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spk00: Good morning and welcome to Cablevision Holdings conference call. My name is Chad and I will be your conference operator today. After the speaker's remarks, there will be a question and answer session. You may submit your questions throughout the event by clicking in the submit a question box on your screen. Today, we will discuss Cablevision Holdings nine months and third quarter 2022 results. This call is for investors and analysts only. Therefore, questions from the media will not be taken at this time. However, if you are a member of the media and have questions, please contact FIG Corporate Communications following the call. I will now introduce our speaker, Ms. Samantha Olivieri, Head of Investor Relations. The team will be discussing the results as per the earnings released distributed last Thursday, November the 10th. If you have not received the report or need assistance during today's call, please contact FIG Corporate Communications in New York at 917-691-4047 or the company in Buenos Aires at 5411-4309-3417. CVH has also posted the webcast presentation that can be found at www.cablevisionholding.com slash investors. Comments made by management may contain forward-looking statements about Cablevision Holdings' future performance, plans, strategies, and targets. Such statements are subject to uncertainties that could cause Cablevision Holdings' actual results and operations to differ materially. Such uncertainties include but are not limited to the effects of the impact and duration of Eastern Europe conflict, new or ongoing industry and economic regulations, possible changes in demand for Cablevision Holdings products and services, and the effects of more general factors such as changes in general market, economic, or in regulatory conditions. Please refer to the disclaimer in the earnings report or presentation for additional information regarding forward-looking statements. It is now my pleasure to turn the call over to Ms. Samantha Oliveri. Please go ahead.
spk01: Thank you, Chad. Good morning, everyone, and thank you for joining us. Today's call will begin with a brief macro overview and continue with a review of the company's income statements and operating results, followed by a review of the financial position. Please move to slide four. As we've been describing in the past quarterly presentations, Argentina's economy continues to register acceleration in the inflation rate. In addition, the attempts to bring the interest rates and exchange rates closer to inflation result in an acceleration in the nominality of the economy, which, if continuous, could challenge the central bank's ability to maintain the level of reserves. Going into numbers, September inflation rose to 6.2%, somewhat lower than the previous month, which registered a record high in July and accumulates 66.1%, reaching 83% year-over-year. Estimates for 2022 are being revised upwards and are entering the triple-digit terrain, according to the Central Bank Expectations Survey. Current estimates for 2023, in the best-case scenario, are of a null GDP growth, following a 4.5% growth expected for the current year and 100% inflation rate. Given the scenario, there seems to be some level of consensus between the governing party and the opposition about the need for a stabilization plan to anchor general prices. Any stabilization plan must initially correct relative prices, including official effects rates, while ensuring a quick closure of the fiscal deficit that puts an end to the direct monetary financing of the Treasury, whether by central bank transfers or dividends, or indirect, through purchase of sovereign debt. This must come hand in hand with the prices and salaries agreement to bring an end to the indexation of salaries and pensions. The presentation in agreement with the IMF staff of a consistent monetary and fiscal roadmap for the years to come would contribute to anchor expectations about the future economic performance. We will now continue with CVH key financials. Slide six shows the highlights for the nine months of 2022. The company has reflected the effects of inflation adjustment adopted by Resolution 777-18 of the Commission Nacional de Valores , which establishes the re-expression of figures must be applied to the annual financial statements for intermediate and special periods ended as of and including December 31st, 2018. Accordingly, the reported figures corresponding to the nine-month 2022 include the effects of the adoption of inflationary accounting in accordance with the International Accounting Standard 29. For comparative purposes, the results restated by inflation corresponding to September 2021 contain the effect of year-over-year inflation as of September 2022, which amounted to 83%. In this presentation, we included some figures and historical values for the sake of clarity. CBH owns 39.08 stake in TIO and is controlling shareholder of Telecom Argentina. It consolidates 100% of its operations. In constant currency, revenues for nine months 22 dropped 12.2% from 536.2 to 471 billion pesos. mainly driven by lower service revenues. Increasingly higher inflation is hard to fully pass through to prices for our services. EBITDA reached approximately 134.7 billion pesos in constant currency, a 22.6% decrease compared to 9 months 21, driven by lower revenues partially upset by lower operating costs. EBITDA margin decreased from 32.5% to 28.6%. EBITDA nominal pesos amounted to 107.1 billion pesos, 24% higher than nominal EBITDA for nine months 21, while inflation for the same period was approximately 83%. Net income totaled negative 131,999 million from 2,548 million reported during nine months 21. The decrease in net income is mainly the result of an impairment loss of the goodwill asset of 174,558 million pesos following a revision