Megacable Holdings

Good morning and welcome to Megacable's third quarter 2021 earnings conference call. With us this morning from Megacable, we have Mr. Enrique Yamuni, CEO, Mr. Raimundo Fernandez, Deputy CEO, and Mr. Luis Zetter, CFO. Let me remind you that the information discussed in today's call may include forward-looking statements on the company's future financial performance and prospects, which are subjects to risks and uncertainties. Megacable undertakes no obligation to update or revise any forward-looking statements. I will now turn the call over to Mr. Enrique Yamuni. Sir, you may begin.

Thank you. Good morning, everyone, and thank you for joining us today. This first result consolidated the positive operations trend in terms of net additions. Not only were we able to continue to grow, but also to pose the highest figures of the year. This achievement reflects the company's resilience dealing with a challenging environment including increased competition. This resilience comes from our advanced infrastructure, rapid execution, and high level of adaptability to new market trends. The demand for our services in the mass market remains at high levels, proved that the changes we experienced on our day-to-day activities including the accelerated adoption of connectivity, are here to stay. This is reflected in a stable churn rate and increased gross ads. We continue to capitalize on these opportunities by offering the best service to edge technology at the best market rate. We have been able to grow in terms of both unique subscribers and early use, which during the quarter have surpassed the $10 million mark. The corporate segment continues to expand, recording the third consecutive period with revenue growth, highlighting Metro Carrier, which continues to reach record high revenue figures, while Ola is on its way to improving its 2020 performance with double-digit growth. In terms of financials, our revenues are higher than ever, Recent record high figures each quarter, which coupled with one of the highest dividend margins in the industry, have allowed us to maintain a very healthy financial profile with a very comfortable balance sheet. To wrap up on results, the company is going through one of its best moments in the quarterly results for this period to sustain the decision we have made in the last couple of years. and validate the projects and challenges we have undertaken. Moving into the projects that reflect the company's vision for the following years, first related for the evolution of our video service, HD Plus has received a wide level of acceptance from our subscribers, whose video content consumption needs are being covered given the growing amount of content supplied from different sources. We have successful I'm sorry, we have successfully consolidated linear or traditional TV, a new generation of TV service that allows the subscriber to go back in time and record future events in the linear channels, catch-up service in a native library of content, plus all the possibilities that external OTPs can provide. Secondly, on GPON migration process, we continue to successfully advance on completion of this project that would improve our infrastructure in the region migrated to GPON and in the HFC footprint that we take advantage of investments already made. This project will ensure to the company the required capacity to reach higher bandwidth that the market will demand in the coming years. Early in the quarter, and as a part of our growth plan, we started to offer services in certain regions of cities like Mexico City, Monterrey, and Zapopan. The rapid entrance to these markets was possibly given the existing infrastructure and our execution capacity due to a greater extent to a high capable team as we complement the operation in those specific territories with additional resources. We will be able to gain a relevant position in these markets. And finally, the third line of our vision for the future in which the company is ready to take it to the next level. We are glad to announce a multi-year program that will represent the evolution of our footprint as we prepare ourselves to deploy a FIDO network in several new markets among various cities. This plan includes operations in the mass and corporate markets through the deployment of a state-of-the-art FIPO network that will allow the company to continue delivering our factory services to new territories, not the existing, new territories. We will continue with the inertia that we already have to cover the demand of a market that continues and will continue to grow by almost doubling the size of this company in the coming years. These territories have been carefully selected on the basis of the market characteristics and return on investments objectives of the company. To elaborate on that, we want to ensure that the markets we are targeting really represent a growth opportunity for the company. We will not enter saturated markets that do not make sense. We are privileging above all value creation through incremental contribution to revenue and EBITDA. Our distinctive know-how developed over many years will help us to efficiently and effectively deploy infrastructure that was not available in past years due to its high cost, but that now represents the best options not only in terms of cost, but also in terms of technology for the future. We are thrilled about the opportunities and challenges that we have ahead of us with the execution of this project. but we are confident in the capacity of the company and in the qualified collaborators that will take this plan into reality. Leveraging on our innovation and adaptation capacity together with our effective execution, we will continue with solid foundations to support an incremental generation of value for our shareholders, the market, and the subscribers, as well as to our working associates. With this, I conclude my remarks, and I pass along the words to Raimundo. Please go on, Raimundo.

Thank you, Enrique, and good morning, everyone. In an increasingly competitive environment, Megacablet has always relied on its operational strengths to remain the best option in the market. Those qualities allow us not just to keep up to date with the current trends, but at the forefront of the services we offer. and therefore to continue delivering results on challenging environments. Performance during the third quarter of 2021 continues to be favored by the solid fundamentals of demand segment and further recovery of the corporate segment. In this sense, our value offer enable us to take advantage of the demand for connectivity services that comes from the inherent conditions of our new day-to-day, including home office, and distance learning. Our sales strategy, focused mainly in the sale of attractive triple-plate bundles, boosted unique subscribers to reach 4.1 million, an annual increase of 6% that equals 245,000 meta-additions, of which roughly 80,000 were added this quarter. On the same line, third quarter 21, our use rose 10% annually, totaling 10.2 million, while IDUs per unique subscriber increased from 2.41 to 2.49. In the breakdown by service, broadband totaled 339,000 net ads for a 10% growth when compared to the same quarter of last year to reach over 3.7 million subscribers. On a sequential basis, 105,000 net ads were recorded. the highest figure since the first quarter of 2018. At the end of the quarter, the number of subscribers with speeds of 30 megabits or more have increased more than 150% when compared to pre-pandemic levels, and this trend is only going to increase. We are looking at a market that continues to grow, and Megacable is growing faster than the market. Regarding video subscribers, they went from 3,360,000 in the third quarter 2020 to 3,515,000 this quarter, with net ads of 155,000 for a 5% growth on a year-to-year comparison. Waterloo net ads nearly tripled when compared to the previous quarters of 2021. going from 24,000 in the first quarter and 21,000 in the second quarter to 59,000 net additions in this quarter. As Enrique mentioned, our new generation platform, XView on XViewPlus, continues to benefit from a solid demand absorption, hosting 1.2 million net annual additions and 203,000 net sequential additions to stand at 2.3 million set-top boxes as of September end. Our XView Plus service came as a revolutionary solution to combine linear TV with an unmatched integration capability. This platform currently delivers over 70 million of interactions monthly. Our interactive features continue to be a significant aggregator to an already very complete solution. in which the integration of external apps now offset the premium bundles. Turning to telephony, this service reported net additions to the period of 129,000. Therefore, telephony subscribers reached the 2.9 million mark in the third quarter, with 423,000 net additions year over year. Separately, the MVNO service reported a remarkable figure of 90,000 net additions for the quarter, thus carving the required drive to reaching almost 350,000 lines as of September 30, 2021, out of which 89% are post-paid services. On the short-range-wide, as a result of the high degree of satisfaction reached by our customer approach and quality of services, This indicator remains virtually unchanged on a sequential basis, with rates of 2.0 at broadband, 2.3% in video, and 2.5% in telephone. This accomplishment gains further relevance when considering the current environment of rising competition and represents a hard proof of the solid position that Mega Cable has gained in the market that serves. Consequently, ARPU per unique subscriber for the third quarter totaled 411.5 pesos, increasing 2% on annual basis, and almost in the same levels as of the second quarter 2021. The above mentioned is explained by a lower contribution given additional discounts as subscribers adopt triple-pay methods. Breaking down by service, ARPU increased 3% and 6% on an annual basis, at internet and telephony, respectively, while video went down 3% year-over-year. In relation to the corporate segment, revenue from both MetroCarrie and OLA remained on its growth trend, with annual growth rates of 9% and 13%, respectively. On the MetroCarrie side, connectivity services continued to be the main growth driver, and this period coupled with the recovery in the hospitality sector. On the other hand, a year-to-year recovery is observing OLA as a result of a better outlook in the private investment. NCM Revenue posted its third quarter sequential growth, standing only 3% below of its annual comparison. On the GPON migration, this process continues to advance and we are aiming at the first quarter 22 for conclusion. This project will undoubtedly expand our competitive advantage for the next few years, improving the overall experience of the subscribers. As Enrique first mentioned, we have established a plan to be executed on the next years that will significantly increase the Mega Cable's footprint. The company is fully committed to taking its services and infrastructure to the next level in terms of coverage. will be destined to ensure that Megacable will be a leading player in the industry for many more years, delivering the best possible service through the best infrastructure. And just to be clear, the goal of this project is not to evolve, but to expand the footprint of the company. Innovation, adaptability, and a fast and efficient execution have always been part of our culture, and the projects and deployments that we have ahead of us will reflect these values. To conclude, quarterly results have confirmed that we are on the right track, and the projects ahead of us are aimed towards securing the future of the company. We will continue to execute as we have over the last few years, with a responsible and intelligent exercise of investment, a focus on cost efficiency, and the maximization of opportunities. With this, I conclude my remarks. Now, I would like to hand the call over to Luis. who will share broader color on the financial results.