Megacable Holdings

Good morning and welcome to Megacobly's third quarter 2023 earnings conference call. With us this morning from Megacobly, we have Mr. Enrique Yamuni, CEO, Mr. Armando Fernandez, Deputy CEO, and Mr. Luis Zeller, 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. Megacably undertakes no obligation to update or revise any forward-looking statement. I'll now turn the call over to Mr. Enrique Yamune. Sir, you may begin.

Thank you. Good morning, everyone, and thank you for joining us today. I would like to provide you with an overview of our company's performance and highlight the significant advances we made this quarter. Similar to the previous periods, the company's results this quarter were characterized by the ongoing execution of the expansion plan. This is now being reflected in the revenue growth in the MAS segment, the highest recorded since 2018. Overall, our growth trajectory remains positive with expectations for further improvement towards the coming years. In terms of homes passed, this is the strongest quarter ever. We're moving ahead of our initial objectives for the year, taking advantage of the current market conditions, both in terms of economics and competition. By year end, we would have surpassed more than 6 million homes passed of this initiative, including 2022 and 2023, and over 60 new cities. We have a clear plan when respect to our infrastructure based on two main edges. One, fiber deployment is in new areas. As of today, we have more than 5 million homes passed of state-of-the-art full fiber technology from our CTCs all the way to the subscriber premises, including OTT, Android TV, set-top boxes, and ONTs, Wi-Fi, broadband modems, to guarantee the best experience for the subscribers. As of quarter end, more than 33,000 kilometers have been converted from our HSC legacy technology to 100% fiber network, including what we did in previous years. Once again, a full fiber network with all the technological advances we can offer. As of today, 62% of our network is 100% fiber to the home. These initiatives are not related to replace only the last mile and keeping the same technology that the subscriber already had. This is a complete state-of-the-art new network that improves the capacity from the backbone to the subscriber end and allow us to present great products, very superior than our competitors. The rest of our network that remains with HFC technology has been upgraded to 500 and 200 homes per node, depending on the market, guaranteeing the best performance and speed until the project of comparing mega to 100% fiber takes place in the future years. Our full fiber vision is right on track. All the previous mentioned has been possible at the lower cost in the industry proof of the efficiency culture embedded in the company. Turning to operational performance, it is encouraging to see a contribution of NEDAS in both our legacy and new territories. Regarding our churn rate performance, we believe the slight increase recorded was within the expected range. Considering the price adjustments made earlier this year, In the aggressive growth strategies of the last periods aimed at capturing the market in the new territories, we continue to look for a more efficient model of sales, including promotional rates and subscribers quality to support the growth of the company. Something we're proud of is that after so many years of strong competition by not just but several companies, we keep the highest market share in our organic territories, we clearly must be doing something right. On the financial side, the quarter's revenue growth was mainly driven by the significant increase in mass market revenues, in line with the continuous subscriber increase recorded in the last period. It is worth mentioning that we register revenues as received by our subscribers. So we have a real subscriber increase. Regarding EBITDA margin, we saw a slight contraction as a result of our expansion. On that line, it's very relevant to note that this quarter, the margin of the expansion territories is already positive. Our balance sheet remains robust. due to our prudent and strategic management as reflected by HR ratings pre-affirmation of our investment grade, quite in line with the fees ratings credit action of June. Regarding leverage, it remains a very similar leverage when compared to the last quarter, well under the industry average. As we have stated before, we are planning to issue additional debt in the first half of next year. Given our cap as management, we are confident that after the issuance, our cash generation will be enough to cover our investment plan, emphasizing both network expansion and technological upgrades in legacy territories. In summary, our expansion project was conceived and approved by the Board at the end of 2021 and began its operation in the third quarter of 2022. So after 15 months of this initiative, we can agree that it remains as the right decision. We have created a company with double this growth in revenue with a manageable leverage in doubling the size of its infrastructure by 2024 with a complete transition to fiber technology. Thank you for your attention and now I hand the call to Raimundo for a deep drive into our operational performance. Raimundo, please go ahead.