of the recoverable value estimation of the goodwill generated by the merger between Telecom and Cablevision in 2018, given the current microeconomic and market environments. And lower VETA, partially offset by lower income tax as a result of the application of the deferred income tax method, which resulted in a gain versus a loss in 2021 and higher net financial results. The FX lag prevented the impact of losses and results due to the revaluation of debt in dollars as has been occurring in previous quarters. The equity shareholders net loss for the period amounted to $80,988 million and is mainly the result of CVH's stake in Telecom and adjustments of the goodwill generated by the merger at CVH level. Now let's continue on to slide seven for a discussion of the operating results in the third quarter 22. Revenues in third quarter 22 decreased by 15.9%. A late price increases for our services keeping up with high levels of inflation the Argentine economy has experienced over the past 12 months has been a challenge. Revenues in nominal terms increased 49%, while inflation for the same period was approximately 83%. The main source of revenues was fixed infrastructure. Broadband, pay-to-be, and fixed telephone and data services amounted to 51.7% of total, while mobile service participation stood at 40.9%. EBITDA increased by 24% year-on-year in nominal terms, representing an EBITDA margin of 25.3%, while EBITDA margin in real terms decreased to 24.5%. The net loss for the period attributable to the equity shareholders was $95,256 million in constant pesos, mainly as a result of CBH's participation in Telecom's net income and adjustments of goodwill generated by the merger at CVH level. Now let's move on to slide eight. Mobile revenues represent approximately 40.9% of our revenue and decreased 9.5% in real terms when comparing third quarter 22 versus third quarter 21. Personal Argentina clients increased 2.4% to 20 million and postpaid clients amounted to 43% of total mobile clients. Mobile internet usage increased, reaching an average of 5 gigabytes per user per month in the first nine months of 2022. Thanks to the CAPEX deployment, Telecom has been able to increase the number of its 4G subscribers. This rapid growth in subscribers that use the 4G network has been the main driver of data traffic increase. In Argentina, ARPU restated in constant currency decreased by 9.9% to 936.5 pesos in nine months, 22, and monthly churn increased to 2.5% from 1.6% in nine months 21. The commercial strategy has been focused on achieving higher mobile portability through convergent offers and promoting the consumption of mobile internet. Up to date, 52% of telecoms broadband customers have a mobile bundle. Since the rollout of the strategic CapEx plan and the convergent offer, the company has turned around its trend of negative portability in adaptation in Argentina and has been increasing the number of subs over the last four and a half years. Please turn to slide nine. Revenues for fixed services, including broadband cable TV and fixed telephone and data services, decreased by 20% in real terms, mainly driven by the challenging inflationary dynamic. Broadband subscribers remain stable at 4.2 million, while monthly churn was 1.5% stable as compared to the same figure last year. Algo in real terms decreased to approximately 2,642 pesos. Price increases in September 21, January, April, and July 22, and higher internet speeds sold to our customer base were not enough to offset the inflation. It should also be noted that due to our cross-selling strategy, Fixed products have been offered with some discounts to encourage positive mobile portability. Around 79% of our 4.2 million broadband customers reach in third quarter 22 subscribe to services with speeds of 50 megabytes or higher. Moving to the cable TV subscribers, the customer base remains stable at 3.5 million, showing a slight decrease year over year. Furthermore, Flow unique customers achieved 1.3 million, an 18.3% increase from figures observed over a year ago. During the past month, Flow, through its Flow app version, has continued to expand its penetration in areas where personal has a great presence, mainly the northern region of Argentina. This has allowed an increase in the capture of cable TV subscribers in regions in which the company reaches through its XDSL and fiber-to-home networks. Through its content proposal as a content aggregator, Flow includes not only linear TV series, on-demand movies, documentaries, and co-productions, but also music, gaming, and exclusive events. In addition, as a step forward into the technological evolution of its platform, Dacom began activating the ISDBT digitalization service solution to its analogical customers. which allows clients to connect to a digital service from the traditional cable connection without a decoder. This initiative will continue to expand during the rest of 2022. Furthermore, during this quarter, Telecom launched FlowFlex, a prepaid flexible pay TV service that enables clients to hire the service for a few days period. Carpool, in real terms, decreased by 18.1%, to 2,620.9 pesos during nine months 22, and monthly trend increased to 1.3%. Please turn to slide 10. In August 2020, the Argentine government issued Decree 690-2020, later confirmed by Congress, declaring mobile, fixed voice broadband, and pay TV as public essential services, and freezing their prices until the end of 2020. while instating ENACOM as a regulatory agency in charge of enforcing the decree and regulating the industry prices. Its legality has been challenged in court by the industry in general. In 2021, TELECOM was granted a preliminary injunction suspending the effects of several sections of the decree, which has been extended to the last time in October 2022. Although we feel that the final ruling regarding the underlying issue is imperative to guarantee the health of the industry, as a consequence of such injunction, Telecom can manage the pricing policy of its services as before the Decree 690-2020. The company has been trying to offset the inflation impact on revenues and costs, but with price increases suspended in 2020 and the increasingly high inflation, the covering term is a challenge. Year-over-year inflation as of September 30th, 2022 amounted to 83%, while inflation for the first nine months of 2022 amounted to 66.1%. During January, April, and July 2022, our subsidiary increased prices on all of its services, and again in September and November 22, for mobile services and October 22 for fixed services. Mobile prices were increased by 17% for postpaid and up to 20% for prepaid services. Broadband prices for XDSL services increased by 19% and prices for HSC and fiber to the home services increased by up to 15%. Pay TV services were increased by up to 19% and premium services up to 15%. Prices of fixed voice basic services were increased by up to 19%. These price increases have resulted in higher ARPU in nominal terms across all services, as shown in exhibits 19 to 22. The nominal price increases were not enough to offset interannual inflation, 83% year-over-year as of September, thus resulting in lower revenues when measured in constant pesos. The company will continue to monitor its cost structure, competitive environment, inclined behavior, and household income in order to decide on future price increases to help compensate for inflation and maintain sustainability. Let's move to the next slide for a discussion of cost structure before we discuss quarter-over-quarter EBITDA performance. Amongst the most significant operating costs and expenses are salaries, fees for service, maintenance materials and supply costs, taxes and fees with a regulatory authority, and programming and content costs. On slide 11, we show the performance of EBITDA and the behavior of different components of revenues and costs. The company continues with its efforts to expand efficiencies and has shown some positive results despite the challenging economic context. Operating costs, excluding cost of equipment and handsets, decreased in real terms 9%. Most of the company's cost components decreased in real terms reflecting efficiencies except for employee costs which increased above inflation as a result of severance payments, which amounted to $6.2 billion from $3.8 billion in Q3 2021, and agreements reached with our unions. As a result, operating costs decreased 10% in real terms, and driven by the reduction in revenues, EBITDA decreased by 30% in real terms, while margin contracted to 24.5%. Margin for the effective severance payment was 28.7% from 31.6% in third quarter 21. Next slide, please. In third quarter 22, CAPEX as a percentage of revenues was 20.6% lower than the same period of the previous year. Technical CAPEX was mainly allocated to network and technology and customer-premise equipment, or CPE, The balance was allocated to our international operations in Paraguay and Uruguay. During the third quarter 22, 34 new mobile sites were deployed and more than 500 existing sites were upgraded. The company has been focused on expanding its fiber to the home network, performing an overlay with the fiber to the home over the HFC network and increasing its upstream capacity. In addition, Telecom expanded its fiber-to-home network in the province of Mendoza over 550 new blocks. Telecom has also pioneered the 5G deployment in Argentina. In September 2022, it deployed 109 5G DSS sites with connection speeds up to 15 gigabytes and expects to have a total of 170 sites working with the DSS technology by the end of the year. Argentina's government is working to auction 5G spectrum frequencies during 2023. The GAPEX program will continue evolving according to Argentina's economic condition, network performance, and customers' requirements. Going to the GAP financial position as per slide 15. As of September 2022, we have reported a total financial debt of 400 billion pesos and net debt of 359.3 billion pesos, equivalent to 2.4 billion in U.S. dollars. 100% of the debt is at the operating level in Telecom Argentina. As the total debt, 62.4% is dollar denominated, 30.6% is in Argentine pesos, including dollar-linked local emissions, and the rest is in Guaranias and Bamimbi. Our U.S. dollar cost of debt is approximately 6.5%. From 2023 to 2026, debt maturities remain manageable within the range of $500 to $600 million each year, and under the current central bank regulations, DELCOM has access to the FX market to attend its maturities. The company expects to continue accessing the local capital markets for any potential financing needs. Net debt to adjusted EBITDA coverage ratio as of the end of September 2022 was two times. That concludes our comments. We are now ready to take your questions. Chad?
spk00: Thank you. At this time, we will open the floor for your questions. If you would like to ask a question, please type it in the box and click send. We will now pause for a few seconds in order to allow participants to write their questions. Thank you. And again, if you do have a question, please type it in the box and click send. Once again, we will pause momentarily to assemble those questions. And ladies and gentlemen, it appears that we have no questions at this time, so I would like to turn the program back over to Samantha Oliveri for any closing remarks.
spk01: Thank you, Chad. I thank you all for your interest in CVH. Should you have any questions in the future, do not hesitate to contact our IR team. I look forward to speaking with you regarding the fourth quarter and annual results of 2022. Have a great day.
spk00: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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