Grupo Televisa SAB (TV) 2017 Q4 法說會逐字稿

Good morning, everyone, and welcome to Grupo Televisa's Fourth Quarter and Full Year 2017 Conference Call.

Before we begin, I'd 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, Jarred. Good morning, everyone, and thanks for joining us today. With me are the heads of our 3 core business segments: Isaac Lee, our Chief Content Officer; Alex Penna, CEO of Sky; and Salvi Folch, Interim CEO of Cable. And also Carlos Ferreiro and Antonio Lara, Corporate Vice Presidents of Finance and Administration, respectively.

I will walk you through the highlights of our 2017 results and our expectations for 2018. Following my opening remarks, they will join me in answering all your questions.

Now starting with our financial results for 2017. Consolidated revenues were down by 4.4% in the fourth quarter and by 2% for the year, and consolidated operating segment income was down by 7% in the fourth quarter and by 3.8% for the year. Without a doubt, 2017 was a disappointing year. The main drivers of this result were: first, in Content, we experienced the decline in advertising revenue even though ratings improved. We were unable to eliminate the disconnect between revenues and ratings and fixing this will remain one of Televisa's highest priorities in 2018. Our other business segment also contributed to the decline in consolidated results, mostly as a result of our publishing operation. Sky remained very resilient while maintaining strong margins. And our residential cable business showed a marked improvement operationally.

Now let me address each of our 3 core operations. Starting with Cable. This operation contributed last year with 34% of segment net sales and was the largest contributor of operating segment income reaching 37%. During 2017 and in spite of a number of challenges earlier in the year, our cable business posted top line growth of 3.6%. Growth in operating segment income was 6% and the margin reached 42.5%, the highest on record for a full year.

Operations wise, our Cable division showed ongoing improvement throughout 2017 quarter-after-quarter and in November, we surpassed the 10 million milestone in terms of revenue generating units or RGUs. Our Cable operation is now firing on all cylinders. Net adds in terms of RGUs during the fourth quarter at 241,000 were the highest of the last 6 quarters with both data and video customers growing at a very healthy pace. With all the steps taken during 2017, we have come out of the 2016 slowdown stronger. Our 5 cable companies are now mostly operated as a single fully integrated cable company. Our credit filters and improved service have resulted in a significant reduction in churn, and a large portion of our infrastructure has been upgraded.

Our opportunity and competitive position in the market is enviable. For example, we now have a technological advantage versus our main competitor in many of our markets. Low data penetration of about 52%, a growing demand for high-speed data among many households that still have a DSL service and a very competitive price. In the process of integrating and upgrading our Cable operations, we have been able to find efficiencies that have resulted in the expansion of our operating segment income margins to more than 42% from 38% just three years ago. As you can tell, the prospects of our residential or MSO business looks very promising while strong top line growth over the coming years while maintaining very healthy margins. We believe these margins are sustainable over the medium term. That being said, the result of our enterprise business, which provides telecommunication services to large institutions, government entities and other telecom participants fell short of our objectives. We are relaunching this operation in 2018, so it can contribute to growth.

2018 shall be another year of improving free cash flow as a result of growing customer base, together with lower CapEx after completion of substantially all of our network upgrades.

In sum, we remain very excited about the outlook for our Cable division and focused on creating value for Televisa shareholders as we move ahead with our plans.

Moving on to Sky. During 2017, it contributed with 23% of segment net sales and 27% of operating segment income. For the full year, it posted modest revenue growth of 1.2% and operating segment income growth of 2.1% with a margin of 45.5%. We closed 2017 with approximately 8 million subscribers. The growth in subscribers during the year was just about flat, but it followed a very solid growth of 742,000 subscribers in 2016 as a consequence of the analog shutdown.

In addition, the number of high-definition subscribers increased by 20% last year reaching close to 600,000 subscribers and the average revenue per customer grew by 6%. With the difficult comparison behind us, we now expect that revenue growth will resume in 2018, helped in part by further increases to the pricing of our packages. The price of Sky's prepaid packages remains very low when compared to other markets in the region even when adjusting for purchasing power.

