Good morning, everyone and welcome to Grupo Televisa's First Quarter 2022 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.

Thank you, Manuel. Good morning, everyone, and thank you for joining us. With me today are Jose Antonio Gonzalez, CEO of Cable, Luis Malvido, CEO of Sky, and Carlos Phillips, CFO at Grupo Televisa. While the macroeconomic environment remains volatile, we're confident that we will deliver solid operating performance at both Grupo Televisa and Televisa Univision throughout the year. Mexico's GDP growth is expected to slow to around 2% in 2022 from 4.8% last year. In addition, high inflation has proved more persistent than initially expected as headline inflation remains above 7%. This coupled with the expected monetary policy tightening at the Fed will keep pushing Bank of Mexico towards further policy rate increases throughout the year. On a more positive note, consumption has been recovering since last year due to record high remittances of around $52 billion, an increase of approximately 27% year-on-year and that have remained strong in January and February growing by about 22%. Also after more than two years, social distancing measures related to COVID-19 continued to decline allowing us to operate under normal circumstances. Despite the expected economic slowdown, we are confident that we will deliver strong revenue growth at Televisa Univision and improving operating performance at Grupo Televisa throughout the year. Still, it's important to highlight that we expect growth in 2022 to be back-end loaded (ph), both at Televisa Univision and Grupo Televisa driven by several factors such as the midterm elections in the United States, increased advertising spending in Mexico due to the Qatar World Cup during the fourth quarter, the monetization of the World Cup rights. Solid RGU net adds in the reminder of the year at Cable and price increases at Sky. Before reviewing Grupo Televisa's operating and financial performance, let me walk you through the Televisa Univision, strong first-quarter…

Thank you very much, Alfonso. During the first quarter of 2022, our cable segment saw a continuation of the important turnaround in operating metrics experienced in the fourth quarter of 2021. We have obtained a strong performance foothold for two quarters in a row now. In terms of net app, the first quarter at 319,006 revenue generating units and 17,000 mobile RGUs. It was the strongest quarter since the peak of the pandemic in the second and third quarters of 2020, and the highest since 2018, excluding the two quarters of the pandemic. The quarter closed with 14.9 million total RGUs, 14.76 and 170,000 mobile RGUs. The result was largely driven by the realignment of some of our flagship products, the resumption of our customer retention programs, as well as the home pass expansion plan we implemented last year. Our residential segment keep growing due to our higher levels of sales cable turn and improved product mix. In video, we confirmed the turnaround experience in the fourth quarter of 2021. We added 89,000 video RGUs during the quarter because of our improved product mix from the product realignment. Today, 77% of sales are triple play. In broadband, we added 83,000 RGUs for a total of 5.7 million RGUs. Broadband continues to be the highest margin service we will continue to have as product offering. Now, for the financial metrics. During the first quarter, our residential segment grew 3.4% while our enterprise segment, which accounts for 13% of total Cable revenue, declined by 10.1% mainly due to tough comps and because in 2021, we concluded the development of a sizable project called Red Jalisco. As a reminder, Red Jalisco was a project developed for the Government of the State of Jalisco to build a fiber network owned by the State. Excluding Red Jalisco, our enterprise segment revenue grew by 7.4%. Nevertheless, we are looking for new projects to replace. Overall, our Cable segment delivered year-on-year revenue growth of 1.1% while operating segment income increased 3%. Again, and I want to emphasize this part, if we were to exclude Red Jalisco, revenue would increase 3.5% and operating segment would have increased 6%. Moreover, we expect the strong operating metrics result to translate into stronger financial results later in the year. Before turning the call back to Alfonso, let me say that we are confident that the expansion to selective locations last year should allow us to keep delivering solid RGU net asset over the coming quarters.

T [Indiscernible] Antonio, great results. Now, let me turn the call over to Luis Malvido, who has been at the job as CEO of Sky for a 108 days.

