Megacable Holdings

Mr. Raymundo Fernandez, Deputy CEO, and Luis Zetter, CFO. Let me remind you that the information discussed and 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 turn on the call to Mr. Enrique Yamuni. Sir, you may begin.

Good morning, everyone, and thank you for joining us today. I am pleased to present my accolades result for the second quarter of this year, a period in which we continue to grow our brand and enhance characteristics of our company in recent years, growing even faster than the market, despite the challenging competitive and macroeconomic environment. Our net additions came within the range we have communicated and sure remain stable, which speaks of the quality of our platform and the discipline behind our growth. Aligned with this approach, our continuous subscriber growth pace led to surpass the 6 million internet users mark. And as in previous periods, this trend has been accompanied by growth in revenue, thus providing that our subscribers are actively contributing to value creations. The company has entered a clearly defined strategy phase. Over the past four years, we have expanded and modernized our network, taking our footprint beyond 19 million homes past in transforming megacabinet into a predominantly fiber-based operator. Most of that expansion is now behind us. Our broader priority is to capture more value from the investments already made, increase penetration, monetize the network, and adapt execution to the specific conditions of each market. And regarding our most recent expansion, it is worth noting that during the first half of the year, we have added more than half a million new homes passed, but we have also upgraded more than 600,000 homes from HFC to FTTH for a total of more than 1.1 million new fiber homes built in the first six months of the year. Our growth strategy goes beyond consistently expanding our homes past footprint. It also focuses on migrating subscribers to the latest technology and providing them with a superior service experience. As a result, 88% of our subscribers are now served through GPON technology, substantially strengthening our ability to deliver high-quality services and higher bandwidth capabilities. And most importantly, we have shifted all of this while maintaining optical capex level. We continue to both convert and build our network and still maintain investment figures in line with the arrangements we have shared clear evidence of there, which is easy. with which we are now deploying our capital. Within the enterprise segment, we continue restructuring our corporate business in order to address a highly competitive market where integrating connectivity with services and solutions have become essential. During this period, we began to see signs of stabilizations. Financially, revenue on EBITDA continued to grow and net income remained strong among our best quarterly results since the second quarter of 2023. Our margin held stable rather than widening due to the one-time impact of our Bluefin promotions of last year. This effect is seasonal and distinct from the structural cost actions I described earlier. Once we move past it, we expect margins to resume steady growth. Our balance sheet remains a source of strength, as reflected in Fisheries Ratings' recent reaffirmation of our national scale AAA rating with a stable outlook. It is important to highlight that despite the dividend paid this quarter, which required no additional debt, our net-to-debt-to-ebit-debt ratio remained within the 1.1 to 1.3 times range. This means we do not need to pursue further deliberation as an objective. Cash generating above that level can support shareholders' distributions for strategic opportunities that meet our operating and return criteria. Capital allocation remains disciplined. Investment in the first half follows the seasonality we have seen in prior years, remains consistent with our annual plan. and Mark, the lowest first half capex level since the expansion project was announced. As we move beyond the peak of the expansion cycle, every peso invested must support network quality, penetration, productivity or an attractive return. Regarding artificial intelligence, we are focused on improving operational efficiencies. Our current objective is to enhance processes and functions through their digitalization. In addition, we are introducing this technology into the most critical areas of the business, aiming to achieve cost and expense efficiencies. The structure responsible for the implementation of AI has already been established, and we expect to share the results with you soon. In the meantime, we continue to pursue other opportunities to improve efficiencies, including workforce reduction across corporate back office, field sales, and operational areas, mainly due to the automation and digitalization of current processes. As a result, we have reduced headcounts by more than 1.3 thousand positions at the core end compared to the year end of 26. In summary, Megacable has completed a major expansion cycle and is moving into a face center on execution and returns. Our priorities are clear. Grow broadband with discipline, protect the consumer experience, monetize the footprints, improve efficiencies into the organization, and preserve the financial flexibility that has long distinguished the company. The resilience of this company lies not only in the homes we have built and our steady subscriber growth, but in our proven ability to efficiently migrate and acquire subscribers already on Fiverr. With that, let me turn the call over to Raymundo for the operational review.

