Good morning, everyone, and welcome to Grupo Televisa’s Third Quarter 2019 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today’s call and in the earnings release. I will now turn the call over to Mr.

Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir..

Salvi Folch, CEO of Cable; Alex Penna, CEO of Sky; Patricio Wills, Head of Televisa Estudios; and also Carlos Ferreiro, Antonio Lara, Corporate Vice Presidents of Finance and Administration respectively. We will take you through the highlights of our 2019 third quarter results. And following our opening remarks, we will answer all your questions.

As you will hear next, we hit a number of milestones during the quarter. For example, private sector advertising performed well even considering the difficult comparison related to the transmission of the World Cup last year.

In addition, we reached new viewership records with our production and transmission of a number of very successful shows this quarter. In Univision after the successful negotiation with Dish, our royalties are growing again. Also during the quarter, Sky resumed growth in video revenue generating units, or RGUs, and added 82,000 broadband RGUs.

Finally, cable continued to post double-digit growth and expanded its broadband market share. We’re happy with this progress, but we have a lot of work in front of us. Let me start by addressing our financial results for the third quarter.

Consolidated sales and operating segment income as reported grew by 3% and 4.4% respectively; however, excluding the non-recurring licensing of the broadcast and digital rights of the World Cup in Latin America, consolidated sales and operating segment income increased by 7.3% and 10.8% respectively.

These figures don’t take into account other factors, which make the comparison to last year more difficult such as the World Cup incremental advertising revenue that year nor the decline in government advertising this year. Now, we will address each of our core businesses in detail. I will turn it over to Salvi for a discussion of our Cable business..

Thank you, Alfonso. During the third quarter, revenue grew 14.7%, excluding the acquisition of Axtel, which took place during the fourth quarter last year. Top-line growth was also strong at 8.4%.

The strong organic growth was driven by our pricing strategy, promotions we have put in place to increase the speeds and reduce turn and the increase in our load factor. In addition, we now have stronger content talker at higher revenue per service, which includes our new unlimited bundle of Netflix and Blim priced at 670 pesos per month.

We are the first and only operator in Mexico offering an OTT bundle to our customers. Such package and the option to subscribe to start Acorn, HBO, Fox Premium, and Noggin among other content offering has allowed us to position ourselves as an aggregator of the most relevant content available in the market.

During the quarter, we added 126,000 RGUs, posting growth in voice and broadband services although, we experienced a marginal decline in the video RGUs. We have continued to gain market share in the markets where we operate and remain very optimistic about the ongoing increase in broadband penetration in Mexico and in the levels of data consumption.

For example, almost half of all our new customers are contracting at least 20 migs. It is very positive for us that they are moving from our lowest priced offers to peers with faster speeds. Also the amount of data used by our average customer continues to increase.

During the third quarter, this figure reached approximately 210 gigabits per month, a year-over-year increase of more than 20%. Transition to high speed data in Mexico is happening, just like it did in the U.S. some years ago. In this regard, we are several years behind the U.S. So the migration to higher-speed plans will continue over time.

We closed the quarter with 12.5 million RGUs, of which 4.7 million were broadband, 4.3 million were video and 3.5 million were voice RGUs. We are confident that we have a very competitive product and that we will be able to continue growing our market share in all our services.

Growing our enterprise business was 5.9% and was driven by higher revenues mainly in our private sector clients. Our market share in this business segment is low, and we see good growth opportunities in the future. Operating segment income posted a growth of 14.7%.

And we reached the margin of 42.4%, notwithstanding the additional cost of content related to our unlimited product..

Thank you, Salvi. Now let me turn it over to Alex Penna, CEO of Sky..

Thank you, Alfonso. During the third quarter, total revenues were marginally down by 1.3%. The decline is explained by the difficult comparison with last year given the disconnections that followed Sky’s transmission of all matches of the Soccer World Cup. On a sequential basis, however, video RGUs rose by 19,000.