In addition, Sky will be the only pay television platform in Mexico to offer all 64 games of the soccer World Cup, which will drive further growth. Sky's investment in exclusive sports content during 2018 such as the World Cup will result in the temporary step down in its operating segment income margins. Nevertheless, we see such investments as crucial to the company's competitive position and anticipate that Sky's margins will likely remain healthy during 2018 at around low to mid-40s. Lastly, Sky continues to explore offering voice and data services. It's just recently launched Blue Telecomm using local loop unbundling and in the second quarter, it will start offering Internet services through fixed wireless. We have big plans for Sky in this respect, but we will remain careful with our rollout as we continue running tests.

Moving on to Content. During 2017, it contributed with approximately 35% of segment net sales. Advertising now represents about 21% of consolidated sales, and in sharp contrast to about 36% just 6 years ago. We are much less dependent on advertising sales as we did in the past. For the full year, Content revenue dropped by 9.3% during the quarter and by 7.3% for the year. Operating segment income reached MXN 12.8 billion with a margin of 37.7%. As I mentioned before, advertising revenue declined sharply in 2017 and the fourth quarter was no exception. Similar to the first 3 quarters of the year, clients were generally absent from the scatter market during the fourth quarter.

Overall, our clients 2017 upfront investments were more than sufficient for them to meet their target eyeballs. So they saw little need to tap the scatter market last year. As a result, for the full year, total advertising revenues declined by 10.8%. On the other hand, audiences were strong overall in 2017, even though competition intensified quite a bit towards year-end. Prime time audiences on our flagship network were up 15% for the full year and 22% in the fourth quarter versus the prior year.

As we explained, throughout last year, higher ratings coupled with fixed prices on a per spot basis, limited our ability and flexibility and worked against us. This is precisely why we're changing how we sell our advertising.

Starting 2018, under the new management structure for our Content business, Bernardo and I have made it our priority to monetize the strong viewership of our Content property. This process has started with a very difficult negotiation of our upfront. In large part, it was difficult because those discussions included both the change in the pricing mechanism and the actual amount committed. In that respect, I am very happy to report that, first, 100% of our clients are now buying advertising based on ratings. And second, the total amount in upfront commitments was very strong. In total, more than MXN 16.4 billion have been committed in noncancelable television advertising for 2018. On an apples-to-apples basis, advertising customers -- customer deposits rose by 1.8%, and this includes several contracts that were concluded soon after year-end.

Also, we're extremely happy to report that we have a few new clients such as Amazon, Uber, MercadoLibre and Trivago. This proves that television advertising continues to be an important outlet even for big Internet companies. As you have seen from the most recent years, the upfront is not a predictor of the likely performance for the full year, but the results of the latest round of negotiations represent the strong vote of confidence in Televisa's ability to deliver solid audience consistently. While at this moment, we cannot provide advertising revenue guidance, we know that our scale is unmatched by our competition and we reach very desirable and diverse audiences with 4 free-to-air networks and 14 pay television networks. We are cautiously optimistic and we believe that with a proper pricing mechanism and once we stabilize it, this is a business that could go back to growing together with the economy. As you have seen, we have made significant progress in boosting ratings, evidenced by the double-digit growth on our flagship in 2017. This was accomplished even as we reduced costs and expenses during the year by approximately MXN 800 million.

There is no denying that the industry is becoming more competitive, and we need to invest in our content to deliver what audiences are demanding. In 2018 and starting from a lower base of 2017, we forecast that the percentage growth in content costs and expenses will be in the low teens. The increase will be driven primarily by 3 specific factors, 2 of which are onetime event-driven investments. These 3 factors are: first, we are investing in a number of transformational initiatives to strengthen our content and consolidate the recent improvement in ratings. For example, we launched recently the first ever television pilot season initiative to expand our Content pipeline by developing new original series by national and international independent producers. The first phase of the pilot program resulted in more than 100 television projects being submitted by 55 third party independent production companies.

