Grupo Televisa, S.A.B. Sponsored ADR Aktie

Good morning, everyone, and welcome to the Grupo Televisa's First Quarter 2026 Earnings 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. Thank you, and over to you.

Thank you, Elsa. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky; and Carlos Phillips, CFO of Grupo Televisa. Before discussing our first quarter operating and financial performance, let me remind you of the strategic priorities approved by the Board of Directors of Grupo Televisa and TelevisaUnivision that we will pursue this year. At Grupo Televisa, we will continue to focus on attracting and retaining value customers to keep growing our Internet subscriber base throughout this year, extract further synergies from the integration between Izzi and Sky, execute on the implementation of OpEx and CapEx efficiencies and upgrade 6 million homes to FTTH technology, ending 2026 with 75% of our total footprint passed with FTTH.

Efficiency measures implemented over the last couple of years have already contributed to expanding our consolidated operating segment income margin by around 330 basis points in the first quarter, driven by a year-on-year OpEx reduction of around 8%, and we would expect to sustain profitability above 40% over the coming quarters. And at TelevisaUnivision, now that our direct-to-consumer business, ViX, represents over 20% of consolidated revenue and EBITDA, we are confident that additional value can be unlocked through further integration and operational optimization of our content business.

Despite anticipated headwinds in the U.S. from the cyclical timing of events such as the Winter Olympics and FIFA World Cup, we preserved our audience ratings and managed yields to drive pricing growth. We also expanded our political sales infrastructure to ensure that we are well positioned to capitalize on record political advertising spend ahead of the November midterm elections. In Mexico, the great results of our upfront position us well to continue monetizing the FIFA World Cup momentum with sales to date exceeding the prior 2022 World Cup cycle.

Having said that, let me turn the call over to Valim as he will discuss the operating and financial performance of our consolidated assets.

Thank you, Alfonso. Good morning, everyone. First, let me walk you through the operating and financial performance of our cable operations. We ended March with a network of 20 million homes after passing around 12,000 new homes during the quarter. In addition, we upgraded over 1.5 million homes to fiber-to-the-home technology, ending the first quarter with over 52% of our total footprint passed with FTTH. Moreover, we are on track to upgrade another 4.5 million homes to FTTH technology in the remainder of the year.

In the first quarter, our monthly churn rate remained below our historical average of 2% for fourth consecutive quarter as we keep executing our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction.

Our broadband gross adds remained solid, allowing us to deliver 35,000 (sic) [ 25,000 ] net adds during the first quarter, in line with our fourth quarter of last year. In video, we experienced less cancellations than in the fourth quarter of last year. Therefore, we lost about 24,000 video subscribers in the first quarter compared to 31,000 disconnections in the fourth quarter and 43,000 cancellations in the third quarter, 53,000 disconnections in the second quarter and a loss of 73,000 video subscribers in the first quarter of 2025. Furthermore, as we mentioned in our previous earnings conference call, we expect lower video cancellation numbers to continue going forward, influenced by our multiyear partnership with Formula 1 to provide live coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky beginning in the fourth quarter of last year and through the 2028 season.

Moving on, our mobile net adds of 95,000 subscribers during the first quarter maintained the strong momentum of the last couple of quarters. Our MVNO service has been making our bundles more competitive, allowing us to increase share of wallet from our existing customers and helping us maintaining low churn. During the quarter, net revenue from our residential operations of MXN 10.6 billion, which accounts for around 89% of total cable revenue, increased by 0.9% year-on-year. This marks the best quarter of the last 2 years of our residential operations from a revenue growth performance standpoint and compares well to a full year revenue decline of 1.8% and 2.5% in 2025 and 2024, respectively.

On a sequential basis, net revenue from our residential operations grew by 0.5%, signaling a gradual sequential recovery as well. Net revenue from our enterprise operations of MXN 1.3 billion, which accounted for around 11% of total cable revenue increased by 30% year-on-year, partially due to the timing of revenue recognition of an important contract signed in the fourth quarter of 2025 and because of easy comps. Adjusting this contract, net revenue from our enterprise operations grew by 15.6% as we have been signaling new deals with public and private customers.

Moving on to Sky's operating and financial performance. During the first quarter, we lost 325,000 revenue-generating units, mostly coming from prepaid subscribers that have not been recharging their services. In addition, as we have discussed in the past, beginning in the second quarter of last year, we started charging installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investment for this service. This translates in a slowdown in video gross add additions for Sky that has been steady over the last 4 quarters. Sky's first quarter revenue of MXN 2.6 billion fell by 24.6% year-on-year, mainly driven by a lower subscriber base.

To sum up, segment revenue of MXN 14.5 billion fell by 3.1% year-on-year, while operating segment income of MXN 6 billion increased by 5.2%, showing sustained momentum of the growth rebound experienced in the fourth quarter of last year. Our operating segment income margin of 41.4% expanded by 330 basis points year-on-year, making it the best quarter over the last 3 years in terms of profitability, driven by the efficiency measures that we have implemented and the synergies from the ongoing integration between Izzi and Sky.

On a sequential basis, operating segment income increased by 0.9%, while profitability expanded by 50 basis points. Regarding CapEx deployment, our first quarter total investments of MXN 2.5 billion accounted for 17.2% of sales. The main reason behind having higher total investments relative to the first quarter of the last year was the FTTH upgrade of 1.5 million homes previously discussed. Finally, operating cash flow of Cable and Sky, which is equivalent to EBITDA minus CapEx, was MXN 3.5 billion in the first quarter, accounting for 34.2% of sales.

Thank you, Valim. Amazing job. Now let me walk you through TelevisaUnivision's first quarter results. The company's first quarter revenue of $1.1 billion increased by 5% year-on-year. Excluding the impact from the appreciation of the Mexican peso, TelevisaUnivision's first quarter revenue was flat, underscoring the resilience of our portfolio in a dynamic macro environment.

During the quarter, results were driven by growth in ViX, which remains a key engine of expansion across both of our advertising and subscription businesses. We also delivered strong linear distribution and content licensing revenue in both regions and total advertising results remained nearly flat even as we faced anticipated softness in the U.S. from a sports calendar weighted to events outside our portfolio.

While operational performance remained solid during the quarter, total operating expenses increased 11% or 5%, excluding the appreciation of the Mexican peso, largely due to an increase in strategic marketing investments and a higher concentration of sports-related costs, primarily related to the Winter Olympics and the FIFA World Cup. As a result, adjusted EBITDA of $323 million declined by 6%.

Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue decreased by 3% year-on-year. In the U.S., advertising revenue was 12% lower as growth in direct-to-consumer advertising revenue was offset by softness in linear networks. In Mexico, advertising revenue increased 13% year-on-year, driven by DTC growth, which partially offset a timing shift of private sector advertising revenue to latter quarters related to FIFA World Cup campaigns.

During the quarter, consolidated subscription and licensing revenue increased by 15% year-on-year. In the U.S., subscription and licensing revenue grew by 12%, driven by continued DTC momentum, higher average rates and incremental revenue from Hulu Live TV.

In Mexico, subscription and licensing revenue increased by 28%, supported by the subscriber growth in ViX's premium tier, higher average rates and growth in content licensing driven by demand for our sports rights. Now we have fully lapped the renewal cycle impacts that we experienced last year, positioning us for more normalized growth comparison going forward.

Turning on to ViX. We delivered another quarter of solid growth and profitability and reinforce the strength of our DTC strategy. Its subscription video-on-demand tier also achieved double-digit subscriber growth and achieved an all-time low global churn. In addition, we achieved an engagement record on ViX with 1 billion streaming hours across AVOD and SVOD tiers while advancing our ecosystem readiness ahead of the FIFA World Cup. We have made strong progress in executing our World Cup's strategy, which is clearly focused on driving acquisition, expanding accessibility and sustaining engagement beyond the tournament.

Moving on to the balance sheet. TelevisaUnivision ended the quarter with $411 million in cash and approximately $725 million of available capacity under its credit facilities. Capital expenditures were $34 million for the quarter, essentially flat year-on-year, and we expect 2026 full year CapEx to be consistent with that of 2025. At the end of the first quarter, TelevisaUnivision's leverage ratio was 5.7x EBITDA, a modest increase from 5.6x at the end of 2025, partially due to the seasonality of the business.