This is a second consecutive quarter with video net additions after the disconnections earlier in the year. Sky has been able to resume growth in video customers by implementing a number of initiatives, including price alignments to competition, in some postpaid packages and attractive video and broadband double-play offers.

In terms of broadband customers, Sky the added 81,000 during the quarter, reaching above the 319,000 broadband RGUs. Sky operating segment income was lower by 6.6% when compared to last year. But the margin remained strong at 45%.

The drop was 250 basis points in the margin, when compared to last year, is explained by the increase of broadband RGUs with the lower margin than video, higher transmission costs and amortization of special events and higher marketing expense..

Thank you, Alex. Moving on to Content. Advertising fell year-over-year by 5.2% with government advertising down by approximately 40% this quarter. Private sector advertising however is marginally up by 1.3%, even including incremental advertising revenues from the transmission of the World Cup last year.

Excluding the effect of the Cup, core private sector advertising revenue rose by 5.1%, which resulted from the reactivation of the campaigns by many of our customers and their growing confidence in our Content. In addition, we had solid performance in the other two sources of Content revenue.

Licensing and Syndication, which includes the Univision royalties, was up by 6.8% and Network Subscription revenue was up by 4.7%. The acceleration in this line items is mainly explained by repackaging of some of our networks.

Excluding the income last year, from the licensing of the World Cup rights in Latin America, Content revenue and operating segment income were practically flat year-over-year. Year-to-date, Content costs and expenses are down by MXN854 million and in line with our goal for a full year reduction of around MXN1 billion.

Now in terms of our upfront negotiation this year, we are implementing a number of changes in order to monetize our inventory more effectively. For many years, the negotiation of the upfront and the negotiation of our fourth quarter advertising sales happened simultaneously.

This overlapping the negotiations has undermined our ability to price our upfront inventory property and close a strong fourth quarter, which is the most important quarter of the year for us.

For that reason, among the changes we’re implementing, we will extend the conclusion of the negotiations of the upfront for the first few months of the coming year. We’re convinced that Televisa has the Content, the audiences and the reach that advertisers need to promote their products and services.

This change is incremental to all other changes we got recently put in place in our advertising sales operations. I will now turn it over to Patricio for a discussion of the progress we made during the quarter in our Content offering..

Thank you, Alfonso. In terms of Content offer, Televisa continued producing and does very successful chart. For example, during the quarter, we had a lot of success with the broadcast of our drama series, La Usurpadora. This series which concluded this month bought on television Mexico and on Univision in United States.

In Mexico, La Usurpadora adds us a record 5.6 rating points during the 9:30 PM time slot some 6.2 million viewers per episode over each 25 episodes, delivering the higher rating of any TV series in Mexico since September 2017.

In Televisa, digital platform, the first episode of Usurpadora, which is the highest number of views of any program during the third quarter. Year-to-date, it is a program which is the second highest number of views with a total cumulative of 4.2 million views from the date of this launch. In the U.S.

to Univision La usurpadora outperformed in Telemundo and English language shows on CBS, ABC, NBC and CW, during the 9:00 p.m. time slot. La usurpadora, it is the first series development, through the Dream Factory initiative which consistent with creating Televisa’s most iconic drama in less than 30 episodes.

Also our transmission of [indiscernible] averaged a record 7.4 rating points on prime time and we have average of 8.2 million viewers per episode over each its eight episodes. The final episode reached around 19.4 million people, being the top highest entertainment final episode since 2016.

The top 10 transmission of licensed content on Mexican television this year were produced and terminated by Televisa. In the USA, the top 10 shows were terminated by four different networks, NBC, CBS, ABC and Fox. Furthermore, the percentage of total population, all of our top 10 shows delivered another largest that the top 10 shows in the USA.

As an example, after adjusting for this size of population in each market, our transmission of the max single delivered 85% more viewers than faster transmission of show in the USA. Competition for viewers is intense and will remain volatile. This show is very successful, but we also have a number of shows that did not meet our expectations.

