Megacable Holdings

Good morning and welcome to MegaCable's fourth 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 Zetter, 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 statement. I will now turn the call over to Mr. Enrique Yamuni. Sir, please go ahead.

Thank you very much, and good morning, everyone. Thank you for joining us today. I hope you had a wonderful start of the year. At the end of this quarter, the challenging economic conditions we saw throughout the entire year prevailed as we reached the end of 2022 with the highest inflationary rates in the last two decades, leading to the continuous ramp up in the reference interest rate by bicycle, while the GDP growth for the 2022 was lower than in previous years, framing the economic deceleration. In this challenging context, we closed 2022 with a robust operating performance that drove revenues back to a double-digit growth path. This reflects the momentum gained from the formal execution of our strategy to penetrate new markets and pick up on important growth projects, especially in the corporate segment, which posted its highest quarterly revenue figure in the last seven years. The net ads figure for this quarter grew sequentially in year to year, confirming the growth trends observed in the third quarter, driven mainly by our entry into more than 30 new markets by the end of the year 2022. As a result, we recorded the best quarterly net ads figure of unique subscribers in total already used in the last nine periods. The quality service we provide focused on customer service that has helped us to maintain the preference of our subscribers as reflected in the lower churn rate coupled with reliable connectivity solutions and the best video platforms in the market. In that regard, we remain satisfied with the acceptance of the EdgeView platform among our subscribers. Nevertheless, We continue to work diligently to increase the quality and content available and to generate further customer growth at the back of an attractive value proposition. Regarding our financials, in this period, we registered a record high revenue figure for the ninth consecutive quarter, reflecting the solid growth trend the company is following. supported not only by the expansion project, but also by organic growth within the existing footprint. The corporate segment continues to perform and the revenue for this period represented the best quarterly figure for this segment ever, highlighting the outstanding performance of OLA, We are confident that this positive trend will continue amid the company's geographic expansion. In light of these results, the company maintains a very healthy financial position with very low leverage, which gives us the capacity, if we need, to increase our debt to support and accelerate the company's future plans. It is important to mention that CAPEX figure, excluding the special projects that we are carrying out, remains at levels close to the 20%. This means that even with the current temporary deterioration of margins, the outlook that we have for the following years is very optimistic, given that once we have doubled the size, the company will have a higher and sustainable cash generation. Moving to our current projects, the outcome obtained so far from our expansion project, particularly in terms of infrastructure, is within our expectations. The growth achieved during the quarter in terms of homes passed and kilometers activated will be a milestone for the next two years as we prepare to reach more than 30 additional cities for a sum of more than 65. Considering the aforementioned, we will continue to move forward as planned, investing in our infrastructure intelligently and practicing a financial discipline with a long-term vision to lay out the foundation for the company's long-term profitable growth. These investments include our expansion to new territories. the consolidation of Jeep Home Evolution Project, and the migration of the remaining HFC territories. In this regard, we are confident that upgrading our network to the latest technology will benefit our business as the demand and connectivity requirements of Mexican homes and businesses continues to grow. Now, regarding the M&A offer that the Board of Directors received last November, For the moment, we can tell you that nevertheless the company is not for sale. The company's board will always remain open to receive and analyze any business proposal. Our main interest is to maximize value creation for all our stockholders. All the decisions are made with the same principle. And nothing comes before what we believe is right for all of us who participate in some way in this company. To conclude, this quarter's results demonstrate that the strategy we have adopted is the right one for the long term, which becomes more meaningful when looking at the persistently challenging environment. We are determined to become a nationwide company, spending our presence to other markets and growing our infrastructure, our financial profile, and our employee base In this sense, we recognize and appreciate the hard work put in to achieve another successful year for our company. I will turn the call now over to Raimundo to discuss our operational performance. Raimundo, please go ahead.

Thanks, Enrique, and good morning, everyone. Our operational performance for the quarter continues to enclose the growth trend we have observed in recent periods. both in the organic territories and in the new cities in which we have started to operate. Although the economic context remains difficult, the company has leveraged its growth on its capacity for innovation and its ability to adapt its services to current market conditions. This includes bandwidth increases to our subscribers and a very aggressive market penetration strategy, which coupled with rate adjustments will result in a higher ARPU and therefore better profitability in the future to come. From the consumer side, we have seen great acceptance and demand for our service packages in all our territories, as reflected in a decrease in churn rate despite more aggressive competitive dynamics and inflationary pressures, which we have addressed with measured pricing and efficient bundling strategies. It is also worth highlighting the performance of the corporate segments especially OLA, whose result for the quarter in line with the reactivation of the public and enterprise segment, provided boost for this segment to contribute with a little over 20% of the consolidated revenue for the period. Now, moving into results, unique subscribers reached almost 4.4 million at the end of this period, increasing 6% versus the fourth quarter of 2021, translating into 245,000 net additions, of which 124,000 correspond for this period, which represents that 50% of the annual growth was achieved in this past quarter. By segment, internet subscribers increased 8% compared to the fourth quarter of last year, totaling more than 4.1 million, resulting in 304,000 net additions In this period, 125,000 new subscribers were registered, the highest figure in the last nine quarters, or 3% growth. In a competitive environment, the constant evolution of our network, including the rollout of new territories, together with the consolidation of the GPON Evolution Project and the migration of other territories, continues to support our company's transformation and ensure our capacity to deliver the bandwidth the market requires. At quarter end, half of our subscribers receive their service through fiber technology. In addition, the investments we have made allow us to increase the speed we provide to our subscribers, and now 54% of the base has a service of 50 megabits or higher, compared to only 18% a year ago. Video subscribers reached almost 3.7 million, growing 4% versus the fourth quarter of 2021, adding 136,000 subscribers. While in the sequential comparison, it had a growth of 2% or 83,000 net additions. Our XView platform continued to grow, going from 2.4 million set-top boxes at the end of 2021 to more than 3.5 million this period. an increase of 46%, or 1.1 million net additions. Our interest remains in increasing the content available in our platform. We are working closely with the content providers in order to maintain XView Plus in the preference of the market on the base of the best content with a friendly interface and superior integration capabilities. The telephony segment records 3.4 million subscribers, growing 12% when compared to the same quarter of 2021. implying 373,000 net additions. At the end of the quarter, REUs totaled more than 11.2 million, 8% more than 10.4 million of the fourth quarter of 2021, driven by the strong subscriber growth, mostly coming from our expansion project, which is also reflected in the REUs per unique subscriber that went 2.51 in the fourth quarter 2021 to 2.55 this reporting period. The MVNO service active lines totaled 357,000, decreasing versus the same quarter of last year due to the implementation of a customer-based cleanup strategy, which we have now concluded, expecting to build a more profitable and active base of subscribers who contribute positively to a healthy ARPU growth. At quarter end, Most of our subscriber base is comprised of post-paid services with one of the highest ARPU in the industry. The accelerated subscriber growth was supported by lower chunk rates on an annual and sequential basis, with broadband at 1.7%, video at 1.8%, and telephony at 1.9%, a clear sign that our subscribers continue to see the value of our offering. Consequently, the ARCO per unit subscriber was 419.5 pesos, an increase against the previous quarter, which is quite meaningful if we consider the promotional rates, meaning that new subscribers have not yet fully contributed to revenue. Therefore, greater growth is expected in the coming periods after the expected penetration is achieved in the new territories. Turning to ARCO by segment, broadband and fixed telephony remained practically unchanged when compared to the third quarter of 2022, while video grew by 2%. And mobile services increased by 20%, reflecting the optimization of the client base. Now, on the corporate side, the corporate telecom segment recorded one of its best results ever, highlighting the performance of OLA, which grew 1.2 times, or 124%, compared to the same period of last year. mainly due to the pickup of several important projects in the public market, coupled with a strong increase in the corporate market when compared to 421. In addition, Metro, Carrier, and MCM also presented solid results, increasing its revenues by 20% and 14% respectively on the same comparison. The results from the expansion project are now more visible. As of year end, we were able to enter 30 new markets by means of nearly 9,500 additional network kilometers, which represented nearly 2 million home paths. That means increases of 14 and 21 percent respectively when compared to the end of 2021. We are certain that this infrastructure will be reflected in the subscribing roads for the next period. Wrapping up, in light of the current momentum of our expansion plan, and important projects to improve our network, we are confident to further grow in the mass and corporate mass market while bringing connectivity and video solutions and with higher value to our customer base. 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.