Release Date: October 25, 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 to 39.4% compared to the third quarter of 2023.
- The company achieved a significant milestone by making its direct-to-consumer (DTC) business profitable within two years, faster than its peers.
- Consolidated operating cash flow grew by about 27% year on year, reaching around 11.3 billion pesos, accounting for approximately 24% of sales.
- The integration of Sky with the cable segment has led to operational efficiencies, including a reduction in OpEx by around 8.5% year on year.
- Grupo Televisa SAB (TV) generated over 6.3 billion pesos in free cash flow, representing a nine-month free cash flow yield of around 25% for its consolidated operations.
Negative Points
- Net revenue from cable operations decreased by 1.6% year on year due to the cancellation of a video package and the impact of a hurricane in Acapulco.
- Sky's third-quarter revenue fell by 13.2% year on year, driven by a decline in prepaid subscribers.
- The enterprise segment's net revenue declined by 22.6% year on year due to not renewing an important government contract.
- The operating segment income margin contracted by 60 basis points sequentially due to faster revenue decline at Sky compared to synergy realization.
- Grupo Televisa SAB (TV) faces challenges in further integrating and optimizing operations at Televisa Univision, requiring significant effort to unlock efficiencies.
Q & A Highlights
Q: Could you provide more details on how Televisa Univision plans to achieve efficiency and deleveraging?
A: Alfonso De Noriega, Co-CEO, explained that the focus will be on broad cost-cutting initiatives to improve free cash flow and reduce leverage. This involves rethinking the company's operations and prioritizing efficiency over growth at any cost.
Q: How is the competitive environment in broadband, and what are the trends in churn?
A: Francisco Valim, CEO of Izzi Grupo, noted that the market is rational with stable prices. There was a temporary increase in churn due to price hikes, but it is returning to historical levels.
Q: Can you elaborate on the operating segment margin performance and the impact of efficiency initiatives at Sky?
A: Alfonso De Noriega stated that margins have expanded due to efficiency measures and headcount reductions. Although there was a sequential margin contraction, further synergies are expected to improve margins in the coming quarters.
Q: How has Grupo Televisa managed to generate strong free cash flow despite decreasing revenues?
A: Carlos Phillips, CFO, attributed the strong free cash flow to operational efficiencies, better inventory and working capital management, and a focus on CapEx efficiency. These factors have significantly boosted free cash flow compared to the previous year.
Q: Are there any plans to reduce gross debt given the strong cash position?
A: Carlos Phillips confirmed that the company aims to use cash flow to strengthen the balance sheet and reduce debt, maintaining a focus on net leverage to support investment-grade ratings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
