Cablemas 4Q05 Net Revenue and Adjusted EBITDA Up 14.7% and 26.5% YoY

Cablemas 4Q05 Net Revenue and Adjusted EBITDA Up 14.7% and 26.5% YoY

MEXICO CITY, April 11 /PRNewswire/ -- Cablemas, S.A. de C.V., (Cablemas), the second largest cable television operator in Mexico based on number of subscribers and homes passed, today announced results for the three and twelve-month periods ending December 31, 2005.

Financial and Operational Highlights(1)
(in million Mexican Pesos)

4 Q 04 4 Q 05 % Chg. 2004 2005 %Chg.
Financial Highlights
Net revenue 385.7 442.3 14.7% 1,499.7 1,724.4 15.0%
Operating profit 41.8 84.3 101.9% 248.3 349.1 40.6%
Adjusted EBITDA(2) 132.7 167.8 26.5% 555.6 663.8 19.5%
Net income (4.0) (62.0) 1441.7% 105.6 78.3 -25.9%
Operating margin 10.8% 19.1% 830 bps 16.6% 20.2% +360 bps
Adjusted EBITDA
margin(2) 34.4% 37.9% +350 bps 37.0% 38.5% +150 bps
Net income margin -1.0% -14.0% -1300 bps 7.0% 4.5% -250 bps
Total Debt 977.3 1,874.4 91.8% 977.3 1,874.4 91.8%
Net Debt 925.5 1,105.7 19.5% 925.5 1,105.7 19.5%
Total Debt/ LTM Adj.
EBITDA(2) 1.76 2.82 1.76 2.82
Net Debt/ LTM Adj.
EBITDA(2) 1.67 1.67 1.67 1.67
EBITDA/ Net interest
expense 5.19 2.66 6.57 3.99

Operational Highlights
Homes passed 1,565,342 1,743,740 11.4% 1,565,342 1,743,740 11.4%
Cable Television
subscribers 481,871 596,998 23.9% 481,871 596,998 23.9%

High-speed internet
subscribers 63,792 114,088 78.8% 63,792 114,088 78.8%
IP Telephony lines -- 3,246 NA -- 3,246 NA

Cablemas, CEO Carlos M. Alvarez Figueroa commented: "Cablemas had another excellent quarter with increases in net revenue, operating profit and adjusted EBITDA. This was achieved despite the loss of revenue in the states of Quintana Roo and Yucatan resulting from Hurricane Wilma."

"We continue to make progress with rolling out services and increasing market penetration. In fact, in 4Q05 the number of cable television subscribers increased 23.9% YoY, while high-speed Internet subscribers increased 78.8% YoY. Furthermore, in November we began generating IP telephony revenues from our recently established joint venture with Axtel."

IMPACT OF HURRICANE WILMA ON 4Q05 AND FY05 RESULTS

On October 22-23, 2005 Hurricane Wilma passed over the Mexican states of Quintana Roo and Yucatan, in the southeast region of Mexico, where Cablemas has operations and network infrastructure in Cancun, Playa del Carmen, Cozumel and Isla Mujeres.

The hurricane caused extensive damage and flooding in the area, and, as a result, Cablemas' network was down and repairs were made during November and December. By December 31, 2005, 90.0% of its subscribers had been re-connected. Preliminary damages have been estimated to be approximately US$22.0 million. Of this amount, US$15.0 million has already been reimbursed by its insurer, US$2.4 million represents the insurance deductible and co-insurance cost, and the remaining US$4.6 million has not yet been paid, is still being reviewed by the company and its insurer and could be revised upwards.

FOURTH QUARTER 2005 CONSOLIDATED RESULTS

Net Revenues

Net revenues increased 14.7%, or Ps.56.6 million, during 4Q05 to Ps.442.3 million. Based on the impact that Hurricane Isidore, which hit the region in September 2002, had on Cablemas' revenues, Cablemas estimates that, had it not been for Hurricane Wilma, net revenues in 4Q05 would have been Ps.474.3 million, an increase of 23.0% YoY.

* Cable Television: The 8.0%, or Ps. 26.8 million, growth in cable
television revenues was driven by a 23.9% increase in the number of
subscribers, despite a 12.8% decline in average monthly cable television
revenues per subscriber (ARPU) to Ps.207.0. This decline in ARPU was
primarily the result of a 40.6% increase in Minibasic subscribers, who
pay lower monthly fees, while Basic subscribers increased only 18.9%.
Average monthly net churn rates for cable television fell to 1.8% for
4Q05 from 2.0% in 4Q04. Adjusting for the impact of Hurricane Wilma, as
previously described, cable television revenues for 4Q05 would have
increased by 16.7%, or Ps. 55.6 million, to Ps.389.4 million, with ARPU
down by 5.9%.