Thanks, Enrique, and good morning, everyone. Building on last quarter's momentum, our operational performance continues to be driven by a combination of our expansion into new territories, technological evolution, and the continued growth in the legacy footprint, all of it with a focus on customer satisfaction. Starting with our infrastructure efforts, we added another 4.3 thousand kilometers of fiber this quarter and expanded our reach to an additional 1.1 million homes. This achievement brings our yearly total home paths to over 3 million, with a total figure of 14.5 million home paths, meaning that we are ahead of our CAPEX spending and we have almost completed our goal of new home paths for the year. Moving into technological evolution, during this quarter, we converted an additional 360,000 home paths from HFC to FTTH in the legacy territories, reaching more than 760,000 for the full year for a total of close to 9 million full fiber home paths in the company. As you can see, we have a very clear vision of the future of the company, and we have been executing in that regard. The more than 55,000 kilometers of fiber to the home network that we have are a reality. And this has been reflected in the quality of the services we can provide, improving our customer satisfaction KPIs. It is relevant to note that this quarterly cap figure includes an advance in the expansion and conversion kilometers, as well as in the CPEs that we will need in the future. Regarding our subscriber metrics, We continue with a solid growth trend. As Enrique mentioned, we are reinforcing our sales and marketing staff to keep a stronger pace of activations to better capitalize on our modern infrastructure. We recorded a 12% year-over-year increase in unique subscribers, reaching 4.8 million. This growth consists of over 523,000 net additions, including 106,000 from this quarter. In the internet segment, there was a 14% year-over-year growth, totaling 4.6 million subscribers or 551,000 net additions. Sequentially, this segment added 116,000 subscribers, with our ongoing speed upgrades further strengthening our reputation as a market leader. Both our state-of-the-art fiber network and robust HFC technology are unique in facilitating these upgrades. Significantly, 83% of our subscriber base now has high-speed connections of 60 megabits or higher, up from approximately 54% during the same period last year. Our video subscriber reached 3.9 million, a growth of 8%, or 297,000, compared to the third quarter of 2022. And with 43,000 at this quarter alone, maintaining its solid growth trend. The XView platform user base grew by 27% year-over-year, reaching 2.7 million subscribers. Concurrently, XView's set-top boxes are now in over 4.1 million homes. The unique features and functionalities of the XView, coupled with the monthly interaction of more than one 108 million, underlining its importance within our value proposition. Telephony saw a growth of 20% year-over-year, reaching 3.9 million subscribers. This was translated into 643,000 net additions with 144,000 from this quarter. The performance is attributed to the penetration into new markets with bundles that include telephony services. By the end of this quarter, REUs reached more than 12 million, marking a 14% growth from last year. REUs per unique subscriber this quarter averaged 2.58, up from 2.54 during the same period last year. Now, the MVNO segment showed a 1% and 6% year-over-year and quarter-over-quarter growth, respectively, standing at 414%. thousand subscribers. This highlights our focus on quality post-paid customers. Our churn rate for internet video and telephony are 2.1%, 2.3%, and 2.2% respectively, reflecting a slight increase when compared to the previous quarter. This is explained by the rate increases and the aggressive growth and commercial campaigns of the previous quarter. The gross ads of the quarter remain at the same levels on a sequential comparison. both higher than those of the third quarter of last year. The approach of the company remains to prioritize the gross ads that will remain in the long term, looking for the right balance with the short rate. The ARCO per unique subscriber remained resilient at 418.7 pesos, an increase of 1% versus the same period last year. On a sequential basis, it practically remained at the same levels when compared to the second quarter of 2023. This is mainly due to the rate increases we have performed, which offset the promotional rates offering new territories. Regarding ARPU per service, while internet and video ARPU increased by 3% and 1% year-over-year, respectively, telephony saw a 4% decrease. However, the MVNO service ARPU grew by 29% year-over-year, emphasizing our strategy of prioritizing quality revenues over quantity. On the corporate telecom front, revenue remained flat when compared to the same quarter of last year, with MetroCarrier and MCN registering growths of 2% and 5%, respectively. In the case of MetroCarrier, the decrease is based on a thought comparison effect due to the extraordinary revenues recorded in third quarter 22. Excluding this effect, the quarterly increase should have been 12%. OLA's revenue decreased 18% as a result of a slowdown in the projects by life and more restrictive credit conditions after a strong first half of the year. Going forward, we expect a strong end of the year for OLA in line with the seasonality of this business. Wrapping up, we remain optimistic about our business strategy as we get closer to the end of the building phase of our expansion project. We are now focused on speeding up the pace of the sales to fully reflect growth. Our efforts in infrastructure expansion, alongside our commitment to technological transformation, mark a promising future, featuring sustainable growth and unmatched service delivery. Thank you for your time. Now, I'll hand over the call to Luis for a deeper dive into the financial insights.