Grupo Televisa SAB (TV) 2013 Q1 法說會逐字稿

Good morning everyone, and welcome to the Grupo Televisa's first quarter 2013 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, Executive Vice President of Grupo Televisa. Please go ahead, sir.

Thank you, Rosita. Good morning, and thanks to everyone for joining us today. With me today is Jose Baston, President of Television and Content, and Salvi Folch, our Chief Financial Officer.

I will begin by taking you through the highlights of our first quarter financial results. Then, Pepe will discuss the operating results of our Content segment. We will be happy to take your questions right after that.

During the first quarter, consolidated sales increased 2.4%, and operating segment income margin reached 35.9%.

Starting with our Content businesses, revenue decreased by 1.9%, to MXN6.3 billion during the quarter, and the margin reached 37.5%. Our Advertising business declined 7.2%, year over year. There are two main reasons for the drop. First, we faced a difficult comparison to last year, mainly as a result of Easter week falling in the second quarter instead of the first quarter, like it happened this year. But, also, there was an important drop in advertising spending by local and federal government entities this quarter. Pepe will go into further detail on this topic.

Notwithstanding, we are maintaining our full-year guidance of revenue growth in our Content business of mid-single digit and for margins at close to 47%.

Our other two sources of Content revenue continued to grow at a solid pace. Network Subscription revenue expanded by 17.3%, and Licensing and Syndication revenue expanded by 6.3%. As you know, Licensing and Syndication revenue includes the royalties that we receive from Univision. During the first quarter, Univision royalties reached $57 million. This is equivalent to a year-over-year growth of 7.2%, and almost twice as much as the royalties we received in the first quarter of 2010, just three years ago.

We're working very close with Univision to make our content more relevant to the Hispanic market and to its advertising customers. We are creating more synergies between our companies every day. Our royalties will continue to grow at a pace similar to that of Univision's revenues until 2018, when there will be a significant increase in the royalty rates.

Moving on to our Telecommunications businesses. During the quarter, SKY added over 259,000 new customers. With this, SKY added one more quarter of substantial growth in subscribers after already 13 quarters of growing at a fast pace. As a result, SKY delivered record revenues of MXN3.8 billion and record operating segment income of MXN1.8 billion. In spite of growing so fast, we continue to focus on maintaining high levels of profitability. During the quarter, operating segment income margin reached 46.2%.

As of the end of the quarter, SKY reached 5.4 million customers. Many of them subscribe to SKY's low-cost, pay-television package. We believe this is very positive because as the Mexican economy grows, customer purchasing power will also expand. When that happens, there is a very good chance that these customers will want richer pay-TV offerings and many premium services such as high definition channels, video on demand, and exclusive sports content. SKY is very well positioned to provide all of those services.

Our Cable and Telecom segment grew 6.6% in video customers. Voice and data customers grew very fast -- 15% and 21%, respectively. The combined number of voice and data revenue generating units, or RGUs, is now almost the same as the number of video RGUs. So, telecom services continue to be the main engine of growth for our cable companies.

Revenue in our Cable and Telecom segment grew 5.4% during the quarter, and operating segment income margin reached 35.7%. However, excluding Bestel, revenue expanded double digit, and operating segment income expanded close to 10%.

As you know, Bestel provides managed telecom services to businesses and institutions. So, its business model is very different to that of our cable subsidiaries. The company is making very good progress in improving this business model, but some quarters may be challenging.

In this particular quarter, Bestel's revenues were impacted by the loss of Megacable as a customer when that company migrated to GTAC. GTAC is the consortium that we have together with Megacable and Telefonica to operate the fiber network of the national electricity commission. Also, there were lower revenues from long distance and certain managed services.

As a result, Bestel's sales dropped 12.5% during the quarter. This alone explains the lower than expected pace of growth in our Cable and Telecom segment. This is an effect that you will see in the next three quarters, but our cable companies, however, shall continue to post very solid results.

Revenue in our Publishing business experienced a drop of 4.2%. The negative translation effect on foreign currency denominated sales accounted for about half of the drop, but advertising revenue in Mexico was also weak. This is explained primarily by a very important drop in advertising by governmental entities, just as it happened in radio and television. Circulation revenues remained strong, both in Mexico and abroad.

