Grupo Televisa SAB (TV) 2014 Q4 法說會逐字稿

Good morning everyone and welcome to the Grupo Televisa's Fourth Quarter and Full Year 2014 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, that we will discuss in today's call and in the earnings release.

I would now turn the call over to Mr. Alfonso de Angoitia, Executive Vice President of Grupo Televisa. Please go ahead, sir.

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

I will begin by taking you through the highlights of our fourth quarter and 2014 financial results. Then Salvi will discuss the operating results of our Content segment. After that, we'll be happy to take your questions.

For the full year, net sales increased to 8.6% to 80 billion pesos with revenue growing across all of our business segments and operating segment income increased to 8.1% reaching 32 billion pesos.

Now moving on to each of our businesses. Content revenues increased 6.7% during the fourth quarter to 11 billion pesos and by 3.1% for the full year to almost 35 billion pesos. Within our Content division advertising revenue increased 3.8% for the fourth quarter, reversing the negative result of the third quarter. For the full-year ad revenue by 2.4%.

Revenue in Network Subscription business increased by 21.5% in the fourth quarter as oppose to the drop reported in this line item during each of last four quarters.

We are back to showing organic growth, as we no longer have the unfavorable comparison that resulted from the most offer regulation. During the fourth quarter, we also benefited from a positive translation effect. For the full year, Network Subscription revenue decreased by 12.5%, which as explained before was a result of the must offer obligation.

Our Licensing and Syndication business increased by 16.5% during the quarter or by 15.1% for the full year.

The royalties from Univision, which accounted for the majority of this revenue line remained strong growing by 4.7% in the fourth quarter and by 15% during 2014.

In total for the year royalties reached $314 million. Our exports to the rest of the world and our international co-productions also performed well. Finally, our Licensing and Syndication business also benefited from a positive translation effect.

Operating segment income for our content division which comprises the three lines of business. I just mentioned, increased by 9.1% during the quarter and remained relatively flat for the full year reaching a margin of 44.6%. Excluding the negative impact of the must-offer regulation instead of a drop in margins by 140 basis points when compared to last year margins would have expanded by close to 70 basis points.

(inaudible) will go into further detail on the performance of our content business during 2014. Moving on to Sky during the fourth quarter sales increased by 7.4% after adding a total of 120,000 subscribers and for the full year by 8.7% to 17.5 billion pesos, as of year-end Sky reached 6.6 million pay television customers.

In terms of operating segment income fourth quarter growth was 14.4% and for the fourth quarter margin reached 45.5%. For the full year the margin was 46.9%, the highest in the last six years.

In our Cable and Telco segment in line with our strategy to expand cable presence, we concluded the acquisition of Cablecom in the second half of 2014 and bought Group AV also called Cablevision Red in January this year. We now have operations in many of the key cities throughout the country and are aggressively launching new video, voice, and data offerings. These offerings take advantage of both the change in regulation and many upgrades to infrastructure that we have made.

In this segment, fourth quarter sales increased 35.4% to 6.2 billion pesos. This was driven both by continued organic growth and by the consolidation of Cablecom, excluding Cablecom fourth quarter sales from our three cable operations and the sale increased by 12.8%.

Full year sales increased 22.2% to 21 billion pesos and excluding the consolidation of Cablecom by 14.2%. Organically during the year, both voice and data revenue generating units and RGUs grew close to 20% and video RGUs grew close to 4%. In total including Cablecom, which we started consolidating in September, during the quarter we added 44,000 video, 123,000 data in 80,000 voice RGUs.

Fourth quarter operating segment income increased 50.7% to 2.5 billion pesos and the margin reached 40.1%, excluding Cablecom fourth quarter operating segment income increased by 21.7%. Full year segment operating segment income increased 28.6% to 7.9 billion pesos and excluding Cablecom by 18.2%. The resulting margin of close to 38% and for 2014 is the highest in the last eight years.

In our other businesses segments fourth quarter sales decreased by 1.6% and for the full year increased by 1.6% reaching 8.2 billion pesos. The feature film distribution business gaming and radio performed well, while publishing continued to be challenging. For the full-year operating segment income reached 651 million pesos compared with 882 million pesos in 2012.

In terms of our capital expenditures during 2014, we invested $1.3 billion, including approximately $700 million for our Cable and Telco segment, approximately $390 million for Sky segment and approximately $180 million for our Content segment and other businesses.

As you can tell, the majority of our CapEx in our Cable and Telco segments. Our data to video penetration is only 68%, voice is even lower and our radio customers are just a fraction of our total homes passed. So we have a significant opportunity to grow and we'll continue to support this growth with improvements in our network and other service offerings. In terms of our net result for the year which declined by 30% and reached 5.4 billion pesos, let me highlight three important aspects that impacted this figure.

First, finance expenses net increased by over 5 billion pesos during the year, those 3.5 billion pesos I explained by a lower adjustment in the value of our interest in Univision, when compared to the adjustment made last year. An additional 1 billion pesos is explained by a favorable -- by the foreign exchange loss -- I'm sorry, on the net dollar liability position as a result of the depreciation of the peso.

Second, our other expense line reported a loss of close to 5 billion pesos, as a result of the sale of our 50% interest in this user sale.

And third, this year, we did not have the impact of an impairment charge and our investment in user sale which we did in 2013. This is partially compensated the negative impact of the two assets, I just mentioned.

Finally, I would like to inform you that yesterday, the Board approved our proposal for a dividend of $0.35 per CPO payable in May in line with our dividend policy, this proposal will be presented for approval to our annual shareholders' meeting.

In closing, in spite of a complicated 2014, we believe we posted solid results. Regulation took away a significant amount of revenue from us, we have to face the recognition of our loss in the sale of our mobile investments, we acquired two cable companies, our content business remained resilient and our distribution business continued to grow at a good pace. We started 2015 with a solid footing and focused on execution. We expect to continue reducing our dependence on that revenue producing top quality content pushing for further growth in Sky and Cable, seeking efficiencies among our main -- our Cable investments and protecting our balance sheet. We trust that we'll have a good year ahead of us. Thank you for your attention and then I'll now turn the call over to Pepe.

Thank you, Alfonso. Good morning everyone and thank you for joining us. As Alfonso mentioned Content revenue increased 3.1% for the full year and 6.7% in the fourth quarter. Within our Content division advertising, our largest source of revenue grew 2.4% during this year. This relatively low growth was due to a weak economic environment. As you recall at the beginning of 2014, the Mexican economy was expected to grow close to 3.5% but only grew by 2.2%. Additionally, the fiscal reform created new taxes that had an impact on our customers advertising budgets.

Finally new regulation was implemented, restricting television advertising for high caloric foods and beverages doing certain time slots of the day. Despite these challenges, our advertising sales force went to extreme efforts during the fourth quarter, and was able to grow advertising revenues by 3.8%. Our free toward channels continue to be the main source of advertising revenues. Nevertheless advertising on our pay-TV networks which now represent 6% of total advertising revenues posted another year of double-digit growth.

We are confident that the rising pay-TV penetration and the success of our pay-TV networks will allow us to continue developing the source of revenue in the future. During 2014, in spite of more competition for -- from pay-TV and other sources of 2010, viewership of our free toward networks posted a year-over-year increase of mid-single digits during the fourth quarter. Our flagship channel two performed even better posted an increase of high single digits. It was possible to the consistency in the success of our Content.

In terms of our Network Subscription business, as you know and as Alfonso mentioned this business watching per day was impacted by the implementation of the most offer regulation. As a result for the full year, the business declined 12.5%. Nevertheless, in the four quarters when we have an apples to apples comparison, we expect to 2013 Network Subscription revenues increased by 21.5%. These resulting from the continued growth of pay-TV penetration in Mexico from the success of our high definition and signals from higher sales of our networks in Latin America. And from a positive translation effect on revenues denominated in US dollars. We closed the year with 25 Pay-TV brands and close to 50 feets. As of year end we reached about 40 million homes in Mexico and internationally.

Moving on to our licensing and syndication business, revenue increased by 16.5% and 15.1% in fourth quarter 2014 on full year 2014 respectively. In the fourth quarter the growth was driven mainly by deploying royalties from Univision and also by a positive translation effect on revenues denominated in US dollars. For the full year, our licensing and syndication revenues benefited from an increase of almost 15% in royalties from Univision and also stronger exports of our shows and formats to the rest of the world.

In 2014, we implemented a strategy aimed at developing new entertainment formats that are attractive to different demos all around the world. So far, we have a catalog of more than 50 new formats, some of which have already been sold in several countries. with this strategy, we aim to continue increasing the source of revenue for (inaudible) and from our production expertise. 2014 was also a very important year for Univision, for example 2014 was the second consecutive year where Univision ranked as the number one network for the July sweeps ahead of ABC, CBS, NBC and Fox among adults 18 to 49 during primetime. More and more we have decisions we make decisions based on the overall impact on both Televisa and Univision. For example in 2014 for the first time in history we premiere one of our telenovelas in the Univision network before launching in launching it in Mexico. We truly believe that synergies is between Televisa and Univision will continue to render excellent results.

Next to the discipline with which we run our content business and in spite of the difficult market environment in 2014 we reached an operating segment income margin of 44.6%, above our margin guidance of 44%.

In closing, as you know 2014 was not an easy year in many fronts but thanks to our diversified strategy, we were still able to deliver positive revenue growth for our content business. In the last few years, we have faced many macroeconomic, competitive, and regulatory challenges. But we have continued to build our business on the basis of our competitive advantages. On the one side the quantity, quality, consistency and efficacy of our content we produce and on the other the monetization of many platforms as possible including free-to-air, pay-TV, Digital in the US, Univision and then maybe on the markets internationally. What we'll continue working hard on developing the quarter, this competitive advantages. Thank you so much for your attention and now we are ready to take your questions.

(Operator Instructions) Your first question comes from the line of Richard Dineen with UBS.

Thanks very much. Good morning everyone. First question on advertising sales, I could speak what pleasantly surprised by the bounce back in the fourth quarter, you mentioned that this third quarter had some timing effects obviously, the new regulations. Do you also noticed maybe there was a sales execution issued. I'm just wondering if you can explain what you did differently this quarter, because -- you said it was no better. And specifically on macro we saw a pretty disastrous quarter from Genomma which is a consumer bell weather a big advertiser with Televisa. I'm just wondering if you can disclose what percentage to your ad sales is from Genomma and if you have any broader comments on macro and ad sales going forward, that would be great. Thank you.

What we've seen in the fourth quarter was basically they recoup, what happen in the third quarter because of the uncertainty economy. Now the fourth quarter as you know, we're always it has been the most important quarter of the year and we saw that the compression based on the great resource that we have in our audience of the seasonality has always been, like I said the most important quarter of the year. And we think that it was like I said the recuperation of that which that the clients needed that they did not used in the third quarter because of all the regulation changes.

Then to your second question Genomma is an important client of ours, I don't I mean we don't disclose the percentage of sales that we made to a specific client. But it is an important client.

But it's important to add also that we had a lower mortgage that we normally had of the finals of this soccer league in Mexico during that quarter also. So that definitely help to increase the ratings and of course their sales having again the biggest rates the year during the fourth quarter.

Okay. Pepe, thanks. Alfonso, thanks for the color. Just want one quick and second question, if I may. I'm just wondering if you can share any insights into the sudden resignation of the CFO, Andy Hobson at Univision. I think you've made some comments on the quarter's earnings call about and of that business in 12 to 18 months, which doesn't sound unreasonable. So I guess the market's concern is, are those two things connected and why would that be an exit of the CFO may be associated with those comments, any insight on that would be really helpful was well thank you guys?

Yes, thank you for your question Richard. I guess what I can say is that Univision decided to accept Andy's resignation and that's about it, that's what would be appropriate for me to comment on, but what I can tell you is that Univision is a great asset, it has a unique business model, has access to all our content, the Program License Agreement is a long-term agreement. And I believe Univision has very prospects for growth. So we do not believe that the change in the CFO should have an impact in the plans that we and our partners have for the asset. As to Andy's comments in their conference call, as you know, Univision is owned by Televisa and a group of private equity firms. And by nature of those firms and by the nature of its business model, they will most likely want to sell their ownership in Univision. Remember that they bought the company in 2006 so it has been a while. I believe that this will most likely happen through a public offering. It is difficult to tell when the deal would take place, but it is probable that it will happen in the next 12 to 18 months.

And I would like to also say that Televisa would be 100% supportive of an IPO.

Okay, that's, that's great, thank you very much gentlemen congratulatioms again on the quarter.

Thank you, Richard.

Andrew Campbell, Credit Suisse.

Yes, good morning gentlemen my question is on the guidance whether or not this year you'll be providing guidance as you've done in the past related to content, segment growth, margins, things of this nature?

Hi Andy. Yes I think that as you know, the majority of this line item is advertising revenue, which is highly dependent on the level of economic activity. So basically given the uncertain macroeconomic environment, at this moment, we do not think it's prudent to give giduence.

Okay. Might you be able to share any color on how the upfront season progressed?

Well as you can tell from our customer, our balance sheet the majority of which is advertising customer advances that line, that light item was down about 10% and we believe that this is a consequence of a certain economic conditions in Mexico. For that reason this current market will continue to increase, an important, a very important during 2015. But we know that, with no doubt the best offer of advertising to any client in Mexico. So we do offer of the multi-platform activities that we have already with the great resource of our ratings in broadcast and in pay and the growth that we have in our activities in Digital Media. We think that with the comp we know that the most important commercial offer to any client. So we'll be working in this current market to be able to keep the growth going.

Understood. Okay, thank you very much.

Thank you, Andy.

Our next question comes from line of Michel Morin with Morgan Stanley.

So, on Cable or I should say Telecom, it seems like you had very strong net ads on an organic basis in broadband and voice and obviously we know if the rebranding too easy during the quarter. So something if you can give us a little bit more color in terms of what kind of traction you've seen with the easy rebranding and what the plan is in terms of rolling that out beyond Mexico City, because my understanding was that it was just completely seeing initially in Mexico City. So what should we expect in terms of further momentum there going forward? that would be the first question.

And then secondly, just a follow-up on what was just said around the deposits down 10%. Pepe, how much of this is kind of difficult comparison versus the year ago World Cup. And also if you can quantify a little bit what you said around the soccer tournaments in Q4. How much of that really helped the Q4 number? Thank you.

Thank you, Michel. As to easy, I would say that I mean we launched that in November, basically in Mexico City. It's disruptive telecommunications offering. Basically its a double play offering, which we have simplified to the maximum extent possible. So it's an offering that includes $400 pesos per month. And that allows residential customers to unlimited calls to any number, fixed or mobile in Mexico and most parts of the world. So it's basically unlimited local calls, unlimited long distance calls; and this package also includes our data offering of 10 megs for speed. We launched that, as I mentioned in November, we believe it's a very compelling offer and a disruptive one. So the response has been very good. We need more time to make a fair assessment. How it's going to work out and the degree of success, because as I mentioned it's only Mexico City, we're going to roll it out throughout the country between this year and next one, so it's too early to say that we have seen good results up to now.

No, I would tell you that it is not a difficult comparison. I will not think that has anything to do with the World Cup. I think that has totally everything to do with the uncertainty of the economy of Mexico, the differentiation of I mean the compression of upfront 2013 and 2014.

And during the fourth quarter it's very hard to say how much was accounted to that, but I can tell you that we have basically all the finals of the soccer league that does not happen. So when you have those kind of events you have the possibility to get the rates higher as well as the amount of clients all want to be in that, as you know the ratings of that sport in Mexico are with no doubt the biggest one. As you know sports is a very attractive program for any client and when you have basically all of the games of the semi finals and the finals, you can rule different strategies of marketing, so I can tell you that it's very hard to specify the amount, but it was a very important part of that growth that compels for quarter against year-over-year quarters.

Okay. That's very helpful and Alfonso, if I can just follow-up on your answer on EZ, so the net adds, presumably, this is coming from your main competitor or are there really some people who do not have any service provider as of yet, who aer brand new to broadband?

I think it's both, Michel.

Okay, great. Thank you.

Gordon lee, BTG.

Hi, good morning, thanks for the call. Most of my questions have been answered. I just have one quick question on the Pay TV. So this applies to both the cable and telco and the sky platforms but ARPUs, which have been under pressure from various years seems to sort of stabilized in the last two, three quarters, and given the strong net ads that we're seeing the additional product offering to be given to EG etc. We get into a point where you think at some point, we might even start thinking about ARPU starting to rebound a little bit? Thank you

Hi Gordon, I think it all depends on the economy. As we start to grow more we will be able to increase those ARPU's. Basically as a result of price increase. Sky had slight increase in prices, but it was only in the respective to your service offerings. So a broad price increase that would drive ARPU increases I think depends on the economy.

And just one final follow up. And I know you're not providing any guidance now, but as far as CapEx should we expect CapEx level similar to the ones we saw in 2014 for the different units?

Yes. Thank you for the question. And Gordon, I think it's a very good one, more likely over the short to medium term, I would say that our CapEx will be higher than it was last year, primarily because we have two recent acquisitions in the Cable sector and of course, continued organic growth. So we cover a huge opportunity of converting the majority of the subscribers into -- in those two companies into double and triple play customers. So that is pretty significant and we believe it will generate a lot of value for Televisa and its shareholders. So it will require additional investment in the Cable plant of the two companies. We've already gone through that phase in many of our territories within our other cable operations and we have seen that this type of investments, has yielded and we'll continue to yield very attractive returns. So on the Sky front, we will continue to require capital in order to fund these growth. Most of Sky's CapEx is growth driven. So as we continue to see an accelerated growth of Sky will continue to see the CapEx going up.

Okay, that's very clear. Thank you very much.

Your next question comes from the line of John Tinker with Maxim.

Thank you. Could you just, you mention that you had your first telenovelas launched in the state before launching in Mexico. Could you and you're becoming more involved with Univision. Could you just discuss that a little more, and particularly in terms of as the changes in the states where the audience is becoming a lot more bilingual and bicultural and how do you see that working out. Thanks.

Well, yes, we're getting more involve, we have been doing this few years ago. And what we're trying to do is to look for efficiencies between both companies as well as the strategies, knowing that the competitive the environment in the US is a little higher than in Mexico, so the main reason of this decision was based on a slot in the United States that we need to get in more strong, I mean more stronger and that's why we made that decision. Although that's a problem that will be, that it's where it been in Mexico with great results showing some way what we know is that we have a very healthy network in Mexico and in the Unites States and sometimes it happens in that came in business sometimes you don't get the results that you are expecting one time slot, and sometimes clients demand those results and you cannot have a flop in the way, so you have to make a quick decision.

So, that's why we made that decision, and we will be making them knowing that, that will give value to the audience of Univision. Now, we think that there is a big, big market for the Spanish-speaking audience in the US, I mean there is a lot of bilingual activity also but we think that the product that we are offering in Spanish is unique. The results are really, really high, the reach that we get with our content in the U.S. is we're no doubt the leader with the big, big advantage. So, we think there's going to be a space for the multi, for the bilingual hispanics, as well as the Spanish speaker hispanics.

Now, also the bilingual hispanics watch Spanish language content. So, its not that, because they don't speak the language, they don't watch the language. We have seen that, we have done a lot of stories that even bilingual people that speaks English in their homes, third, fourth generation of hispanics watch the Spanish language contents. So, we think that our offer is unique like I said, our offer is very consistent always with good results and we have a great product to get a good chunk of the market in the United States.

Rodrigo Villanueva, Merrill Lynch.

Thank you. Good morning. I was wondering if growth (inaudible) that hasn't been quite strong over the last 12 months should continue to be that strong going forward and I would like to know if you could share with us the percentage of the contracts I believe that come from the Mexican government? That would be my first question, thank you.

Yeah, Hi Rodrigo, as you have seen, but Televisa had the very good results. They are becoming more and more competitive, and I think that will be sustainable I mean they will continue to grow and I don't have the percentage of their contracts that have come from the government. I think they have a good mix in terms of private sector and governmental contracts. But I don't have the mix yet.

Okay, thank you very much Alfonso. My second question is regarding advertising on free-to-air television by the (inaudible) Group. Apparently, they are already advertising with (Azteca) and I was wondering if you already have negotiations with them to potentially see them coming back to advertise with Televisa?

Well, group of Carso is not a customer of Televisa, but we will welcome them back as clients anytime.

Yes, as Pepe was saying we welcome any advertiser of that size and scale including group of Carso in particular.

But also companies like AT&T, which will start to advertise as well. And any other company that wants to invest in advertising with us I mean our business to sell advertising. So we're very happy to have that type of clients.

Understood. Thank you very much and my last question is related to CapEx. I was wondering if you could share with us how much of the cable CapEx goes through network expansion and upgrades and how much to set top boxes and also regarding your comment on Sky you mentioned potential acceleration on Sky's growth does it mean that we should see the net additions accelerating in 2015 compared to 2014? Thank you.

Yeah, well there already led to us to cable I guess most of the CapEx goes to its physical plant and networks, but I don't have the breakdown here. As to Sky of course, I mean that as we have seen it has had tremendous growth we expect that growth to be accelerated but accelerated at a floor price at pace and then the last years. Gross additions are likely to remain strong and as you have seen churn stayed relatively stable in line with industry standards. But the result of net additions although accelerated will be of lower pace of growth in the number of subscribers, we're following the trend of the last two years. Keep in mind that in 2014, we had the benefit of the World Cup, but we continue to believe that will see a very positive trend in the pick of our subscribers.

Excellent. Thank you very much.

Your next question comes from the line of Soomit Datta with NewStreet Research.

Yes, hi there two or three questions please. One on Univision can you give any thoughts at all on the incentive auction which is potentially coming up next year 12 to 18 months or so. How are you thinking about from the perspective of your ownership in Univision you support about that principle is anything you can just help us in terms of thinking about going forward. And secondly on the Cellular just interested in where you are in your latest thoughts on the cellular strategy. Have you had discussions with America mobile. in terms of (inaudible). Are you in any discussions, you can talk about Telefonica people have speculated about potentially pairing up there anything you can add on cellular strategy would be intersted and then the final question, just on Sky, the kind of diverging growth rates between Sky and Cable. Cable doing very well on an underlying basis, Sky growth I noticed sort of ticks down on every quarter and can you give any thoughts on why that momentum is slightly different, does that give you any pause thought in terms your relationship with AT&T in net assets? Thank you.

Hi Soomit, yes as to the possible IPO. As I mentioned Televisa would be 100% supportive of an IPO. As I also mentioned, it will most likely happen in the next 12 to 18 months, as to your second question has to do with MVNO in mobile, we have had discussions with many operators, we would not like to speculate as to specific discussions or a conversations, however and we're thinking about having a mobile strategy, which would be based on not investing in infrastructure, but using the networks of other companies. So we, will definitely have an mobile strategy, because we have the subscriber base, so it makes a lot of sense to offer mobility to those clients. However, we have been investing in the company in a cell company nor -- we’re investing in the networks purse, but we would be doing this through some type of agreement with a company that already has invested in networks. And as to Sky will once the AT&T's deal gets approved, they will become partners of ours. We welcome them as partners. We -- great companies, we admire them as telecommunications operators, so I think they will be a great addition to our Board and to our shareholding in that company.

So, as a follow-up -- so Univision. The question was more was not to do the IP or more to do with the incentive auction in the US. I wondered if you had any thoughts on that, And then we talk about a 600 megahertz frequency in supplying Univision, the number of markets.

Yeah. There's Soomit of course, we believe that it has a great value for Univision and we're in the process of determining come, how much of that value is and the uses for that spectrum.

Okay. Thank you.

Your next question comes from the line of Vera Rossi, Goldman Sachs.

Thank you. My question is on the Cable companies and pay-TV, if Televisa has the chance to increase the stake in the Cable companies that it doesn't own 100% or Sky, would you use this option to increase the stake of this compines? And my second question would be, what would be the maximum level of net debt to EBITDA ratio that Televisa would go with all these acquisitions potential acquisitions going forward?

Yeah, for the time being we're going to focus on operating those companies. And as I mentioned, taking advantage of the synergies in the cost reductions that we can experience throughout those operations. So we're focusing on that and not on new acquisitions. So we are going -- we want to improve the performance of the companies and will do many things with all those companies acting together. But as of now, we're not thinking about consolidating all those comparables minorities.

Okay. Thank you.

Your next question comes from the line of Sunil Rajgopal, HSBC.

Hi there. I just had a couple of questions. The first question is with regarding to the pay-TV investigation which is ongoing with the regulator. I wanted to check if you had any update or thoughts on that on what would be the possible outcomes? Would it be just the fines or the regulator would seek you to divest some of the assets or with the regulator proposals opening up of your cable network?

And then the second question is with regarding to the other expenses line. We saw a huge jump on this line year-on-year. I believe there might be some one-offs in this line, so can you please quantify that? And thirdly, with regarding to your mobile strategy, you are proposing to go towards a CapEx like model. So I just again trying to see if this has -- I mean, this shows that that probably there will be little interest in a strategic alliance with any other bigger mobile operator in the market? Thank you.

Yes.Thank you Sunil for your questions. There is an ongoing investigation (inaudible) in markets of video and audio visual services, telecommunications networks and also of voice, video and data services through the same telecommunications networks. I would not know or can speculate on so the potential outcome particular investigation. But what I would like to mention is that we have intensive competition in those market every one of our cable and satellite customers has at least one more pay television option to choose from and particularly referring to dish which has joined forces with America mobile as you know. Also our pay television offerings have a very low price are incredibly access, Sky is offering a package for a 169 pesos per month on a prepaid basis. I think it's one of the lowest in the world. So I believe that we are offering low prices packages priced at very low prices. And also, I mean we have competition all over Mexico and so that's what I can say about.

As to your second question, that has to do with other expenses, the increase of about 290 million pesos in that line item of other expenses when compared to the fourth quarter of last past year, had to do mostly with an impairment charge we took related to our publishing operations in Argentina.

And as to your third question that has to do with our mobile strategy. We haven't finished the strategy purse. We're in the middle of doing that. It will be CapEx light. We have learned our lesson in that field. And, however, as I mentioned, we have about 10 million subscribers and it makes a lot of sense to offer mobility to those subscribers but we have to find the right partner or the right company to do it through. So I think we will be able to share the strategy with you in the following quarters. Once it's finalized and once we have the right partner to do it with.

That will be a Q&A session for today's call, I will now turn the call back over to Mr. De Angoitia.

Well, thank you very much for participating in our call. And give us a call, if you have any additional questions. Goodbye.

Thank you for joining today's teleconference. You may now disconnect the lines.