Cablevision Holding S.A.

Good morning, and welcome to Cable Vision Holdings Conference Call. Today, the team will discuss fourth quarter and full year 2024 results, as per the earnings release distributed last Thursday, February 27, 2025. My name is Nick, and I will be your conference operator for today. 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. Comments made by the company 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 new impact of 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. If you have not received the report or need any 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.cablevisionholdings.com slash investors. Following the presentation, 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. I will now introduce our speakers, Mrs. Samantha Olivieri, Head of Investor Relations, and Julian Basquiat, Senior Analyst. For the Q&A session, they will be joined by Mr. Ignacio Gillette, CVH's Executive Director and Chairman. It is now my pleasure to turn the call over to Mrs. Samantha Olivieri. Please go ahead.

Thank you, Nick. 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. Having gone through the agenda for today's webcast, I will now pass the call to Julian for the macro overview.

Thank you, Samantha. After 13 months in office, the government has achieved better than expected results despite the inevitable short-term costs associated with drastic macroeconomic reordering. This reordering was based on a stabilization program with three key anchors, a fiscal anchor, an exchange rate anchor, and a monetary anchor. For the first time in over a decade, a fiscal surplus was achieved. The result of the recurrent fiscal imbalance is basically explained by the unprecedented cut in public spending made during the year of close to 30% and equivalent to almost four points of GDP. As a result, the monetary issuance derived from the central bank's assistance to the treasury was eliminated. On the exchange rate front, within the framework of currency controls, the government stabilized the currency through a crawling peg policy. Initially, it settled at around a 2% monthly adjustment. As inflation declined and the program gained more credibility, the crawling peg was recently reduced to 1% per month. The government also advanced in adjusting relative prices. particularly for regulated services. Regarding inflation, there was a significant progress in slowing down the speed of price increases. The CPI index closed 2024 with variations of 2.7% monthly and 118% on a year basis, well below the 25% and 211% of 2023. This inflation dynamic allowed monetary policy rates to be lowered from 133% to 29% nominal annual rate, while the interest rate remained above the base of the valuation to mitigate exchange rates and inflationary pressures. On its part, the central bank has focused on improving its balance sheet by eliminating remunerated liabilities and broadly rebuilding gross reserves. The tax amnesty program led to a nearly $33 billion in private USD deposits. a 77% year-over-year increase. The strong agriculture and energy exports and corporate bonds, which were particularly driven by the rigid tax incentive for large investors, boosted gross reserves from $21 billion to close $28.5 billion. In addition, market confidence in the economic program has shown signs of improvement. Since the beginning of the new administration, the country's risk index has dropped to levels of around 700 to 800 basic points, the lowest in the last five years. This is an encouraging indicator given the need to re-access international debt markets in order to strengthen the central bank's fragile reserve position. The stabilization program had a negative impact on activity and consumption. The GDP of 2024 averaged a decline of around 1.8% below expectations. The decline concentrated in the early months of 2024, after which a floor was reached, and global signs of improvement began to emerge. The monthly economic activity indicator has shown consecutive increases, surpassing preordering program levels. The best-performing sectors in 2024 were agriculture and energy, while the lagging sectors were industry, construction, and retail. Regarding perspectives, it is worth mentioning that even despite the advancement achieved in the macroeconomic situation, it has yet to prove itself sustainable in time. The reordering incentive in the fiscal balance has generated positive stabilization signals in the economy. However, the challenges to be faced are several, amongst which are the degree of adaptation to the new exchange parity of the different economic sectors, the dynamic of the external front, and in particular, the need to accumulate central bank reserves, and the final exchange and monetary regime to be adopted once the still in place currency controls are leased. Consolidating the fiscal balance in an election year in order to keep advancing in the deflationary process and setting the basis of a sustainable growth path will be this administration's main challenge for its second year in office. This concludes our macroeconomic analysis I will now pass the call back to Samantha. Thank you.

Thank you, Julian. We will now continue with CBH Key Financials. Slide 6 shows some highlights for 2024. During this year, we collected dividends in kind from Telecom for an equivalent to approximately 45.2 billion pesos or 39.1 million US dollars. While some FX market restrictions were still in place, After a 90-day period hold, we successfully applied the bonds collected to pay dividends in kind to our shareholders during February 2025, resulting in a gross dividend equivalent to approximately 246.49 pesos per share or a gross dividend of 0.2062 per CDR. We maintained a healthy cash position with most of the liquidity at CBH level in U.S. dollar accounts. After a challenging beginning of the year, with soaring inflation after the devaluation of the Argentine pesos in December 2023, revenues of our subsidiary Telecom decreased 7.7% in constant pesos year-over-year, an improvement from the last two years, while year-over-year revenue in constant pesos performance for the fourth quarter was positive for the first time. Thanks to cost management efforts and the effective pricing policy carried out by Telecom, EBITDA margin remains stable. Slide 7 shows the key financials for 2024. The company has reflected the effects of the inflation adjustment adopted by Resolution 777-18 of the Comisión Nacional de Valores , which establishes the re-expression of figures must be applied to the annual financial statements Four intermediate and special periods ended as of and including December 31, 2018. Accordingly, the reported figures corresponding to 2024 include the effects of the adoption of inflationary accounting in accordance with International Accounting Standard 29. For comparative purposes, the results restated by inflation corresponding to December 2023 contained the effect of year-over-year inflation as of December 2024, which amounted to 117.8%. In this presentation, we included some figures and historical values for the sake of clarity. TVH owns 39.08% stake in PIO, and as controlling shareholder of Telecom Argentina, it consolidates 100% of its operations. Revenues in nominal terms increased 159%. In constant currency, revenues for 2024 dropped 7.7% from 4,484 to 4,137.6 billion pesos, mainly driven by lower service revenues. Even in a challenging macro scenario, particularly during the first quarter of the year, an effective pricing policy and a decrease in inflation as the year progressed allowed the company to close the gap to inflation versus previous years. EBITDA reached approximately 1,155.5 billion pesos in constant currency, an 8.1% decrease compared to 2023, driven by lower revenues partially upset by lower operating costs. EBITDA margin reached 27.9% compared to 28.1% in 2023. It is worth mentioning that as part of its efforts to gain efficiency and thanks to the digitization of processes, Telecom has accelerated the right sizing of its structure, particularly in the second half of 2024. EBITDA margin for 2024, excluding the effects of severance payments, was 31.1% versus 29.4% for the same period of the previous year. EBITDA and nominal pesos amounted to 1,005.3 billion pesos, 207% higher than nominal EBITDA for 2023. while average inflation for the same period was approximately 219.9%, and end-of-period year-over-year inflation amounted to 117.8%. Net income resulted in a profit of 1,024.7 billion pesos from a net loss of 537.5 billion pesos reported during 2023. This increase in net income is mainly explained by the financial net results as a variation of the parity between the official exchange rate and the US dollar was lower than the inflation for the period, resulting in positive foreign exchange results, partially offset by income tax. The equity shareholders net income for the period amounted to 387.1 billion pesos, and it's mainly the result of CBH's stake in Telecom. Now let's continue on slide eight for a discussion of the operating results for the fourth quarter of 2024. Revenues in the fourth quarter of 2024 increased by 1.3%. Price increases for our services and a lower inflation have had positive results in terms of revenues, even with commercial discounts granted according to customer retention policy for some of the services. Revenues in nominal pesos increased 159%, higher than the average inflation rate for the period, resulting in higher revenues when measured in constant basis. The main source of our revenues is our fixed infrastructure. Rather than pay-to-be and fixed telephony and data services amounted to 51.2% of the total, mobile service participation increased slightly, reaching 40.9% from 40.3% of 2023, driven by the decrease in share of pay-to-be revenues over total revenues. EBITDA increased by 145% year-on-year in nominal terms, representing an EBITDA margin of 26.4%, while EBITDA in real terms increased 0.3% and margin decreased to 25.5%, lower than the 25.7% margin for the fourth quarter of 23. As I mentioned, Telecom has accelerated the rate sizing of its structure, particularly in the last two quarters. EBITDA margin, excluding the effect of severance payment, was 29.2% in fourth quarter 24 versus 27.7% for the same period of the previous year. The net loss for the period attributable to equity shareholders was $4,198 million in constant pesos, mainly as a result of the reflection in the fourth quarter of 24 of the change in criteria established by the fiscal authority regarding the basis for the calculation of the personal assets tax, which was reflected in CBA's financials this quarter. Partially upset by positive financial results from the holding of bonds collected from telecoms in times dividend payments. Now let's move on to slide nine. Mobile revenues represented approximately 40.9% of our revenues and increased 5.2% in real terms when comparing fourth quarter 24 versus fourth quarter 23, mainly explained by hierarchical in real terms in the quarter, thanks to the decrease in year-over-year inflation and an increase in cuts. Personal Argentina clients increased 3% to 21.6 million, of which POSPAY clients amounted to 38%. Mobile internet usage increased, reaching an average of 6.4 gigabytes per user per month in 2024. In Argentina, in a highly competitive environment and influenced by an increase in prepaid clients which have lower ARPU, ARPU was stated in constant currency decreased by 10.4% to 5,960 pesos in the full year 2024, although ARPU for the last quarter of the year increased in real terms versus 2023. Monthly churn decreased to 1.4% from 1.8% in 2023. Since the rollout of the strategic CapEx plan and the convergence offer, the company has turned around its trend of negative portability net addition in Argentina and has been increasing the number of subs over the last six years, even in a highly competitive market. Telecom's CAPEX deployment has also allowed it to obtain the award for the fastest 4G network in Argentina for MUCLA at the 2024 Mobile World Congress in Barcelona for a fifth year in a row. Please turn to slide 10. Revenues for fixed services, including broadband cable TV and fixed telephony and data services, increased by 0.4% in real terms, mainly driven by higher Internet service revenues, partially upset by cable TV and fixed telephony and data services revenues. related to the challenging inflationary dynamic and change in consumer habits affecting pay TV and a reduction in fixed telephony clients. Legacy Copper fixed voice service continues experiencing a reduction in accesses, partially assessed by an increase in IT telephony lines. Data services offset the decrease in legacy telephony revenues. On the B2B services, Dagon's strategy is to position itself as an integrated service provider for large customers by offering Convergent ICT solutions, including fixed and mobile data. Internet multimedia data center and application services through sales, consulting, management, and specialized and targeted post-sale customer service. Internet services revenues increased 14.5% year over year in real terms. Broadband subscribers decreased slightly, 1.1% to 4 million, while monthly churn was 1.8%. stable as compared to the same figure of last year. Nonetheless, there is growth in the fiber-to-the-home segment, resulting in an increase in average speeds. 89% of our customers have accesses with speeds of 100 megabytes or higher versus 85% in 2023. Thanks to the effective pricing policy implemented since 2023, price increases during 2023 and 2024 and higher internet speeds sold to our customer base allowed Telecom to increase prop and ARCO in real terms for the third quarter in a row. Moving to the cable TV subscribers, the customer base increased to 3.4 million, mainly explained by the success of FlowFlex, which is 100% digital with no decoder or installation needed. Flow unique customers achieved 1.5 million, a 3.8% increase from figures observed over a year ago. This proposal as a content generator flow includes not only linear TV series, on-demand movies, documentaries, and co-production, but also music, gaming, and exclusive events. Actual and real terms decreased by 26.3% to 13,792.3 pesos during 2024, mainly due to the challenge presented by the high inflation and commercial discounts granted according to customer retention policy. Monthly churn increased to 2.1%. Please turn to slide 11. The company has been trying to assess the impact of inflation on revenues and costs, but with the high inflation dynamic of the last two years and the stress price increases generated on the subscriber base, recovering terrain has been a challenge. Nonetheless, it is worth mentioning that the deceleration of inflation in 2024 and the effective pricing policy the company has implemented has allowed it to increase prices above inflation over the past month resulting in higher revenues in real terms quarter over quarter. Year-over-year inflation as of December 31st of 2024 amounted to 117.8%, while average inflation for the same period was 219.9%. During 2023, given the increasing inflation, our subsidiary Telecom increased prices of its services with greater frequency and has continued with this policy until September 2024. increasing prices monthly, which has allowed it to close the gap between inflation and ARPUs. In parallel, it has undertaken retention actions, mainly granting discounts to its clients. As inflation stabilized during the last quarter, it increased prices in October and then again at the end of December, which impacts mostly January 2025. These price increases have resulted in higher ARPU and normal terms across all services, as shown in exhibits 19 to 22, The nominal price increases, coupled with certain discounts and promotions to retain customers following these rises in a strong competitive environment, were not enough to offset the inter-annual inflation in mobile and pay TV, thus resulting in lower revenues when measured in Pesos versus the year 2023, while ARPU for the broadband services increased inter-annually for the third quarter in a row. It is also worth mentioning that in the fourth quarter of 2024, Mobile service revenues have increased above year-over-year inflation for the first time since the fourth quarter of 2021. The company will continue to monitor its cost structure, competitive environment, client behavior, and household income in order to decide on future price increases to help compensate for inflation and maintain margins. Now let's move to slide 12 for a review of cost structure before we discuss quarter-over-quarter EBITDA performance. Among the most significant operating costs and expenses are salaries, fees for services, maintenance, materials, and supplies costs, and taxes and fees with a regulatory authority. On slide 13, we show the performance of EBITDA and the behavior of different components of revenues and costs. The company continues with its cost management efforts and has shown positive results despite a challenging economic context. Operating costs, excluding the cost of equipment and hands, have increased in real-time 2.4%. As I mentioned before, Telecom is accelerating its rate sizing. As a consequence, severance payments increased significantly during this quarter and represented 3.7% over revenues from 1.9% in fourth quarter 23, although the smaller headcount is reflected in lower labor costs even with the effect of severance payments. Salaries before the effect of severance payments decreased 14%. Commission and advertising include higher advertising expenses relating to advertising campaigns for our product. Other operating expenses include the effect of the change in criteria established by the fiscal authority regarding the basis for the calculation of the personal assets tax at CBH level, which was reflected in this quarter and partially explained year-over-year increase. In addition, it should be noted that the fourth quarter 23 included recovery of bad debt charges. Therefore, fourth quarter 2024 reflects a year-over-year increase although on an yearly basis, bad debt as a percentage of revenues was 2.1% below 2023 levels. Total operating costs, including severance payments, increased 1.6% in real terms, higher than the increase in revenues. Thus, although EBITDA increased by 0.3% in real terms, margin reached 25.5%, slightly lower than the margin for the fourth quarter of 2013. If we exclude the effect of severance payments, EBITDA margin was 29.2% in fourth quarter 24 versus 27.7% for the same period of the previous year. Next slide, please. It's worth mentioning that given the stabilization of the inflation, this is the first quarter with year-over-year revenue increase in real-term, and the fourth quarter with EBITDA margin before severance payments growth, reflecting the efficiencies achieved in terms of cost and the effective pricing policy executed to tackle inflation. Slide 15, please. In the fourth quarter of 24, investments as a percentage of revenues was 21.3% or 15.9% before rates of use for leases, staying significantly lower than the same period of the previous year, which included the acquisition of 5G spectrum. Before considering spectrum, investments decreased 4.5% year over year. The CAPEX plan is flexible, and the company has been investing above global average ratio of CAPEX to revenues during previous years in order to achieve its goals in terms of network performance and coverage, which is currently strong. Second, CAPEX was mainly allocated to network and technology and customer premises equipment, or CPE. The balance was allocated for international operations in Paraguay and Uruguay. During the last quarter, the company continued with the deployment and upgrading of existing sites and expansion of the fiber-to-home network, including overlay over the HSC network. Following the frequency option in 2023, it has reached 205G sites by the end of the year. The CAPEX program will continue evolving according to Argentina's economic condition, network performance, and customers' requirements. Going to the debt financial position, as per slide 17, as of December 2024, we have reported a total financial debt of 2,878 billion pesos and net debt of 2,468.2 billion pesos, equivalent to 2.4 billion in U.S. dollars. The year-over-year decrease of total debt measured in constant pesos is mainly explained by the effect of inflation being higher than the jump in the FX rate for the same period, resulting in lower debt when measured in constant pesos, partially except by additional debt subscribe corporate bonds in order to settle commercial debt generated by the restrictions to access the effects market. With the past administration, net of maturities canceled during the same period. 100% of the debt is at operating level in Telecom Argentina. Of the total debt, 50.2% is cross border dollar denominated. 43.7% is in Argentine pesos included dollar linked local emissions. and the rest is in Guaranis and Rambimbi. During the past year, Telecom has been accessing the local market for its financing needs, tackling the increase in interest rates and reducing cross-border risk. As per current central bank regulations, Telecom has access to the official FX market for all its financial debt maturities. In addition, during July and August, Telecom accessed the international markets conducting liability management transactions that have allowed it to significantly improve the maturity profile and average life of its debt, extending maturities over 2029, 2030, and 2031. Furthermore, in October, Telecom reopened its international 2031 bond, raising an additional 200 million US dollars, which is applied to improve the profile of its debt. From 2025 to 2026, debt maturities remain manageable. Net debt to adjusted EBITDA coverage ratio as of the end of December 2024 was 2.1 times a significant improvement versus the December 2023 figure, a testament of the company's resilience to changing macroeconomic conditions. That concludes our comments. We are now ready to take your questions. Operator?

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 to allow participants to write their questions. And it appears that we have no questions at this time. I would like to turn the program back to Samantha Olivieri for any closing remarks.

Samantha Olivieri Thank you, Nick. Thank you all for your interest in CBH. Should you have any questions in the future, do not hesitate to contact our IR team. Have a great day.

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