Okay. You're very nice, Alfonso. As Alfonso said, I've been in the job for few tens of days now, and it is my first quarter as CEO at Sky and also my sixth role as CEO in 500 throughout 25 years in Latin America and Europe. I landed in Mexico and the first day of January and I was pleasantly surprise for this coverage company with many thanks. And it's the brand will know are under globe, the largest is probably base scattered throughout the vast territory of Mexico and Central America. A great portfolio of products, including the most affordable and leading prepaid entertainment platform, and an extensive library of exclusive content. Also advantage in very professional salesforce and a highly motivated and committed team. Happy with my findings during this first quarter, we started to build on our strength. We refreshed the leading team to be ready to face the new challenges ahead. We are in the process of restructuring our sales channels compensations to better align their incentives with our incentives. We are also launching a new entry level postpaid package with which we expect to improve the quality of our sales. In addition, during the first quarter we secure the exclusive rights of several relevance soccer properties, including exclusive rights for the Spanish La Liga and Copa del Rey, exclusive rights for all UEFA national teams tournaments and exclusive rights for the Bundesliga. Sky also have the most comprehensive coverage of the FIFA World Cup, Qatar 2022 at the end of the year, including a large number of exclusive gains and features. This drives will further enhance Sky position as the ultimate sports provider in Mexico. During the third quarter, we also launched several promotions and commercial initiatives for both prepaid and postpaid products that allow…

Yes, sir. [Operator Instructions]. Your first question is from the line of David Joyce from Barclays. Your line is now open.

Thank you very much. Two questions, please. First for Luis, I appreciate your -- all of the actions that you've made so far in adjusting packages and pricing and that you've got more plans that you want avail in the future. But for now, could you help us understand where the loss of subscribers is coming from? Is it more from something seasonal or are they going to other satellite or are they going to Cable in particular to this other Televisa entities? Just wondering what the trends are on the subscribers there. And then secondly, on Cable for Pepe, where you've been building out into new areas and upgrading, what is the ARPU experience been like first versus your legacy subscriberset? Thank you very much.

Thank you, David, for your questions I'll ask Luis, to answer the first one Prep Antonio can take the second.

Thank you for the question. Our gross us are coming both from prepaid and postpaid. Of course prepaid represents over 85% of our assets in video. And this is typically the biggest figuring in our growth. We are declining in growth and acquisition because of the refinance already explain, of course, not having new areas worth to sell our [Indiscernible] can grow that has been a challenge for us, and this is assets as explained coming from the lack of investment in town. And we are positive on [Indiscernible] and to solve their financial struggles and study this and again in the second half of the year, but this is something we need to prove to be true. As said most of our gross asset coming from prepaid and we're working heavily in improving the quality of those sales in order to stop the revolve and go that is inclined for us, a big acquisition costs that implied around 22% of our revenue every year. And this is a huge opportunity for us to save money in acquisition and put that money into [Indiscernible] value or different kind of transformation in the company.

Thank you, Luis. And I would add that absolute traditional subscribers that Sky 's have, of course, those are challenged by triple-play offerings that are meeting in essence by cable and telco providers. And as to the lower tier package, which is measured basically in terms of recharges every month or half a month that depends highly on the economy. So that is -- the larger package the best that they're offering is the most cost efficient entertainment offering that exists in Mexico for the Mexican families. So that is being challenged basically in terms of the recharges by the economy itself. And for your second question, Antonio, can take it.

Thank you. Thank you very much for your question, David. The output is about the same to slightly higher than the rest of the country, and let me try to explain why. In the new areas where we have expanded, we're expanding with fiber to the home. So the survey -- the service we're providing is a higher quality, so we are able to slightly increase it. At the same time, these are very competitive markets we're entering, so our pricing on our products have to remain very competitive so we can increase our preference there. So the answer to your question is very similar to the rest of the country with applied margin upwards. Thank you very much.

Thank you very much for the color.

Your next question is from the line of Marcelo Santos from J.P. Morgan. Your line is now open.

Hi, good morning. Thanks for taking my questions. The first question is if you could please comment on the competitive environment in Mexican broadband and if that is putting pressure on your ARPUs? And the second question would -- if you could, does the weak results on the Netflix, do they impact management thinking on best view of the opportunity? Thank you.

Thank you, Marcelo for your question. Of course, there is a competitive environment in Cable in Mexico and I'll ask Antonio to expand on this. But what we can say is that the capital investments that we made in the previous years have us -- put us in a very competitive precision in terms of having a great network, a reliable network, various service and good products with packages that Antonio and the team have been working on the packages and the pricing. So we believe that, of course, it is competitive, but we're seeing with different products and different pricing depending on the region, depending on competitiveness in each of those places. We believe that we are gaining traction. The net adds that we experienced in this quarter were great. We feel comfortable in saying that this pace will continue. So even though there's, of course, a lot of competition we feel comfortable in saying that. And I'll ask Antonio to expand on that.