We are testing new shows like never before and this is allowing to reach the new record in terms of parts..

Thank you, Patricio. Moving on to Univision. Its operating metrics are looking better and we are enthusiastic about its prospects in 2020. For example, for the first time in four years, Univision’s most recent upfront grew by mid single-digits.

Also Univision’s flagship network finished as a number one Spanish-language network in 2018-2019 broadcast season, despite being dark on Dish for close to six months. In addition, the Univision network outdelivered at least one of the big four English-language networks, roughly half of the nights during the third quarter.

Also during the July suites, Univision aired 60 of the top 100 entertainment programs in prime time among U.S. Hispanics, regardless of language. Univision continues to be in the transmission of soccer matches. During July, the 2019 Gold Cup final outperformed last year’s soccer World Cup Final on Telemundo by 36%.

Finally, Univision hosted the September democratic presidential debate, beating the rating of the prior debate on Telemundo by 35%. Over the past two quarters, we have taken a number of measures to strengthen our balance sheet. We raised MXN 25 billion through two facilities. The first one for $750 million in 30-year term senior notes.

And also second, MXN 10 billion in the five-year term syndicated loan. With the proceeds, we prepaid our 2010, 2014 and 2015 local issues. As a result, we improved our debt profile by extending our average maturity by three years to 17.3 years and reduced our average cost of debt slightly, including currency hedges to approximately 6.6%.

In closing, we made good progress this quarter across all our businesses and we still have more to do. Our Content is performing really well and we will actively work to monetize it more effectively. Cable keeps expanding its broadband market share and we will focus on reaccelerating the pace of growth in net additions.

Sky has resumed its growth in video customers. And we are in progress of building a relevant scale in our double-play video and broadband package. We are very focused in achieving these goals. Now we are ready to take your questions..

[Operator Instructions] And our first question will come from the line of [indiscernible] from Itau. You may begin..

Hi, thank you, gentlemen. This is actually Arturo Langa. I have two questions, if I may. The first is regarding the functional separation of América Móvil, which I understand is expected to be concluded by March next year.

I was wondering if you could detail what are the opportunities you’re seeing there across your business lines? And my second question is regarding Content. I think the 5% increase in core advertising revenues is interesting.

I just wanted to confirm the [indiscernible] according the figures I am seeing are reaching ratings of close to 5 million or 6 million viewers prime time. This is more than double than the 2.5 million average you were doing maybe a year ago in some of your key shows.

And going forward shows like [indiscernible] so I was wondering what expectations you have there? And maybe what reading we could give into the future for ratings for open TV and how maybe you can monetize that? Thank you very much..

Hi Arturo, as to your first question, it has to do with Telmex as a function of separation. What I can say is that assuming that functional separation works, Sky could benefit from that by offering video – sorry, by offering voice and data services through Telmex’s infrastructure. It would not be limited to fix mobile to Red Compartida.

So Sky continues Telmex’s infrastructure for that purpose. Also our Cable operation could benefit by accessing the infrastructure necessary to offer services to much larger number of homes. The big assumption is whether the functional separation will work.

Unfortunately, Telmex has not complaint with its obligations under the constitution to give access to its network to other operators.

And Salvi, can you expand on this please?.

Yes, sure, Alfonso. But as you know, the overall idea of the access to the infrastructure of the preponderant operator is that the bundles or the resellers use the existing infrastructure to provide more competition in the market.

The European experience showed us that with the proper access to such infrastructure, the resellers from bundles are able to reach four years after it was enacted about 20% market share. Unfortunately, in our country it has not work. The number of bundles services so far is timing. I believe that there are many reasons why this is happening.

And the preponderant operation continues to undermine competition. They want to keep their dominant position. As an example – another example is, in order for us to be able to sell or to use the infrastructure, we have to use the same electronic management system that the preponderant operator uses. So we are on the same level-playing field.