In regards to our other businesses, as you may recall, during the second quarter of last year we sold one of our three soccer teams and shut down our publishing distribution operation in Chile. As a result, revenue contracted by 10.9%. Our radio businesses also experienced a difficult quarter. As with our other advertising platforms, this is explained by an important drop in advertising spending from governmental entities. Operating segment income margin expanded 150 bps, to 11%.

Moving on to our CapEx, during the first quarter of 2013, we invested about $178 million, of which $95 million were in Cable and Telecom, $72 million in SKY, and $10 in our Content business.

In addition, last February we invested $20 million in Iusacell. You may recall that during the third quarter of last year, we shared with you our plans of additional investments in Iusacell over the medium term, for approximately $400 million and subject to certain conditions. The two most important ones are that Iusacell continues to perform better and that we see an improving regulatory environment. The $20 million invested in February are part of those $400 million.

Finally, I would like to inform you that on April 2, 2013, at the general shareholders meeting, we approved the payment of an ordinary dividend for an aggregate amount of MXN1.1 billion, to be paid in cash this coming May.

In closing, we remain committed to delivering strong results for 2013 and, therefore, reiterate our full-year guidance for Content revenue growth of mid-single digits with a margin of close to 47%, and our expectations for continued solid growth in our video, voice, and data customers.

Thank you very much for your time and attention. And, now, I'll turn the call over to Pepe.

Thank you, Alfonso. Good morning, everyone. Thank you for joining us. As you saw from our results, the advertising revenue (inaudible) declined from the same quarter last year. As Alfonso mentioned, this is explained by a significant decline in government spending on advertising and also by a difficult comparison to first quarter of 2012 for a number of reasons.

First, you may recall that all government entities, local and federal, could not buy advertising on radio or television during the [electoral] period of 2012. As a result, some of these budgets moved from the second quarter of last year to the first quarter of last year.

Second, Easter week, which is a time of the time when advertising spending usually slows down, took place in the second quarter of last year instead of the first quarter, as it happened in this 2013.

And, third, 2012 was a leap year. So, our shop was open for one extra day in the first quarter of 2012.

But, our Content continues to perform extremely well. Broadcast television is the most efficient vehicle for advertisers, and our Content business remains as strong as ever. We [saw it] with many clients that invested more with us in this quarter, such as those in the automotive, soft drinks, beer, and [personal care] industries, among others.

Channel Two, our flagship network, continues to perform extremely well. All of our telenovelas broadcast during the primetime delivered very strong results. [All of] the same telenovelas are being broadcast by Univision in the United States with great results.

We continue to buy sports rights, movies, and TV series from outside Mexico, but our success is in the large volume of high-quality content that we produced in-house. It is successful because it delivers strong audiences in a consistent and predictable manner. This quarter alone, we produced close to 23,000 hours of content.

Moving on to our other two sources of Content revenue, as Alfonso mentioned, Network Subscription revenue grew by 17.3%. Network Subscription revenue, which is the sale of our networks to pay-TV platforms, keeps benefitting from the very good dynamic results -- the good dynamics of this industry.

The interest in our pay-TV channels keeps growing. The number of Televisa channels per subscriber is also growing, and pay-TV penetration keeps expanding. During the quarter, we added 1 million to the number of households that receive one or more of our networks, reaching a total of 34 million.

Televisa produces a total of 18 networks of pay-television, and many of them are top-rated. Among the key categories, we produce four of the top five general entertainment channels, the top three music lifestyle channels, and three of the top four movie channels.

As an example, one of the most successful channels [is] Unicable, the magazine and general entertainment network that reaches a very desirable audience from our commercial point of view. It is the second most-watched channel in Mexico in its category. Another one is the tlnovelas network, which has produced over 700 novelas in the last 50 years. So, we have a great library of content. This channel is fully dedicated to transmitting the best and [recent] novelas of all time, 24 hours a day. In Mexico, it is the third most-watched network in the general entertainment category.

In total and excluding the children category, we produce and transmit 7 of the top 11 most popular networks of pay-television in Mexico.