Finally, earlier this month, TelevisaUnivision issued $1.5 billion in new senior notes due 2033 and offered to purchase all its outstanding notes due 2028. With this, our next debt maturity will come in 2029.

Moving on, let me remind you that on January 30, we used part of our free cash flow generated last year at Grupo Televisa to pay the remaining $207 million principal amount of our senior notes maturing this year. Moreover, at the end of the first quarter, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.4x by the end of the first quarter of 2024 due to our free cash flow generation of around MXN 4.3 billion over the last 12 months and our accumulated year-on-year EBITDA growth of 1.5%.

To wrap up, Bernardo and I are confident that our focus on value customers efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business represents over 20% of consolidated revenue and adjusted EBITDA will allow us to create greater value for our shareholders in 2026.

Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A?

[Operator Instructions] We have the first question from the line of Matthew Harrigan from Benchmark Stones.

Reaching a crossover now on the English market on streaming versus linear. I know Spanish is a little more resilient on the linear side. But what are you seeing on AVOD pricing premiums, CPMs? And what -- I know you've got some interesting things with the technology stack. Could you talk about that? And I guess that's my primary question. I had a follow-up.

Well, we feel great about our service, our technology. And if you saw the growth of ViX, it was spectacular. So we feel really comfortable with what we're offering, both technologically. We need some things that have to do with further personalization and recommendations. So we're moving in the right direction, but that needs a little improvement. But in general, I think the service technologically is great. And as a result of that and our content, if you saw our numbers, I think in terms -- we have grown engagement, we have grown the total stream hours. So we're happy with that. Of course, as a result of that, we're selling more advertising on the platform. So we're happy with the development of ViX.

And then you're one of the leading global Spanish news providers. And obviously, you're doing a lot in the mini novelas and all that in the short form content. What do you think the prospects are for ancillary monetization on TikTok and other digital forms because there's a plethora of content that's mostly on AVOD, your linear channels right now.

Yes. As to the micro-novelas, we have been successful. Last year, we produced around 30. This year, we will produce more than 100. So I mean, we're developing that market. We're selling advertising on those. So monetization is working. We have the micros on ViX primarily, but they're also on other platforms. Monetization on TikTok is we're talking to them because it's difficult, but we are talking to them. We're generating a lot of engagement and of course, on YouTube, on TikTok, et cetera. So our content works. Our content has a huge engagement, huge interest in general. So we're working with those platforms in terms of monetization. Today, we're monetizing that primarily on ViX.

We have the next question from the line of Ernesto Gonzalez from Morgan Stanley.

It's 2. First one is, can you talk a little bit about the strong margins you delivered and how sustainable these are going forward, especially considering some of the top line pressures you have from Sky? And the second one is, can you talk a little bit about the competition in the fixed market? That's it.

Thank you for your question, Ernesto. Valim, can you answer, please?

Sure. So the margins will fluctuate around the 40% range. In terms of the top line competition, this is a very competitive market where we all play a role. We tend to play a role more in the more sophisticated, more long-term clients that stay with us. So our churn is, like we said, between this 1.9% to 2% range and has been like that. We don't go -- we don't think that going after huge volumes of new acquisitions will drive any value moving forward. So I think this is more or less how we see the market.

We have the next question from the line of Olivia Mizovarta (sic) [ Olivia Mogavero ] from JPMorgan.

My first question goes on the line of M&A. How is your appetite evolving? And do you have any updates in your capital allocation strategy? And the second one, it would be interesting to have an updated outlook for your CapEx this year and for the mid- to long term, considering the homes [ spent ] that you already did in this quarter and your prospects for the next ones?

Thank you for your question. As to the capital allocation priorities, as you know, we're always exploring M&A opportunities in our sector. And of course, we will continue to use our free cash flow -- the free cash flow that we have generated to keep strengthening our balance sheet. And as I mentioned, we're prepared for potential M&A opportunities in the Mexican telecommunications sector.

As you might remember, on January 30 this year, we used part of our free cash flow generated last year at Grupo Televisa to pay the remaining $207 million of our senior notes maturing this year. So at the end of the first quarter, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.4x by the end of the first quarter of 2024. And this is a result of our free cash flow generation of MXN 4.3 billion over the last 12 months and our accumulated year-on-year EBITDA growth of 1.5%.

And regarding our CapEx, it will be why we are upgrading the network in the low 20s range percentage of revenue. As we finish that next year, obviously, it should go down to the 15% range, but that would be only second half of next year.

We have the next question from the line of Rafael from UBS.

Well, I'm going to start here by asking about the share of income from associates and joint ventures line for Grupo Televisa. It had a pretty relevant increase this quarter. You mentioned in the report that the main drivers were higher earnings at Univision and your increased stake in the company, right? So if you could please comment more about that and comment how should we think about this line going forward?

Yes. Thank you for your question, Rafael. Carlos, can you please answer?

Yes, Rafael, as you mentioned, we had an increase of around MXN 1.2 billion during the quarter in this line. As you may recall, we account for our investment in TelevisaUnivision using the equity method. So on this line, we include things, for example, as our share of net income in TelevisaUnivision. We also include the income from our preferred shares in TelevisaUnivision. And as you mentioned, during the quarter, we had an increase due to the fact that our share in Televisa, our ownership stake increased from 43.2% to 44.3%. Every quarter, this is normal in TU, there are increases and decreases depending on things like, for example, vesting of stock options and other items like that. The main driver of the increase during this quarter was that TU did a [indiscernible] of certain preferred stock, which increased our share. So that's basically the driver on that, which is the lion's share of the increase we saw in that line.

Okay. Super clear. Just a quick follow-up on CapEx. If we look at 2025 levels, it was concentrated more in the second half of the year. So looking at this year, should we expect also CapEx to be back-end loaded?

No. This year, it should be more level because we are already ramped up the build-out of the network last year. So we are on track and at the current speed, stable speed. So we wouldn't see a spike towards the end. It should be more flattish throughout the year.

We have the next question from the line of [ David Lopez ] from New Street Research.

I have a couple of quick questions, please. First one is if you could talk about your -- if you have plans for price increases on broadband this year? And the second question, I was wondering the 25 network that will not be fiber-to-the-home, do you have plans in the longer term to upgrade these homes as well? Or will they stay in non-fiber?

Yes, it's not that it will be -- by the end of this year, will be 75. By mid-2027, will be 100% fiber. So it's just a function of timing. Regarding price increases, we actually did a price increase of MXN 30 now in March on broadband.

We have the next question from the line of Lucca Brendim from Bank of America.

I have one here from my side. You had a very strong performance on enterprise this quarter. And I wanted to understand how much of that is recurring and will continue to the next quarters? You mentioned that part of it was due to the timing, the recognition timing for an important project. So does that only impact this quarter? Or will it also impact other quarters?

In terms of revenue, it is a recurring contract. So it will be impacting other quarters as well. As far as growth is concerned, obviously, the contract has spike in growth. It should not be repeated as much as we did, but we are anticipating still high growth from our enterprise business.

Ladies and gentlemen, that concludes our question-and-answer session. I would like to turn the conference over back to Mr. Alfonso de Angoitia for any closing remarks.

Thank you very much. Well, call us, if you have any additional questions. We're very happy with the results of this quarter. Thank you, and see you later.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, everyone, and welcome to Grupo Televisa's Fourth Quarter and Full Year 2025 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, operator. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Last year was marked by several milestones, both at Grupo Televisa and TelevisaUnivision, which Bernardo and I are confident will allow us to keep creating value for our shareholders. At Grupo Televisa, let me touch on four major achievements.

First, our strategy to focus on attracting and retaining value customers in cable allowed us to grow our Internet subscriber base by around 47,000 in 2025. This marks a full year turning point after losing Internet subscribers, both in 2023 and 2024, mainly driven by a strategy decision not to retain low-value subscribers.

Second, we keep executing on the implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This contributed to expanding our 2025 consolidated operating segment income margin of 39.1%, by 200 basis points, driven by a year-on-year OpEx reduction of 8.3%. Third, we kept a disciplined CapEx deployment approach to focus on free cash flow generation. In 2025, we invested MXN 12.2 billion in CapEx, which is equivalent to 20.7% of sales. This CapEx is intended to deliver higher returns over the investment and has allowed us not only to have close to 1.4 million gross adds during the year, but also to upgrade 4.5 million homes to FTTH technology.