However, Telmex is using a different system to meet their own request, and that works more efficiently. So just to give you an example, we can access the system. And it seems that there is no service available in a particular address due both to Telmex’s store and you can get the service in that particular address.

We have already filed more than 100 complaints against the anticompetitive practices. And the regulator has initiated sanctions perceiving in at least six of them.

For example, some of the things that the authorities have the trim is that Telmex has reached its obligation dragging properly contacting the clients of the competitors that are using their networks, sending invoices directly to the clients instead of sending the information to the concessioners themselves.

So it would go and sell to a particular client, we are the agent that its invoicing the clients and Telmex should not be contacting those clients directly. For another example is that they frequently give us incorrect information off the infrastructure to deny the service, which is a violation of the obligation of the resolution of preponderance.

This is very relevant, not only for selling services, but also for having access to some of their – for deploying our infrastructure. Telmex is replicating practices that we’re banned and severely punished in other jurisdictions, like in Europe.

Today and notwithstanding that the regulator has the term in the violations, but are affecting competition, there have been no sanctions get. So the functional separation, we expect that it could be something that would work, if we are treated exactly the same that Telmex or Telcel with their request..

And Arturo, to your second question, it has to do with the content. As Patricio reported, we’re very happy with the results our new shows in this quarter. For the first time, we aired La Usurpadora, as Patricio mentioned, and this is the first of a series of telenovelas, where we are recreating the most iconic dramas.

And we’re doing that in less than 30 episodes rather than the traditional novela, which lasted around 3.5 to 4 months. So the result of La Usurpadora has been amazing, both in Mexico and all platforms. And in the U.S.

I can mention that in Mexico, the ratings were great and we captured younger generations just on the digital platforms, La Usurpadora was the highest number of use of any program during the third quarter. So the success on digital platform was also there.

And on Univision La Usurpadora outperformed Telemundo and also English language shows on CBS, ABC, NBC during the 9:00 PM time slot. So, we’re very happy with the results. We will continue to follow that initiative and we’ll continue to recreate these iconic Telenovela’s and to produce them as series.

So we’re very happy with the result and what we’re seeing and we’ll continue to do that. As Patricio mentioned also, we had huge success with the Masked Singer. We basically had an audience of – an average audience of about 8 million viewers per episode over it’s eight episodes. So this was the most watched show on Mexican television by far.

And the audiences that we saw are great. So throughout our grid, we’re seeing that what we’re doing in terms of transforming our programming into series and new type of – new, new versions and new type of shows are having success and are working..

Perfect.

Thank you, Alfonso for taking my questions?.

Thank you. And our next question will come from the line of Rodrigo Villanueva from Merrill Lynch. You may begin..

Yes. Thank you. Good morning, Alfonso and team. I have a few questions if I may. The first one is related to pay TV prices in Mexico. I was wondering if you could share your thoughts with us, particularly on how they compare with global pay TV prices. And also if you still see room for pay TV prices to increase in Mexico, at least in line with inflation.

That would be my first question. Thank you..

Hola, Rodrigo. I’ll ask Salvi to answer the question..

Rodrigo, we believe that pay TV prices in Mexico are very competitive. If you see the starting point of our bundles it’s very cheap compared to other markets. As a matter of fact according to our recent Morgan Stanley study, the cost of pay TV in Mexico is the lowest of 10 Latin American counties.

Also, when we bundle our service with unlimited telephony and with broadband access if you compare the price of the bundle with other markets, I think, that we are very competitive, especially considering that a lot of the CapEx that is required on the customer premise equipment is a dollar denominated.

We are very sensitive on the macro environment and we are eager to help to increase the penetration of the different services on the Mexican market. Some of the price increases we make are basically in line with inflation due to increasing costs in labor or programming.