Our third source of Content revenue, License and Syndication revenue, expanded 6.3%. This line item accounts for our export of content to over 50 countries; our programming agreement with Netflix; and, as Alfonso mentioned, the royalties we receive from Univision. This time around, sales to Europe were strong, although sales to Latin America were somewhat a little weaker.

Univision continues to post very solid audiences. During the February sweeps and for the first time in history, Univision delivered a larger primetime audience than NBC among key demos. For the full year, Univision increased its primetime audience by 4% among adults 18 to 49, and finished as the number one network on Friday nights.

UniMas, Univision's other broadcast network, ranked as the number two Spanish-language network, ahead of Telemundo, among many key demos. Galavision, which is Univision's basic cable network, continues to be the leader in the Spanish-speaking cable industry.

Univision is also making great progress with its [free transmission] deals. During the first quarter, it signed a comprehensive agreement with DIRECTV. In addition to carrying the core broadcast and cable network from Univision, this agreement also includes Univision Deportes network, which we produce; tlnovelas, which is our novela network; and Foro TV, our cable news network.

As you can tell, diversification of our revenue sources is a strategy that keeps paying off. This works particularly well for Televisa, because we can monetize our content by transmitting it as many platforms as we want, in as many markets as we find it is attractive, and as many times as we find it appropriate.

Thank you so much for your attention, and now we are ready to take your questions.

(Operator Instructions) Rodrigo Villanueva, Merrill Lynch.

Good morning. This is actually Mauricio Fernandes. Good morning, everyone. I have two questions, Alfonso, if I may. First, now that I guess you have had more time to analyze, digest, discuss the telecom media reform, can you please share with us your thoughts on the impact that it could have on Televisa in whatever form? Maybe the two or three items that you think are most relevant?

Secondly, given that -- still on the same topic -- given that Televisa could potentially be considered as dominant in the pay-TV market, the new definitions established in the telecom reform, do you think you would still be allowed to keep on consolidating the cable sector in Mexico?

Thank you.

Hi, Mauricio. Well, first, as to the question that has to do with the reform, once we have read it and digested the reform, basically what I have to say is, first of all, it's a constitutional reform. So, these are the broad strokes of what is the change in the landscape. And, now we have to see what the secondary legislation has to do and all the details involved in the secondary laws and regulations.

But, in general, I can say that the reform presents both a number of challenges and also a number of opportunities for Televisa. On the broadcasting side, the reform represents challenges in the form of additional competition of new networks. It also represents challenges that have to do with the must-offer obligation of our four over-the-air networks to cable and DTH operators free of charge.

However, as I have mentioned before, we have been producing content successfully for over 60 years, and I believe we have the scale, the talent, and the expertise to continue producing content that has strong appeal, not only in Mexico but also around the world. We will continue to compete with all our production, all our assets and, I would say, all our energy to maintain these audiences.

Aside from the over-the-air channels, as Pepe mentioned, we also produce 18 very successful pay-television networks, which we will continue to sell to cable and satellite companies.

On the other hand, the reform represents a huge opportunity for Televisa in the telecommunications industry. As you know, the telecommunications industry is many times bigger than the broadcasting industry. The implementation of the reform includes the effective leveling of the playing field of the telecommunications sector. That's how we see it.

This sector, the telecommunications sector, is an industry expected to be worth about $32 billion by 2015. So, this is a very important opportunity for us, because we have made significant investments in this sector. We are very well positioned to compete in this sector, now that as a result of the reform we believe that for the first time there will be a new, leveled playing field.

As to your second question, I think the dominance, or preponderance, that was created as a result of the reform has to do with sectors. It's not dominant or preponderance of a specific market, but of a sector in general. So, I believe that we're definitely not preponderant on the telecommunications sector. That is kind of obvious. So, I think that we will, as we have mentioned in the past, continue to seek opportunities to consolidate in that sector. We believe that there are very attractive opportunities on the cable sector and, also, other assets on the telecommunications front in Mexico.

So, in order to be competitive, we have to grow. As I mentioned before, clearly we are not dominant on that sector as a whole. So, we believe that we should actively pursue the consolidation of the cable industry and of the telecommunications industry in Mexico.

OK. Thanks, Alfonso. Just one follow-up. Would you consider cable TV, or to a greater extent pay-TV, within the telecommunications bigger picture, instead of considering it as a separate market, then?

Well, pay-TV is only part of the telecommunications offering of triple play services. If you read the reform carefully, it speaks about convergence and the telecommunications companies being able to provide all types of services. So, in that convergence, you have to consider the sector as a whole and all the services involved in the offerings. So, that's what I believe you have to consider -- all the sectors, all the offerings of services in a sector in particular. So, it's not only pay-TV, but internet, telephony, et cetera, offerings as a component of the whole sector.

OK. Thank you, Alfonso. Appreciate it.

Thank you.

Michel Morin, Morgan Stanley.

Thank you. Two questions, Alfonso. First, we saw during the quarter that America Movil announced that they've acquired the rights to broadcast the Olympics. I was wondering if you could comment on that? And, specifically, whether or not you think we should be concerned that there could be a new bidder out there that would raise the cost of content for you, going forward?

And then, secondly, at SKY we saw the RPU take a little bit of a leg down this quarter, on a sequential basis. And, I was wondering if there was anything there that was going on?

Thank you.

Hi, Michel. As to your first question, we did not transmit the last Winter Olympics, although we had the possibility, as we don't believe that there's much following in Mexico for those Winter Olympic Games. We did transmit the Summer Olympics in 2012, but they did not contribute much to revenue or profitability of Televisa.

Anyways, as to the second part of your question, competition for sports content will continue to increase over time. That's what we believe and we're seeing in the market. Aware of this, we have been structuring medium-term and long-term content agreements, when possible and at the right prices, with companies holding the sports rights that we believe that matter most for our audiences. For example, we hold the rights to the next three soccer World Cup's that are extremely relevant for Mexico.

As to SKY and its RPU, I think it has to do with our offering and with VETV, which is our lower-tier package, basically.

So, it's just the ongoing mix shift there. OK. All right. Thank you very much.

Yes, there's nothing specific about -- nothing different in this quarter from SKY. It's just the package of VETV and its effect.

Great. Thanks very much, Alfonso.

Andrew Campbell, Credit Suisse.

Good morning. My question is just about the guidance that has been reiterated for the broadcasting segment. Does that guidance consider the reform package, in particular regarding any potential lost Network Subscription revenues? Or, is the guidance really relevant on a pre-reform basis?

Well, the trick here, Andy, is the timing of the reform. The House of Representatives approved the reform about a month ago and, then, it was sent to the Senate. The Senate approved the reform, but made some changes. So, the reform had to go back to the House. Yesterday, the House made a new change and, now, it will go back to the Senate.

If the Senate now approves that change, which is a change that they made to one word, exactly one word, it has to go to the legislators of the local governments. So, it has to go to 31 local legislatures, and the majority of them have to approve it. Then, it has to be enacted by the President. And, after that --. It's an amendment to the constitution. At that level, Congress will have to enact in 180 days new broadcasting and telecommunications laws based on the reform and, also, it has to amend other laws and regulations. And, it has to form the new regulatory bodies -- IFETEL and the competition commission.

So, as to your question, our guidance doesn't include -- because we don't know the timing of when this reform will take effect, we cannot basically make it part of our guidance, yet.

Sure. Understood. With regards to the specific point of the must-offer regulation that you mentioned and the free-to-air channels that would have to be provided free of charge, is your understanding that that would go into effect upon the publication of the law? Or, is that something that would depend on the secondary regulations that you mentioned?

That will enter into effect once this new body, the Federal Telecommunications Institute, is constituted. So, that will also take some time.

OK. OK. Great. Thank you very much.

Andres Medina-Mora, GBM.

Thank you. Good morning. I just have a follow-up question to the network subscription question that was asked right now. Do you have any guidance on what the actual reduction, in terms of top line, will be for you guys regarding the must-offer, once it is enacted, on a yearly basis?

And, the second one, you mentioned some attractive opportunities in the cable sector. Do you have a target net debt to EBITDA ratio you wish to stay by the end of the year, or in the coming quarters, taking into account possible acquisitions?

Thank you.

Hi, Andres. As to the revenue that has to do with the free must-offer, it's too early to say, first of all because, as I mentioned before, it will depend on the second stage of the reform. And, second, we currently sell in a single package our 4 over-the-air channels together with 10 of our 18 pay-television channels. Only the over-the-air channels will be free of charge once the reform becomes effective. So, we will then need to renegotiate the affiliation agreements with pay-television distributors -- this is cable, satellite, et cetera -- to determine the price for the 10 pay-television channels. So, this will depend on the negotiations of the price of those channels.

The over-the-air channels contribute with a very good portion of the total rating points of the package of channels. So, we'll lose some revenue, but we're very confident that our pay-television networks will continue to be in high demand. As Pepe mentioned, our pay-television networks are among the most popular networks in very key categories. So, we believe that it's a very strong package. This is a pay-television package of networks.

So, we cannot answer your question, unfortunately, because as I mentioned, it has to do with the effective date of the reform and the new price at which we can sell those networks to the distributors.

Can you repeat your second question?

Yes. You mentioned some attractive opportunities in the cable and telecom sector. I was wondering if you could delve a little bit further into that, in terms of which the targets could be and, also, in terms of what your target net debt to EBITDA ratio would be, taking into account possible acquisitions? Thank you.

We would not like to speculate on acquisition targets or negotiations. However, what I can say is that we will actively seek opportunities of consolidation where it makes sense and where the footprint of the particular company makes sense for the other assets that we have.

Thank you.

Soomit Datta, New Street Research Company.

Hi there. Soomit, at New Street. A couple of questions, please. First of all, on Cable, you've talked a little bit about Bestel and the specific issues affecting that business. But, if I'm looking through the other three Cable assets, there's been a general slowdown which started towards the beginning of 2012 and has continued into Q1. At the same time, the CapEx in Cable is increasing. I just wondered for the other three Cable assets, is this level of growth we're seeing today indicative of what we could expect going forward? Or, should we be expecting growth to accelerate on the back of the investments you're making? That's the first question.

And then, secondly, just on Iusacell, I know you don't give too much information. I think you have given, if nothing else, a subscriber growth number in the past. I wondered if you could update us with that number and any other information you could give, if available?

Thanks.

Hi. As to your first question, two of the three Cable assets -- this is Cablevision, Cablevision Mexico, and Cablemas -- have very strong results in their triple play offerings. However, TVI, which is cablevision based in Monterrey and in the northeastern part of Mexico, was impacted during the quarter as a result of some technical issues. This has to do with their infrastructure, and it's related to the digitalization of the network, specifically in the area of Monterrey where we had these problems.

This was reflected in a higher churn rate. We had a problem specifically in what had to do with the telephony service. My team is very aware of this problem, and we're addressing it. I believe that in the following quarters we'll see better results on the TVI front.

As to your second part of the question that has to do with Cable CapEx, we're investing in all cable and fiber subsidiaries -- this is including Bestel -- because, as you saw from our results, all of them are growing. Penetration of video services is still low, and penetration of broadband services is even lower. So, we see a very good opportunity ahead of us. I think, as I mentioned before, for the first time as a result of the reform there will be a more leveled playing field on the telecommunications front, and this provides Televisa with a huge opportunity in that market, which is much larger than our traditional market.

So, I believe that we're investing for the future. We're investing in digitalization of all our cable companies. We're investing in fiber. So, we're investing for the future. That's why CapEx is increasing.

As to Iusacell, you're right. We don't provide a lot of information, because we believe from the competitive standpoint that it's in the best interest of our shareholders and of Grupo Televisa not to share that information, especially to share it with our competitors. So, the color that I can share with you is that we believe that Iusacell is performing better. Its operations are improving. So, in general, we're happy with improvements in the performance.

It's a company that, as I have mentioned on many occasions, has many challenges. However, as a result of this better performance, I think it can face those challenges, especially as a result of the things we're seeing in the reform, which I mentioned will level the playing field on the telecommunications sector in general and, more specifically, I think it will provide opportunities for Iusacell once it becomes effective.

And, just a quick follow-up. I think in Q4, you said the subscriber growth was 37%, year over year. Are you able to give an update for that number?

Well, I would not like to share that number. We'll be providing full-year information.

OK. Thank you.

Thank you.

Andres Coello, Scotiabank.

Hi, Alfonso. You mentioned in the report that the government's advertising expenditures in television, radio, and magazines were down on the quarter and that that explained why these segments reported weak results. But, just yesterday, I saw the state of Mexico, the Ministry of Education, the state of Puebla, the Supreme Court of Justice, and political parties all advertising in YouTube, Facebook, Twitter, and online media.

Now, with Apple's Final Cut software and a decent camera, you can produce some pretty neat local content. With LT coming, there could be an army of independent content producers in Mexico willing to grab share of the advertising pie. People watching online content in Mexico is the people with money in their pockets, and I think that advertisers know that.

My question to you is this. Televisa's soap operas appear to be increasingly unappealing to the A and B segments that are more hungry to watch smarter content online and in pay-television, where advertising is way cheaper that in free-to-air. It seems that Televisa's content, especially the soap operas, is becoming too oriented to the low-end segment. It is clear you are doing a great job in telecommunications, (inaudible) Televisa.

Do you feel comfortable with the position of the Company to face the growth of online media? Aren't you worried that you are losing the A and B segments? Aren't you worried that your prices on free-to-air television are too expensive and that it will cost you more to retain audiences? Are you taking action to gain audiences in online media?

Thank you.

OK. Let me start -- this is Pepe. How are you, Andres? Let me start by telling you the way that we see the online industry. [We definitely see] advertising revenues which are not significant at all, and we have seen that in the industry of online in Mexico, the revenues in advertising are still really low.

With that said, you were talking about telenovelas. Telenovelas, which basically -- they reach basically all the different demographics that are available in many markets in the world. That includes, of course, A-B. And, those persons also watch -- they are watching television and doing some multitasking and [sometimes] watching some of the different strategies that we are doing with the television, as well as within the mobile device.

So, we are very well aware of the online activities. We are well positioned with growing our traffics in all the different forums that we have been developing, besides all the different content that we have been developing especially for the online industry.

We are very well aware of the growth of that industry and the great opportunities that are there for content producers. So, I can guarantee you that the Company is concentrating a very important part of our strategy on a long-term basis to be clear that the possibilities of upside on the online market are there, and that a company like ours that produces a lot of content, that to produce content direct for online will be very easy because all the infrastructure that we have.

So, we see the upside, and we are very well positioned to be an important player in many of the platforms available or that will be available in the near-term basis.

All right. So, to be clear, you are not expecting online media to gain share from free-to-air television? Or, rather, that you are not expecting free-to-air television advertising revenues to come down as a result of online substitution, at least in the short term?

We don't expect it on the short term. We definitely think that online advertising -- we don't think it's going to hurt broadcast television because of the reach that you can get in broadcast television. We think that it will hurt other media and, like I said, we are very well positioned to recover that money that we can lose in other media, by producing content and having good activities, like cross-promotional activities, to be able to have that additional advertising money that today we don't have in some way, because they are buying other media that is not part, in sometimes, of the Televisa offer. And, an example would be newspapers.

So, we definitely know that that is going to happen, and we know that has been happening in other parts of the world. But, like I said, Andres, we are very well positioned to be part of that. And, in Cable, we see that that can hurt any of our advertising revenue lines. We are going to be part of that upside in the online industry because, with no doubt, we are the most important production company in the Spanish-speaking world, and we can produce content for that new media in Mexico, that's still very, very low, by the way. But, we know that there is an upside there, like I said, and we are going to be there to be part of that important upside.

OK. OK. Thank you.

(Operator Instructions) Andre Baggio, J.P. Morgan.

Good morning, everyone. Our question relates to what's going on in Mexico. We are seeing a slowdown in many industries with respect to revenues. So, we want to know if you could comment if there is anything going on in this country besides the [holiday], which we see as an excuse for many companies? And, (inaudible) how that could affect Televisa?

Hi, Andre. Well, we're not seeing a slowdown in Mexico. The result of Content, of Radio, and of the Publishing company had to do with specific reasons that we have mentioned before. However, SKY continues to have strong growth. Our Cable assets continue to have also strong growth. So, we are not seeing a slowdown at all in our businesses. As I mentioned, in our Content, Radio, and Publishing businesses, it had to do with very specific reasons that both Pepe and I have mentioned before.

