TLEVISACPO.MX

3-Year Telecom Turnaround Accomplishments

• Successfully implemented a value-focused customer strategy for Cable, growing the Internet subscriber base sequentially for 5 consecutive quarters and maintaining churn below 2% for 5 quarters, with the lowest churn in 10 quarters in Q2 2026
• Achieved a turning point in Cable revenue growth: first half 2026 residential and enterprise revenue of MXN 23.7 billion grew 2.6% year-on-year, ending a multi-year trend of declining revenue
• Delivered significant OpEx efficiencies and Izzi-Sky integration synergies: annual OpEx is MXN 34.5 billion, 18.4% lower than 3 years prior despite 14.7% cumulative inflation. Reduced headcount from ~34,000 to ~25,000, cut programming costs by ~20%, and expanded the annual consolidated operating segment income margin by 260 basis points to 40.7%
• Exceeded progress on the full FTTH network upgrade: 18 months after launching the upgrade, 12 million of 20 million total homes have been passed with FTTH (60% of the total footprint as of Q2 2026), up from 22.5% at the end of 2024
• Maintained disciplined CapEx focused on free cash flow: average annual CapEx is MXN 11.3 billion, 36.5% lower than the 2-year pre-turnaround average, with an aggregate CapEx-to-sales ratio of 18.5% down from 25.8% previously
• Cut corporate expenses by ~65% to an annual run rate of ~MXN 400 million via functional integration with telecom operations
• Delivered strong cumulative free cash flow of MXN 16.4 billion over 3 years (~$300 million annually), reducing the leverage ratio from 2.4x EBITDA to 1.6x EBITDA

Q2 2026 Operational Highlights

• Cable: Broadband net adds were 9,400 (soft due to an April price increase, heightened competitor promotions, and an early rainy season), but 4-quarter rolling net adds totaled over 80,000, meeting internal annual targets. Video lost 31,000 subscribers (an improvement from the 4-quarter average of 38,000). Mobile net adds were a solid 72,000, slowed partially by a new Mexican regulation requiring mandatory photo ID registration for all mobile lines (Televisa is well positioned as all new users are postpaid with automatic registration)
• Sky: Lost 279,000 revenue-generating units (mostly inactive prepaid subscribers), an improvement from the 4-quarter average of 326,000 disconnections, partially due to FIFA World Cup demand. The pace of revenue decline slowed to 20.3% year-on-year from 24.6% in Q1 2026
• TelevisaUnivision: The FIFA World Cup drove exceptional results in Mexico, delivering 415 million total reach across 79 matches and driving strong multi-platform growth. ViX, the exclusive streaming home of the tournament, posted record subscription revenue and the highest quarterly subscriber additions in its history

• The full FTTH network upgrade remains on track to be completed by the end of the second quarter of 2027, with 8 million additional homes to be upgraded over the next 12 months
• TelevisaUnivision full year 2026 CapEx is expected to remain consistent with 2025 full year levels
• Management expects third quarter 2026 U.S. advertising trends to remain broadly consistent with Q2 2026, pressured by ongoing macroeconomic headwinds and a competitive sports programming slate. Continued World Cup momentum in Mexico/Latin America and fourth quarter U.S. political advertising are expected to partially offset these U.S. headwinds in the second half of 2026
• Management expects additional incremental margin expansion from ongoing operational efficiency improvements at the combined Cable/Sky business

1. Cable and Sky (Telecom): Combined segment revenue was MXN 14.3 billion, a 3% year-on-year decline. Operating segment income was MXN 6 billion, a 5% year-on-year increase, with an operating margin of 41.8% (up 310 basis points year-on-year). Within the segment: Residential Cable operations posted net revenue of MXN 10.7 billion, up 1.8% year-on-year. Enterprise Cable operations posted net revenue of MXN 1 billion, up 0.8% year-on-year. Sky reported revenue of MXN 2.5 billion, down 20.3% year-on-year. Second quarter total CapEx for the segment was MXN 3.6 billion, equal to 25.3% of sales. Operating cash flow (EBITDA minus CapEx) was MXN 2.4 billion, equal to 16.6% of sales.

2. TelevisaUnivision: Total revenue was $1.3 billion, up 10% year-on-year. Mexico revenue grew 53% year-on-year to $605 million, while U.S. revenue fell 11% to $722 million. Consolidated advertising revenue decreased 9% year-on-year (U.S. advertising fell 29%, Mexico advertising rose 23%). Consolidated subscription and licensing revenue increased 40% year-on-year (U.S. grew 8%, Mexico grew 157%). Adjusted EBITDA was $388 million, a 3% year-on-year decline. Second quarter CapEx was $36 million.

• Heightened competitor activity targeting low-ARPU entry-level broadband subscribers has increased front-end churn and pressured broadband gross adds in the quarter
• The new Mexican mandatory mobile line photo ID registration regulation has caused a generalized temporary slowdown in the Mexican mobile market
• Continued subscriber erosion at Sky driven by fiber adoption and OTT service competition is an ongoing trend
• U.S. advertising markets face ongoing cyclical softness that has pressured TelevisaUnivision's U.S. revenue
• There is uncertainty around long-term AI infrastructure costs, though management has mitigated this via an internal infrastructure model

Q: What is Grupo Televisa's approach to potential telecom market consolidation, including whether it will pursue deals alone or with partners, what ownership stake it will target, and what leverage level it finds acceptable? / A: Management notes it has long supported telecom industry consolidation and regularly evaluates strategic opportunities that strengthen competitiveness and create shareholder value. All decisions around partnering, stake size, and acceptable leverage are dependent on the specific opportunity, cash flow profile of the target, and projected deleveraging path. Management adds that the company's current leverage is below 2x EBITDA, creating a strong balance sheet to pursue potential opportunities. (417 characters)

Q: How much additional synergy is left from the Izzi and Sky integration, and can management expand on current competitive dynamics in broadband? / A: While the core integration of Izzi and Sky is mostly complete, management still sees ongoing opportunities for efficiency improvements driven by new technology, with room for further margin expansion over time. Regarding competition, competitors are aggressively targeting low-ARPU, entry-level subscribers with deep discounts, which leads to higher churn and lower investment payback. Televisa intentionally avoids this segment, focusing on higher-value customers that deliver stable long-term cash flow, aligning with its core strategy. (512 characters)

Q: What is the impact of Starlink on Grupo Televisa's business, and would the company monetize its TelevisaUnivision stake to fund telecom M&A? / A: Management does not see Starlink as a near-term mass market threat, and has an active profitable partnership with Starlink: using it as a complementary solution for B2B corporate clients, and as a complementary offering for underserved B2C areas where Televisa has not yet deployed fiber. Management reaffirmed that its core strategic priority for TelevisaUnivision is growing the ViX streaming platform, which saw extremely strong growth from the World Cup, so it has no plan to monetize its stake. (498 characters)

Q: What operational AI benefits does management expect, and is there concern around rising AI token costs? / A: At TelevisaUnivision, AI is already driving major efficiencies in content production (including set design, special effects, and dubbing) and also enables new revenue streams by allowing efficient localization of content to new global markets. At Izzi, AI is already embedded in core processes from sales to collections. To mitigate token cost volatility and data leakage risks, Izzi hosts its AI infrastructure internally, allowing for precise cost management. (442 characters)