Grupo Televisa S.A.B.

Good morning, everyone, and welcome to Grupo Televisa's fourth quarter and full year 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 discussed in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoixa, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.

Thank you, Operator. Good morning, everyone, and thank you for joining us. With me today are Francisco Balim, CEO of Cable & Sky, and Carlos Phillips, CFO of Grupo Televisa. Last year was marked by several milestones, both at Grupo Televisa and Televisa Univision, which Bernardo and I are confident will allow us to keep creating value for our shareholders. At Grupo Televisa, let me touch on four major achievements. First, a strategy to focus on attracting and retaining value customers in cable allowed us to grow our internet subscriber base by around 47,000 in 2025. This marks a full year turning point after losing internet subscribers both in 2023 and 2024, mainly driven by a strategy decision not to retain low value subscribers. Second, we keep executing on the implementation of OPEX efficiencies and the integration between EASY and Sky to extract further synergies. This contributed to expanding our 2025 consolidated operating segment income margin of 39.1% by 200 basis points driven by a year-on-year OPEX reduction of 8.3%. Third, We kept a disciplined CapEx deployment approach to focus on free cash flow generation. In 2025, we invested 12.2 billion pesos in CapEx, which is equivalent to 20.7% of sales. This CapEx is intended to deliver higher returns over the investment and has allowed us not only to have close to 1.4 million gross ads during the year, but also to upgrade 4.5 million homes to FTTH technology. This basically means that we ended 2025 with around 9 million homes or approximately 45% of our total footprint passed with FTTH technology. Balin will elaborate on our plan to keep upgrading our network later during the call. And fourth, in 2025, we generated around 5.9 billion pesos in free cash flow, allowing us to prepay a bank loan due in 2026 with a principal amount of around 2.7 billion pesos. This debt repayment comes up of the $220 million principal amount of our senior notes already paid on March 18th. Additionally, at the end of 2025, Grupo Televisa's leverage ratio of two times IDETA compared to two and a half times at the end of last year, mainly driven by our free cash flow generation. And at Televisa Univision, I will mention three key milestones. First, 2025 was a breakthrough year for our direct to consumer business as VIX delivered record revenue since it was launched, achieving profitability in every quarter expanded operating margins throughout the year. For the full year, our DTC business represented nearly a quarter of the total company revenue driven by robust advertising growth from our free tier and the continued expansion of our premium subscription offerings. Moreover, our DTC business is now a significant contributor to our adjusted EBITDA accounting for approximately 20% driven by its industry leading margins. Second, the efficiency plan to reduce gross operating expenses at Televisa Univision by around $400 million in 2025 delivered outstanding results. During the year, our total operating expenses declined by around 8% year on year for total operating expenses of around $3.2 billion. This shows a disciplined execution of our cost savings initiative. These OPEX reductions have been fully realized in our 2025 results. And third, looking at Televisa Univision's leverage and debt profile, the company ended the year at 5.6 times even that, an improvement from 5.9 times at the end of 2024, driven by growth. Moreover, in 2025, Televisa Univision successfully refinanced $2.3 billion of debt, which extended its credit facilities and eliminated all near-term maturities. The leveraging remains a core strategic priority for Televisa Univision. Having said that, let me turn the call over to Alin, as he will discuss the operating and financial performance of our consolidated assets.

Thank you, Alfonso. Good morning, everyone. In 2025, consolidated revenue reached 58.9 billion pesos, representing an year-on-year decline of 5.5%, mainly driven by lower revenue at Sky. Operating segment income reached 23 billion pesos, equivalent to a slight decrease of only 0.6% year-on-year. Turning to our fourth quarter results, consolidated revenue reached 14.5 billion pesos, representing a year-on-year decrease of 4.5%, while operating segment income reached 5.9 billion pesos, equivalent to our year-on-year expansion of 6.1%, driven by the efficiency measures that we have been implementing since the integration of Sky. Now, let me walk you through the operating financial performance of our cable operations. We ended December with a network of 20 million homes after passing around 59,000 new homes during the quarter, or over 118,000 new homes during the year. During the quarter, we continued to execute our strategies to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate below our historical averages of 2% for the third consecutive quarter. our broadband gross ads remained solid, allowing us to deliver 25,000 net ads during the fourth quarter compared to net ads of around 22,000 in the third quarter and 6,000 in the second quarter and the disconnection of about 6,000 in the first quarter of 2025. In video, we also experienced stronger gross ads than in the first three quarters of the year and managed to reduce churn. Therefore, we lost about 31,000 video subscribers during the fourth quarter compared to 43,000 disconnections in the third quarter and 53,000 cancellations in the second quarter, and a loss of 73,000 video subscribers in the first quarter of 2025. Moreover, we expect these improving trends to continue going forward, influenced by our multi-year partnership with Formula One to provide line coverage of all Grand Prix via Sky Sports channels available to East and Sky, beginning in the fourth quarter of last year and through the 2028 season. Moving to mobile, our net ads of 95,000 subscribers during the quarter showed sustained momentum as they were mostly in line with the 94,000 net ads in the third quarter. Our innovative MDNO services are already making our bundles more competitive, allowing us to increase the share of wallet of our existing customers and helping us to reduce significantly the churn of our existing customers. During the quarter, net revenue from our residential operations of 10.6 billion pesos, which accounted for around 90% of total cable revenue, decreased by only 0.6% year-on-year. This marked the best quarter of the last two years at our residential operations from a revenue growth performance standpoint and compares well to a decline of 1.8% in 2025. On a sequential basis, net revenue from our residential operations remained stable, potentially signalling a gradual recovery. During the quarter, net revenue from our enterprise operations of 1.2 billion pesos, which accounted for around 10% of our cable revenue, fell by 4.2% year-on-year, due to the timing of revenue recognition of an important contract signing in the fourth quarter of 2025 and because of tough comps. Moving on to Sky's operating financial performance, during the fourth quarter, we lost 304,000 revenue generating units, mostly coming from prepaid subscribers that have not been recharging their services. In addition, beginning the second quarter, we started to charge an installation fee of 1,250 pesos to all new satellite pay-to-vis subscribers to increase the return on investments on the service. This translated into a slowdown of video gross additions for Sky that has been steady over the last three quarters. Sky's fourth quarter revenue of 2.8 billion pesos declined by 16.8% year on year, mainly driven by a lower subscriber base. To sum up, Segment revenue of 14.5 billion pesos fell by 4.5% year on year, while operating segment income of 5.9 billion pesos increased by 6.1%, making it the best quarter of the year driven by efficiency measures that we have been implementing and synergies from the ongoing integration between East and Sky. Our operating segment income margin of 40.9% expanded by 410 basis points year on year. Regarding CapEx deployment, our total investment of 4.6 billion pesos accounted for 31.8% of sales in the fourth quarter. During the year, our CapEx deployment of 12 billion pesos equivalent to $645 million or 20.7% of sales. The main reason behind having a higher total investment relative to our 2025 CapEx budget of around $600 million was the strong than expected Mexican pesos. particularly during the second half of the year, and the fact that around 50% of our capex budget is in local currency. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus capex, was 1.3 billion pesos in the fourth quarter, representing 9.1% of sales. For 2026, our capex-to-sales ratio should be close to 25%, as we plan to upgrade 6 million homes to fiber-to-the-home technology. increase our subscriber base, and support growth. This basically means that we expect to end 2026 with 75% of our total footprint passed with FTTH technology.