Thank you Alfonso. Well, I think as Alfonso said, I mean, we feel very comfortable that the [Indiscernible] has invested heavily in the last few years. So today, we have a reliable, a very reliable network. Our customer experience is very well rated and the realignment of our products in the last few months has made us very competitive. The market is, as has been said, relatively gaining competitiveness but we're not seeing any effects on our ARPUs. We are well placed and we have two good results in a row, two good quarters results in a row and we expect this level to be sustainable somewhere in between the last quarter and this one, closer to this one. So I think things are looking good and we feel comfortable with the position we are in. Thank you very much for your question Mr. Marcelo.

Marcelo, to your second question about Netflix and what has happened in that sector. I guess what has happened to Netflix in the quarter on the validates what we're doing as ViX Television Univision. What we can say as we have announced, we're going to have hybrid product, which is basically going to include an AVOD product, ViX, and a subscription product ViX plus. This hybrid product is going to include linear channels and it's going to include sports, basically, soccer, and more specifically, Mexican Soccer targeting the U.S Hispanic market in Mexico. So we can see contrary to fix that, we only launched and ViX plus, which is a subscription services which we will launch in the second-half of the year. We think Netflix with 222 million subscribers worldwide we've seen a more mature phase. So the markets that we're targeting still have low penetration of all of these services. And we're talking about our niche -- the Spanish-speaking world, The addressable market as we have been mentioning is 600 million people around the world with a combined GDP of $7 trillion. But more importantly, half of that GDP $3.5 trillion dollars is the U.S. expanding market in Mexico. So we're going to focus exclusively on the Spanish-speaking world, which as I mentioned, is low, it's not penetrated with this type of services. And we have many advantages in doing that. Talking about the [Indiscernible] selling, basically advertising on that platform, I can say that we have the largest advertising sales force targeting the Spanish language speaking content market, both in Mexico and the United States which account for over 50% of our total addressable market. So that is to say that we have been selling advertising for 60 years and we got the best teams both in Mexico…

Perfect. Thank you very much for the comprehensive answers.

Your next question is from the line of Leonardo Olmos from UBS. Your line is still open.

Hi, good morning, everyone. My question is, if its supported to understand Televisa Univision margins, if you should you prefer to talk only about the Mexican [Indiscernible]. How do you expect margins -- how did margins perform at [Indiscernible] first [Indiscernible] into what no longer be slowed? And how we expect it to performing the remaining to [Indiscernible]. And Moreover, for what will be normalized in level of margins for both Mexican and new subscribers of Televisa Univision?

Thank you, Leonardo, for your question. We're not talking anymore about margins of each market. What I can tell you is that margins of TelevisaUnivision as a whole should be in line with 2021. So the margins should be around 40%. Of course, we have EBITDA losses because of our investments in the streaming business. But the beauty of this combination of Televisa and Univision is that our traditional business continues to grow double digit and continues to basically generate this EBITDA and this margins and that allows us to finance our investments in streaming basically with that EBITDA that we're generating. So we expect double-digit revenue growth because of what -- the upfront sales in Mexico and in the United States. Just keep in mind and I can mention again that we have a historic upfront in both the United States and Mexico. In Mexico, we grew up our upfront by 14% versus 2021, which is a historical number, also in terms of the number of clients that joined the upfront plan. So we can expect double-digit revenue growth. However, for TelevisaUnivision as a whole, and because of our investments in streaming platforms, we expect EBITDA to be flat to slightly higher than 2021. In the medium-term, our streaming platform should achieve low-to-mid 30s margin.

Yes. Thank you. Just a quick follow up. You mentioned are out 40% margins going into of flattish purchase 21. But now in the end it set mid 30, and I'm not sure how to look at [Indiscernible]

I mean, there's value for traditional media and the other one is for streaming. But basically, we expect TelevisaUnivision as a whole to have a consolidated margin of around 40%.

Okay. Thank you. Very good. Thank you very much. Have a good day.

Thank you.

Your next question is from the line of Soomit Datta from New Street Research, your line is still open.

Hi guys, two or three quick questions. Sorry, just to go back to the content profitability, just get a little bit lost in some of those numbers. do you mind confirm just what the proforma full-year 2021 EBITDA was for TelevisaUnivision, please? And the again, I was a little bit confused I'm not sure whether EBITDA is projected to be flat in full-Year 2022, or whether indeed the multi-room is expected to be flat. Obviously, given the growth you've talked about double-digit than not quite consistent. I'm sorry. Do you mind just clarifying them -- clarifying that, please?