Thanks Enrique and good morning everyone. Building on Enrique's remarks, the second quarter was characterized by a steady and disciplined operating growth. The company emphasizes profitable and sustainable improvement, ensuring that subscriber additions are accompanied by a strong monetization performance. While our commercial execution continues to support subscriber growth, prioritizing quality additions, the operating focus is increasingly shifting from adding scale to extracting more value from the scale already in place, highlighting efficiency and operational productivity. Let me begin with broadband. We added 112,000 internet subscribers sequentially and surpassed 6 million subscribers at quarter end. These results remain within the 100,000 to 150,000 quarterly range we have communicated and was above the first quarter. On a year-over-year basis, the internet base increased 8.5%, equivalent to 474,000 net additions over the last 12 months. That growth is supported by a superior network. At quarter end, our footprint reached 19.8 million home passes. of 9% year-over-year across approximately 111,000 kilometers. More importantly, 88% of our subscriber base has already been migrated to a full cyber service compared with 80% a year ago. Our increasingly fiber-based platform allows us to offer higher speeds, expand capacity, and improve reliability, strengthen both customer experience and the competitive position of our service, while giving us a stronger infrastructure for which to pursue operating efficiency. In content, the mix continues to shift from traditional video to a broader digital proposition. Traditional video closed at 3.8 million subscribers while uses of our streaming applications reached 2.4 million. As a result, unique video subscribers totaled roughly 4 million subscribers at QuadrantM. Our objective is to serve different viewing preferences through a combination of linear channels, applications, and other digital formats. Our MVNO operations also continue to expand. Mobile lines increased 26% year-over-year to 781,000 with 40,000 sequential net additions. Mobile complements our fixed service and extends the customer relationship beyond the home, adding a converged dimension to our value proposition. Sean, remain at the same level compared with the first quarter and increase on an annual comparison to reach 2.0% for broadband. Maintaining these levels in a competitive market indicates that service quality and their overall value proposition remains sound. ARPU, measure over internet subscribers on the methodology introduced at year end 2025. was $430.8 and declined on a sequential basis. This decrease is primarily attributable to the temporary effect of commercial promotions implemented last year. Nevertheless, this commercial strategy contributed to straining customer acquisition and rotation, driving subscriber-based growth and long-term value creation. We continue to manage our pension together, balancing monetization, retention and sustainable subscriber growth. The corporate telecom segment showed the greatest improvement in this quarter. After several quarters of contraction, revenue increased 5% year-over-year in the quarter and 0.1% in the first half. Looking ahead to the second half of the year, we remain optimistic. Our diversified portfolio and our dedicated team focus on delivering value positionals to build on this momentum. To conclude, we are successfully transitioning from expansion to a stage of consolidation marked by the pursuit of efficiency and higher productivity, including process automation and digitalization, in which AI will play a very relevant role. Overall, the operating platform remains strong. Subscriber growth continues within the range we have communicated. The fiber transition is well advanced, shorn is stable, and corporate has returned to growth. Our priorities for the remainder of the year are to improve penetration, deepen the customer relationship, capture more value from the existing footprint, and advance the efficiency initiatives now underway. Thank you for your attention. I will now turn the call over to Luis for the financial review.