OK. Thanks a lot.

Ken Berlin, Legal & General.

Good morning, and thank you for taking my questions. Two, if I may please. First questions go back to one of the prior caller's questions on, are there any explicit balance sheet leverage targets that you're looking to run the business to, both on an organic, absent-M&A scenario? And, then, is there a maximum level that you're comfortable with respect to running the balance sheet at, on a net debt to EBITDA basis?

Hi, Ken. Well, as we have mentioned before, what we would always maintain is an investment grade. So, we would not leverage the Company if it were to put at risk our investment grade.

OK. I guess recognizing that you're at BBB+ today, is there anything further you can lend behind that? There's obviously a fair amount of downside from the current rating to keeping it investment grade. Or, is it just investment grade is what the framework is set, and that's all you're willing to convey?

From the capital structure perspective, we would like to maintain our investment grade.

OK. Great. And, then, two other questions, if I might. On the Iusacell --?

However --. I'm sorry. However, we believe that market conditions are very good now and, of course, keeping our investment grade, if we see opportunities we may issue debt in order to refinance liabilities and for general corporate purposes. But, this is of course opportunistic, and we believe that market conditions are very good. But, in general, we would always maintain our investment grade. That's our policy, and that's our goal.

OK. Great. On the Iusacell, the $20 million payment, can you give us any insights on the timing and trajectory of the remaining --? I guess it's $400 million that you've outlined that Iusacell would need, your 50% portion of the $800 million total. So, you've made $20 million. Is there any --? Can you give any sense on how the timing would be for the remaining $380 million, please?

Ken, I will have a clear picture in the next quarter. We're finalizing a strategic plan there.

OK. Great. And, then, one last thing, a housekeeping item. Can you give any color with respect to the drivers on the big change in the Other Income line on the income statement, please?

Basically, there, we sold a soccer team last year. So, in terms of --. Other Income. No. I thought that you were referring to Other Businesses. Sorry. Other Income. During the quarter, we received $30 million from Univision, and that has to do with the release of certain carriage rights with DIRECTV that were held by us in the United States and which Univision used in their negotiation with DIRECTV. And, it had to do with the carriage of the pay-television networks in the United States. So, it was a one-time payment of $30 million that had to do with this release of the carriage rights that we had with DIRECTV.

OK. So, that was the preponderance of that item, and it's a one-time item, not something that you would expect to recur.

That's correct.

OK. Great. Thank you very much.

Thank you.

Michel Morin.

I just wanted to drill down a little bit more in Cable. Specifically, if we look at the margins by segment, Cablemas is the one that has been declining now, I think, if you look at year-on-year margins, for the last five quarters, or so. So, overall, your margins have been moving, but Cablemas has not. So, I'm wondering if there is something that's happening there that you can give us a little bit more clarity as to what's going on there.

And, also, in terms of CapEx, we saw Cablevision report much lower CapEx to sales, and I'm wondering if that's something that is just seasonal? It's a one-quarter change? Or, is there really a shift here where Cablevision has made the network upgrades and is in a position now to start spending less?

Thank you.

Michel, as to Cablemas, it has to do with the cost of digitalization, specifically in that company. So, we're making more progress on that front. So, we're investing more.

On Cablevision Mexico, as you remember, we have [invested] more than $400 million in taking fiber to the nodes, and that was concluded last year. So, that's why we're -- if you see it in proportion to sales, CapEx will be lower, because of the huge investment we did in the past. And, basically, we finished taking fiber to the nodes in that whole project in Mexico City.

And, what about the other two Cable entities? Are you doing something similar with fiber to the node? And, when should we expect those projects to end?

Well, as I mentioned before, TVI -- this is cablevision in Monterrey -- is in that process, in process of finishing 100% of the digitalization of that network. And, we're doing that in other parts of the northeastern part of Mexico. So, that will continue.

And, Cablemas, we're going city by city, looking at which ones make more sense. So, it has to do with specific cities. So, that will -- in the case of Cablemas, it will take longer.

And, at this time, there are no further questions. Do you have any closing remarks?

Well, thank you very much for participating, and give us a call if you have some additional questions. Bye.

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