Megacable Holdings

Good morning and welcome to Megacable's fourth quarter 2023 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 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.

Good morning, everyone. Thank you for joining us today. Once again, during this period, we achieved strong operating and financial performance, supported by the successful execution of our special projects. After the sales strategy adjustments, we are returning to the subscriber growth trend of previous periods. Supported by greater penetration in expansion cities, while legacy territories continue to grow despite a competitive market in that line, in 2023, we recorded the highest annual net additions of broadband and unique subscribers in the company's history. As we have mentioned before, our expansion plan was conceived with two main strategies. First, the building of the infrastructure, which would bring 8 to 9 million additional homes to the 9.3 million homes that we had when we announced this initiative, using state-of-the-art fiber technology and entering into approximately 60 new cities. And second, to gradually increase the penetration rates to levels of 20% the objective that we have set. This will result in the subscriber increase that will generate additional revenues. As of December 2023, we are very satisfied with this year's significant achievements in both strategies. as we have far exceeded the initial expectations for this period, bringing us closer to the project conclusion. Regarding the building phase, we managed to add close to 4 million homes passed during the year with the state-of-the-art 5A technology. With this result, we now have reached 6.1 million additional homes passed since the third quarter of 2021. which implies that we are very close to conclusion, it is important to highlight that we have achieved this within the timeframe initially established by the company. With respect to penetration levels, we have reached a total average of 13% as of December. However, for some territories that we have been operating for a longer period, we have started to see levels of 20%. This allows us to be optimistic about regional penetration targets in all of the territories and thus to achieve the expected return of investment. At the same time, we have continued with our network evolution project, which is another initiative that supports our fiber adoption. During this year, we have migrated more than 6.1 thousand kilometers to fiber from the HFC network. to reach a start of 35,000 kilometers updated since we started this project in 2020. Both initiatives have contributed to increase the percentage of fiber footprint in the company's network as of the end of 2023. 63% of our subscribers are already getting their service through this technology. This ensures the competitive capacity of the company, not only for the present, but also for the coming years. Also, it is important to note that the CapEx figure for the year is in line with these efforts, as it reflects the top quality infrastructure that we are deploying. Considering the peak of the investment cycle was in 2023, CapEx levels will start to decrease in the short term. starting in this year, 2024, in which not only we expect a lower capex to revenue rate when compared to 2023, but also the actual amount spent will be lower. The investments we carried out during this period are reflected in the net additions coming from the new cities, but also in a higher growth rate than the rest of the market in the legacy territories. Regarding the results of the period, we were able to record the best figure in revenues for the mass segment since we announced the initiative, with a very positive outlook for the following quarters in the corporate segment. The revenues for the period remained below the figure recorded in the fourth quarter of 22, due to a difficult comparison effect. However, in the normal performance of the business, we had the best quarter of the year. The outstanding performance in revenues allowed us to see double digit growth in consolidated EBITDA with a margin that exceeded the market expectations. As we have established before, our expansion territories were going to positively contribute to EBITDA duration by the end of 2023, and we achieved that. Margin for the quarter was close to 20% in the expansion territories. Going forward, we are aiming at a higher margin for 2024 when compared to the previous year, as expansion cities continue to improve their performance due to a higher penetration. Our financial position remains strong. Despite the increase in our debt, we maintain one of the lowest leverage ratios in the industry. It is worth noting that our current net debt to EBITDA ratio is in line with the significant investments we have made. As you may know, we're in the process of issuing local sustainable notes of 8 billion pesos as part of our 20 million pesos debt program. Importantly, a portion of the proceeds raised from these issuance will be deployed toward our network evolution and expansion projects. The remaining proceeds will be used to repay the debt maturing in 2024. In this sense, our financial market management coupled with our strong market position enabled us to receive AAA credit ratings from Fitch and HAR ratings. On the other hand, Sustainable Fitch granted our sustainable debt framework the opinion of excellence, the highest grade with respect to the alignment of our framework with the most relevant international principles. In this context, I would like to highlight the increasing relevance of sustainability practices in our operations. Our strategies now aim to integrate ESG practices utilizing energy-efficient technologies to reduce our environmental footprint while reinforcing our commitment to promoting digital inclusion, ensuring that our growth translates into tangible benefits for all our stakeholders. As we move forward in 2024, our focus remains on growth, technologically evolution, and enhancing operational efficiency. We are committed to delivering industry-leading margins and providing exceptional value to our customers and shareholders. In conclusion, this quarter's performance is clear proof of our strength as our strategic initiatives are clearly showing results. Thank you for your support and trust. We look forward to another year of growth and expansion. Now, I hand the floor to Raimundo for his remarks on our operational performance.

Thanks, Enrique, and good morning, everyone. As we review our operational performance for both the fourth quarter and full year 2023, It is evident that our progress is closely aligned with our expansion and network evolution initiatives, which have gained considerable momentum and will continue their trend during 2024. The path ahead is clear to us, as we have established a plan and have been executing in that direction. This strategy has put us in a position where we have built most of the homes that we plan to become a national player. And even with these investments, we still maintain leverage with reasonable boundaries. We have recorded the best annual growth figure in terms of new subscribers, whose permanency with the companies reflected in this quarter's ARPU and mass market revenue figure. Additionally, as penetration in the new territories continues to improve, also consolidated margin has also started to recover. With such a strategy, we're ensuring that we will be able to continue generating value for our shareholders over the long term. So the future looks brighter. The company has a track record of efficient execution. And now that we have passed the most demanding part of the investment cycle, we will be focusing all our efforts on capturing all the value we can from the investment made. Moving into results, we have further extended our infrastructure. adding 3.1 thousand kilometers of fiber, thus expanding our reach to an additional 885,000 homes. This figure brings our total number of homes added this year to roughly 3.9 million, beating our initial target. In terms of technological deployment, during the quarter we converted an additional 2,000 kilometers of our network from coaxial to fiber, thus enhancing the connectivity of 400,000 homes with full fiber technology. For the full year, we have updated more than 61,000 kilometers or more than 1.1 million home paths of the existing territories. Once again, as Enrique mentioned, with the results of this year, we now have a total of 6.1 million additional home paths from the expansion initiative and more than 35,000 kilometers of updated network related to our network evolution project. On the subscriber front, we achieved a stronger sequential load due to the enhanced sales and marketing operations implemented during the period. Our total unique subscriber count has now reached 4.9 million, an annual growth of 13%, including 548,000 net additions, with 148,000 coming from the fourth quarter alone. Now, in the internet segment, we recorded a 14% year-over-year growth, now serving 4.7 million subscribers. Of these, 157,000 subscribers were added this quarter, bringing the full-year figure to 584,000 net additions, where our continuous network upgrades were instrumental. A significant highlight is that 63% of our internet subscribers now enjoy high-speed connections to our fiber service, a significant achievement from the 50% of last year. This underlines our commitment to provide a faster and highly reliable internet service. Our video subscriber base increased to 3.9 million, a 7% year-over-year growth, or 238,000 net additions, with 25,000 subscribers at this quarter. The XView platform continues to be a cornerstone to our offering, with its user base expanding by 22%. reaching 2.9 million subscribers by quarter end. The platform's innovative features, including personalized content and interactive options, continue to drive customer engagement with monthly interactions surpassing 108 million. In the telephony segment, we recorded 20% year-over-year growth, now serving 4.1 million subscribers. Net additions amounted to 678,000, with 176,000 from this quarter. REUs reached 12.7 million, a 13% growth from the previous year, reflecting the progress of our expansion plan. The MVNO segment showed a strong growth, with a 21% increase year-over-year of 77,000 net additions, standing at over 433,000 subscribers. On a sequential basis, this segment recorded 19,000 net additions. This shows our strategic focus on output contribution over quantity in customer acquisition. Shown rates for internet video and telephony are 1.8%, 2.2%, and 2%, improving when compared to the previous quarter. Proof of our success is in customer retention in expansion territories. where a big portion of the subscribers that have tried this service decide to continue with the company, as well as the seasonality effect. The ARPU Perionix subscriber stood at 426 pesos, 2% higher than that of the fourth quarter of 2022 and the third quarter of 2023, even considering the significant subscriber increase recorded during the period, reflecting the effectiveness of our pricing strategies and service quality, despite a higher competitive environment. By segment, ARP of broadband, video, and mobile services increased more compared to the same quarter of last year, while on a sequential basis, the ARP of internet and video services also recorded increases. On the corporate side, the corporate telecom segment recorded a lower figure than that of the fourth quarter of 2022, mainly due to the extraordinary results that all achieved last year. However, On a sequential basis, this segment reached a 10% increase and the best quarterly figure of the year, mainly supported by the recovery of OLA. On a full year comparison, this segment recorded a 5% increase as a result of the positive performance of MetroCard and MCM. Before concluding, I would like to mention that this year's investments have been higher than initially expected, but as we have commented, we are certain that this year represents a window of opportunity that we decide to take advantage of by accelerating our plans. Nevertheless, this year CAPEX includes nearly 4 million additional home paths, almost half of the goal of the entire expansion plan, the addition of nearly 600,000 broadband subscribers, more than 900,000 set-to-box and a similar amount of modems, ONTs for broadband, added 7,000 employees to reach more than 31,000. We are now providing service in nearly 55 expansion cities, and the conversion of more than 6,000 kilometers from HFC to fiber technology among our main initiatives. We are very proud of what this organization has achieved with that amount of investment. There is no doubt that no other company has such interest and focus on execution and efficiency than MEGA. In conclusion, our strategic approach to infrastructure technology, customer satisfaction, and strategic market penetration position us on solid ground for continued growth, remaining confident in our ability to maintain momentum and achieve our operational target for 2024. Thank you for your attention. I will now hand over the call to Luis, who will provide a detailed analysis of our financial performance.