Grupo Televisa S.A.B.

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. I will now turn the call over to Mr. Alfonso de Angosia, co-chief executive officer of Grupo Televisa. Please go ahead,

sir. 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 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 the community vision that we will 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 EZ and Sky to extract further synergies. This has 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%, and we would expect this profitability improvement to remain over the coming quarters. And at Televisa Univision, 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, Televisa Univision's first quarter 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 the first quarter. Having said that, let me turn the call over to Valim, as he will discuss the operating and financial performance of our consolidated assets. Thank

you, 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 the first quarter, our monthly churn rate remained in line with our historical average of 2% as we kept executing our stretches to focus on value customers rather than volume, while working on customer reputation and satisfaction. Our broadband gross ads improved considerably on a sequential basis, allowing us to deliver disconnections of only around 6,000 subscribers during the first quarter compared to a loss of 85,000 in the fourth quarter of last year. Regarding video, we also experienced stronger gross ads than in the fourth quarter of last year. Therefore, we lost about 73,000 video subscribers in the first quarter compared to the 95,000 disconnections in the fourth quarter of 2024. Of note, our mobile net ads were solid at 46,000 subscribers during the first quarter compared to a full-year net ads 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. During the quarter, net revenue from our residual operations of 10.5 billion pesos, which accounted for around 91% of total cable revenue, decreased by 3% -on-year mainly because we lost some revenue given the cancellation of the aficionados video package during the second quarter of 2024 and as we had a slightly lower subscriber base. Net revenue from our enterprise operations of 1 billion pesos, which accounted for around 9% of total cable revenue, declined by .5% -on-year as in the first quarter of 2024, we are concluding an important government contract which translated into higher revenue streams. Moving on to Sky, operating and financial performance, during the first quarter, we had a significant increase in revenue generated units, mostly coming from prepaid subscribers that had not been recharging their services. Sky, first quarter revenue of 3.5 billion pesos, fell by .2% -on-year, mainly driven by a lower subscriber base. To sum up, segment revenue of 15.1 billion pesos fell by 5.7 -on-year while operating segment income of 5.7 billion pesos declined by 3.1%. Our operating segment income margin of .8% expanded by 100 basis points -on-year, mainly driven by the efficiency measures that we have been implementing and synergies from the ongoing integration between Easy and Sky. On a sequential basis, our operating segment income for the first quarter already marked a turning point as it increased by .6% -on-quarter, while our operating segment income margin expanded by 180 basis points. Regarding CAPEX deployment, our total investment of 1.8 billion pesos during the first quarter fell by around 13% -on-year, so our -to-sales ratio of .8% was around 100 basis points lower than that of the first quarter of 2024. Finally, operating cash flow of Cable and Sky, which is equivalent to EBITDA minus CAPEX, was 3.9 billion pesos in the first quarter, increasing by 2% -on-year and accounting for 26% of sales. This basically means that our operating cash flow margin increased by 200 basis points

-on-year. Thank you, Valim. Now, let me walk you through Televisa Univision's first quarter results released last week. The company's first quarter revenue of $1 billion declined by 11% -on-year, while adjusted EBITDA of $345 million increased by 5%. Excluding the impact from the depreciation of the Mexican peso, Televisa Univision's first quarter revenue decreased by 6% -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 partners in Mexico. On the other hand, adjusted EBITDA increased by 10% -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% -on-year, or 3%, excluding the Super Bowl in the U.S. and the FX impact. 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. Excluding the Super Bowl, U.S. advertising revenue declined by 6%. In Mexico, advertising revenue declined by 16% -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 the Liga MX and the Super Bowl. During the quarter, consolidated subscription and licensing revenue fell by 7% -on-year, but grew 1%, excluding the FX impact and the previously mentioned distribution renewal cycle in Mexico. In the U.S., subscription and licensing revenue increased by 5%, driven by VIXX's premium tier. 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 VIXX's premium tier. Turning to VIXX, 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 U.S., underscoring the value of our unique offering. All in all, VIXX remains well-positioned, delivering consistent performance across key metrics while reinforcing our leadership in Spanish language streaming. Finally, at the end of the first quarter, Televisa Univision's leverage ratio was 5.8 times EBITDA compared to 5.9 times 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 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 our senior notes maturing this year. This payment was hedged at an exchange rate of 17.8 pesos per dollar. Moreover, at the end of the first quarter, Grupo Televisa's 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 around 2.2 billion pesos during the quarter. To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies, and ongoing integration between EZ and Sky at Grupo Televisa, and further integration and operational optimization at Televisa Univision 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're ready to take your questions. Operator, can you please provide us with instructions for the Q&A?

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Lizzea Mizzobatta with JP Morgan. Please go ahead.

Hi, good morning. Thank you for taking my questions. I have two from my side. First, with all of the 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? And the second one, if you could give us some color on the guidance of 1 million HOMPest for fiber in 2025, how should be this curve given the first quarter? Is there a risk of downside revision following the low number of HOMPest? And can you give us an update on your CAPEX budget for the year? That is from my side. Thank you.

Thank you, Livia. Balim, can you answer these questions? Sure, counsel.

Livia, I think that the first question is we are still finalizing some synergies with SCIE, but we have a constant effort on margin improvement. So obviously, we're not forecasting further increments, but we are always focusing on improving margins, and that's a recurring theme amongst ourselves. Regarding the 1 million HOMPest, 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 budget, we are in the 665. We should not deviate much from that in any way. So we should anticipate doing that. Obviously, like I said, the first quarter is a little slower, so there is seasonality, and obviously the last quarter tends to be the heaviest one in terms of CAPEX deployment.

Thank you very much.

Our next question is from Carlos Legareta with E2. Please go ahead.

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, it seems like reactivating bioactivity could be interesting. And the second one, I just wanted to hear your thoughts on the recent downgrade by movies of the Lisa Univision debt rating also will be interesting. Your thoughts. Thank you.

Thank you, Carlos. I'll take the second one, and then I'll ask Carlos Phillips to take the first one. As to the movies 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 the Lisa Univision. 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 first quarter, as we managed to grow the Lisa Univision's EBITDA by 5% year on year, and this is despite the revenue decline of 11%, we also managed to reduce leverage from 5.9 times EBITDA by the end of last year to 5.8 times by the end of the first quarter. So, 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 the movies report, unfortunately, it appears that they are concerned with the ongoing economic growth in the U.S. for 2025. And this, as you read there, it's triggered by the potential implementation of tariffs and Mexico's relatively weak economic environment. And they have adopted a more cautious view with regard to our advertising business, and as a result, downgraded the Lisa Univision's credit ratings. But we see a better scenario than they do, but that's what I can tell you about the downgrade. And Carlos can take your first question.

Hi, Carlos. In terms of your question about cash flow, this year we expect to deliver another year of positive cash flow. However, you have to consider that, as Vanim and the team have mentioned, we're going to have higher CAPEX requirements compared to last year. And 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 hit that into peso exposure at a pretty attractive rate. It was 17.8 FX. And 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 continue to have a very conservative liquidity position. As we've mentioned before, the idea here is to maintain our investment grade ratings. We're very committed to that.

Thank you both for your comments. Thank you.

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

Hi, everyone. Thanks for taking my questions. Also, too, for my end. So the first one, we've seen some lower broadband and video disconnections. So 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. And 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 and foreign advertising, maybe impacts that, if any, you foresee for television and television, it could be very helpful. Thank you.

Francisco will answer your first question and I'll take the second one.

So, 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. And in a mature market, if you try to add a lot of graph adds, you end up having a higher churn as well. So the way we approach this is we think this market, we need to grow between 350,000, 400,000 new graph adds per quarter and have a smaller number than that in terms of cancellations. So that's the way we see this moving forward. And 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 we'll be forward. We have a very robust and reliable subscriber base and we are working very hard to maintain that subscriber base in the long run. And so the graph adds minus the churn is mostly driven by new acquisitions as opposed to the more longer term subscribers. So that's the way we see this moving forward and quarter after quarter, starting with the second quarter, if I may.

And 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 clear view on the proposal, we'll be in better shape to share with you our thoughts. Also, 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.

Thank you all. Thank you all.

This concludes our question and answer session. I would now like to turn the conference back over to Mr. Dan Guettia for any closing remarks.

Thank you very much. Thank you for participating in the call, and we're here to answer any questions that you may have. So give us a call. Thank you very much. Bye.

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