So I think that we will continue to focus on offering very attractive offers to our customers. And I believe that the room for providing additional services such, for example like the one that we are providing, giving access to our customers to Blim and to Netflix.

It’s very useful for our customers that we provide them a set-top box by which they can see the relevant content on their TV set. There are not that many smart TVs in the Mexican market and we help to allow them to use the content in their devices not withstanding if they are all the TV sets.

So we will continue to offer very attractive pricing in the different services that we have.

Understood, Salvi, thank you very much. My next question is related to advertising. I was wondering if you could share with us how would you expect advertising revenue to perform in the fourth quarter, particularly considering that it appears that last year the government was not very active already in the fourth quarter.

And also if you could please share your thoughts regarding potential ad campaigns from the public sector in the fourth quarter of 2019. Thank you..

Yes, well, you’re right Rodrigo. The conflict in the fourth quarter this year and the fourth quarter last year will be an easy one because last year it was the end of the Benadministration where basically they did not advertise. And then we had December when the López Obrador administration took over and there were no campaigns.

So they were very small amounts of money that came from the state and from other public entities. But the comp will be easy. We believe that from what we saw in the third quarter we’ll see a more active federal government and a more active local governments and public entities. So we believe that will reactivate their expenditure.

And we believe that all in all, throughout the year the decline will be 50% – around 50% of what used to be the total budgets that were assigned to us in terms of advertising..

Understood. That one was very clear. And one final question if I may. I was wondering if you could please elaborate on the potential to accelerate share buybacks in the open market look trades or even a tender offer.

What I mean here is, how much would you be willing to invest to buy back stock, and why now and not during the second quarter when the stock reached a 15 year low. Thank you..

Yes, very good question. We’re extremely frustrated because during the quarter there were certain events which unfortunately for us and for the shareholders, but under the advice of both our New York and Mexican legal counsel, we were precluded from doing any share buybacks. This was really unfortunate and as I mentioned, frustrating.

But we continue to see great value in our shares. And as we mentioned, we’re looking at alternatives. We’re looking at alternatives that would allow us to accelerate the repurchases.

Unfortunately the mechanisms that we have examined such as a tender offer via – for example, the Dutch auction from the regulatory perspective would have to happen both in Mexico and in the United States simultaneously. And surprising to us when we have explored this, this has never been done in Mexico by a Mexican company.

So the regulatory hurdles and this – from that perspective has become a headache, since it has never been done. So those are the type of mechanisms that we are actively – very actively exploring. And as I mentioned it was very unfortunate that we could not do them during the quarter. So in terms of money invested it’s very difficult to say.

We have a very strong balance sheet and we believe that the purchase of our own stock is very attractive. And you’ll be seeing us more active going forward through these type of mechanisms or through direct purchases..

Understood. Thank you very much, Alfonso..

Thank you. And our next question will come from the line of David Joyce from Evercore ISI. You may begin..

Thank you. Two questions please. First on the video losses would that be explained by some of the economic softness? Are those lower-ARPU video packages, the cost net declines, and then or if there’s another explanation that would be helpful.

And then secondly, on your new upfront mechanism, how should we think about that altering the balance of the upfront versus scatter proportion and that would we still expect all of the upfront deposits needed to made at some point in the first quarter. That thank you very much..

Thank you. David. I’ll ask Salvi to answer your first question..

Yes. I mean regarding the video losses that we had during the quarter, what I would say is that the economic environment has caused a temporarily slowdown in the pace of net additions for the industry and we are not the exception. As you are aware, we increased prices in line with inflation in September.

So some of our customers have been disconnected due to economic factors and it’s likely that such price increase had an impact on some of our customers. However, we are confident that the penetration of our video and broadband services, we continue to increase overtime.

We are strengthening our offer of – as I pointed out, including additional content, additional services, many of the disconnects that we had where single place of video and that’s why you see a decline. But we are confident that our offer is very strong and that we will not have disconnections like that in the coming quarters..