This basically means that we ended 2025 with around 9 million homes or approximately 45% of our total footprint passed with FTTH technology. Valim will elaborate on our plan to keep upgrading our network later during the call.

And fourth, in 2025, we generated around MXN 5.9 billion in free cash flow, allowing us to prepay bank loan due in 2026, with a principal amount of around MXN 2.7 billion. This debt repayment comes on top of the $220 million principal amount of our senior notes already paid on March 18.

Additionally, at the end of 2025, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.5x at the end of last year, mainly driven by our free cash flow generation. And at TelevisaUnivision, I will mention three key milestones. First, 2025 was a breakthrough year for our direct-to-consumer business, as ViX delivered record revenue since it was launched, achieving profitability in every quarter and expanded operating margins throughout the year.

For the full year, our DTC business represented nearly 1/4 of the total company revenue, driven by robust advertising growth from our free tier and the continued expansion of our premium subscription offerings. Moreover, our DTC business is now a significant contributor to our adjusted EBITDA, accounting for approximately 20%, driven by its industry-leading margins.

Second, the efficiency plan to reduce gross operating expenses at the TelevisaUnivision by around $400 million in 2025, delivered outstanding results. During the year, our total operating expenses declined by around 8% year-on-year for total operating expenses of around $3.2 billion. This shows a disciplined execution of our cost savings initiative. This OpEx reductions have been fully realized in our 2025 results.

And third, looking at TelevisaUnivision's leverage and debt profile the company ended the year at 5.6x EBITDA, an improvement from 5.9x at the end of 2024, driven by growth. Moreover, in 2025, TelevisaUnivision successfully refinanced $2.3 billion of debt, which extended its credit facilities and eliminated all near-term maturities. Deleveraging remains a core strategic priority for TelevisaUnivision.

Having said that, let me turn the call over to Valim, as he will discuss the operating and financial performance of our consolidated assets.

Thank you, Alfonso. Good morning, everyone. In 2025, consolidated revenue reached MXN 58.9 billion, representing a year-on-year decline of 5.5%, mainly driven by lower revenue at Sky. Operating segment income reached MXN 23 billion, equivalent to a slight decrease of only 0.6% year-on-year.

Turning to our fourth quarter results. Consolidated revenue reached MXN 14.5 billion, representing a year-on-year decrease of 4.5%, while operating segment income reached MXN 5.9 billion, equivalent to a year-on-year expansion of 6.1%, driven by the efficiency measures that we have been implementing since the integration of Sky.

Now let me walk you through the operating financial performance of our cable operations. We ended December with a network of 20 million homes after passing around 59,000 new homes during the quarter or over 118,000 new homes during the year. During the quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate below our historical averages of 2% for the third consecutive quarter.

Our broadband gross adds remained solid, allowing us to deliver 25,000 net adds during the fourth quarter compared to net adds of around 22,000 in the third quarter and 6,000 in the second quarter and the disconnection of about 6,000 in the first quarter of 2025.

In video, we also experienced stronger gross adds than in the first three quarters of the year and managed to reduce churn. Therefore, we lost about 31,000 video subscribers during the fourth quarter compared to 43,000 disconnections in the third quarter and 53,000 cancellations in the second quarter and a loss of 73,000 video subscribers in the first quarter of 2025.

Moreover, we expect these improving trends to continue going forward, influenced by our multiyear partnership with Formula 1 to provide line coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky, beginning in the fourth quarter of last year and through the 2028 season.

Moving to mobile. Our net adds of 95,000 subscribers during the quarter showed sustained momentum as they were mostly in line with the 94,000 net adds in the third quarter. Our innovative MVNO services are already making our bundles more competitive, allowing us to increase the share of wallet of our existing customers and helping us to reduce significantly the churn of our existing customers.

During the quarter, net revenue from our residential operations of MXN 10.6 billion, which accounted for around 90% of total cable revenue decreased by only 0.6% year-on-year. This marked the best quarter of the last 2 years at our residential operations from a revenue growth performance standpoint and compares well to a decline of 1.8% in 2025.

On a sequential basis, net revenue from our residential operations remained stable, potentially signaling a gradual recovery. During the quarter, net revenue from our enterprise operations of MXN 1.2 billion, which accounted for around 10% of our cable revenue fell by 4.2% year-on-year. Due to the timing of revenue recognition of an important contract signing in the fourth quarter of 2025 and because of tough comps.

Moving on to Sky's operating and financial performance. During the fourth quarter, we lost 304,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investments on this service. This translated into a slowdown of video gross additions for Sky that has been steady over the last three quarters. Sky's fourth quarter revenue of MXN 2.8 billion declined by 16.8% year-on-year, mainly driven by a lower subscriber base.

To sum up, segment revenue of MXN 14.5 billion fell by 4.5% year-on-year, while operating segment income of MXN 5.9 billion increased by 6.1%, making it the best quarter of the year driven by efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky. Our operating segment income margin of 40.9% expanded by 410 basis points year-on-year.

Regarding CapEx deployment, our total investment of MXN 4.6 billion accounted for 31.8% of sales in the fourth quarter. During the year, our CapEx deployment of MXN 12 billion, equivalent to $645 million, or 20.7% of sales. The main reason behind having a higher total investment relative to our 2025 CapEx budget of around $600 million was the strong-than-expected Mexican pesos, particularly during the second half of the year and the fact that around 50% of our CapEx budget is in local currency.

Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 1.3 billion in the fourth quarter, representing 9.1% of sales. For 2026, our CapEx to sales ratio should be close to 25% as we plan to upgrade 6 million homes to fiber-to-the-home technology, increase our subscriber base and support growth. This basically means that we expect to end 2026 with 75% of our total footprint passed with FTTH technology.

Thank you, Valim. You're doing a great job. Now let me walk you through TelevisaUnivision's 2025 results released on Tuesday morning. As expected, the company's full year revenue fell by 5% year-on-year to $4.8 billion, while adjusted EBITDA of $1.6 billion, increased by 2%. Excluding political advertising and FX volatility, adjusted EBITDA increased by a healthy 7% year-on-year, underscoring the scalability of a profitable DTC business and the sustained impact of the cost reduction initiatives launched at the end of 2024.

Turning to the fourth quarter. Revenues of $1.3 billion declined by 2% year-on-year, while adjusted EBITDA of $396 million fell by 12%. Excluding political advertising, total revenue grew by 1% year-on-year, while adjusted EBITDA decreased by 5%, despite continued DTC profitability and continued cost management.

Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue was flat year-on-year. In the U.S., advertising revenue was 11% lower as continued growth in ViX and higher pricing were more than offset by declines in linear advertising due to secular softness and political spending relative to the prior year due to the absence of U.S. presidential election cycle.

Excluding political advertising, advertising revenue in the U.S. fell by 3%. In Mexico, advertising revenue increased by 15% year-on-year, driven by the strong ViX growth and a resilient linear business, including private sector advertising. In local currency, advertising revenue in Mexico grew by 6%.

During the quarter, consolidated subscription and licensing revenue decreased by 4% year-on-year. Continued growth in ViX across both the United States and Mexico along with higher U.S. linear subscription and licensing revenue, including benefits from our new Hulu agreement and higher content licensing, more than offset the loss of Fubo, the temporary YouTube TV carriage dispute and ongoing net subscriber declines.

However, these increases were more than offset by lower linear subscription revenue in Mexico due to the renewal cycle with Izzi Sky and the cancellation of another distribution company, which we have already lapped.

Moving on to the balance sheet. TelevisaUnivision ended 2025 with $440 million in cash, an increase of 33% compared to the previous year. Total CapEx investments were $119 million for the full year or a year-on-year increase of 4%.

We expect CapEx deployment to remain at similar levels in 2026. Speaking about the 2026 World Cup, it represents a great opportunity both for Grupo Televisa and TelevisaUnivision, and we are approaching it with a fully integrated strategy across broadcast, streaming, digital and social. Our goal is to deliver comprehensive coverage with flawless execution, while maximizing the commercial impact across platforms.

In Mexico, ViX will become the official home of the World Cup, making ViX the exclusive streaming destination for all 104 matches available at a preferential price for customers of Izzi and Sky.

ViX premium annual subscribers will get access included while ViX's monthly subscribers and the customers of Izzi and Sky will have the option to add on World Cup coverage.

Finally, considering several opportunities in the telecom sector in Mexico that we're currently exploring, our Board of Directors approved suspending the payment of our regular dividend in 2026. This will be presented for approval at our Annual Shareholders' Meeting.

To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business represents over 20% of consolidated revenue and adjusted EBITDA, will allow us to create greater value for our shareholders in 2026.

Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A?

[Operator Instructions] The first question today comes from Marcelo Santos with JPMorgan.

I have two. The first is for Valim. Could you please walk us through the fiber plan, how many homes with fiber-to-the-home do you have today? I mean, is this goal -- what is the goal exactly, if you could repeat? And is it for the end of 2026? So just wanted to get a bit more color on this plan. And the second question is about the competitive environment. How has been like the room to increase prices? Could you make some comments on how the market is going?

Thank you, Marcelo. Valim, please.

Thank you, Marcelo. So I think that the fiber deployment is we're already at 9 million homes with fiber today, and planning to get to 15 million, 16 million by the end of 2026. So that would mean 75% of our existing network would be fiber-based. So that is on plan and on target.

Regarding the competitive environment in Mexico, I think it's important to emphasize that we have been increasing ARPU consistently over the last several quarters. So it's due to price increases, mostly is due to more products to more -- to our existing customers and better and better services. So that's what we decide.

We see that our alternative players, their flat or declining ARPU as opposed to ours, which is increasing constantly. And that's the route we are taking, not so much on price increases, but enable to sell more to the existing clients. And so the competitive environment in Mexico has been very stable over the last 2, 3 years, basically. And what we have been doing also consistently is focusing on high-value clients that will churn less and value our services and be able to acquire more services from us. That's the strategy moving forward.

Pretty much a rational competitive environment.

Great. Just a follow-up on the first answer. When you mentioned the 9 million today and to 15 million to 16 million, this is really like fiber-to-the-home where there's no cable involved anymore, like it's fiber box in the home? Or is it like more fiber to the curb, but there is still a cable.

No. Marcelo, fiber is still a cable. It's just a different cable.

HFC, sorry.

Yes, I understand what you're saying. And just couldn't a point the joke. So it's just, yes, we will have fiber to the home on 15 million, 16 million homes by the end of the year. So if acquired, actually, nowadays, when the network is deployed, there are no deployments in HRC. So we still have a percentage of our deployments are in HRC because we are not with the full coverage. But as we grow our subscriber -- our fiber network, every new subscriber goes into fiber, and we migrate them as conditions are needed into fiber. So in a few years, all of our clients will not only be under a fiber network infrastructure, but also be connected to our fiber network.

The next question comes from Matthew Harrigan with Benchmark.

You're kind of almost uniquely exposed to AI positively on the telecom side, given all the repetitive processes and consumer-facing kind of customer journey experiences. And then on the media side with your JV, I think you're -- I know you're obviously the largest volume producer of Spanish programming in the world, and you may even be #1 overall. You had a lot of dislocation in the U.S. media names a few weeks ago on account of 20. And I was just curious, what's your broad perspective on how AI affects you both on the blocking and tackling side on telecom and then on the creative side on TelevisaUnivision, both with respect to your in-house content creation being even faster and more short form and then more competition you might face on people and companies aren't nearly as well funded as you.

Thank you, Matthew. A very interesting question. I'll answer the media side and then Valim can take the telecom side. On the media side, we're experimenting with AI and production through AI. It's a very important tool. So in terms of script driving in terms of production itself, it is very useful. So we're experimenting especially. We launched last year our micronovelas on the short form. We produced -- we started producing last year this type of content. This year, we will produce more than 300 micronovela. And some of them are produced 100% with AI. So we're moving in that direction, moving I mean, using AI more and more, which will become a very efficient way of producing content.

In telecom, AI is mostly useful in how we handle our customer and how we operate our network. And as we speak, we are in very challenging and deep changes into the organization, making sure we have AI all over, meaning from the network usage to the client interface. So in the next few months, we're seeing significant impacts on how we interact with customers focusing on basically 100% AI. So 2026 will be the year we'll flip from a typical call center kind of a thing to full AI, everything AI in terms of customer relationship. So this is the year that will go from a typical telephone to an AI-based telecom operator.

Great. It feels like even with some pretty straightforward kind of enterprise AI applications, you're in a great place without being too fans on the value LM models.

And sorry, just to complement on that, we are operating with the large guys, which is the typical Oracle, Salesforce, AWS kind of guys. So we have a clear path and we're working with the right guys to be able to achieve it.

The next question comes from Ernesto Gonzalez with Morgan Stanley.

It's on the opportunities you're exploring in Mexico Telecom. Just wanted to see if you can comment a little bit on whether these opportunities are in the fixed market or on the mobile market or any additional color you can give? And on the residential or your operations in Mexico, operating segment income was really strong in the fourth quarter. How sustainable is this margin level?

Well, yes, we are actively exploring opportunities in the telecommunications sector. But unfortunately, we cannot comment on specifics or at this point, share more information. Hopefully, we can get those to materialize. There's no guarantee, of course, that they will we'll be in touch as those -- as we make progress as to those.

And as to your second question, Valim?

We keep on optimizing our operations like we were just discussing a few moments ago, try to make sure our systems are more AI-oriented in order to make our processes more efficient, not only from a customer facing perspective, in other words, the clients see and understand that we are closer to them and providing better service, but also the flip side to that discussion is that it would allow us to have a lower cost base. All in all in the service of our clients. So yes, we keep on pursuing increasing operating cash flow.

The next question comes from Alejandro Azar with GBM.

Third one is on your comment, Valim, of the 25% CapEx to sales for 2026. Is that on the telecom service or it's telecom enterprise or it's the full telecom enterprise satellite? Should we think 25% of consolidated Televisa?

And my second question is also on -- relative to Sky. With the rate of the connections that we have had in the last couple of years. And if this continue, it becomes really tough for Televisa at the consolidated level, at least on the EBITDA side to show growth. I'm just wondering if you guys can give us more color of how you see Sky going forward, if there is a level where you see these connections or your total clients might normalize?

Okay. That's a great question. I think that the CapEx discussion is up to 25%. It comprises everything. Izzi Sky and Bestel, our B2B, our DTH and our cable fiber business. So that comprises it all. With regards to Sky, I think there is just misperception of what Sky really is. used to be a great business, all over the world, DTH represented a great business. But in all markets, what has happened is with the advancement of the networks, the FIC networks, Obviously, the connections are better and a lot of the streaming are also competing with that. So you see Internet plus the first streaming that doesn't allow much room for a DTH platform to keep on growing.

So our plan is basically to make sure that we have the lowest possible cost at the Sky, meaning it's revenues minus variable cost, programming costs, minus the satellite and conditional access. Other than that, it's a cash flow generating business. So we don't expect it to stop or to normalize or level at any point. And I don't think that's something that people have seen anywhere else given the conditions that I have just described.

So as you segregate that segment, Sky and its direct costs, which is -- which are the only costs that they basically have. And so everything else is our B2B and our B2C business. So I think that's the way you should approach this market as opposed to this is an overall thing and our revenue was declining. Yes, our DTH revenue is declining as expected. And what we did is streamline the DTH business. So keeps on generating cash and will be generating cash for the foreseeable future.

And we have a business that is long lasting, which is our direct-to-consumer and B2B businesses.

One more, if I may, and this is just to remind us all, when do you have to pay the transaction of Sky?

It's 2027 or 2028.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Angoitia for any closing remarks.

Well, thank you very much for participating. Give us a call if you have any additional questions. Have a great weekend.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, everyone, and welcome to Grupo Televisa's Third Quarter 2025 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 discussed in today's call and in the earnings release. Please note, this event is being recorded.

I would now like to turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead.

Thank you, Elsa. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Before discussing our third quarter operating and financial performance, let me share with you what we believe are the key milestones achieved this year, both at Grupo Televisa and TelevisaUnivision.

At Grupo Televisa, let me touch on 4 major achievements. First, our strategy to focus on attracting and retaining value customers in cable has allowed us to grow our Internet subscriber base in the first 9 months of the year compared to the end of 2024. Second, we keep executing on implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This has already contributed to expanding our consolidated operating segment income margin by 100 basis points in the first 9 months of the year to 38.2% driven by year-on-year OpEx reduction of around 7%.

Third, we continue to keep a disciplined CapEx deployment approach to focus on free cash flow generation. So far this year, we have invested MXN 7.5 billion in CapEx, which is equivalent to 16.8% of sales. In the fourth quarter, CapEx deployment should remain at similar levels to those of the third quarter. Still, our CapEx budget of $600 million for 2025 implies a reasonable CapEx to sales ratio of less than 20% for the full year. We have been able to achieve this mainly because we have had successful negotiations with suppliers, resulting in more favorable terms.

And fourth, during the first 9 months of the year, we have generated around MXN 4.2 billion in free cash flow, allowing us to prepay a bank loan due in 2026 with a principal amount of around MXN 2.7 billion. This debt repayment comes on top of the $220 million principal amount of our senior notes already paid on March 18. Additionally, at the end of the third quarter, Grupo Televisa's leverage ratio of 2.1x EBITDA compared to 2.5x at the end of last year, mainly driven by our free cash flow generation.

And at TelevisaUnivision, I will mention 3 key milestones. First, engagement and growth for ViX remains solid with strong momentum across both our free and premium tiers. Moreover, the Gold Cup semifinals and final and the compelling entertainment in sports slate that included the third season of La casa de los famosos, Mexico and our broadcast of Liga MX and the NFL helped drive a high single-digit increase in MAUs and robust demand for advertisers and ViX.

Second, the efficiency plan to reduce operating expenses at TelevisaUnivision by over $400 million in 2025 is delivering outstanding results. In the first 9 months of the year, our total operating expenses have declined by around 12% year-on-year for total savings of around $300 million. This shows a disciplined execution of our cost savings initiatives, including lower content, technology and marketing costs and the normalization of our DTC related investments.

And third, looking at TelevisaUnivision's leverage and debt profile, the company ended the quarter at 5.5x EBITDA an improvement from 5.9x in the fourth quarter of 2024, driven by growth. Moreover, so far this year, TelevisaUnivision successfully refinanced $2.3 billion of debt. As discussed in our second quarter earnings conference call, the company successfully issued $1.5 billion of new 2032 senior secured notes and refinanced over $760 million of term loan A now due in 2030.

In addition, more recently, TelevisaUnivision extended its $500 million revolving credit facility and its $400 million accounts receivable facility. These transactions strengthened TelevisaUnivision's balance sheet, enhanced its liquidity and extended its maturity profile with its nearest maturity now almost 3 years away. Deleveraging remains a core strategic priority for TelevisaUnivision and management remains committed to further strengthening the capital structure of the company over the coming quarters. Having said that, let me turn the call over to Valim as he will discuss the operating and financial performance of our consolidated assets.

Thank you, Alfonso. Good morning, everyone. As Alfonso mentioned, we had an excellent quarter in this third quarter. First, let me walk you through the operating and financial performance of our cable operations. We ended September with a network of almost 20 million homes after passing around 20,000 new homes during the quarter. Our monthly churn rate has remained below our historical average of 2% for 2 consecutive quarters as we continue to execute our strategy to focus on value customers while working on customers' retention and satisfaction. Our broadband gross adds continues to improve on a sequential basis, allowing us to deliver 22,000 net adds during the third quarter compared to net adds of around 6,000 in the second quarter and disconnections of about 6,000 in the first quarter.

In video, we also experienced a strong gross adds than in the first 2 quarters of the year and managed to reduce churn. Therefore, we lost about 43,000 video subscribers during the third quarter compared to 53,000 cancellations in the second quarter and 73,000 disconnections in the first quarter of the year. Moreover, we expect the improving trends to continue going forward, influenced by our recently announced multiyear partnership with Formula 1 to provide live coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky. Beginning in the fourth quarter of this year until 2028 season, Formula 1 is the one of the fastest-growing and most passionate sports events in Mexico and around the world, and we definitely see this as a competitive advantage relative to our peers.

Moving to mobile. Our net adds of 94,000 subscribers during the quarter continued to gain momentum, beating the 83,000 net adds of the second quarter and doubling those of the first quarter. Our innovative MVNO service developed by ZTE, offering enhanced user experience is already making our bundles more competitive and allowing us to increase our share of wallet from our existing customers. During the quarter, net revenues from our residential operations of MXN 10.6 billion, which accounted for around 91% of total cable revenue decreased by only 0.7% year-on-year. This marked the best quarter of the last 2 years at our residential operations from the revenue growth performance standpoint and compares well to a decline of 3% in the first half of the year. On a sequential basis, net revenue from our residential operations grew by 0.4%, potentially signaling an ongoing gradual recovery.

During the quarter, revenue from our enterprise operations of MXN 1.1 billion, which accounted for around 9% of our cable revenue increased by 7.7% year-on-year. This also marks the best quarter of the last 3 years of our enterprise operations from a revenue growth performance standpoint and compares favorably to growth of 3% in the second quarter and a decline of 4.5% in the first quarter of this year.

Moving on to Sky's operating and financial performance. During the third quarter, we lost 329,000 revenue-generating units, mostly coming from prepaid subscribers that have not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all satellite pay TV subscribers to increase the return on investment for this service. This translated into a slowdown of video gross additions for Sky that has been steady over the last 2 quarters. Sky's second quarter revenue of MXN 3.1 billion declined by 18.2% year-on-year mainly driven by a lower subscriber base.

To sum up, segment revenue of MXN 14.7 billion fell by 4.4% year-on-year, while operating segment income of MXN 5.7 billion declined by only 0.7%, making it the best quarter of the year as we appear to be very close to reaching operating segment income stabilization. Our operating segment income margin of 38.5% extended by 140 basis points year-on-year, mainly driven by the efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky.

Regarding CapEx deployment, our total investment of MXN 3.6 billion account for 24.3% of sales during the third quarter. This shows a material sequential increase in CapEx deployment, but it is in line with our updated CapEx budget for 2025 of $600 million. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 2.1 billion in the third quarter, representing 14.2% of sales.

Thank you, Valim, best quarter of the year indeed. Now let me take you through TelevisaUnivision's third quarter results. The company's third quarter revenue of $1.3 billion declined by 3% year-on-year, while adjusted EBITDA of $460 million increased by 9%. Excluding political advertising, revenue fell by 1% year-on-year, marking a sequential improvement compared to both the first and second quarters of this year. On the other hand, also excluding political advertising, adjusted EBITDA increased by 13% year-on-year, underscoring the scalability of a profitable DTC business and the sustained impact of cost reductions initiatives launched at the end of last year.

Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue decreased by 6% year-on-year or 3% excluding political advertising expenditure. In the U.S., advertising revenue was 11% lower as growth in ViX continued to partially offset linear declines. Within ViX, the Gold Cup, semifinals and finals helped drive a high single-digit increase in MAUs and robust demand from advertisers.

In Mexico, advertising revenue increased by 3% year-on-year, primarily driven by private and public sector ad sales that powered ARPU growth for ViX. Results this quarter benefited from a compelling entertainment and sports slate that including the performance of the third season of La casa de los famosos Mexico, dramas such as Monteverde and Amanecer and our broadcast of Liga MX and the NFL. During the quarter, consolidated subscription and licensing revenue increased by 3% year-on-year, driven by ViX's premium tier and higher content licensing revenue.

In the U.S., subscription and licensing revenue grew by 11%, supported by ViX and results included a mid-single-digit increase in linear subscription revenue and higher content licensing revenue due to timing of content delivery. In Mexico, subscription and licensing revenue fell by 17%. Excluding the impact of the renewal cycle, subscription and licensing revenue in Mexico grew by 5% driven by ViX.

To wrap up, Bernardo and I remain confident that our focus on value customers, efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at the TelevisaUnivision now that our DTC business has gained scale and achieved profitability will allow us to create greater value for our shareholders throughout this year.

Now we are ready to take your questions. Operator, could you please provide instructions for the Q&A.

[Operator Instructions] Our first question comes from Marcelo dos Santos with JPMorgan.

The first question is if you could comment a bit the CapEx outlook for 2026. How do you see this trending? And the second question is regarding the insurance claim you received. Was that related to Hurricane Otis? And is there something left to be received?

Thank you, Marcelo. I'll ask Valim to answer both questions.

We gave -- Marcelo, we gave a guidance of around $600 million, and we should be within that range. Regarding the insurance claim, I think that's the last portion of the claim on the Otis Acapulco situation. So we shouldn't be seeing anything more from that event.

Valim, just one question. The CapEx for 2026, so for next year you're...

2026, no 2026 is so far away, Marcelo. No, no, no.

Let's finish 2025, then we can talk about '26.

Our next question comes from Matthew Harrigan with Benchmark.

You've actually reached a point in the U.S. when you look at the entire TV industry, there's more consumption on streaming than on linear. And I know your linear is much more durable than your English language peers. But you've got tremendous local programming positions, particularly in news and some of the largest U.S. EMAs. Are you really taking a lot of our -- hopefully, eventually almost all the news content on local stations and the distinctive content on the local stations and moving that to ViX over time because it feels like it would be a shame to lose the local identity. You have those stations because eventually, linear is going to fall off even for Hispanic audiences.

And then secondly, clearly, a very dynamic situation in the U.S. and Mexico right now. Are you doing anything more on the BC side in relation to advertising for investments? And also, I can't help but ask, what's your general perspective on the U.S. and the imaginations with the administration on the tariff side and the prospects for near-shoring and everything going on. I know this is kind of ridiculously open-ended question. But just any thoughts on the stability of the economic relationship with the U.S.

Yes. Thank you, Matthew, for your questions. I think, as to your first one, local news is very important for us. We are very strong in the local places where we produce news and local programming. We are exploring the possibility of including that in our streaming platform. We haven't yet included all of that content, but we're exploring that. The good thing is that, as I was saying, the local content is very strong. So very popular.

As to your second question, we have made media for equity deals with great companies with great startups. We have assembled a great portfolio, I would say, and more companies are coming to us as they realize the importance of our platforms. And this is because of the strength of our platforms, we can position and grow their products and especially their brands when they're launching.

Companies like Kavak, like Rappi, have become our ambassadors. At the beginning, we had doubts about the strength of linear television and most specifically in Mexico. But now they have become ambassadors of ours. We will continue to do these deals as we generate value with unsold inventory. And these companies become regular clients. So it's basically a funnel for these start-ups to grow, to position their brands, to position their products. And we take equity, which is great at very good valuations, and then they become regular clients and this is basically unsold inventory. So we're very happy with the portfolio we have been able to put together, and we'll continue to do this.

As to your last question, I think that the Mexican government President, Sheinbaum has done an extraordinary job in dealing with the negotiations, the trade negotiations. I think that Mexico and the U.S. are key partners. If you look at the border region, it's one of the largest economies in the world by itself. The border, the legal border crossings that happened every day are in the millions. So I mean it's an integrated region. It's an integrated economy. So I believe that eventually, we'll be able to get to the right deal for Mexico and for the U.S.

Our next question comes from Alex Azar with GBM.

Few ones on competition, Valim, on cable. If you can share a little bit of color on short-term and medium-term dynamics, especially when seeing how competitors are adding 1 million, 1.5 million net adds per year. It seems that in 2, 3 years, the market is going to be fully penetrated. So that would be my first question. And the second one is on Sky. With the levels of net disconnections you have year after year, how should we think about the EBITDA contribution in the next couple of years from Sky?

Thank you, Alex. Valim?

Thank you, Alfonso. Well, I agree 100% with you. With this amount of net adds on a yearly basis, the market is very close to being fully penetrated. That's why our strategy is not going after volume because we know that we will be fighting for prices at the lower end of the pyramid. So our aim is to focus on the higher-end clients. That's why we have -- we are the only company in Mexico increasing ARPU consistently across the board. So I think that's the focus. So we think there's obviously a diminishing returns of this fight for the volumes of subscribers. And that's why our strategy moved away from that, and we have been successful in doing that.

Regarding Sky, Alex, the way I see Sky is very straightforward. This is a business that will eventually disappear. Why? The penetration of the fiber networks and the amount of OTTs and the availability of a linear TV through cable and fiber operators is something that will obviously position Sky to only subscribers that are outside of those covered areas. So it will by definition then keep on declining.

So how we perceive it, we perceive it as a cash flow from existing subscribers minus the programming cost, minus the technological cost of the satellite and all that is involved in that and then it generates a positive cash flow. That's the business and it has been generating positive cash flow and for the foreseeable future, we'll see positive contribution from Sky as a cash flow perspective. Obviously, it has this negative optics on our revenue, but just the way we see it is we've kind of segregate that from everything else and see that as an inflow of cash flow and everything else is more a stable growing businesses.

Yes. And to add to your first question, to add on what Valim was saying, in Mexico, we have a 4-player market, but it's a pretty rational market, except for Telmex, which has kept its entry price unchanged for, I guess, more than 10 years, while also increasing Internet speeds and offering Netflix now for 3 -- for 6 months. They don't seem to be really interested in the profitability of Telmex as they extract value from the lease of fiber owned by other subsidiaries of theirs. And the other Megacable raised prices by around MXN 30 per month from the beginning of the year. So there, you can see that the industry is raising prices, except for Telmex. Totalplay also announced price hikes from April particularly from broadband customers that are heavy data users. So even though it's a 4-player market, it's a rational market and if you look at the prices and ARPU, we feel comfortable, and we feel confident that this will remain like that.

If I can just add a follow-up on Sky remarks. When you say Sky probably will disappear. I'm just thinking that there must be some part of the population that where fiber is not around, and they -- if Sky becomes the only thing that they can use, especially for video. Do you guys have an approximate of that? I don't know.

No, you're absolutely right. I mean there are rural areas where a satellite provider makes sense. I don't know.

No, I don't think they will disappear per se. It's obviously a diminishing volume like we have been seeing and we'll keep on seeing. But just to give an example, in Central America, we have close to 100,000 subscribers basically flat because in those areas, there are less competitors offering a fiber network or a cable network. And it is very stable. And like Mexico, where we are all deploying network and expanding our infrastructure. So yes, I don't think it will disappear, not just there will be a day that will be just shut down. I think it will still have -- and I think there are just several hundred thousand people living in areas where there's no other option for entertainment and Sky will keep on being a solution. But that's why we don't see this as a -- I understand some people see this as a problem. We actually see this as an upside given the fact that we're generating positive cash flow.

Yes. I think Valim is absolutely right. We see Sky as a cash flow. And the more we extend, we prolong the life of the subscribers, it's going to be an amazing driver for our cash flow.

Our next question comes from Ernesto Gonzalez with Morgan Stanley.

Look, I know it's early but going back to the discussion on broadband penetration in Mexico. Do you have any -- or can you share any expectations for cable growth rates next -- sorry, next year? Do you believe that you can accelerate growth for the unit. And the second question is on the sustainability of margins for Cable Sky but also TelevisaUnivision. They were strong in the third quarter. So I wanted to get a sense of how much more room they have to grow going forward.

Well, I think that -- back to your point Ernesto, I think that it's key to understand that obviously, as penetrations go higher, the level of net adds will diminish for every player in the market. And you have already saw that. As you see quarter after quarter after quarter, we already see a diminishing number of net adds being added to the different players. So that's a diminishing return in other countries like Brazil, for example, where the penetration is significantly higher even than Mexico. You see there's this dynamic as well and companies find ways by selling more products to the same existing customers to keep revenues growing but obviously, you're not going to be seeing high double-digit numbers because of the dynamic of the market.

So like Alfonso just said, this is a very rational market. Nobody is flashing, prep is down. The promotions are very reasonable. And everybody is actually making money in this market like our cash flow generation that we have just presented. This is significantly -- is very significant. So I think that's a dynamic in mature market that you'll see. And what happens is you add more products, better products, more speeds and that's how you keep on increasing ARPU. And that's why we think the strategy of going after the high-end customers, they have more disposable income available as opposed to the other end of the pyramid. And I think regarding margins of cable...

No. I think he asked about TU...

No, no, no. The answer is not over.

Okay. Go ahead.

So the idea here is we think that we keep on improving margins. This is an ongoing, never stopping exercise that will go internally. And we find that through many different ways, mostly through technology. Obviously, we still are collecting a few synergies from Sky mostly through technology and improvement in how we provide services and processes. So there is an ongoing effort to increase margins. I'm talking about cable.

Yes. Yes. And about -- I mean, TU amazing margins. I think that was a result of the cost cutting and all that we did in terms of costs and expenses in the fourth quarter of last year, which are being reflected in this year. We believe that we have the highest margins in the industry. And that has to do with that cost cutting, $415 million. And also, it has to do with owning the largest library of content in Spanish in the world, more than 300,000 hours of content. It also has to do with the very efficient way in which we produce content, especially in our studios in Mexico. And that allows us to have these amazing margins. So I think those margins in the mid-30s are sustainable.

This concludes our question and answer session. I Would like to turn the conference back over to Mr. Alfonso de Noriega for any closing remarks.

Well, thank you very much for participating in our call. And if you have any questions, please give us a call. Have a great weekend.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to Grupo Televisa's Second Quarter 2025 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements to everything we discuss in today's call and in the earnings release.

Now let me turn this call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.

Thank you, Elcita. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Before discussing our second quarter operating and financial performance, let me share with you what we believe are the key milestones achieved so far this year, both at Grupo Televisa and TelevisaUnivision.

On Grupo Televisa, let me touch on 4 major achievements. First, our strategy to focus on attracting and retaining value customers in Cable has allowed us to stabilize our Internet subscriber base in the first half of the year and potentially grow it sequentially over the coming quarters.

Second, we keep executing on the implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This has already contributed to expanding our consolidated operating segment income margin by around 80 basis points in the first half of the year to 38.1% driven by a year-on-year OpEx reduction of around 7%.

Third, we continue to maintain a disciplined CapEx deployment approach to focus on free cash flow generation. So far this year, we have invested MXN 3.9 billion in CapEx, which is equivalent to 13% of sales. While we expect CapEx deployment to accelerate during the second half of the year, we are cutting our CapEx budget from 2025 to $600 million from the $665 million previously disclosed, mainly because we have had successful negotiations with suppliers, resulting in more favorable terms.

And fourth, during the first half of the year, we have generated around MXN 3.6 billion in free cash flow, allowing us to prepay a bank loan due in 2026 with a principal amount of MXN 2.65 billion. This debt repayment comes on top of the $219 million principal amount of our senior notes already paid on March 18.

Additionally, at the end of the second quarter, Grupo Televisa's leverage ratio of 2.2x EBITDA compared to 2.4x at the end of the first quarter, mainly driven by our free cash flow generation. And at TelevisaUnivision, I will elaborate on 3 key milestones. First, engagement and growth for ViX remained strong with momentum accelerating across both our free and premium tiers.

Moreover, subscribers have now surpassed $10 million, implying double-digit growth year-on-year. Second, the efficiency plan to reduce operating expenses at TelevisaUnivision by over $400 million in 2025 is proving to be successful. In the first half of the year, our total operating expenses have declined by around 13% year-on-year for total savings of around $226 million. This shows a disciplined execution of our cost-saving initiatives, including lower content, technology and marketing costs and the normalization of our DTC related investments.

And third, looking at TelevisaUnivision's leverage and debt profile. The company ended the quarter at 5.5x EBITDA, an improvement from 5.8x in the prior quarter, driven by growth. Furthermore, last week, TelevisaUnivision addressed its near-term debt maturity profile by refinancing $1.5 billion, eliminating the majority of its 2027 bond maturities.

Deleveraging remains a core strategic priority for TelevisaUnivision and management remains committed to further strengthening the capital structure of the company during the second half of the year. Having said that, let me turn the call over to Valim as he will discuss the operating and financial performance of our consolidated assets.

Thanks, Alfonso. Good morning, everyone. First, let me walk you through the operational and financial performance of our cable operations. We ended June with a network of almost 20 million homes after passing around 18,000 new homes during the quarter. In the second quarter, our monthly churn rate fell below our historical average 2% as we kept executing our strategy to focus on value customers, while working on customer retention and satisfaction.

Our broadband gross has continued to improve on a sequential basis, allowing us to deliver more than 6,000 net adds during the second quarter compared to the disconnections of around 6,000 of the first quarter and losses of about $85,000 in the fourth quarter of last year.

In video, we also experienced stronger gross sales than in the first quarter, therefore, we lost about 53,000 video subscribers during the second quarter compared to 73,000 cancellations in the first quarter and 95,000 disconnections in the fourth quarter of 2024. Our mobile net adds of 83,000 subscribers during the quarter were almost 2x higher than those of the first quarter and more than triple compared to the full year of net adds of 2024.

We are able to achieve this because late last year, we relaunched a new and innovative MVNO service developed by ZTE, offering an enhanced user experience. We are confident that this new service will make our bundles more competitive, while allowing us to increase the share of wallet from our existing customers. During the quarter, net revenue from residential operations of MXN 10.5 billion, which accounted for around 91% of total cable revenue decreased by 3.1% year-on-year mainly because we had a slight lower subscriber base.

However, net revenue from our residential operations remained stable on a sequential basis, potentially suggesting a turning point. On the other hand, net revenue from our enterprise operations of MXN 1.1 million, which accounted for around 9% of Cable revenue, increased by 3% year-on-year, mainly driven by higher recurring revenue.

Moving on to Sky's operating and financial performance. During the second quarter, we lost 347,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investment for this service.

This translated into a slowdown in video gross additions for Sky. Sky second quarter revenue of MXN 3.2 billion declined by 16.3% year-on-year, mainly driven by a lower subscriber base. To sum up, segment revenue of MXN 14.8 billion fell by 5.9% year-on-year, while operating segment income of MXN 5.7 billion, declined by 4.2%. Our operating segment income margin of 38.4% expanded by 70 basis points year-on-year, mainly driven by the efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky.

On a sequential basis, our operating segment income for the second quarter was basically flat, while our operating segment income margin expanded by 60 basis points. Regarding CapEx deployment, our total investment of MXN 2.1 billion accounted for 14.3% of sales during the second quarter. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 3.6 billion in the second quarter, representing 24.1% of sales.

Thank you, Valim. Now let me walk you through the TelevisaUnivision's second quarter results. The company's second quarter revenue of $1.2 billion declined by 4% year-on-year, while adjusted EBITDA of $398 million increased by 10%. Excluding the impact from the depreciation of the Mexican peso, TelevisaUnivision's second quarter revenue remained unchanged year-on-year despite the impact of the renewal cycle with key distribution partners in Mexico.

On the other hand, adjusted EBITDA increased by 14% year-on-year, reflecting margin expansion driven by the benefits of a streamlined cost structure and continued DTC profitability. Moving on to the details of our revenue performance during the quarter. Consolidated advertising revenue decreased by 5% year-on-year or 1% excluding the FX impact.

In the U.S., advertising revenue was 2% lower, reflecting a sequential improvement compared to the first quarter as growth in ViX and linear ratings stabilized driven by the strong performance of our content. In Mexico, advertising revenue declined by 13% year-on-year, driven by the depreciation of the Mexican peso.

FX neutral advertising revenue in Mexico was stable, driven by ViX and a strong sports programming slate that was partially offset by a decline in local advertising revenue. During the quarter, consolidated subscription and licensing revenue was flat year-on-year, but grew by 2%, excluding the FX impact. The growth was driven by ViX's premium tiers in both geographies, offsetting linear platform declines primarily related to the renewal cycle with key distribution partners in Mexico.

In the U.S., subscription and licensing revenue increased by 9%, while in Mexico, it fell by 23%. Excluding impacts from FX and the renewal cycle subscription and licensing revenue in Mexico grew by 13%. To wrap up, Bernardo and I remain confident that our focus on value customers efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business has gained scale and achieved profitability will allow us to create greater value for our shareholders throughout this year.

Now we're ready to take your questions. Elcita, could you please provide instructions for the Q&A.

[Operator Instructions] First question today comes from Emilio Fuentes from GBM.

