Megacable Holdings

Good morning. Welcome to Megacable's third quarter 2024 earnings conference call. With us this morning, we have Mr. Enrique Yamuni, CEO, Mr. Raimundo Fernandez, Deputy CEO, and Mr. Luis Eter, 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 risk 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, you may begin. Good morning, everyone. Thank you for joining us today. I would like to start by addressing some key achievements of this quarter. 100,000 kilometers of distribution network, 17 million homes passed, 5 million broadband subscribers, 10% revenue growth, 33% capex to revenue rate and declining, and lastly, positive free cash flow. The organization is pleased with these results. As you know, our company is focused on two main strategic axes of projects, the evolution of the network and expansion into new territories. And both initiatives are evolving satisfactorily, driving sustainable subscribing growth as well as revenues in EBITDA generation. Starting with the first of our strategic axis, our legacy territories, we remain focused on consolidating our presence and enhancing our network infrastructure. During the quarter, we converted 1,000 kilometers of network to FTTH technology. bringing the total to 38.8 thousand kilometers since the initiative began. As a result, 73% of our subscribers now receive their service through fiber optics compared to 59% a year ago. In these territories, we maintain a significant penetration rate, which leads to a steady subscriber base. We are focused on improving service quality and offering a competitive service to the best in class infrastructure. Our margins in organic territories remain strong at healthy levels reflecting the long-term operations efficiencies we have built, reaching 47.9% for the first nine months of the year. As the penetration in the expansion territories rises, our consolidated margin should get closer to this level. By upgrading its network infrastructure, Megacabler remains ahead of technological trends improving the customer experience and strengthening its market position, while realizing both economic and sustainability benefits through advanced technologies. Regarding the second strategic axis, our expansion into new territories continues to progress well. As the network grows in these areas, steady margin improvements are observed as penetration rates increase. As of quarter end, we have already reached 8 million homes passed in expansion territories, turning into the main contributor to subscriber growth over the last few quarters. In that sense, we are growing according to the plan, and this growth should continue for several more periods, giving us an opportunity for significant revenue growth with an investment that has already been made. And finally, Regarding our financial profile, as we near the completion of the expansion plan, our capex to revenue ratio significantly decreased from 41% as of September last year to approximately 32% in the first nine months of 2024. As we continue to consistently increase revenue, an EBITDA cash flow generation will improve in the coming periods. We will maintain discipline in our capital allocation with no large-scale projects planned for the coming years and financial position that will lead us to cash generation in the near terms. Our solid financial position is reinforced by the recent reaffirmation of our AAA credit ratings from HR Ratings in line with the reaffirmation granted by Fitch Ratings in May. Regarding results, we are recording one of the best quarters ever in terms of subscriber growth. Our confirmation that the slight deceleration observed in the second quarter is behind us and that we are aiming at a consistent delivery of positive operating results. From a financial perspective, our revenues for the quarter increased by double digits, continuing the strong top-line performance seen in recent quarters. Even the growth was more moderate due to the seasonal nature of our business. We, for the third and fourth quarters, typically see lower margins, compounded by temporary operations costs associated with expansion projects. These costs will be more than offset by the expected long-term benefits of our projects. Looking ahead, despite the challenging environment, I remain confident in our ability to complete our expansion plan in the coming quarters while preparing to consolidate the progress achieved over the past years. We will stay focused on delivering value to our shareholders by executing our long-term vision of providing world-class connectivity and entertainment services to millions of homes and businesses across Mexico. Now, I will pass the floor to Raimundo, who will discuss operational performance in greater detail. Raymundo, please.

Thanks, Enrique. Good morning, everyone. With the steady progress in our expansion strategy and solid performance on our legacy territories, as Enrique mentioned before, we maintain subscriber growth, a steady construction and compass build, as well as revenue growth and conservative CapEx investment. The results of this quarter validate the goal of our organization, duplicate the size of the company, as stated in 2021 when we announced the expansion project. Moving to results, starting with network development, our infrastructure now covers more than 100,000 kilometers, marking an 11% year-over-year increase and supporting our nearly 17 million home paths. During the quarter, an additional 1.1 thousand kilometers were upgraded to FTTH for a total of 38.8 thousand kilometers, advancing our commitment to delivering top-tier connectivity to homes and businesses alike. The internet segment grew 13% year-over-year. adding 581,000 subscribers, including 182,000 this quarter, surpassing the 5 million subscriber mark and achieving a growth above our quarterly threshold, thus contributing significantly to the expansion of unique subscribers. Individual segment, traditional pay TV subscriber reach a total of 3.9 million, recording a slight decrease and reflecting market trends favoring digital platforms, which at quarter end rose to 887,000 users, a 26% increase year over year. This trend has been observed in international markets. However, we maintain our efforts to mitigate these impacts, evidenced by the sequential reduction in the churn rate for video to 2.4% below the one recorded in the previous quarter. Likewise, our XV1 and XV2 Plus platform reached 3.3 million subscribers, with growth in both subscriber and set-top boxes. Thus, as of quarter-end, 85% of our video subscriber base now receives an interactive service with the state-of-the-art capabilities. Telephony also showed a strong growth, with an 18% year-over-year increase, adding 686,000 net subscribers, of which 227,000 were at the Discord. Meanwhile, our MVNO service grew 23.7% annually with 98,000 net additions, including 44,000 this quarter, the highest quarterly growth in the last two years. Our unique subscriber base remains robust, exceeding 5.3 million this quarter, reflecting a 12% year-over-year increase, In the third quarter alone, we added more than 180,000 subscribers, the highest figure since the expansion project was announced. For total RUs, we reached 13.6 million this quarter, reflecting a 10% annual increase, driven by the growth of the mass segment. REUs per unique subscriber, however, stood at 2.54, slightly declining year over year as a result of a service mix, including more double-plate bundles. Regarding churn rates, we saw a decrease when compared to the previous quarter, as expected, due to the positive trend observed after a complex start at the second quarter of this year. Year over year, broadband record a slight decrease, while video and telephony rose marginally. In this context, in the middle of a competitive environment, our per unit subscriber was 418.9 pesos, showing a slight increase annually and remained almost flat sequentially, reflecting the promotional rates registered during the period and higher participation of double-play bundles. Turning to the corporate segment, we recorded a 7% year-over-year growth, with all standing out by growing 37% due to a favorable performance in the corporate and enterprise segments. MetroCard also achieved a 6% annual growth, while MCN registered a slight 5% decline. However, it showed a sequential improvement and is expected to continue its upward trend. Finally, PCTV remained stable with a slight growth. To conclude, this quarter reflects our commitment to strategic growth and orderly improve our technological infrastructure, a plan that we will maintain through the end of 2024 as we aim towards the consolidation of our expansion project by 2025-2026. The achievements in network expansion and subscriber growth show a well-executed plan that will support a sustainable growth path for the company. Thank you all for your attention. I will now hand over the call to Luis, who will provide a detailed analysis of our financial performance.