Thank you, Raymundo, and good morning, everyone. Let me begin by the top line. Second quarter consolidated revenue total 9.3 billion pesos, an increase of 7% year over year. Revenue growth moderated slightly when compared to the first quarter, while subscriber growth remained within the operating range we have communicated. By segment, mass market revenue increased nearly 8% year-over-year to 8 billion pesos and remained the main driver of consolidated growth. Corporate revenue rose approximately 4% in the quarter, making a return to growth after several quarters of contraction. Mobile revenue totaled 274 million pesos, marking an all-time high for the segment. The strong performance was driven by continued subscriber growth and the ongoing integration of mobile services into the company's bundle offerings. As Enrique mentioned earlier, this quarter's revenue included a one-time effect related to a promotion offered during last year's Buen Fin campaign. which granted subscribers one month of free service. The benefit associated with this promotion was recognized between May and June of this year for eligible subscribers. While the initiative contributed to subscriber growth and retention, we don't expect any recurring impact from this promotion in future periods. Moving down the PL, Cost of services totaled 2.5 billion pesos, up 5% year over year, while SG&A was 2.6 billion pesos, an increase of 11%. The main pressure was labor costs reflecting both the annual minimum wage adjustments and the working force built during the expansion phase. Labor expense declined sequentially from its first quarter peak although it remained above the level recorded in the second quarter of 2025. EBITDA reached 4.2 billion pesos, up 6% year-over-year. The EBITDA margin was 44.9% compared to 45.4% in the second quarter of 2025, reflecting a cost base that has not yet fully adjusted to the company's current operating phase. We have taken actions to align headcount and strengthen cost control through productivity gains. The benefits should develop over time rather than appear in a single quarter. Net income was approximately 852 million pesos, an increase of 11% year over year and higher than the figure recorded in the first quarter. Financing costs were an important contributor. Interest expense declined more than 19% from the prior year period. Our predominantly peso-denominated debt profile with a significant variable rate component has allowed the company to benefit from the current interest rate environment and a favorable foreign exchange backdrop. while maintaining a conservative approach to financial risks. Capital expenditure total 2.2 billion pesos in the quarter equivalent to 23.4% of revenue and 4.2 billion pesos or 22.3% of revenue for the entire first half. We are confident reducing our capex forecast for 2026 and now we expect to be among 23 to 25 percent range for the entire year. At quarter end, cash and investments were 4.7 billion pesos, total debt was 26.2 billion pesos, and net debt was 21.6 billion pesos, an annual decrease of 8%. Net debt to EBITDA was 1.31 times compared to 1.56 times in the same period last year. and 1.25 times in the first quarter, with the sequential increase mainly reflected the dividend payment of last May. Interest coverage was 6.81 times and leverage remains within the 1.1 to 1.3 times range we considered conservative. In summary, revenue continued to grow, corporate return to positive territory and lower financing costs supporting strong net income. Margin performance remains our principal area of focus with actions already underway to moderate labor costs. At the same time, the balance sheet remains conservative and provides flexibility for investment and shareholder distribution with no additional debt. Thank you for your trust. I will now open the floor for questions.

If you would like to ask a question, please use the raise your hand function in Zoom. You may also submit your question through the Q&A function. Please ensure that you are muted when called upon. The first question comes from the line of Marcelo Santos from JP Morgan. Marcelo, please go ahead.

Good morning. Thanks for the opportunity for asking questions. So the first question is regarding the ARPU. So, I mean, what we saw, the weakness we saw, just to be sure, it was an accounting effect of a discount that you gave last year. So just why was it recognized now? And if we should look for the ARPU of the first quarter as a good indication of what's expected to come. And the second question is, you said, I think 23, 24% CapEx range for the year. How do you think of the CapEx for next year? Thank you very much.

Thank you, Marcelo. Taking away that, we wouldn't have an increase in the output, a slight increase in the output, pretty similar to what we had before, but not a decline on that. That's a promotion that was successful, and as I said, was at the end of last year, and you shouldn't expect that to be something that affects on a regular basis, let's call it that way. More than that, we're more focused on part of what we're trying to send the message is that from here on, after this period of big expansion, we're on a process of bringing more productivity, more efficiency, trying to go into the macroeconomic part of the megacablet, bringing a good range of subscribers between the 100,000 to 150,000 subscribers per quarter, probably In the middle of the range, normally. But trying to focus into the short that has a decline compared to last year. And we will focus into increasing and trying to bring those margins back to the company. At the end, we know that the effect of the revenue can send a message of lower ARP on that. But we feel comfortable that you will see a second half getting to the levels that the company normally provides.

And the other one, the CAPEX, Marcelo? Luis? Yeah, Marcelo, thank you for the question. Yes, confirming that we expect now CAPEX between 23% and 25% for 2026. And for 2027, we stick to the previous message we have sent, that the CAPEX will be among 22% to 24%.

and also Marcelo, I'd like to add to what Luis says. We expect a good second half in terms of CapEx. We're in control and as a different years, we are not expanding our plan that much. We are migrating less subscribers because we have 88% of subscribers already migrate. So the CapEx point towards expansion is less and less every time. I point that the organic CapEx is around 15% of revenue. So we're very happy of what we will see into the future to come. Don't have any doubt that the capex that Luis told you around that 22% to 24%, it will be in the lowest range for next year, even though Luis don't like me to say that, but I'm very confident that we can have it in the lowest part of the range we're telling you about. And that will release many things for the company, including free cash flow on that part. Thank you, Marcelo. I don't know if we answered everything. We talked too much.

No, you answered very well, but there's a follow-up. It is 15% you mentioned of organic capex. What's included in there?

Well, pretty much everything. We need to keep the regular growth of subscribers within the plant, the fiber home paths that we have. As we said, we didn't mention we're close to 20 million home paths on that part. What is not included is to continue to upgrade HFC to fiber or to expand kilometers of fiber within the expansion territories. The rest is included on that part.

Thank you very much.

Thank you, Marcelo. The next question comes from the line of Fanny Canemudi from HSBC. Fanny, please go ahead.

Thanks for taking my questions. The first one is regarding the, could you quantify what is the impact of the promotion that you had in 2Q and whether it would impact even the month of July? So will it impact even the 3Q results? The second one is on your EBITDA margin. I mean, Now that you're very focused on expanding your current network, where do you expect the EBITDA margin to reach in the longer term? Is it in line with your previous guidance? Thank you

Thank you. Thank you, Fanny, for the question. Again, the promotion of the Buen Fin won't impact us in July. As we say, that promotion is very clear. It's a promotion that will provide subscribers a month for free. That is reflected in May and June, not in July. So you don't expect that to happen in July. Of course, in a competitive market, we have promotion, but that's a very particular promotion that we do at the end of November, which is the Buen Fin promotion. or the Black Friday for us in Mexico. So don't expect that to happen. We expect to go back to a better level and not having this non-returning effect. The rest of the promotions normally are on a month-to-month basis and you'll see it. You have seen that in the last three to four years. This is a particular one that, again, don't expect to affect us. The other one is the EBITDA margin. that we have. If you can imagine, as we say, Enrique mentioned in his speech at the end of this quarter, we decreased more than a thousand employees within the company who are continue to digitalize, automate, and use the AI within the company. We are really, really, really focused in having an expansion of the subscriber base, Having also a decrease in the cost and OPEX of the company through efficiency and productivity that will continue to bring EBITDA and better margin to the company. And at the end, the capex that we say decreasing to the levels that Luis is telling you between 23 to 25% for 2026 and 22 to 24% for 2027 and decreasing above, I'm pretty sure that's gonna continue to bring better margins and better numbers for the company.

Maybe a quick follow up. Could you quantify what is the impact of this one-off promotion?

The impact of the one month promotion will have the revenue growth in levels between 8.7 to 9%. So it will be the usual growth in revenues for the quarter compared to the previous year. And the EBITDA levels will be around also 8.5 to 8.7%. So that's basically the impact of the promotion.

And that's a very good question, Fanny, and I don't know if it's clear for everybody. Taking away that promotion, everything wouldn't look very different.

Thank you. Thanks, everyone.

Thanks, Fanny. The next question comes from the line of Andres Cardona from Citi.

Good morning. Thanks for the presentation. I have one question about capital allocation. You have been explaining us how the Luis Antonio Zetter Zermeno, Manuel Urquijo Beltrán Thank you, Andres, for that. Look, we know we are creating free cash flow. We're very happy with that.

We have several options within the management and the board, and we're presented to the board. It's clear that we will do what's best for the company and the shareholders. Within all those, we feel comfortable with the dividend policy that we have right now. It's one of the highest in the industry on that part. Give you a good yield on that part. But we're not against restructuring our debt. As we say, we feel comfortable between the 1 to 1.3. On that part, We are telling you that we are not also very strong into looking to repay debt on that part, but more infrastructure. Other options that we have on that free cash flow is the M&A opportunities that may arise. We're active on that part. We want to be active in the market. We have the balance. We have the position. So for every opportunity that we bring to the shareholders, management is pursuing those opportunities. So It can be all of the vote, whatever is the best for the shareholders, whether we do an M&A, whether we increase dividends, whether restructuring the debt, whatever else, it can be around. Some people can tell us about doing the buybacks of the shares. For me, not for me, for the Just a follow up

Here, if you decide to do M&A, is it a condition that you have the control of this potential deal or you are open to have co-controls or even minority stakes?

Well, as we said, Andrés, at this point, we're very interested in looking for M&A opportunities. we are not close to whatever is the best for the shareholders on that part if controlling is the best for this organization of course that's a priority but we will look for what's the best as we can see our position is very favorable very positive to be a strong player in the M&A market Thank you guys

Thank you, Andres. And the next question comes from Luca Brandim from Bank of America.

Hi, good afternoon, everyone. Thank you for taking my questions. I also have two from my side. The first one, you accelerated revenues in the corporate business this quarter. I wanted to understand if this is the new normal, if there are one-offs and how can we expect this line going forward? And then the second one, how long Do you guys think you can maintain the current level of net ads that you have in the 100,000 to 150,000 net ads per quarter? Is this something that can last for the next two, three years? How long do you think it can last? Thank you.

Thank you, Luca. Revenues, as we said, we went through a transition from Thank you very much. and many other enterprise companies that also provide. So it has taken us a while to transform that one because I don't know how familiar you are with the technology, but normally we sell dedicated, secure cybersecurity lines on the corporate level compared to the GPON. Once you have GPON, GPON is the best effort and spreads the bandwidth between different companies, but it has a lower ARPA. So we went to that transition and it's taking It's taking quite a while to transform the way we provide services to the subscribers. We are very happy that now looks like we stabilized and we were growing. I expect that to continue to be. It's a challenge, but I will say it has to be positive, not negative, on that part going into the future. We're very committed. I like particularly that business unit, even though it's 15% of our company, It has a lot of possibility we are very efficient in doing that and we expect that to happen into the future. Now regarding the net ads coming into the next years, well you all have told us about market penetration, about how broadband reaches almost 90, it is around 87% according to the figures that we have for urban Penetration, 83% nationwide. So 87% has some room to grow, yes. Marginal because the levels you are getting are low economic levels. So we have to be very careful on that. And the other part to grow on that part is getting that market between four people going from one side to the other one. That's what makes the challenge for everybody. It's a very competitive market between the four of us. with companies that don't raise rate, companies that lower tariff to get that. The good thing is that we have, I believe, the best content proposition with the best connectivity proposition. We are the one that provides the highest bandwidth to start with at 200 megabits on that part. And as I said, we are not a cable company. We are a fiber telco company. 88% of our fiber, our lines are already fiber. So we're very, very, very well positioned. But that doesn't mean it's going to be between the 100 and 150 for the next three or four years. That will be too optimistic of our part. I believe we can continue to bring between 100 to 150 pretty much in the range of 120 to 25. That's where we feel it has to be. And also because we're not only focusing bringing more subscribers. We're focused on bringing continued growth of the subscribers, but reducing the shunt. As I said in my remarks, shunt compared to last year decreased on the broadband, slightly decreased in a very competitive market with the World Cup and everything coming. And I say the World Cup because the World Cup took away money from the market. And that's a pressure that comes to all of us for new ads and for whatever is in the market to keep shunt. And still we managed to grab the 2%. So we would like to focus on retaining subscribers in the Iranian market, doing expansion in territories, but in a very, let's say, strategic way. I would like to see 400,000 gross ads and 390,000 Thank you, Luca. Thank you, Luca. The next question comes from Emilio Fuentes from GBM. Go ahead, Emilio.

Hi, thank you for taking my question. I was wondering, you mentioned your efficiency initiatives backed by AI. Do you have any expectations of what would be the margin tailwind from these initiatives? Thank you.

Good question, Emilio. As I said before, we still haven't seen the light at the end of the tunnel. Nobody can predict what is that going to be. I'm pretty sure that what Organization has said to come back of the levels of money that we have in the past is going to include AI. So if we want to bring, normally we have 48% margin levels. We told you and we expect to reach 47 in the future to come. That one is going to be through several things. Challenge, market penetration, challenge, decrease of regular video, TV linear, and Migration to Acts. We've been very successful to do that part. Third, bringing productivity to the company. Decreasing the number of gross acts While keeping a reduce of the churn, that will bring a release on everything, cost and subscriber acquisition cost on that part. And also bringing the AI with the already digitalization automation that we have of the company, gather get us to those levels of margins in the years to come. It is not only AI that I can tell you it is 0.5, 0.75 or 1%. It has to be all around together. But I can tell you that we are very, very much to the AI. We already have gen agents answering our subscribers. We have agents answering our collaborators for correlation of our internal KPIs of the network. I can tell you several things that are already working in the company that those has not been Thank you, very clear. Just a quick follow-up.

So would this put you more optimistic on reaching your past margins and bringing expansion territories in a consolidated margin to the 48-49% range you used to have before entering the expansion?

Yes, that's basically what we strive for.

Thank you.

Thank you, Emilio. The next question comes from Miriam Soto from Scotiabank.

Miriam?

Maybe not. Okay, we'll jump that one. So the next question comes from... Oh, yeah.

That's me.

Now we have it. We have him.

Hello, Miriam?

Okay, we'll jump that one. Maybe you can get the question again. The next question is from Ernesto Gonzalez from Morgan Stanley.

Hi, thank you for taking our question. It's one. Can you please comment on how you're seeing competition evolving your legacy territories and how it's evolving in the new territories where you're expanding? Thank you.

Sure, Ernesto. Well, in legacy territories, as you know, we have mainly competition from from Telmex that convert the network to Fiverr. And we also have total play in the main territories that we have in the company. We haven't seen EC expanding to our territories as they announced. EC is more into converting their network from HFC to Fiverr in that part. So legacy territories we have covered The majority of our tourists with Fiverr migrate with subscribers and we keep growth in those territories even though we have the highest penetration and share of the market. So we're very happy on that. We're focused in being more efficient. That means reducing short and not having to have so many gross ads in order to sell on those that contribute to an increase on On the expansion territories, we find competition from Telmex, Total Play and Easy. Not in all the territories, it's important to tell that the largest footprint is from Telmex. Telmex covers all the urban home paths in the country. The rest of those are around 20 million, while Telmex is around Luis Antonio Zetter Zermeno and the penetration that we have there or the market share tell us that we can continue to provide growth to this company in expansion. So that's pretty much our strategy separating or splitting expansion from legacy.

Really clear. Thank you.

Thank you, Ernesto. The next question comes from Andres Ortiz from BDG. Go ahead, Andres.

Hello, Enrique, Raymundo, Luis. Thank you for the space for questions. I would like to ask two, please. The first one on M&A, what are you looking into or fixed mobile? What is your perception of the market today? What would you like to see down the road? And the second one will be on the promotion side. This promotion that you did, one month free at the end of the contract, is it the first time you do this? Or should we expect that to continue going forward? Just to have a sense if this could repeat in the future. Thank you.

Thank you, Andrés. Well, regarding M&A, what I can tell you is that, as I said before, we're active on that part. And we will all benefit from market consolidations and conversions. Telling you which one we like the most, I don't think is something that we're in the position to disclaim right now. Both markets brings opportunity to our companies. So M&A is active. That's what I can tell you without releasing things that we don't feel comfortable to release right now. Now in the promotion, it is the time that we did it most effectively on that part. What we are going to do in the future is trying to keep it within a certain range that doesn't affect in the future, but We're not against that one fully because Sean continues to be that. So we need to find a way to have a promotion. As I said before, we haven't had a promotion like we did in the Buen Fin. You won't have that effect in the future. But we will need to have promotions that will help us to bring quality subscribers. That's all I can tell you. So as a summary, don't expect that promotion of Buen Fin to hit us again.

Understood. And if I can have another question. In the past you've mentioned that you expect like 50 basis points of margin improvement every year. Is that achievable today, given your today results? Thank you.

You say 50 basis points of margin improvement every year? That was the items that you mentioned in the past Yes, yes, yes, yes I thought for the rest of the year No, for the years to come That's what we say in our Normally When we look at our forecast When we announce the expansion Project, we say that The margins that we have In legacy territories without competition Were the highest In this industry We will target to continue to have the highest market but not at the same level that we have because between legacy and expansion territories is a significant difference of margin that we have. Also because video is decreasing and app are increasing and the margin is different between our old offer and the new one. But we do expect through everything we said that we could continue to improve margins at the levels that you are mentioning right now, the 0.5 in the 50 basis points year over year.

Thank you. Appreciate it.

Thank you, Andres. And it seems like we have Miriam Soto once again from Scotiabank.

Hi, can you hear me?

Yes, we hear you, Miriam.

Perfect. Thanks for taking my question. My question is regarding the upcoming Spectrum Auction focused on enabled private networks in industrial regions. Are you evaluating participation and how does this opportunity align with your long-term enterprise connectivity strategy?

Thank you, Miriam. We know about the Spectrum. We will not participate directly on the part. We don't want to... Thank you for joining us. Well, there is convergence in the industry that's different. That's, you know, participate through a M&A of a company on that part. But no, we will not participate in a spectrum that is not our core business. We're very happy with the results of the FNO because it's still a postpaid info that brings additional EBITDA margin to our company and a nice bundle for the subscribers. help us to know how to run a mobile office, okay, cell channels and that part. But no, we won't participate in Spectre. That leave it for the mobile companies.

Thanks, Ray Cleve.

Thanks, Miriam. We have one question from Jack Leroux from Jack 10. You delivered on your promise from 2021 to double homes passed. and have now passed one million more beyond that. Do you expect the same penetration in ARPU from this continued expansion in Homspass?

Yes, as we said, everything we do, the penetration is related to the social economic level and the level of competition that we have. We have decreased, of course, the growth of expansion significantly, okay, aimed to very strategic markets. And in all the markets, we are targeting pretty much on average the same penetration in the cities. It is different, a highly competitive, low-income market in a small city than a large city like Mexico City. But yet you can say that we expect the output to grow because the penetration is going to grow, okay?

Okay, it seems like we have a follow-up from Emilio Fuentes from CBME.

Hi, thank you. Just a quick additional question. You've mentioned throughout an increased focus on margins and profitability efficiency. Would you say this is an explicit change in strategy? What I mean with this is, will you still focus your... Your net ads and your customer acquisition strategy targeting the lower end of the socioeconomic spectrum? Or will you transition to focus into higher quality subscribers? Thank you.

Thank you, Emilio. That's the challenge, and yes, you're right. We're focusing to a moderate growth coming from quality growth ads that is not going to be away from the lower economic levels. We still believe that we have growth to come, but we want to increase our penetration and expansion territory Thank you. Very clear.

Thank you Emilio.

With no further questions in the queue, this concludes the question and answer session. I will now turn the call back to Mr. Enrique Yamuni for closing remarks.

Thank you very much Esau and thank you all for taking the call and the interest in our company and I look forward to any other further questions that you have. You can go directly to our investment relations department and please Have a nice weekend. Thank you all. Thank you everybody.