First of all, regarding TelevisaUnivision, I was wondering how you're thinking the business in light of the ongoing separation between content streaming and Cable TV in the U.S. you still see value in keeping distribution and content bundles, both through streaming and linear channels? Or would it make more sense to separate from the traditional Cable TV. And regarding Sky, given the current rate of these connections to this eventually become a cost burden for Izzi? Or is that something you want -- you would not allow to happen?

Thank you, Emilio, for your question. I think that the transactions that Warner and Comcast did make a lot of sense for them. It's part of the evolution of this industry that is undergoing an existential transformation. For us at Televisa, the distribution business or selling our networks to distributors is still a $1.1 billion revenue business.

Our channel packages continue to be very strong, especially in entertainment and sports. We just renewed our deals with DIRECTV and Cox and we just launched our U.S. networks on Hulu. So it makes sense for now to keep everything together as a bundle. But we will always analyze alternatives to generate value.

Dave Zaslav is Director of ours. He's part of the Board of Directors. And we learn always a lot from Dave. So we'll keep analyzing alternatives. But for the time being, it's a large business, and it makes sense to keep it together. As to your second question, I'll ask Valim to answer it.

Thank you, Emilio. I think that's a great question because it gives me the opportunity to address an issue that I see there's a little confusion regarding Sky. As far as the integration is concerned, we are almost towards the very end meaning that all the cost structure that Sky used to have has now basically disappeared.

So Sky, as we see it, is a revenue stream of prepaid and postpaid subscribers with a variable cost of programming and a satellite cost. Other than that, everything is already embedded in the infrastructure that Izzi already has. So there is no potential likelihood of Sky being a burden because it only becomes a revenue stream. And like we've mentioned before on the initial presentation, we are charging installation fee of MXN 1,200. So we make sure that we have a payback on every new subscriber. So but the connections don't generate any sort of CapEx or OpEx to us basically as we collect them as part of the payment that they have to pay back as part of collections.

So there is no impact. So if I see this moving forward, Sky, it will be this revenue stream that will be declining as it is in this business everywhere in the world. So that there is a declining rate of revenue, but still a very robust, very high margin generation. And since what we are paying or will be paying for the stake that we bought, we basically have amounted for that in the first 12 months of synergies, so everything else that Sky generates from now on will be basically going to the bottom line of our business.

So I think there needs to be some clarity. So we're not so concerned about the decline of the Sky business because that was already in our forecast and for technological reasons, we don't see that changing anytime soon. But we are, yes, generating a lot of cash from that transaction that we think was very profitable to all of us.

Yes, I think to add on that, the deal that we made when we bought 42% of Sky from AT&T was a great deal and the execution by Valim and his team in terms of the synergies that he was mentioning has been great. So now it's all a matter of extending the life of the subscribers that we have. But of course, it's no surprise to us that we have lost subscribers, and we have -- we will continue to lose subscribers as the whole industry, the DTH industry is in secular decline.

Our next question comes from Olivia Mogavero from JPMorgan.

My first 1 would be on CapEx. Could you comment on your expectations for the year? Do you see room for a downside revision on the guidance? And are you still targeting the 1 million homes passed for 2025? And the second one, we see broadband adds going back to positive territory. What can we expect for the second half of the year? Could you comment a little bit on your trend trajectory and how has been the response to your strategy to focusing on value clients? And what do you see as a healthy level for gross adds, net adds and churn for the second half of 2025?

Olivia. Yes, as I mentioned in the opening remarks, we have updated our CapEx guidance for 2025 from $665 million to $600 million that had been previously disclosed. And I'll ask Valim to go into the details.

Thank you, Alfonso. I think that -- and also like it was said in the beginning, this is mostly due to more efficient negotiation with suppliers. And because of the way we approach the market with a very focused approach on higher-end subscribers, we don't have to worry too much about just bringing a whole bunch of subscribers, they will churn very quickly. And that's why churn is at its lowest rate not only in this company, but also in the industry overall, which we think is very valuable.

So as we see the world moving forward, we anticipate churn to be low because of the things that we are doing into retaining and value our existing customers, but also, we are targeting growth of those high-end, more reliable and more stable customers. So we don't -- we are not trying to become the leader in market share of net adds -- what we are trying to do is start increasing quarter-over-quarter the revenues of our cable business.

Like I said, the Sky discussion, I just mentioned that a second ago. So that's our focus. So we see, yes, the trend moving upwards in terms of quarter-over-quarter revenue growth and growth not huge growth, but still growth in terms of subscribers in cable. I think that was basically your question. I don't know, if you -- if that answers what you had in mind.

Yes, that answers.

Our next question comes from Milenna Okamura from Goldman Sachs.

The first 1 is you mentioned that you continue to focus on high-end customers. Could you please tell a little bit about your commercial strategy recently? And how have you seen competition evolving?

Thank you, Milenna. Valim, can you please go over the questions.

Yes. So like I said, we don't have any changes in that. We see the competition in Mexico being very, very rational. And I think that's a key element of the success of our strategy in this market. All the players are being very rational. Prices are -- they do not increase, but we don't see anyone discounting significantly prices, which means all the major players are seeing this as a stable market moving forward. So no one should see big swings either way.

[Operator Instructions] Our next question comes from Matthew Harrigan from Benchmark.

There's a real tendency in the U.S. for more consumption of specialty sports, but also hit streaming shows and even linear programming on social media, Tiktok, and obviously, a lot of streaming consumption is on YouTube, and it doesn't really monetize that well yet, especially for sports. With your primacy in Spanish language, media, what are you doing to get more efficient on realizing the digital revenues because your profile there including on sports is really important.

And then second question, and I know this is just inherently fuzzy, but any new concerns on U.S. tariff policy and specifically anything that might affect the composition of your programming was so much being produced in Mexico City on a very efficient basis. Congratulations on the cost savings, a remarkable job.

Thank you, Matthew. Yes, I mean, there is a tendency, where sports and also entertainment content is being streamed, of course. And we're putting a lot of effort at TelevisaUnivision into selling more digital packages. I don't know if you saw, but we brought in a head of sales in the United States, Tim Natividad, that comes from Tiktok. And he's somebody that knows a lot about the digital market and he will help us to enhance all our digital products.

So now we have centered on ViX and selling advertising on ViX. That has picked up. ViX is now a $1 billion revenue business. including subscriptions and advertising sales on the AVOD product. So that has become a real and substantial business. However, we're also enhancing all our digital sales, more especially in the U.S., where we have to do a better job.

So Tim will help us in using basically our sports assets and our entertainment assets to build up and enhance those sales. We're also doing a much better job in windowing our content. We own the sports rights, and we own most of our content. And now we have achieved Content Officer for TelevisaUnivision. As you might remember, before we had a content officer for ViX, a content officer for Linear Mexico, and another 1 for linear in the United States.

Now we have unified that position. And now the Chief Content Officer is a seasoned executive that comes from Televisa and he's in charge of basically windowing all our content, including sports and of course, enhancing our monetization of that content. So I think we have a much better team now and we're doing things much better, and you'll see the results this year and in 2026. So I think that we're doing a much better job there, as I was mentioning.

And what was your second question?

Just all the volatility in U.S. tariff policy and the posturing and you occasionally see hypotheticals, where there's effects on entertainment companies. I mean clearly, you produced a lot of programming down in Mexico City that's also showed in the U.S. I know that wasn't a primary concern, people think more about agriculture and cars and [ chips ] and all that, but you have seen articles in the trade press about people, the major studios, starting to worry about some things that administration might do or could do.

It doesn't seem like it's too likely to happen, but it's definitely much more on people's radar screens than you would have thought before Trump was elected to say the least.

Yes. Great question, Matthew. Fortunately, digital content is not considered a physical good for purposes of tariffs. So all the shows and films produced in Mexico and that are aired or streamed in the U.S. remain outside of the scope of the tariff loss. And under the U.S. MCA, that it's currently exempt -- it exempts digital transmitted content from tariffs. So we never know and we can never predict what is going to happen in respect to tariffs as you have seen many things change. But we think that we're in solid ground now.

Ladies and gentlemen, with that, we will be concluding today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

Thank you very much for participating in our call, and we're always here to answer any questions that you may have. Have a great day. Bye.

Ladies and gentlemen, that does conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.