Megacable Holdings

Good morning and welcome to Megacable's third quarter 2022 earnings conference call. With us this morning from Megacable, we have Mr. Enrique Yamuni, CEO, Mr. Raymundo Fernandez, Deputy CEO, and Mr. Luis Setter, CFO. Let me remind you that the 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 statements. I will now turn the call over to Mr. Enrique Umunni so he may begin.

Thank you very much and good morning to everyone and thank you for joining us today. During the third quarter, the macroeconomic situation continued to generate a challenging environment for the industry and for Mexican families. including a raising inflation, the increase in the Mexican central bank reference rate, and lower annual growth expectations. In this context, Mercado continued to make steady progress in its business strategy and growing EBITDA. While entering new territories and reaffirming its commitment to offering quality services, adding the best value for the market. The remarkable subscriber growth achieved during this quarter confirms that the strategies that we have implemented are paying off. We are convinced that this is only the beginning of the positive trend and that increases for the coming period should be higher to meet the goals that we have set for the company. It is worth noting that successful sales strategy of the company, which continues to be reflected in the highest level of gross ads for a quarter, a proof of the subscriber preference and service position in this growth is coming from both legacy footprint as well as from expansion to new territories. In that regard, we have added 11 new cities at quarter end, and 30 more cities and towns will be announced before year end. Regarding financial results, continue to be very solid revenue figures for the period reflect an outstanding performance for the corporate segment. This revenue comes from a balanced mix, including the government, corporate, and enterprise markets. Regarding EBITDA margin, EBITDA margin erosion is mainly due to the higher costs and expenses inherent to the current operating volume. The EBITDA margin should bounce back as we continue to increase penetration in the new territories. Moving into our new generation video platform, the integration capabilities and the friendly user interface of XView continue to position our service on top of the subscribers' preference. We are certain that we have the best video product and the market's acceptance is being reflected in the close to 90 million interactions registered on a monthly basis. Regarding the GPON Evolution project, we can confirm it has been concluded with a progress of 100%. We are very satisfied with what we have accomplished with this initiative, since fiber deployment together with the evolution of HFC, including node partition to reach a lower number of homes per node, will ensure the quality of our services in all our footprints. As per our expansion plan, we can proudly say that we are finally seeing a sight of the total potential of the project. The contribution of the new territories is now visible on the subscribers and REUs for the quarter. It has been very challenging since we are subject to external factors that are raised in the market such as extended delivery times, electronic equipment shortages, and public safety. even to the contribution from the new territories, is not at the levels that we expected, we are confident that a more noticeable ramp-up is underway, starting in the fourth quarter, considering the current fiber rollout capacity of the company. We are aware of the challenges of our current macroeconomic environment, but we are confident that the measures we have deployed to contain those factors Together with the positive reception we have registered in new markets, by offering higher quality products and a great customer service will allow us to achieve greater operating traction in the next quarters. Regarding CapEx, it is important to clarify that even though we are behind schedule in terms of activated kilometers, The associated investments have already been reflected in the CAPEX figures. We have been working closely to overcome the delays we have been facing in the fiber rollout. As a result, we expect a substantial change in the activation of additional kilometers in the coming periods. Another aspect to highlight was the successful placement of 7 billion Mexican pesos in long-term local notes issued during this quarter with the participation of various players in the financial market, including brokerage firms, afforets, and investment funds. That, the oversubscription recorded, reflects the high confidence that the investors have in Megacablis. This transaction, which strategically allowed us to continue strengthening our operating and financial position by recognizing short-term debt and accelerate our online expansion plans, represented our first-time participation in the Mexican debt markets and the highest credit ratings from the PHR ratings. We are convinced that under the strategic path, we are not only overbuilding the foundations for growth, only building the foundations for growth in the coming periods, but we are also laying the grounds that will allow us to achieve our medium and long-term objectives with the consolidation starting in 2023 of the new territories that we have entered. I will turn the call now over to Raimundo to discuss our operational performance. Raimundo, please go ahead.

Thanks, Enrique, and good morning, everyone. The first nine months of the year have been marked by the beginning of the execution of the most important project for the company. This ambitious expansion project has been undergoing for several months now, and we are currently offering our innovative services in 11 additional cities and towns with the expectation of increasing that number significantly before year's end. Despite the many challenges that we have found along the way, the company continues to move forward with our plan to consolidate the national presence and take advantage of the opportunities that the market presents. In line with our expectations and as we mentioned in previous calls, this quarter reflects the growth of subscribers coming from the new territories. coupled with the contribution from our existing footprint, has resulted in the highest net add figure in the last two years. In this regard, please be assured that we are conducting all necessary studies to strategically select the regions where we plan to enter, without losing focus on our main operating and financial metrics to guarantee sustainable growth. There is still a lot to do. And despite the fact that we have already added close to one million new home paths during the last nine months, the pace should pick up significantly in the coming periods once we have fine-tuned our building strategy to reach the growth we're looking for. Moving into the results. IUs rose to more than 10.8 million, which represents net additions of 278,000 during the quarter, compared to only 66,000 recorded during the second quarter of 2022. In the same comparison, unique subscribers record 84,000 net ads during the quarter, compared to 11,000 on the previous quarter, reaching almost 4.3 million subs. On an annual basis, IUs grew 7%, while unique subscribers grew 4% when compared to the same quarter of last year. As a result, IUs per unique subscriber reached 2.54 this quarter, comparing February with the 2.49 in the third quarter of 2021. Internet shops exceeded the 4 million mark during the quarter, due to more than 100,000 net ads recorded on the quarter. On an annual basis, 260,000 subscribers were added, which represents a 7% growth when compared to the third quarter of 2021. The investments that we have carried out since 2020 to migrate subscribers to fiber technology, as well as to increase the bandwidth capacity of our network, resulted in 54% of our customer base getting a 50 max speed or higher. compared to only 18% a year ago. In the same line, at quarter end, 45% of our subscribers are receiving their service through our FTTH network. The video segment added 49,000 attacks during the quarter, totaling 3.6 million subs. While on the annual comparison, it increased by 2%. Our new generation platform, XView, recorded 650,000 annual net additions and 207,000 sequential net additions. To approach 3 million TV outlets, 60% of our subscriber base already joined this service in the compact. In the same line, Telephony subscribers grew 11% versus the third quarter of 2021, reaching almost 3.3 million and recording 129,000 net ads on a sequential basis, mostly due to the bundling strategy of the company. The MVNO service recorded 65,000 net additions in the last 12 months. It is important to mention that this represents a sequential decrease derived from the conservative approach we have maintained in recent quarters in terms of adding new subscribers, as we seek to prioritize ARPUs and therefore higher revenue generation over volume. In that sense, more than 82% of the total 410,000 active lines were post-paid customers. This mix has proven to support revenue generation, as postpaid customers have a higher ARPU than the rest of the MVNO market. On the churn side, following the normalization of several factors that affected the churn rate for the previous quarter, this indicator decreased on a sequential basis, with broadband at 2.3%, video at 2.4%, and telephony at 2.5%. This becomes even more important when realizing the challenges of the current economic situation. Regarding ARPU per unique subscriber, it contracted slightly on a sequential basis because under our commercial strategy, new subscribers have promotional rates during the first months of the services so that as these rates normalize, the contribution of new customers to revenues will grow and then will be reflected in ARPUs. By segment, ARPU grew 1.1% year-over-year at the internet service and 2.4% on video, while telephony was down 12.2% compared to the third quarter of 2021. Now, the corporate segment recorded its highest quarterly figure in the history of the company, reaching 1.2 billion pesos, and now outstanding 26% growth when compared to the third quarter of 2021. This was the result of double-digit growth across all the companies that integrate this segment, highlighting MetroCarrie's performance in the connectivity service for the B2B market, as well as the higher revenue in the corporate and government markets in order. To conclude, the results obtained this quarter show the greater growth trend that we expect for the following periods, as we continue to grow in those markets where we already have presence. and the contribution of new markets is gaining traction. In addition, our expansion strategy continues to make steady progress to reach more cities, same that will be soon announced. With this, I conclude my remarks. Now I would like to hand the call over to Luis, who will shed broader color on the financial results.