Megacable Holdings

Good morning. Welcome to Megacable's second quarter 2025 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 at 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. We're pleased to report one of the strongest quarters in recent history, driven by solid growth in the mass market, with net additions rounding the $130,000 for broadband and $45,000 for video. result of the performance across both legacy and newly entered territories. In an industry where average growth fluctuates around 2.5% to 3%, our 10% growth in the mass market segment stands out as a clear indicator of market share gains and deeper penetration. This performance validates our investment decisions and the effectiveness of our long-term strategy. According to the latest data from the World Bank, internet penetration in Mexico stands at approximately 81%, leaving a wide window for continued growth within this context and based on the most recent figures from the IFT. MEGA holds an estimated 20% share of the nation's fixed broadband market, highlighting the significant opportunities that still lies ahead. This operational momentum is translated into sustained revenue growth, a near double-digit increase in EBITDA, an annual expansion in EBITDA margin, and a year-over-year increase in net income of over 30%. Altogether, these results reaffirm the disciplined execution of our strategy and underscore the strength and resilience of our business model, even in a context still marked by macroeconomic hindrance in tighter public spending. From a strategic perspective, we remain firmly on track towards our goal of becoming a full fiber operator by 2028. More than 80% of our subscribers are already served through Fiverr, consolidating the transition we have still executed over the recent years. These positions us to deliver best in class quality and next generation digital experiences, improving our competitive edge. Since the announcement of our expansion plan at the end of 2021, we have nearly doubled the size of our network infrastructure, a clear demonstration of our capacity to execute large-scale strategic initiatives with precision. We have reached the milestone of 18 million homes past footprint, increasing 9 million homes since the expansion project was launched. Reaching this milestone represents a significant achievement for the company. However, we continue to expand our footprint at a more moderate pace, guided by business fundamentals and aligned with emerging market opportunities. New deployments will be target based on population and demand growth, both in legacy and expansion territories. On the financial side, our EBITDA margin expanded year over year, supported by greater penetration in newly launched territories and sustained efficiencies across our legacy footprint. While it is typical for margins to peak in the first quarter and normalize over the remainder of the year, we remain on track to surpass our full 2024 margin. Furthermore, EBITDA grew at a near double-digit annual rate. reflecting the combined effect of disciplined cost optimization and the operating leverage inherent in our model. The sustained profitability along with our strong cash generation allowed us to return value to our shareholders through a dividend distribution in April past April, of approximately 2.9 billion pesos, equivalent to around 20% of 2024 EBITDA, maintaining one of the highest yields in the Mexican market. Although this led to a temporary reduction in cash and a slight upstick in leverage, our debt levels remain comfortably within our target range. We're certain that the leverage peaks is already behind us, and we are well positioned to continue generating positive cash flow, founding future dividends, getting return on our past investments, and supporting strategic future projects. This prudent financial management was further validated during the quarter, as pitch rating reaffirmed our investment grade rating AAA with a stable outlook. This endorsement takes relevance at the light of recent downward pressures on industry peers and reflect continued market confidence in our credit fundamentals, long-term stability, and the positive impact of our infrastructure modernization and expansion strategy. On the investment front, CapEx remained stable after a slow start of the year in terms of kilometers deployed and homes passed. reflecting our focus on optimizing the use of existing infrastructure and consolidating recent deployments. Going forward, we expect investment activity to gradually increase in the second half of the year, and we remain committed to achieving a full-year capex-to-revenue ratio between 27% and 29%. Over the longer term, our goal is to progressively reduce this ratio to below 20% by 2028, as our network expansion matures and additional efficiency gains are realized. Looking ahead, our outlook for the remainder of 2025 remains unchanged, marked by the solid fundamentals of our core segment In particular, growth in the mass market remains strong. Margins continue expanding on our annual basis, and net income maintains its upward trend. More importantly, our strategic strategy continues posting resilient results despite a challenging environment, while remaining fully aligned to our long-term vision. Before handing the call over to Raimundo, I want to emphasize our disciplined and consistent execution of our clearly defined strategy, which for our six consecutive quarters has allowed us to deliver sustained subscriber growth, margin expansion, and stronger cash generation. This performance has been clearly reflected in our share price, which stood at 52 pesos and 59 cents as of June 3, 2025, representing a 55% increase from 33.91 pesos at the end of December 2024. Our market capitalization reached 45.3 billion pesos. While this is a better valuation of our company, we firmly believe there is still meaningful upside ahead. These figures sign renewed investor confidence, signal renewed investor confidence as we remain the best positioned telecommunications operators in Mexico. backed by best-in-class service, high customer satisfaction, state-of-the-art infrastructure, and a long-term commitment to sustainable growth. Raymundo, now you can proceed. Thank you very much.