And after your second question, David, we’re going to see a dramatic change in the way in which we sell advertising. What we have seen, and I’m sure you also notice is that our selling CPMs at a very low price when compared to other parts of the world, especially in Latin America.

Today, we have the product; we have the audiences with our productions, our content, which has been very successful. We have the reach, which nobody can deliver, no digital platform in Mexico, nor anybody can deliver the reach that we can, especially through Las Estrellas our flagship.

And what we have realized through a detailed analysis is that the manner, in which we have been selling advertising for many years, which is the upfront plan.

We’re tying our hands and basically, it was taking leverage away from us, in the sense that it coincided with the fourth quarter, where we were trying to have a successful fourth quarter, which is very important for us cyclically.

And that coincidence of the fourth quarter and the negotiation of the upfront and the negotiation of the budget – advertising budgets for next year was creating issues in terms of taking the leverage away, because we wanted to close the fourth quarter with good results.

And we also wanted to think that money for the upfront and we were putting pressure on ourselves by trying to close everything at the same time by December. So now, we’re disassociating the post of the fourth quarter with the upfront. So, you’ll see ongoing negotiations during the month of January and February.

So, the pricing of the upfront will take place then, rather than trying to do everything at the same time in December. You will see an increase in terms of CPMs, because of what I mentioned if you compare them to other countries in Latin America, they are extremely low. So now, it’s the right time to do it. Of course, it has risks associated with this.

But we believe that we have the product audiences and the reach to be able to do it. the advertisers know that they’re paying low CPMs in Mexico, because they know how much, especially, the transnational companies know how much they’re paying in other parts of the world.

And they know that our product works in terms of positioning their products and their brands. So, I think we have to do it and we have to give value to our product and we have to change the way, in which we have been doing things. So, this is the right time and that’s what we’re going to do..

Great. Thank you very much..

Thank you. And our next question comes from the line of Fred Mendes from Bradesco. You may begin..

Good morning everyone. Thanks for the call. I have two questions as well. I mean the first one, if I you can just go back to the advertising revenue.

The media results, especially on the private segment, I mean there was a significant change of course, positive versus the second Q you’re growing 5% adjusted, last Q you’re dropping 5% adjusted for the World Cup impact. So just trying to understand what really changed that, it’s only the impact of La Usurpadora or if there is something else to it.

And of course, how you expect that to continue in 2020 and any follow-up? The second question, looking at the cable segment, again very strong performance, but you know I guess your main competitor has mentioned, you guys see more on fiber now.

So, if you are seeing stronger competition in the cable segment, especially, in Mexico City or the competition is coming mainly from price and not so much in terms of quality yet. Thank you..

Yes. Thanks for your question Fred.

Yes, I think the increase in terms of private sector advertising had to do with what you mentioned the products are working, not only Usurpadora, but if you look at the programming grid most of the shows are working, but also we believe that the sentiment as to Mexico is better, I think it’s important to look at advertising revenue on an annualized basis rather than on a quarterly year-over-year basis, what happened this year is that many of our clients did not use their advertising money or their deposits in the first half of the year.

So it was back loaded and they started to advertise more heavily during the third quarter and we expect that to continue during the fourth quarter.

So in talking to our largest clients we believe that they’re being more optimistic and so in many cases they are launching more active campaigns, they have launched more active campaigns in the third quarter and as I mentioned, they will continue in the fourth.

So in terms of – I think that the environment is better, the sentiment is better and that’s great for us. And I will ask Salvi to answer your question that has to do with Cable..

Well, I think that there’s no doubt that penetration of broadband will increase in Mexico over time. The need for faster speeds, for more data is going to happen, as it has happened in many other countries. As a matter of fact, Mexico has basically one of the lowest penetrations in the OECD and that’s why we are very optimistic.

