, it will be open for discussion with the industry players before being approved at the lower house. Once we have a clearer view on the proposal, we'll be in better shape to share with you our thoughts. As we currently understand it, limitations on advertising in Mexico are related to foreign governments buying advertising on television and other media. We're in full agreement with that change. It doesn't represent anything material for us in Mexico.

Speaker Change: And I will start with your first question.

Speaker Change: Your second question I'm, sorry, we're still analyzing the proposed telecommunications reform.

Speaker Change: As far as we understand it.

It will be opened for discussion with the industry players before being approved.

Speaker Change: The lower house.

Speaker Change: Once we have a clear review on the proposal.

Speaker Change: We'll be in better shape to share with you our thoughts.

Speaker Change: Also as we currently understand it limitations on advertising in Mexico are related to foreign governments by advertising on TV.

Speaker Change: Other media.

Speaker Change: We're in full agreement with that change it doesn't represent anything material for us in Mexico.

Gustavo Farias: Thank you all.

Speaker Change: Thank you all.

Alfonso de Angoitia: Thank you all.

Speaker Change: Sure.

Speaker Change: Okay.

Operator 2: This concludes our question and answer session. I would now like to turn the conference back over to Mr. Alfonso de Angoitia for any closing remarks.

Speaker Change: This concludes our question and answer session.

Dan: I would now like to turn the conference back over to Mr. Dan <unk> for any closing remarks.

Alfonso de Angoitia: Thank you very much. Thank you for participating in the call. We're here to answer any questions that you may have. Give us a call. Thank you very much. Bye.

Thank you very much. Thank you for participating in the call and we're here to answer any questions that you have.

Dan: May have.

Dan: Give us a call. Thank you very much.

Dan: Right.

Operator 2: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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

Dan: Okay.

Dan: [music].

Dan: Okay.

Dan: [music].

Dan: