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 Balim, 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 Univision 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 EASY 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's 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 cross-sets 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 36,000 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 residential operations of 10.5 billion pesos, 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 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 4.5% year-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's operating and financial performance, during the first quarter, we lost 331,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. SKY first quarter revenue of 3.5 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 pesos 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 EASY and Sky. On a sequential basis, our operating segment income for the first quarter 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 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 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% 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.