And we think that with the networks that we have, we can provide great service for our customers. We’ve seen how the cable company in the U.S. have been able to not only to be very competitive, but to win market share especially using DOCSIS 3.1. So we have room for being very competitive. I would provoke, continues to be strong.

The speeds that people are requesting keep increasing as people have more devices on their phones, the number of gigs that are used by our customer base continue to increase, which is encouraging because that means that the need for broadband is going to grow over time.

However, the penetration is lower because it’s very linked to the economy, but we’re pretty sure that it’s temporary, this slowdown in the pace of net additions of broadband.

People need a lot of gigas and the mobile sector in Mexico, it’s not an option because it’s very expensive to use broadband data in mobile devices, right? There’s no one that can watch a Netflix or an OTT or Blim on their mobile device because basically they would run out of their prepaid plans.

Goldman Sachs recently made a report of how expensive it is and it’s more expensive that in the region to consume that data. Just to put it in context, I think that in Mexico, the average use on mobile devices is close to two gigs per month.

When you compare it to over 200 gigs on the fixed side, we welcome competition if there is more competition in markets, as you pointed out, like in Mexico City, well. If the industry is not growing, we will fight more for the existing customers.

But as the industry expands, our offer is very competitive and we have made the investments and we have the technology to be one of the best offers in the Mexican market. Our market share has consistently expanded and we only cover about 15 million homes out of the 33 million homes in the country.

So if we have an overall market share north of 24%, but if you consider the areas where we operate, it is in the region of about 38%. So we have a very competitive product and we are very confident that as penetration increases, we will be gaining many more customers..

Perfect, very clear. Thank you. Alfonso. Thank you, Salvi..

Thank you. And our next question comes from the line of Daniel Federle from Credit Suisse. You may begin..

Hi, good morning everyone. Thank you very much for taking my questions. The first one to you is on the advertising site. Just to understand a little bit more on the reasons behind increase in the private sector.

This is mostly new clients coming to Televisa or the existing clients that are spending more with the company and if that’s the case, if they are spending more because they are buying extra time or because of price increases? That’s the first question. And the second question on the cable side.

If the growth in the future, what is it expected to gain from, that is mostly from a network expansion or if it’s additional penetration in the existing footprint? Thank you very much..

Thank you, Daniel. As to your first question, it’s basically traditional clients, existing clients where they’re advertising expenditures or investments happen more in the third quarter and we’ll continue in the fourth quarter. So, basically as I mentioned we believe that the sentiment in Mexico is much better.

And this advertising client bought in the upfront mostly and they decided to advertise more in the third quarter and fourth quarters rather than in the first half of the year. They – some of those clients have bought additional campaign, so they have bought in the scatter market, but it’s mostly a traditional client. To your second questions Salvi..

Thanks, Daniel. Regarding the second question, I think the expansion will come from both the having more customers on the network that we already have, but we also continue to expand our network at the cities where we operate growth.

There is good opportunities to grow, I think we are doing a good job on increasing the loading factor and the prices that people – the packages that our customer starts subscribing to have higher speed, as I pointed out before and that helps us to improve revenues.

I think that we will all – we are having good success and we will continue to have good success over the coming years on selling the unlimited bundle, which includes Netflix and Blim, that will help us to grow, unfortunately, it has lower margin, so we’ll see good result on the top line, but it comes at a higher cost specialty.

Netflix, as you know has a lower margin than our traditional products, but I think that we will expand. If you look at the IFT studies of broadband penetration on the different places in the country, there are big opportunities in the areas that have even lower penetration. We are present in some of those markets.

So I think that it will come from both network expansion and a better use of – or a higher number of customers and our existing footprint..

Okay. Thank you very much..

Thank you. And I’m actually showing no further questions at this time. I would like to turn the call back to the speakers for closing remarks..

Well, I would like to thank everyone for joining us today. I think we have made great progress and we believe that we’ll be able to make further progress in the quarters to come. As always, feel free to contact us at anytime with any questions that you might have. Thank you..

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect..