Megacable Hldgs Sab Ord

Good morning, and welcome to Megacable's third quarter 2020 earnings conference call. With us this morning from Megacable, we have Mr. Enrique Yamoni, CEO, Mr. Raimundo Fernandez, Deputy CEO, and Mr. Luis Zetter, CFO. Let me remind you that information discussed in today's earnings call may include forward-looking statements on the company's future financial performance and prospects, which are subject to risks and uncertainties. Megacable undertakes no obligation to update or revise any forward-looking statement. I will now turn the call over to Mr. Enrique Yamuni. Sir, you may begin.

Thank you very much. Good morning, everyone, and thank you for joining us today. In the middle of the economic slowdown caused by the health contingency, Megacable continued to benefit from Advancing to capture the demand of the new normal, which has recently increased the connectivity needs arising from the expansion of our office and remote school programs. In this regard, during this period out stood the kickoff of Aprende en Casa, the school program that aimed to replace face-to-face classes to online lessons. which coupled with the vast numbers of customers who adapt their daily routines to the home office mode have heavily driven our internet business in the mass market to an all-time high, being this the first time that we posted a larger number of internet than video subscribers. Consequently, total subscribers maintain its upward trend, recording a rising demand for all services. R2 per unique subscriber increased when compared to the same period of last year, while in the numbers by service, a slight decrease was recorded, as some of these new clients are not yet paying full rates, and most of them were either added in the second part of the quarter. Under these dynamics, Quarterly revenue increased year over year, while EBITDA recorded a solid double-digit growth and a new record high figure for the company. This result was driven by cost and expenses efficiency, giving our continuous effort towards a lean organization in our ability to adapt to the market circumstances. This is reflected in the annual improvement of the EBITDA margin which exceeded the expected forecast of the consensus of analysts. In the corporate segment, recovery is now more visible. As the companies in the connectivity segments have posted revenue growth, we continue to work hard to get this segment back on its feet and to reduce the exposure towards government-related revenues. Now, given some color on our projects in development, The Euponymia migration process advances as planned, as we have started to migrate some of them to our new FTTH network, some of our customers. Likewise, I would like to take a moment to contextualize the magnitude of this project, as it represents a significant investment that will allow us to migrate about 50% of our subscribers to a private home network. before the end of 2021, while significantly increasing the bandwidth capacity of the rest of our HFC network, thus boosting our competitive position for the following years. On the other hand, our XView Plus platform development is also concluded, and preparations are underway for its launching towards year end. We are quite positive on this project, as we will be capable of further stimulating the commercialization of triple and quadruple play packages toward our NBNO platform. Here, it is important to note that in line with the timely development of our projects, mostly those from final stages, we expect to post the second half of the year CapEx figures significantly above than that of the first six months. to reach our target set for 2020. However, these present investments will help us improve our service to a more efficient use of our infrastructure and better and more reliable services in all our products and packages, resulting in a significant decrease in capacity intensity for the medium and long term. Wrapping up, despite these satisfactory results, we keep minding the difficult economic background, having a close watch on our strategy metrics, such as ARPU and churn rates. But we seek to be ready before any arising challenge. Also, we believe that this new reality changed for good the way we live, and the increasing use of the telecom technology is here to stay. is the move up of our services in the priority of the family's budget and the business community. I will now turn the call to Raimundo Fernandez for further explanations.

Thank you and good morning, everyone. In the third quarter 2020, demand for our services continued to increase, particularly in the mass market. As the compelling value of our portfolio and improved technological capacities allow us to seize the opportunities posed by the pandemic, including the back-to-school season under an online modality. To put this in a better perspective, sequential growth additions accelerated during this period compared to the past quarter. In internet, it went from 83,000 in second quarter to 185,000 this quarter. video from 28,000 to 100,000, and telephony from 82 to 243,000 in this quarter. At the end of the period, REU's totaled $9.4 million at 12% growth or $592,000 net ads when compared to the third quarter of 2019. Supported by the company's bundling strategy, and also reflected in the REUs per unique subscriber, which went from 2.3 in the third quarter 2019 to 2.44 this reporting period. Thanks to that strong dynamic, net additions of unique subscribers for the last four months climbed to 224,000, out of which 148,000 were added this period. closing the quarter near the 3.9 million unique subscriber mark. These results were highly driven by the performance obtained at broadband, which posted net annual and sequential additions of 347,000 and 185,000 subscribers, respectively, to reach 3.4 million total subscribers. It is relevant to underscore that Mega already reached the point where it has more internet subscribers than video, making us no longer a predominantly cable television operator, but an internet telecommunication service provider. This business development follows global trends, where the internet becomes the main service to the rapidly growing demand, and to which Mega has answered with greater investment and deployment of the latest technology. In addition, our increased focus on investment in high-speed broadband and related technologies has enabled us to absorb the higher demand from segments requiring higher bandwidth capacity, as reflected in the over 55% growth in Internet subscribers with speeds equal or greater than 50 megabits from September 2019 to September 2020. Moving on, video subscribers amounted almost 3.4 million at quarter end. 138,000 subscribers more on an annual basis and 100,000 more quarter over quarter, attaining one of the strongest growths in our recent history. This performance indicates that this service, contrary to what some may think, still has a growth potential which MEGA intends to take advantage of even more with the upcoming launch of new products and services, most notably XView+. Regarding additional services, as of the end of the quarter, ex-view subscribers totaled 1.1 million as of September 30, 2020, increasing 337,000 net additions over the same period last year, but decreasing when compared to the previous quarter. This slight sequential decrease is attributable to non-recurring one-time factors such as aggressive promotions towards other bundles. Therefore, it is expected to resume its growth trend in the coming months. our HD service reached over 1.2 million subscribers at quarter end, with 321,000 net additions recorded over the last 12 months. These services, besides representing an extra source of revenue, also provide a competitive edge to attract more subscribers and upgrade the packages of active clients. In this sense, we are confident that our enhanced XView Plus platform will contribute to the ARPU's growth over the following quarters. Separately, the telephony segment posted 2.5 million subs as of quarter end, with 438,000 net ads on a yearly basis and 243,000 sequentially. We observed a noteworthy market absorption of the MVNO project, as it recorded 64,000 net additions this quarter. allowing it to beat the 100,000 subs mark with a solid pace to achieve the 150,000 subscriber target set for the first year of operation. Shown rates, on the other hand, remain stable at 1.5%, 1.7%, and 2.1% for broadband, video, and telephony, respectively, reflecting the positive impact of our marketing endeavors and customer satisfaction with our products coupled with an increased need of our services. In terms of ARPU, during the quarter, ARPU per unit subscriber was 406.5 pesos, up 2% in an annual basis, and in the same levels when compared to that of the previous quarter. This performance was mainly driven by a higher number of new subscribers. coupled with prices increases and the contribution from additional services such as it is expected to improve in subsequent periods. ARPU by segment slightly decreased when compared to that of the second quarter 2020. This is basically a result of the high number of net ads with promotional rates, some of which were recorded by quarter end. On an annual basis, internet and telephony dropped 1% and 3% respectively, while video reported a contraction below 1%. On the corporate telecom segment, revenues reached $903 million in the third quarter of 2020, a decrease when compared to the same period of last year. The company has seen a recovery, especially in the connectivity segment. including MCM with a revenue increase of 7% and Metro Carrier of 3%, driven by a higher demand for our services, despite Metro Carriers continuing to be affected in its comparison against last year's figures due to the cancellation of the Mexico Conectado project as of year end 2019. On the OLA side, we have increased the volume of transactions during the quarter, aiming towards recovery. However, we have not been able to increase the average ticket, as this segment continues to be affected by the government austerity policy, while the private initiative continues to be very cautious in terms of carrying out new projects. To conclude, we are certain that the ongoing improvements of our service, the evolution to a fiber-to-the-home network, followed by the upcoming launch of the X-View second generation, will lay the foundation to keep with the increasing demand of high-speed broadband and next-generation video services in the coming years. As such, it should not be perceived as a defensive move towards nowadays competitive environment, but as a future thinking strategy aimed towards meeting the future necessities of our subscribers. We look forward to the operational efficiencies and customer service improvement that we will achieve through the term in the short and medium term, which will surely provide an incremental value to our business. With this, I conclude my remarks. Now I would like to hand the call over to Luis, who will shed broader color on financial results.

Luis? Thank you, Raimundo. Good morning and welcome, everyone. Driven by the revenue improvement recorded at all massive services, the third quarter consolidated revenue climbed 4% on an annual basis to reach 5.6 billion pesos. The mass segment revenues of the quarter were up 7% year-over-year, following the 9%, 3%, and 15% annual growth rate achieved at broadband, video, and telephone services, respectively, supported by a wider subscriber base. Corporate telecom decreased 9% versus that of the same quarter last year, reflecting software market dynamics which were not offset by the recovery in the connectivity service segment, as Rasmundo has explained. In this context, mass market stood for 82.5% of total revenue, and corporate reached a 17.3% participation. Given the recovery of cost and expenses from a previous February resolution on an interconnection matter, On the other end, the cost of services recorded a slight annual decline of 2%, and following the same trend, SG&A were down by 4% on the same period. It is worth noting these items contracted while revenue continued to grow, as we have consolidated further enhancements in our operating economy. Derived from both higher revenues and contained expenses, Consolidated EBITDA increased 12% on an annual basis, amounting close to $2.8 billion, the largest feature recorded for the company ever, with a zone margin of 49.5%, while EBITDA of cable operations reached $2.6 billion, with a margin of 51.1%. These positive results enabled to quickly bounce back on the profitability track, posting a net income of $1.1 billion, up 8% before that of the same period of last year, despite a higher tax rate. Moving into the balance sheet, as of September 30, 2020, the company's net debt was $4.5 .9 billion pesos, almost 500 million pesos lower than the 544 billion pesos recorded last quarter, mainly explained by the 550 million pesos amortization of the credit contracted in the first quarter of 2020. Consequently, the NEP debt to EBITDA ratio stood at 0.45 times, and interest coverage ratio was of 21.4 times both indicators standing at healthy levels. On the investment front, as Enrique mentioned, the development phase of the GPOM project has started to be reflected on CAPEX. As over the quarter, the resources allocated to capital expenditure totaled close to 1.8 billion pesos, representing 31.7% of quarterly revenues. To conclude, despite recording good numbers during the quarter, mostly from a surging demand of mass market services, the uncertainty surrounding the contagion curve of COVID-19 and its effects on the local and global economy requires us to continue to be conservative from providing any guidance for the remaining of the year. Although drawing from the solid fundamentals on the industry, we are confident to end years with stability and for the strength in our technological platform and commercial positioning. With this, I conclude my notes. Now, let me turn back the call to the operator to open the line for Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please, while we poll for your questions.

Thank you. Our first questions come from the line of Arturo Langa with ITAL BBA. Please proceed with your questions.

Hi, good morning, Enrique, Raimundo, and Luis. I was wondering if you could provide us with a bit more detail on how you're able to decrease costs year over year in spite of growing consumers and providing them with higher bandwidth capacity. It'd be interesting to see what this is attributable to. And I was wondering if this has anything to do, for example, with the submarine cable that you guys deployed in the Baja region. And my second question, if I may, could you also share with us what type of customers are the ones that are contracting pay TV and how you're achieving this growth? Is it part of the bundling strategy or are you seeing, you know, increased penetration rates within your footprint? It would be interesting to see if these are, you know, people coming online or it's a consequence of people contracting fixed broadband packages. I would appreciate that. Thank you.

Do you want to start? Sure, Arturo. Well, the first question was regarding the cost. I didn't quite catch the second one. He was talking about the decrease in the cost and how if the submarine, if we can give more information about that.

Sure. Yeah, there is, and we were mentioning this from previous calls, that the savings on the submarine, thanks to the submarine cable, were going to help us, and that is on the links to provide broadband services. And, of course, also together with caches and pitting connections that the company has started to use have reduced the cost of the links. And even when we have increased our demands from our subscribers and all the operations, of course, that has helped. Also, as we have a higher number of customers of subscribers or net ads, we have been able to capitalize some of the costs associated to the sales, and that has helped also. And also, we have been more efficient in terms of the people and the salaries and the RGUs per employee. We have made a great effort there and have come out with great help.

Yeah, it's productivity.

Productivity at the end, yes. So that's kind of basically the major chunks on the cost savings. And second question, Raimundo?

The other one, Arturo, was related to the margin, if we can sustain the margin. That's the question?

No, the second question was regarding your paid TV subscribers. Where is the growth coming from? Is it part of the bundle strategy, or are these new clients coming into your subscriber base? And maybe if you could, you know, share details on if they're coming from a particular socioeconomic sector or region, that would be helpful.

Well, it comes from the bundle strategy. We continue to push the triple play package that increases not only video, but telephony, too, plus... promotions that we did in Telephony accelerated that segment. In terms of video, as I said, we were very efficient in providing to those that cast only broadband and Telephony. We went to our subscribers and get them and offer them the video over the period. Also, we saw an increased trend of entertainment. We have a good price in bundle, and people want to stay. The people that stay at home still want to use it. Also, we have the Back to School campaign, or the over TV educational program from the government that requires also a good signal and digital and several channels. All together is what we did, and we're not only happy about the results of that third quarter, As you know, we have a strong growth of XView over the second quarter. Those promotions, we aim it and we slow down a little bit. But fourth quarter will bring the XView+. That new generation of Android TV platform will surely be a killer app for our subscribers. For the rest, we also aim to recover subscribers in all the different segments. We don't have a just going for the new segments. As you know, we did not increase our footprint significantly. We're aiming towards GPON and increasing HFC with that project, so we slowed down. Everything came from organic growth that brings from higher penetration of our existing plants. So that's what we did. In terms of how we did that, we continued to have several channels. We increased our digital channels that will allow subscribers to ask for the service without us having to go to the home through a door-to-door salesman on that part. We have a strategic point of sales strategy. presence in the major supermarkets where people still go, not that much in the malls. So all together is part of what we are doing in that area. Also, if you see the show of video, it's low. So when you have a recovery system or rate like the one that we have, all together aim to that growth, historically growth in video, which we are very happy about that.

Perfect. Thank you very much. Thank you.

Thank you. Our next questions come from the line of Rodrigo Villanueva of Bank of America. Please proceed with your question.

Thank you. Good morning, gentlemen. So my first question is related to the SAC that you just mentioned. You said that you are capitalizing more SACs. I was wondering if you could share with us what percentage of SAC do you capitalize and if this policy has changed relative to last year. And my second question is related to competition. We have seen Total Play growing very strongly across the country. So I would like to hear your thoughts regarding how big of a threat do you think they represent to Mega and if you overlap with them in many markets. Thank you.

Sure, Rodrigo, and thanks for your questions. And to the first question related to capitalization, we can assure that we have not made any change in the policy. The change was two or three years ago, if you recall. So we follow the same policy this year. And what changed is the amount or the growth in net ads, which actually drives the percentage of capitalization. Certainly, I don't have the precise numbers of the questions you're making in terms of percentage, but for sure we can have a follow-up call, and I'll give you more precise numbers on that. On TotalPay?

On TotalPay, Rodrigo, this is Raimundo. There is no doubt that they have been growing a lot, both in terms of subscriber coverage, nationwide from that part. Part of our success in video and broadband is that we have a great product and great technology. Our video platform, our XView platform does allow to have nonlinear channels, interactivity, VOD capacity, everything required, so we are not in disadvantage so far. Also, the increase in broadband that we allow, as I said, with a space of 30, 50, and more, our network has proven, still on HFC, to be able to handle the demands of our subscribers on that. If you couple that, that we have a very aggressive pricing, it is hard to penetrate in our systems as they have done in other parts. We have no doubt that they have a big footprint in our systems. It is... in 12 of our major systems on that part, and we compete in those 12 cities. But still, if you consider how many subscribers they have in our area and how many do we have quarter over quarter, I think our strategy has proved to be successful because of the growth of subscribers that we report of this quarter. So it's product, service. coupled with bandwidth and pricing, I think we are doing the right approach. With XView+, we will aim still more over another niche, which is getting more toward upper economic levels in some of the areas where they fight with Infinitum and Sky on those. We're also there, but they are aiming on that part. XView+, it is very creative, a great technology, It is fast. It has a great interface. It's a very friendly user. And we're now doing the, like Enrique says, we already have that product in the market in the food. So it is real. It is working there. And very soon you will see the migration of our subscribers toward that new platform, which for sure will be of great success for our subscribers.

That will be our point. Very clear. Thank you so much. And another question, if I may. Given the upgrade to FTTH, can you share with us the difference in terms of cost for the CPEs relative to the ones that you're using now with HFC? Thank you.

Well, the exact cost is something that we keep internally on that part. What we can tell you is that there is no increase in cost to what we have right now. More than that, it might be a decrease in some of the products. So you can count that we won't have an increase on the CPU compared to what you have seen in the past for mega cable. What I can tell you is that it's of the latest technology. It is very fast. It runs over GPON and it runs also over HFC, and it can handle all the different apps with the Play Store and the Android TV devices. a platform, it will be worth betting on that application that people will absorb and will be really, really innovative and well taken by our subscribers.

Understood. Thanks so much. Thank you.

Our next question has come from the line of Marcelo Santos with JP Morgan. Please proceed with your questions.

Hi. Thanks for taking the question. I have two actually. The first is regarding the JIPON project. Would it make sense for you to actually go beyond the cities that you currently operate? Since you are bringing cutting-edge technology, you have many cities that are still under either HFC or DSL, a combination of both. now would be probably a good time if you wanted to enter these new cities to come with this new technology and grab some market. Wouldn't it make sense? Kind of the same way the total play is doing, but you could do that as well. That's the first question. And the second question is about a little bit more detail on price increases. So have you already performed increasing prices? When was that? If you could give us some view on the residential market, it would be very good.

Sure, Marcelo. Regarding question number one, going beyond the cities, as you know, we are very focused right now. We believe that we can increase our penetration like we did in this quarter over the existing areas. We look into new markets. We always look and we analyze the ROI of those markets where we can enter. So far, what we are focused on is to increase our footprint for the metro carrier and MCM purpose. We believe the high ticket give us a good return on that market, and we can compete. We are very efficient on metro carrier, too, and it's still growing, regardless of the effects of the Mexico Conectado that affect and the pandemic. We believe the effects of MCM and the metro carrier are doing very well, and we know how to manage that on that area. The strategy of going GPON brings in a 12-month period, 2020 and 2021, more than 25,000 kilometers of GPON. So it's a very aggressive program. And it does allow us to go in the other markets with a much more aggressive increasing bandwidth and better technology for the rest of megacables. So at the end, we are very focused into our existing footprint that will have the best technology and the best video and broadband product, whether it's HFC or HG-PONT. So we will let you know. We continue. We are not against HFC. growing in any market that makes economic sense. But our short-term strategy is that what I'm telling you, growing metro carrier and MCM on that part, and having the best service and the best market share that you can have and increasing the ARPU in the systems where we are. Regarding the price increases that we did, that one accounts for around 2%, less than that, 1.5% to 2% of our existing revenue. And it's because we don't raise rates to everybody at the same time in all the markets. We have different packages and different rates, whether it's a small town or a larger city than Guadalajara. So that's what we have so far. We will continue to look for price increases in the future whenever we see is the right time to do that. And also the RGU's that were increasing Because of the bundled strategy, we continue to increase the ARPU per unique subscriber. That's what we are focused on, to increase that ARPU. We believe the XView platform will help to do that. And once we continue to have demand for higher bandwidth, we'll also bring that from the broadband segment. So price increases rate was at 1.5% to 2% pretty much average.

Perfect. Thank you very much. Thank you.

Our next questions come from the line of Andre Coilo of Scotiabank. Please proceed with your questions.

Yes. Thank you for taking the question. I was wondering if Megacable is among the companies currently participating in the bidding for Axtel. Are you among those interested in buying the company? And my second question is if you could just mention that the GPON project will comprise 25,000 kilometers. I was just wondering how many homes you intend to pass with GPON. And also, if you can remind us when this project will be completed. Also, if as of today you are already providing hybrid to the home to a percentage of your homes, excluding the Excel residential acquisition, if you can just share with us how many homes have been upgraded to the service with the GPON project.

Thank you. Enrique, you want to say something about the Axtel bidding?

Yeah, sure. We're not in the process of bidding for Axtel. We decided that, well, they're doing a sale to an infrastructure company, maybe. They decided at the end to sell both, you know, the whole thing, the whole package, services and infrastructure. We will look at who buys that. And if that is in our interest, we will lease or buy some of the infrastructure in some of the places that we think did make sense for us. So we decided not to go for the whole thing. We're not focused on that. We think that... we would be very much overbuilding, you know, overposing and have a duplication of infrastructure if we went for that. And we decided not to. So we are not in that process.

The second question was about... The second is more related, expanding a little bit more of the GPOM project. The GPOM project... I can tell you that we'll cover with GPON with fiber to become around 4 million home paths in that part. And we continue to grow as we mature in the years to come on that part. Let me tell you, Andrea, that GPON for us is nothing new. GPON, we built our first GPON system in 2017, 2016, pretty much. And that's because we always wanted to have a foot inside the best technologies. At that time, the technology for DOCSIS and HFC was very competitive and cost-efficient too. With years to pass, we decided with this project to accelerate the capex in this in a much more aggressive move to go for the market, not as a defensive, but as an aggressive move to go more for the subscribers on that part. because we wanted to provide in all the systems better bandwidth, higher bandwidth, and get some cost efficiencies on that part. We needed to upgrade the CPEs, both in video and broadband. So it makes a lot of sense for us to invest in GPON and reuse the of what we have on that part. So some of the areas that some of the systems where we are building GPON, they already have some areas of GPON, both from megacable built before the Excel purchase, some of them, a small area, where we have the local system to manage that kind of technology and prepare technicians. So now that we're migrating subscribers from HFC to GPON in those areas, we have the right personnel and the way to absorb that technology. So I don't know if that answered your question regarding the extent of GPON.

Yes, just one question, sir.

Yeah, go ahead.

Oh, thank you. I was just wondering if If this project gets to be completed at a certain stage and then you turn on or you start migrating subscribers, or is that a gradual process, meaning you will reach 4 million homes and they upgrade gradually, or you need to get to a certain point first and then make a significant upgrade of the subscribers?

It is as it is being built. As we say right now, we're building those kilometers. It's a project that takes some months to be deployed. And as we are building, we're migrating subscribers. So you don't have to wait for the build out of the GPON project. to have subscribers in the new platform. We are right now migrating. We already started on that part, and we have happy subscribers on JITCON and happy subscribers receiving the CPEs of the JITCON project to be installed in the other systems. So it's as we speak. Enrique, you wanted to say something?

Yeah, I just want to say that it's a simultaneous process. We're building and migrating subscribers. We're not waiting to do 100% of the network to start migrating subscribers. It's a simultaneous process. And also, it's a simultaneous process to dismantle the HFC network that we have in those cities. So we are moving that equipment to the other 50% of the network to improve the number of nodes and to improve the bandwidth and to improve the reliability of the network. So we are still getting... our money back from that technology. That technology has a lot to give still, you know. We can provide one gig to the home with that technology. And, you know, enough bandwidth to compete with anyone. And those markets will be better served with the equipment that we're moving to those cities. So I think it was the perfect plan at the perfect moment.

Thank you. Thank you.

Our next questions come from the line of Christian Faria with Tradesco. Please proceed with your questions.

Hi. Thanks for taking my question. Actually, I have just one. I'd like to get a better view regarding the level of churn because the confidence report is at a large level since probably three or four years, and I would like to understand if this is a new normal level or if we should see this return to the historical average. Thank you.

Sure, Christian. Well, that's a new reality that we have. We expect to keep it. I don't know whether we will be able or not. We depend on the market demand on that part, surely. But in our opinion, this pandemic accelerated the need for higher bandwidth at home, accelerated the use of education and entertainment on that. So we only expect to grow the market. We've been much more efficient in terms of recovering the subscribers, going to the end with the right package. So we expect to have in the future a slight increase because of economic conditions, but hopefully nothing like the levels that we have in the past. This for us is the new reality. So we continue to be very careful to have the exact amount of gross assets that the market can absorb without sacrificing of bad sales. You know, we don't want to be so aggressive that we will go back to higher levels of charm. So we expect to keep it slightly above what we have right now.

Okay, thank you.

Thank you. Our next questions come from the line of Alejandro Galastre with BBVA.

Please proceed with your questions. Hi, good morning.

I have two questions. First is regarding the home deployment. You mentioned that you want to migrate 50% of your customers in the end of 2021. Would anyone like to know what would be the percentage covered in terms of home staff with the home infrastructure? I would also like to know what will be next. What will be next? Do you plan to stop at 50% coverage, or do you plan to keep building the territory of home over the next few years, although at a slower pace? And the third, when should we start seeing the benefits of this territory of home deployment when it comes to higher arduous or or higher subscribers? That's my first question.

Sure, Alejandro.

In terms of GPON coverage, you can count that our network will have between 40% to 50% GPON coverage on that part. But also, every growth that we have in the future is being built over GPON monthly. I can tell you that it will be very strange to build over HFC on that area. So the growth that we have will be at least 80% GPON on that area. So GPON will continue to have a better presence. But we would like to send you the message, like Enrique said before, we have a good technology in DOCSIS. Companies in the U.S. run on DOCSIS 2, DOCSIS 3.1, and the new generations, and they are very efficient. So what we're doing is getting the best use of both technologies, you know. It's much more efficient to build in JIPON and grow to that for the market that we have, but we are using a still very good technology, which is the HFC that we have so far, to increase the bandwidth and the efficiency of the other networks. So even though you will have 40 to 50 percent of the JIPON, the other 50 percent that will receive the equipment and the network that we have in the JIPON area will double the capacity of bandwidth in the next 12 months. So we're reinforcing both systems, 100% of the systems that we have. When you will receive the benefits of the GPON, you will receive benefits of GPON in 2021 on that part. We're coming from increase of the XView platform that will be deployed in all of the systems, That will bring a stability of video, hopefully more video subscribers. Hopefully we will have more video subscribers. And a better ARPU of those subscribers by absorbing these new packages that we have coming from them. We cannot tell that this will be the only effect positive on the video ARPU, because we also have new subscribers to penetrate the market. The market increased with the pandemic, It did increase both in video and broadband, mostly in broadband, but also in video. And those increase in market penetration for all the companies, not only for us, came in the lower economic levels. So some of our new subscribers have a lower ARPU. What we are making and all the time we're trying to do is get a mix in between the existing subscribers with higher ARPU, bringing from the XView platform and the operates to better bandwidth, plus new subscribers coming from a lower ARPU to penetrate those areas. So that's why you see that our individual ARPUs decrease slightly over time, but the unique ARPU increases over time. So the benefits will continue to come in terms of the growth of megacables, of having a better and solid foundation of the network and the product that they are providing. All these systems where if we have HFC right now, we're migrating subscribers, not only on the Japan areas, we're migrating subscribers on the HFC plan to an NGV plus platform, an NGV platform completely. Some of them don't have it right now. They just have an HD platform with no access to nonlinear video. Now they will have access to the most a coding edge technology as a product all together across all the systems in Mega Cable by the 2021.

Thank you, Ramon.

My second question is regarding the percentage of clients that you have with bundles, you know, either double or triple play versus subscribers with only pay-per-view. Could you give us an update on that, please?

The number of subscribers we have with one service or video service only?

The number of clients, of clients with bundles? The percentage of bundles with double play versus...

We can tell you that less than 10%, around 10% of our subscribers don't have a double or triple play package.

Yeah, about 10% of them is a single service subscriber, just singles. Most of them are in double or triple plays. And now it's a fourth play with the mobile.

Great. Thank you very much. Do we have webcast questions?

Yes. The first question comes from JVM. And it's, what percentage of your subscribers have already migrated to FTTH network? And do you see the company maintaining the 50% EBITDA margin level in the mid to long term?

Yeah, subscribers already migrated.

Yeah, subscribers migrated to JIPON. It's very small. It is small, but it's significant. We have around 150,000 subscribers over the GPON so far. So that proves you that we're moving. I mean, even though it is small compared to what we have to migrate because we just started, but we already have 150,000 subscribers over the GPON platform, which is very good in my opinion. And the second one is whether we could keep the margins close to 50%.

Well, we will be surrounding 48, 49, 47, and reaching 50 at some point. But we will manage those ranges of margins as we have been very close in the past.

We have another one from Mauricio Alvarado from Citi Banamex. And it is, accounts receivable show a relevant increase as of September 20th. Are you seeing deterioration in the portfolio, and if so, what actions are being taken to recover outstanding balances? What percentage of delayed portfolio over 90 days?

That account receivable is including the down payments we did for the GPOM project. So they will be there for the life of the project. We'll be reducing as we make some progress and recognize capex over time. also including those down payments.

And you have to be very clear on that, that they get, because that's the main... No, that's the main reason for the growth. That's the point. It's not an increase in the account receivable because of operational... The derivation. The derivation of our portfolio. No, it is pretty much what Luis is saying. That's where we recognize the down payment done to the GPOM project.

Those are all the questions we have via webcam, so I'll turn it over to the operator.

There are no further questions on the phone, so I will hand it back to you for any closing remarks.

Okay, thank you very much for your attention or your attendance to this call. We will wait for any questions that you may have. and we expect to keep delivering great results to all our shareholders and great services to our customers and subscribers. Thank you very much for your attention, and have a great rest of the week. Thank you all.

We're very happy, like Enrique said. All our results, all our strategy is proven to so far translate into the great evident growth, efficiency in cost and sales, and increasing in the unique output that we have. And we look into the future to continue to deploy our main two projects, CGPON plus the NGV plus. And the recovery, continued recovery of the corporate segment that we expect. It looks pretty good. So thanks, everybody, for attending. We're very happy again.

Thank you. This does conclude today's call. You may disconnect your lines at this time. Thank you for your participation, and have a great day.