Megacable Holdings

Good morning. Welcome to Megacable's 4th Quarter 2024 Earnings Conference Call. With us this morning, we have Mr. Enrique Yamuni, CEO, Mr. Raimundo 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 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.

Thank you, Saúl. Good morning and thank you for joining us as we close 2024. It is worth remembering that Megas' vision is to be the best telecommunications company in the country. We have made strategic decisions that clearly bring us closer to this goal. Our progress is driven by two strategic axes. First, the modernization of our network in legacy territories, which reinforces our position as the best option in the markets where we have presence. And second, the deployment of fiber in new regions, which has enabled us to build a nationwide state-of-the-art network. By advancing in both areas, we continue to consolidate mega as a benchmark in the telco industry, equipped with the best technology, a strong focus on value creation and commitment to efficient use of resources. This strategy has allowed us to achieve key milestones at our end, among which I would like to highlight the following. We continue to expand our footprint within a few steps of our target of 9 million new homes passed and 50,000 new kilometers deployed since the announcement of our expansion plan in October 2021. Subscribing growth remains strong with net additions in broadband posting our best full-year performance ever. Both quarterly and full-year EBITDA figures achieved double-digit growth. with this quarter making the highest quarterly figure in the company's history. Our EBITDA margins for both the quarter and full year exceeded market expectations, demonstrating that our strategic initiatives are effectively driving sustainable operating profitability. As a percentage of revenues, CapEx continued to decline, reaching its lowest quarterly CapEx to revenue ratio since second quarter of 2020. Lastly, levers continued to decrease sequentially, remaining among the lowest in the industry. In newer territories, we are experiencing steadily improving margins as customer penetration ramps up, with our infrastructure in these regions now fully operational. we are well positioned to convert new subscribers into long-term customers and capture additional value. Turning to subscriber trends in 2024, we recorded our highest ever full-year performance. This strong growth driven by robust demand for our broadband solutions highlights our ability to attract and retain customers even in a highly competitive market. Regarding financial performance, our mass market segment boosted growth with more people increasingly choosing a reliable internet and competitive price bundles. While our corporate segment, particularly Ola, faced unfavorable comparison, our diversified portfolio continues to drive balanced growth across all customer segments. Speaking of the corporate segment, we recently announced the integration of Ola, Metro Carrier, and MCM into MCM Business Tech Co., effectively January 2025. This strategic consolidation enhances operational efficiency, optimizes business services, and strengthens our position in B2B ecosystem by providing comprehensive solutions in connectivity, cloud, cybersecurity, and infrastructure, among many other business lines. Starting in 2025, results will be reported under MCM Business Tech Code. providing greater transparency and supporting sustainable growth as an increasingly digital landscape. Now, let's turn to profitability. In the fourth quarter, we achieved a strong EBITDA performance with higher margins. For the full year, EBITDA growth was robust and our margins surpassed 2023 levels. These results reflect the strength of our operating model and disciplined execution. even as we incur expansion costs in new territories. This progress not only strengthens our financial foundations and supports our ongoing subscriber and network initiatives, but also reaffirms that our overall strategy is on track to deliver sustainable value and lasting competitive edge. We expect evident margins to continue raising as penetration in new territories increases, promotional tariffs normalize, and our legacy markets maintain their strong and stable performance. Our full-year capex to revenue ratio finishes below guidance, with a quarterly ratio reaching the lowest level since the second quarter of 2020. This reflects both a significant lower expansion spending and a higher revenue curve as our major expansion efforts wind down. We expect a lower capex to revenue ratio through the year of 2025. From a financial perspective, sustaining EBITDA growth in a lower investment as a percentage of revenues are key to achieve cash flow generations and realize our vision of becoming Mexico's leading telecommunications company. Fostering sustainable growth, enhancing operational efficiency, and creating long-term shareholder value in that line I would like to highlight that before dividends, we were only able to generate cash flow through 2024, a trend that we expect to continue in the coming period. As we enter 2025, we have one of the strongest balance sheets in the industry. Our net debt to EBITDA ratio remains the lowest in the sector, giving us the flexibility to complete expansion projects, invest in our network, and pursue strategic initiatives. We expect further improvement in this ratio as EBITDA strengthens and external financing needs decline. ensuring that we maintain the financial agility to drive our long-term growth strategy while maintaining a solid balance sheet. While we are not currently pursuing large-scale new investments, we remain committed to maintaining an efficient capital structure that allows us to seize attractive opportunities aligned with our strategic plans. With the building phase of our expansion nearly completed, we are transitioning into a phase of scalable, high margin growth. Our priorities remain clear. First, sustaining subscriber momentum. Second, closing the margin gap between newer and legacy territories as expansion markets mature. And last but not least, accelerating free cash flow by reducing capital intensity to boost our capacity to unlock shareholders' value. In conclusion, 2024 highlighted our ability to perform and deliver results despite a complex environment from intense competition to macroeconomic uncertainty. Our financial strength, operational disciplines, and customer-centric strategy position ask for continuous success in the coming years. I will now give the voice to Raimundo for an operational update.

Thanks, Enrique. Good morning, everyone. This quarter marks the end of a year defined by important trends that will drive the results of the company in the next periods. The slowdown in our construction pace and consequently also in the investments for this year, as expected by the company. The focus on achieving a higher penetration in the new territories, thus resulting in a healthy and sustainable subscriber growth. And finally, the reflect of the above, mentioning an accelerated revenue and EBITDA growth. As we get approach the initial goal set for this project, we are excited about the growth and value we can generate once all objectives are fully achieved. Moving into results. By year-end, our network infrastructure reached nearly 102,000 kilometers of last-mile network, a 9% increase over 2023, extending coverage to 17.4 million home paths, a 13% annual growth. Complementing this achievement, as of December 2024, we have already upgraded 40,000 kilometers of network to FTTH technology since the start of this transition. The kilometers of migration plus our 35,000 kilometers of expansion ensures that our infrastructure meets the growing demand for bandwidth-intensive applications across both enterprise and consumer markets. Currently, 75% of subscribers are served by Fiverr, up from 63% in the fourth quarter of 2023, a critical milestone as we evolve into a fully Fiverr-based company. This transition enables superior quality and position us to capture on top demand and underserved regions. Turning to subscriber growth, we added 162,000 net unique subscribers this quarter, bringing our total base to 5.5 million. For the full year, we added 574,000 unique subscribers, a 12% annual increase, demonstrating sustained demand for our bundle offerings and reinforcing confidence in our long-term strategy. Breaking this down further, internet subscriptions grew by 13% year-over-year to 5.3 million, representing 590,000 net additions for the year, including 167,000 this quarter, driven by our ongoing FTTH upgrades and expansion efforts. In fixed telephony, we now serve 4.8 million subscribers, reflecting a 17% annual increase with 685,000 net additions for the year, including 175,000 this quarter. Meanwhile, our MVNO segment continued the recovery that started early last year, growing at a 28% annual rate as of quarter end to reach 554,000 subscribers, having added 121,000 throughout the year and 42,000 only in the fourth quarter. Turning to video, our strategic initiatives are showing tangible results. while traditional paid TV subscribers declined by 7,000 in the fourth quarter, substantially better than the loss the market anticipated. This marks a significant stabilization compared to previous quarters, as we limit annual losses to just 2%, proof of our digital focus approach. As of this quarter, 90% of our video subscribers use XView+, our advanced, future-rich platform that now serves 3.5 million users. This represents a 19% year-over-year growth with 553,000 net additions during the year, including 115,000 in the quarter. These platforms not only mitigate churn, but also represent the best form of content integration in the market. In this context, REUs reached 14 million, a 10% year-over-year increase, driven by steady growth in the mass sector. REUs per unique subscriber stood at 2.52, down from 2.57 in the fourth quarter of 2023. Shown rates for internet, video, and telephony improved compared to both third quarter 24 and fourth quarter 23, standing at 1.7%, 2.1%, and 1.9% respectively, mainly due to the seasonality effect in the sequential comparison. ARPU per unique subscriber was 421.6 pesos, remaining at the same levels, both sequentially and in a year-to-year comparison, an outcome of balancing retention and promotional efforts with value optimization. Regarding customer satisfaction, the company has made significant improvements over the last three years by focusing on best-in-class technology and services tailored to the subscriber needs. Our MPS, Net Promoter Score, is now approaching the optimal level, and our subscribers ratings for our service reached a record high in 2024. We will continue to make strategic adjustments to align with our customers' preferences. The results of our corporate telecom segment, now known as MCM Business Tech Co., remain flat year over year, but improve sequentially, largely due to the exceptional performance of OLA in the fourth quarter of 2023. For the full year 2024, this segment's revenue grew 5%, driven by a strong performance in metro carrier and all as well. This reflects resilient demand for high-margin, low-latency services, support by our expanding fiber network, which remains essential for businesses undergoing digital transformation. Individually, metro carriers grew annually, driven by a better performance in the corporate sector. Meanwhile, all have faced an annual decline impacted by a challenging 2023 baseline due to special projects delivered at the end of that year. However, sequential trends show growth. Overall, our operational results show momentum and progress across our core product lines. We added significant subscribers, improved churn rates, and network footprint expansion. And even when market competition and macroeconomic headwinds persist, our commitment to operational efficiency, product bonding, service enhancements, and strategic infrastructure investments position us to maintain, grow, and strengthen our market presence despite those challenges. Thank you. I will now hand in the call to Luis for the financial review. Thank you, Raimundo.