Second, we are also investing in transmitting the soccer World Cup in the second and third quarters of the year. Of the 64 matches, about half of them will be transmitted on our free-to-air networks.

And third, our coverage of the elections this year will require an additional onetime investment. They will be the most important elections in Mexico's modern history. These elections comprise the presidential election, the renewal of both chambers of Congress, 9 governorships among others. We want to be the most balanced, trustworthy and reliable source of information for the Mexican public throughout this process. This anticipated increase in costs and expenses comes precisely as the Univision royalty rate goes up by 36% to approximately 16.5% of Univision's audiovisual revenue. Therefore, the royalty increase will support much of the 2018 investment in our Content division.

Moving on to CapEx, there will be $885 million during 2017. This is $600 million less than the prior year and $115 million less than our guidance for the year. For 2018, we expect that the amount in CapEx will be similar to that of 2017. The breakdown of our forecast for 2018 is approximately $550 million for our Cable business, $250 million for Sky and $150 million for our Content and other businesses.

In particular, in the case of the Cable business, CapEx as a percentage of revenue shall be in the high 20s during 2018, down from 55% in 2016. We continue to follow the path of U.S. cable when back in the early 2000s, their investments in rebuilding the networks was practically completed and cable company starting reaping the benefits of growing free cash flows.

Over the past few years, Televisa has taken specific steps to better extract value from its unique set of assets. Our industry continues to change at a fast pace, and we have to be one step ahead. So far, developing a leadership position in both Content and Distribution has been one of our primary competitive advantages. It has given us the scale to compete with global participants and the resources needed to fund our expansion in Cable and develop our Telecom infrastructure.

Currently, Bernardo and I are actively analyzing the advantages and disadvantages of holding our various assets under the same corporate structure. Throughout this exercise, we are watching carefully what other industry participants are doing globally and also considering the specific circumstances in Mexico. Rest assured, the main goal here is to maximize shareholder value. Along those lines, we'll also continue to actively explore the sale of our noncore operations. As a first step and as we reported last week, we have agreed to sell our 19% stake in Imagina in Spain for a total amount of approximately $355 million. This is a transaction that is subject to regulatory approval, but we expect it to close in the next few months. We have also shut down our publishing business in Argentina, which was recurrently losing money, and we will do the same with other nonperforming businesses.

In closing, 2018 will be a very important year for Televisa, as we continue to focus on increasing further our share of high-speed data in the country, resuming growth in Sky, stabilizing advertising revenue and consolidating our improvement in ratings. As in the past, we will continue to maintain a very strict control over cost and expenses and take all necessary steps both operationally and structurally to position Televisa for continued success over the long term.

Thank you for your attention. We are now ready to take your questions.

(Operator Instructions) And your first question comes from the line of David Joyce.

If you could please provide some more color on the advertising front. Last how much of your inventory was sold in the scatter market and was there any inventory was left unsold? And in this upfront round of negotiations where you've got 100% of your ad clients under the new sales mechanism, how much of the inventory was sold in this round of upfronts?.

David, well, as you saw, the fourth quarter was a very difficult quarter. It had to do with the manner in which we sold our advertising for that year and especially it had to do with the increase in terms of ratings especially on prime time ratings. I don't have the numbers that are in terms of inventory usage and especially that and what it had to do with scatter market. However, what I can tell you is that inventory was fairly low both in the third quarter and the fourth quarter. Now we're very excited about the new advertising plan. And as I mentioned, negotiations were pretty difficult because we were migrating, and we were able to migrate 100% of our clients to the new system. We believe that it's a system that, although where clients will have less flexibility, it will allow us to have that flexibility and to be able to use our inventory and deliver the ratings. Of course, now we're guaranteeing ratings as it happens in the U.S. and in most countries in Europe. So we're very excited because of our situation -- our current situation in terms of ratings, and we believe that 2018 will see a better year for us.

And if I could another question. On the Cable side, how much of the broadband or data subscriber growth is coming from increased market share versus just increased penetration or growth of the market?

I will ask Salvi to answer your question.

Well, it has come from both fronts. The penetration of broadband has increased over time. However, we continue to be -- out of the 35 countries in the OECD we continue to be the country with lowest penetration, reaching about 52% at year-end, growing from somewhere about 49%. So there was a slight growth there. Now taking market share away from the incumbent was also a relevant factor. If you see what they added in the year, it was less than 50,000 subscribers, while we added north of 350,000. So it was about penetration and taking market share. We now have about 22.5% market share of the overall industry. However, our homes passed are only 14 million out of 33 million in the country. So only covering about 42% of the country, I think that we -- that demonstrates that our product is very competitive.

Your next question comes from the line of Gregorio Tomassi.

Going back a little bit to advertising revenues outlook for 2018 and having heard you mentioning that the goal here is stabilizing advertising revenues. Isn't there a possibility that you're understating the chances of actually seeing some growth in advertising revenues next year? How do you interpret the 1.8% increase in upfront sales from a year, which was 2017, in which most of actual sales actually came from ad from upfront sales? And in the year in which you sound pretty confident that you will get ratings stronger than they were in 2017. Meaning, isn't it fair to assume that at least 1%, 1.8% is a slower for advertising revenue growth in 2018?

Gregorio, we're encouraged to see the upfront growing 1.8%, and we're also encouraged by the -- what I mentioned before, in the sense of now having the system in place and 100% of our clients using that system for buying advertising. However, we're being cautious. We would rather over-deliver than promise now. It all has to do with our ratings. We're doing necessary investments in our production of content. We will continue to do that. It's a year where we'll have the World Cup. So having the 64 games of the World Cup and basically having 32 on the over the-air there channels gives us an advantage, but we're being cautious about it. We believe that it will be a year where we will be able to stabilize the sales on upfront.

And if I may, considering that, let's say, 2016 was the year of increasing prices, 2017 has been the year of actually linking or leaving without the linkage between prices and ratings. And is there anything missing in the way you approach the advertising business in terms of contracting, client interaction, pricing structure that could affect 2018? Or can we consider 2018 as a year that is a first one or what should be the normal advertising revenue practice for the foreseeable future?

I think that 2018 should be the new normal. It should be the starting point. As I mentioned before, I think we have many advantages. We have an unduplicated reach. If you compare what we delivered on our flagship Channel 2, Las Estrellas every night on prime time, nobody can get there, nobody can get to those numbers. So I believe that it's a starting 2018 will be a starting point, and it will be the new base using the new system of sales.

Your next question comes from the line of Rodrigo Villanueva.

Alfonso, I was wondering if you could help us quantify the extra cost related to the World Cup till the coverage of the elections in Mexico. That will be my first question. And the second is if it is reasonable to assume severance expenses in 2018 and if so, could you please quantify them?

Sorry, Rodrigo, I couldn't hear the last part of your question.

Okay. So the first question is related to extra costs related to the World Cup transmission and the coverage of the elections in Mexico. I was wondering if you could help us quantify them? And the second one would be related to severance expenses. This has been very high in 2016 and 2017. I was wondering if we should expect additional severance expense in 2018? And if so, if you could help us quantify them as well?

Yes, to your first question, we're going to invest a total of around $150 million in Content this year. So that includes all the initiatives that have to do with the production of Content, channels both over-the-air channels and pay television channels. It also includes the World Cup and the coverage of election. So I can give you the total amount, which is $150 million. I would not like to or I don't have the detail here. If you want we can go over the detail in the call afterwards. And Carlos can we go over go the severance payment during 2017, please.

Sure. Regarding the other expense line, in the fourth quarter, approximately MXN 800 million were nonrecurring. This amount includes the closing of our publishing business in Argentina, severance payments for a number of employees and executives, and also the write-off of some Content assets. What we believe it will happen in 2018, severance payments will most likely continue in some form, we're to continue our restructuring of our main businesses. So there would be severance payments in 2018 as well. Too soon to tell what the amount or too soon to say and quantify those amounts, but that will continue going in 2018.

Your next question comes from the line of Daniel Federle.

We have being seeing some articles mentioning the plan of Televisa to increase the partnership with some international content providers like Netflix or Amazon. Could you just tell us what the company is planning in this front? That's my first question. And we saw the Supreme Court's decision from yesterday ruling in favor of Televisa. Could you please tell us how you see the next steps in this discussion about the dominance of Televisa in the pay-TV front?

Thank you for your question, Daniel. I would ask Isaac to answer your first question. But before that, I will answer your last question as to the dominance, determination of Televisa. This is a long story. As you may recall, in September 2016, the IFT decided that we did not have substantial power in the pay television the market and that we're considering the information that they have back then in September of 2016. Then in January 2017, which was last year, ordered the IFT to review its ruling limiting its analysis to a period that complex (inaudible) basically August of 2014. So as a result of that court order, on March 2017, IFETEL reversed its original decision and declared us as an economic agent with substantial power in the pay television market. As of August 2014, so it was the best possible decision that we have substantial power as of August 2014 and the decision was made in 2017. Of course, we have filed several motions, one that brought all the way up to the Supreme Court and now the first chamber of the Supreme Court unanimous vote decided on February 7th that IFETEL reverse of its original rule did not comply to the initial court order. We believe that one of the probable outcomes will be that IFETEL will now determine that we do not have substantial market power in paid television. We have not been officially notified of the Supreme Court decision. So we're waiting to see exactly what that was. And now back to your first question, Isaac?

Daniel, good morning. Our priority remains to focus on our broadcast networks and our 14 cable networks, more than anything else. And we are also doing everything that it's necessary to be fully aligned with Univision on content production. However, with the different window opportunities that we have and considering that the IT is very important to us, you can expect Televisa to partner with international players to produce premium content. As you can imagine, our capacity for marketing in Mexico is second to none and everyone wants to partner with us. So on a case-by-case basis and looking very carefully at what is best for our programming structure, you can see that happening.

I think this will be an exciting part of our business going forward. As Isaac was mentioning, we are the largest producer of content in Spanish in the world. And we have been very successful for many, many decades. And I believe in producing content for others, we will also be very successful.

Your next question comes from the line of Richard Dineen.

Just maybe firstly clarification on the earlier answer that I think Carlos gave on the other expense line. It MXN 800 million is the sale of Argentina and the impairments plus the severance. Assuming that severance will continue, is it possible to say what part of the MXN 800 million is Argentina in the asset write-downs? What's truly nonrecurring in that sense because it looks like that could be quite important on a sort of adjusted EBITDA basis? And then just secondly, if it's possible just with regards to the comment on potentially raising price of the Sky. In the past, that's been quite difficult, we've seen higher churn, lower recharges when you increased prices in the past. Just wondering if there's any reason why that might be the difference as that the World Cup is a stronger economy. So any color on that would be, see, too helpful?

Yes, we'll ask Carlos to answer your first question and give you the detail and the breakdown. And then Alex can take the second question.

Richard, about 70% of other expense line is coming from nonrecurring events. That's Argentina and the write-off of Content assets and the remaining 30% would be severance.

This is Alex. Basically, price increases by its own nature increase churn. Obviously, throughout 2017 where we experienced higher churn on our prepaid product as a result of the price increases we carried out in December of the previous year and January of 2017. This year, 2018, we also carried out another price increase in all our programming packages. But basically -- the average -- weighted average was above 4%. We expect that we will help us with the growth of the top line throughout this year, but -- and we also consider that the effect of the World Cup will help us throughout this year in terms of containing the increase in churn. So the World Cup definitely will help us in that aspect.

I mean, Richard, what I can say is that, of course, we will be rational with any changes in our prices. It all has to do with the economy and how are the economy, in general, is doing. So of course, we would always try to at least grow prices with inflation. But we'll have to be very careful as to appropriate time in doing that. It's important also to mention that we believe that pay television and especially the Sky prices are very affordable in Mexico and our packages -- our pay television packages are very robust. It's also important to mention that our prepaid packages through Sky are one of the lowest priced in Latin America.

Your next question comes from the line of Soomit Datta.

Two or three questions, please. First of all, just to go back to the comment you made about evaluating assets, looking at whether assets should all be under the same corporate structure. And I mean, maybe you could elaborate a little bit more here. I guess, the principal is do you think some of these assets are being undervalued by the market or potentially you think there are synergies to be gained from shuffling things around a bit. You can kind of -- sort of going to a little bit more detail about what is being considered here potentially spinning off cable or sale of DTH anything more here would be very helpful? And then secondly, on Blue Telecomm please, looks to be kind of acceleration of the initiative here. And how should we think about this business going forward and being part of Sky? When might you look to extend the business into triple-play service? And if I could just finally, I don't know, I was interested to hear you talking about a fixed wireless service as well in addition to the unbundling model, could -- what exactly sort of thinking about here? And that would be great.

Soomit, yes, as to your first question, we're considering all types of scenarios. We are not ready to share any specifics at this moment, but we are analyzing all these carefully and thoroughly. They are big decisions. And this is basically whether it's good for Televisa, but most importantly, good to generate value for our shareholders to keep all assets under the same umbrella or to create separate public vehicles. As I mentioned, we're looking in deeper global peers are doing. And even though we now live in a world where media and telecommunications continue to converge from the point of view of customers, there does not seem to be a consensus among our peers, among international telecommunications and media companies in terms of the right business mix. For example, we have seen what our partner AT&T is doing in buying Time Warner, Comcast is maintaining itself as an integrated company with cable and the production of content and over-the-air television signals, et cetera. Comcast is very similar to Televisa in the sense that -- I mean, we're the largest cable supplier, and we are also one of the largest -- in our case one of the largest producer of content. So we are an integrated company. But on the other side, for example, Fox is selling a material part of its assets. So we are looking into this. And as I mentioned, basically, there is no consensus, but for us exploring carefully means that we have to evaluate all the merits of different structures. And also, we are considering the particular circumstances in Mexico. We are also considering the regulatory and competitive environment in our country. So in general, all this analysis that we are making involves and has the main purpose of creating shareholder value.

Maybe just to jump in quickly. I know it's early days, is there anything so for you concluded about Mexico, which is materially different than the U.S., which, I guess, is the main comparison here. Is there anything which you sort of flag as being quite different, which will help shape your thinking?

We have not identified anything that particular about Mexico when compared to other markets.

And then -- sorry, on Blue Telecomm.

Yes, Alex will take that question.

Regards to the Blue Telecomm that we just launched. We launched it as you know, following the friends and family phase that we carried out in the second half of last year. We recently launched our voice and data services under the brand name of Blue Telecomm, and we are starting with focusing on the resale of Telmex products till we have ready our unbundling of the local loop and able to sell directly our own products. We continue facing a number of obstacles from Telmex, both in sales, installation and the full operation of this line of business. But we continue filing our clients' complaints with the authority, the IFETEL. With regards to the launching of Internet services using the fixed wireless technology, we -- our plans is to launch this product in sometime in April. And we believe that this fixed wireless Internet product will be highly successful because of its flexibility in terms of areas coverage and no requirement for installation. It's a plug-in product. So we are very hopeful that this product will be very successful for us.

What frequency or what spectrum ends are you using, please?

We are going to be using the existing network of cellular company, and we are also having conversations with -- conversation with this new shared network that is going to be available in Mexico.

Your next question comes from the line of Andre Baggio.

Can you clarify on the specific network revenues. Was there a price increase in the fourth quarter with the money that Televisa Content division charged to the Sky cable and other operators on a per user basis?

Yes, you mean subscriber revenue -- I mean, basically, the pay television networks?

Yes.

Yes, it has to do mostly with the fact that basically we repackage our pay television networks and now they include different content rights and that resulted in higher overall price.

Perfect. And second is that, I'm just quickly doing some math, but it seems to me that if you add $150 million in cost to the Content division, it more than offset that gain that you could have with the royalties. So are you prepared to have lower margins in the Content division in the year versus what you had in '17?

Yes, well, of course, this year, we'll have the royalty stream coming in from Univision as we were mentioning, and then we'll have these events that are nonrecurring. So it will all depend on the performance of our advertising sales business. As I mentioned, we had a pretty solid upfront where the basic accomplishment was to bring all our customers -- 100% of our customers to the new system, to a system where we are selling GRPs -- guaranteed GRPs and the new pricing mechanism. So it will all depend on the performance of the sales business. But, of course, the additional costs, 2 of which are nonrecurrent, those are the World Cup and the coverage of the elections offset by the increase in terms of the royalty streaming we are receiving from Univision.

Your next question comes from the line of Alejandro Gallostra.

I would like to go back to the Blue Telecomm discussion. And my first question is, again, for Alex. For instance -- you did well, the launch of fixed wireless broadband in April, for that service you will be using your own infrastructure as well as potentially other infrastructure. So you will not be using the TELMEX infrastructure at all, is that correct?

Well, as I said, we are going to use the existing cellular network of one of the existing players in Mexico. to provide this fixed wireless service. And there is also the possibility of using different network in order to expand the position of this fixed wireless service.

Okay. Still on Blue Telecomm, what are the type of synergies that you expect to obtain between Sky and Blue Telecomm. Is there any -- what do you expect -- your expectations for the service and the type of margin that you expect to obtain in the long run? And if you will be reporting this service as part of the Sky and if you will also be reporting the number of RGUs used?

Yes. Well, [Alejandra], the first part of your question, Sky has a tremendous advantage because it has 8 million subscribers, it has national coverage in terms of installation forces, in terms of sales forces. So there are a lot of synergies in offering new product such as this tool that Alex was describing. One is the fixed wireless type of service, which -- I mean, where you plug in a device and you get the broadband. And the second is using basically the infrastructure that Telmex has through the local loop unbundling. So those are the 2 products that Sky is launching. And as to your second part of the question, Alex?

Well, in terms of -- as Alfonso just said, in terms of synergies, they are pretty clear. And in terms of economics for this line of business, we still are fine-tuning the business plan. But if anything, it is clear to us that this product is more than allowing Sky to get into the triple play field, it's going to result in a very important retention to our existing line of business and subscribers of video.

Yes. We're -- basically, we are trying to do what Sky did in the United Kingdom where it has a very large and substantial presence on the broadband-type market. And, I mean, using as a base the 8 million subscribers that we already have and the national infrastructure that is in place. So I think the synergies are tremendous. If the local loop unbundling works, then I think -- and if the new product that is, as I mentioned, plug-in product, which is very easy to -- I mean, you buy it and basically you plug it in and use it, those are going to be very good products for Sky.

thank you very much so if I understood it correctly,, and once you're sure that this product works, would you plan to offer triple-play services to find the customers in a sense that few customers, which obtained the -- not only the Blue Telecomm services but also the SKY service would get an additional advantage for doing that because this is something that you can only do not bundle so that customers do not benefit from this triple play offer. Is it something that you would be considering in future if that actually works, is that correct?

Yes, definitely. So -- and right now what we are doing is offering the packages of voice and data, not including video. But down the road, we may package the 3 services together and price and benefits advantage to our subscribers.

And would you plan to report these figures and these performance as part of the Sky or separately? And do you plan to also report the number of RGUs? And finally, any color on the margin that you'd expect for this operations would be very helpful?

Yes, so the numbers of this new line of businesses are going to be consolidated and reported within Sky numbers. And with regards to our margins, despite the fact, we cannot provide forward guidance, but we expect the margins, as stated by Alfonso earlier, throughout this year to be between low 40s and mid-40s, and we'll continue being in very healthy this margins of Sky going forward.

I'll turn the call back over to the presenters.

Thank you, Jared. Thanks, everyone, for joining us today. If you have any questions, please reach out to us. We look forward to speaking with you in the next quarter.

This does conclude today's conference call. You may now disconnect.