Thanks, Enrique, and good morning, everyone. During the last quarter, Megacable maintained a solid growth trajectory, reaffirming our commitment to becoming the leading telecommunications operator in the country. Our performance reflects the sustained momentum observed in past periods, including first, subscribers. We continue to expand our user base, driven by enhanced service quality and ongoing coverage expansion. Second, revenue and profitability. Subscriber growth translated directly into solid financial performance with year-over-year increases in both revenue and net income. And third, operating margin. Margin expansion was achieved through disciplined cost management and continued efficiency gains. These results confirm that our strategy is being executed with excellence and operational discipline. Moreover, this performance not only validates the path we've taken, but also positions us well for sustainable growth in the future. Now moving to results. During the second quarter, unique subscriber increased almost 565,000 over the last 12 months, reaching 5.7 million at the end of the quarter, representing an 11% year-over-year growth. In the second quarter alone, we added over 129,000 unique subscribers, reflecting strong sequential growth. reinforcing both our progress in consolidating services across new territories and our positioning at legacy markets. REUs increased from 13.2 million in the second quarter of 2024 to 14.4 million this quarter, representing a 9% year-over-year growth Revenue generating units per unique subscriber stood at 2.51 compared to 2.55 in the same period of 2024, in line with the rising preference for dual service bundles. Breakdown by segment, our internet service surpassed 5.5 million subscribers, representing a 12% year-over-year growth equivalent to nearly 581,000 net additions, of which over 132,000 were added this quarter. With these numbers at hand, we remain within our established quarterly growth range with a strong position in this business segment. It is also worth highlighting that over 80% of our subscriber base was already served through high quality fiber technology as of quarter end, representing a significant improvement when compared to the 71% record in the second quarter of 2024, bringing us closer to becoming a full fiber company. In the video segment, we closed the quarter with more than 3.8 million subscribers. slightly above the level record in the second quarter of 2024, with 45,000 net ads this quarter. As we have previously noted, this mark is no longer expanding. However, the company remains focused on creating value leverage on its XView video platform, bundled with the streaming apps, capitalizing on the growing consumer preference for on-demand content. The MVNO segment record a 32% year-over-year growth, driven by the net additions of 151,000 lines over the last 12 months, including 44,000 this quarter, reaching over 619,000 subscribers. This service, which was originally designed to enhance the value of our commercial offering by acting as a retention strategy, now is becoming a relevant stream of revenues. The growth achieved across all mass market segments was carried by a strength infrastructure. Our network expanded by 6% year over year, reaching 104,391 kilometers and enabling coverage of more than 18.1 million homes, representing a 10% increase compared to the same period last year. It is worth noting that 100% of this growth was deployed using fiber technology. The shown rate for internet and telephone services increases slightly from 2.1 to 2.3% in second quarter 24 to 2.2 and 2.5% respectively. In contrast, videos saw significant year-over-year improvement, with shown declining from 2.6% to 2.3% this quarter. As a result, ARPU per unit subscribers improved on a sequential basis to 421 pesos. This recovery reflects both the normalization of seasonal effects observed in the first quarter and the contribution of recent price adjustments across our service portfolio. On a year-over-year basis, decrease was supported by a higher proportion of subscribers on our double-play packages. In the corporate segment, results were softer this quarter. This is due to a decline in the government sector also the sale of contracts with future revenue record recognition better known as managed services instead of infrastructure sales and a short-term reduction in carrier contracts due to extend future terms with price reductions additionally although these causes are dropping revenue The EV that contributed by the business sector does not decrease since the new projects are lowering costs and therefore yield higher margins. In summary, I would like to highlight that in a quarter mark by an economic context of mixed signals, our key performance indicators remain solid. The progress achieved during this period confirms the strength of our operational model and effectiveness of our expansion strategy. Looking ahead, we remain focused on consolidating our strategic projects and reinforcing the quality of our service offering, with the clear objective of delivering reliable, high-performance connectivity solutions that continue to meet the evolving expectations of families and businesses across Mexico. Thank you for your attention. I will now hand in the call to Luis for his financial review.