- EBITDA Margin Improvement: Improved by almost 400 basis points relative to Q3 2023.
- Cable Segment Operating Cash Flow: Over MXN6.4 billion, growing by almost 50% year-on-year, accounting for around 27% of sales.
- CapEx Budget for Cable Segment: Reduced to $590 million for 2024.
- OpEx Savings: Expected savings of approximately MXN400 million in Q3 2024.
- Spin-off Market Cap: Ollamani listed with a market cap of around $330 million.
- Network Expansion: Network of 20 million homes, with 71,000 new homes passed in Q2 2024.
- Residential Revenue Decline: Decreased by 3.8% year-on-year.
- Enterprise Revenue Growth: Increased by 4.4% year-on-year.
- Sky Revenue: MXN3.9 billion, fell by 13.3% year-on-year.
- Segment Revenue: MXN15.8 billion, fell by 5.8% year-on-year.
- Operating Segment Income: MXN6.0 billion, declined by 7.7%.
- Operating Segment Income Margin: 37.7%, contracted by 80 basis points year-on-year.
- CapEx Deployment: Total investments of MXN1.8 billion in Q2, fell by 51.1% year-on-year.
- Operating Cash Flow for Cable and Sky: MXN4.2 billion, increased by 37.8% year-on-year.
- TelevisaUnivision Revenue: $1.3 billion, increased by 3% year-on-year.
- TelevisaUnivision EBITDA: $362 million, declined by 3% year-on-year.
- Consolidated Advertising Revenue Growth: Increased by 6% year-on-year.
- Consolidated Subscription and Licensing Revenue: Decreased by 2% year-on-year.
- ViX Subscribers: Closed Q2 with 8.4 million subscribers.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grupo Televisa SAB (TV, Financial) improved profitability in its Cable segment by almost 400 basis points compared to the third quarter of 2023.
- Operating cash flow for the Cable segment grew by nearly 50% year-on-year, reaching over MXN6.4 billion.
- The acquisition of AT&T's minority stake in Sky was completed at attractive terms, strengthening the competitive and financial position of the combined company.
- The spin-off of Ollamani and its listing on the Mexican Stock Exchange unlocked significant value for shareholders.
- The direct-to-consumer business ViX is on track to become profitable in the second half of the year, only two years after its launch.
Negative Points
- Net revenue from residential operations decreased by 3.8% year-on-year due to a 5.7% lower subscriber base.
- Sky's second quarter revenue fell by 13.3% year-on-year, driven by softer commercial activity.
- The operating segment income margin contracted by 80 basis points year-on-year due to inflationary pressures in labor and content-related costs.
- The discontinuation of the Afizzionados video package and the impact of Hurricane Otis in Acapulco negatively affected revenues.
- Consolidated subscription and licensing revenue decreased by 2%, with declines in linear subscription revenue in both Mexico and the US.
Q & A Highlights
Q: Can you provide more details on how the discontinuation of Afizzionados and the situation in Acapulco impacted MSO revenue this quarter?
A: The Afizzionados channel, which contributed about 1% of our revenues but had a negative EBITDA, was discontinued due to lack of sports rights and content. This decision was margin accretive. In Acapulco, post-hurricane, we built a full fiber network, but many buildings are still under reconstruction, affecting our ability to charge full rates. We expect more clients to return by the end of the year as the city recovers. - Francisco Valim, CEO of Izzi Grupo
Q: How do you view your debt exposure to the US dollar and your hedging strategy?
A: Over 60% of our debt is dollar-denominated at a fixed rate, and we maintain a large cash balance in dollars. We hedge our dollar exposure using plain vanilla instruments, covering 100% of this year's exposure and nearly half of 2025's. Our closest dollar-denominated bond maturities are fully hedged into pesos. - Carlos Margain, CFO
Q: Is Telmex's decision not to increase prices a competitive issue, and what is driving the CapEx cut?
A: We focus on clients who also purchase video services, making our offerings competitive even with Telmex's pricing. The CapEx cut is driven by synergies from integrating Sky and Cable, reducing duplicated costs like licenses, and optimizing operations. We continue to invest in network deployment and new subscriber acquisition. - Francisco Valim, CEO of Izzi Grupo
Q: What operating cash flow margin are you targeting after streamlining Sky and Cable, and what proportion of broadband subscribers are ViX VOD users?
A: We are targeting a 20% operating cash flow margin. Most of our broadband clients have ViX, as it is bundled with packages offering 60 Mbps and above. - Alfonso De Angoitia Noriega, Co-CEO
Q: Considering ViX's value, is there potential for price hikes in the future, and are there other products that may be discontinued like Afizzionados?
A: While price hikes are challenging, we aim to increase revenue per consumer through upselling and additional services. Afizzionados was discontinued due to lack of content, and similar actions will depend on product relevance and profitability. - Francisco Valim, CEO of Izzi Grupo
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