Thank you. Soomit. Yes. The consolidated pro forma EBITDA for Televisa Univision in 2021 was $1.65 billion. And we believe that this EBITDA at Televisa Univision will be flat in 2022, even after all investments that we're making in our streaming platform, both on developing the technology and the product itself and the investments in content for that -- those platforms.

Okay, that's great. Thank you. Secondly, just only on the ViX launch, which I realized hasn't been for very long, has been in the market for almost a month. Can you give any senses to the number of users that that business was born with? What sort of trends you've seen in the brief period of time it's been in the market? Again, any sort of interesting developments in the U.S. versus Mexico versus the rest of Latin America which you've seen so far would be would be super-interesting. I don't suppose we'll get any stare on where that kind of usage number could go but anything you could give in terms of outlook would be super helpful as well. Thank you.

Let me give you some color. We're not disclosing yet the specific numbers. However, I can tell you that we're very happy with the progress we're seeing. Of course, these are early stages but in terms of unique users of the platform both daily and monthly, we're very happy with the progress in the U.S., in Mexico, and Latin -- and the Latin American rollout. So it is working, the content is working, the platform is working. We're very happy with what we're seeing. Basically, that's what I can tell you Soomit. Also in terms of -- because of the content that we have, the channels that we have included and all the preview and content offering that we're having, the engagement continues to grow day-after-day. So basically a little color, we had the draw of the Qatar World Cup special event on ViX and it was extremely successful and that helped us grow the user base.

Okay, thank you.

Your last question is from the line of Matthew Harrigan from Benchmark. Your line's now open.

Thank you for taking my question. I'm sure you know that few hours ago that Comcast and Charter formed a streaming initiative in the U.S. and really violating the tenet of not going outside your service territory. It feels like it's more of a Roku 4K alternative than anything else. But are you likely to provide programming for that notwithstanding Comcast's ownership of Telemundo? And then secondly, with all dislocations in the equity markets right now, you're one of the top five VC companies in Mexico. Does that really present opportunities for you or do you think that given everything you're likely to be pretty constrained in some of the -- in trying to replicate some of the past successful investments you've made on the venture side in Mexico? Thank you.

Thank you, Matthew, as to your first question, of course. I mean, we will expand our distribution of the big service with anyone that is interested in distributing. These, you have seen, of course, the Cable companies in the United States have become aggregators, streaming services, enough content. So anybody that is interested in reaching our distribution deal with us in terms of distributing ViX is welcome. And can you repeat your second question, please? I didn't hear it. Clearly.

Sure, clearly the capital markets are very out of whack right now and you've been very active and the BC market in Mexico, and even the U.S adjust to a certain extent. How do you feel about the possibilities now that everyone is so confused on the economy, and maybe capital is now as readily available from partners that you've worked with in the past? Whether it be [Indiscernible] or someone else? Thank you.

Thank you, Matthew. I guess you're referring to the venture capital alarm that we started in late 2019?

Exactly.

Yeah. That has been really successful for us and basically that model implies exchanging available advertising time slots for equity space. And basically this is with high growth startups or B2C companies that have not had the opportunity to advertise on free-to-air television and our other distribution platforms and advertising platforms. So in essence, what we're doing with select companies based on their potential, all these have been early stages of development and usually companies that need campaigns to position their brands and to position their products. So there we're taking advantage of inventory, unsold inventory, in terms of free-to-air television and other advertising platforms. So that has allowed these companies to position their brands as top of mind. And basically, we have great success stories using this mechanism. So we made investments in Kavak, in Rappi, in Clip, in Uala among others and we did this hand in hand with SouthBank and General Atlantic as partners. So in essence, we have closed eight investments in seven companies and four of those stuff become unicorn. So we're very happy with what we're seeing. I've talked to each and every one of the founders of the companies and they are extremely happy and excited about advertising on over their television. To tell you the truth, when this started, most of them did not foresee the effect that advertising and over their television was going to cost in terms of their brands, brand positioning and sale of their products. But they have come back -- these companies have come back to expand their advertising with us. So we have developed new clients and in the meantime, we have also invested in the equity of these companies that have become great company. So we're planning to continue to do this as part of our venture capital line, and this will continue to grow. I think it's a great opportunity for us both in Mexico and in the United States now through Univision.

Thank you. Looks an excited a year ahead. Congratulations.

Thank you.

That concludes our can anybody today, presenters, please go ahead.

Well, thank you very much for participating in our call and we'll be ready to take any additional questions by phone. Lisa, give any of us a call if you want to get more information about anything that you are interested in. So thank you very much.

This concludes today's conference call. Thank you for attending. You may now disconnect.