* High-Speed Internet: The 62.7%, or Ps. 24.7 million, rise in high-speed
Internet revenues resulted from a 78.8% increase in the number of
subscribers, partially offset by a 9.6% decline in high-speed Internet
ARPU to Ps.200.0. The decrease in ARPU was the result of an increase in
low price / low connection speed subscribers. Average monthly net churn
rates for high-speed internet fell to 3.2% for 4Q05 from 3.6% in 4Q04.
Adjusting for the impact of Hurricane Wilma, as previously described,
revenues for 4Q05 would have increased by 70.9%, or Ps. 27.9 million, to
Ps. 67.3 million, with ARPU down by 5.1%.

* IP Telephony: On April 28, 2005, Cablemas entered into a Joint Venture
agreement with Axtel S.A. de C.V. ("Axtel") to provide IP telephony
services, which began generating revenues in November 2005. IP telephony
revenues for the last two months of FY05 were Ps.5.5 million, or 1.3% of
total revenue. IP telephony ARPU for 4Q05 totaled Ps.1,138.0, of which
approximately 75.0% represented migration fees paid by Axtel to Cablemas
for new subscribers.

Table 1. Revenues by Service Offering
4 Q 04 4Q05 % Chg.
% of % of
Total Total
Revenue Revenue Revenue Revenue
Cable Television 333.8 86.5% 360.6 81.5% 8.0%
High-Speed Internet 39.4 10.2% 64.1 14.5% 62.7%
IP telephony 0.0 5.5 1.3% NA
Advertising 11.2 2.9% 11.4 2.6% 1.9%
Other(1) 1.3 0.3% 0.6 0.1% -53.6%
Total Net Revenue 385.7 100.0% 442.3 100.0% 14.7%

(1) Includes revenue relating to rental and sale of cable decoders and
charges relating to customer's change of residence.

Table 2. Number of Subscribers and Revenue per Service Offering
4Q04 4Q05
Number of Revenue % of Number of Revenue % of %Chg.
of Sub- (millions Total of Sub- (millions Total in Sub-
scribers of pesos) Revenue scribers of pesos) Revenue scribers
Minibasic(1) 98,125 $30.9 8.0% 137,995 $142.7 32.3% 40.6%
Basic(1)(2) 372,131 $250.6 65.0% 442,522 $1,114.5 252.0% 18.9%
Additional
packages
(1)(2) 74,325 $23.5 6.1% 75,699 $88.7 20.0% 1.8%
Hotel 11,615 $8.2 2.1% 16,481 $40.0 9.0% 41.9%
Total Cable
Television 481,871 $313.1 81.2% 596,998 $1,385.9 313.3% 23.9%
High-Speed
Internet 63,792 $39.4 10.2% 114,088 $234.0 52.9% 78.8%
IP Telephony
lines 0 $-- 3,246 $5.5 1.3% NA

(1) Figures do not include installation fees, advertising revenues and
other income.

(2) The number and percentage of Basic subscribers includes Basic,
Superbasic and Premium subscribers due to the fact that all Superbasic
and Premium subscribers must also be Basic subscribers.

Table 3. ARPUs and Churn Per Service Offering
4Q04 4Q05 % Chg.
Homes passed 1,565,342 1,743,740 11.4%
Cable Television
- Revenue 333.8 360.6 8.0%
- Subscribers 481,871 596,998 23.9%
- ARPU 237 207 -12.8%
- Avg. Monthly Churn 2.0% 1.8% -20 bps
High-Speed Internet
- Revenue 39.4 64.1 62.7%
- Subscribers 63,792 114,088 78.8%
- ARPU 221 200 -9.6%
- Avg. Monthly Churn 3.6% 3.2% -40 bps
Total ARPU 235.3 205.6 -12.6%
IP Telephony
- Revenue 0 5.5 NA
- Lines 0 3,246 NA
- ARPU 0 1,138 NA

Operating Profit

Operating profit for 4Q05 increased 101.9%, or Ps. 42.5 million, to Ps.84.3 million, driven by a 23.3% increase in gross profit and a 38.5%, or Ps. 11 million, decline in amortization and depreciation as a result of a change in accounting for goodwill (see "Amortization and Depreciation" below), partially offset by increases of 24.0% and 7.0% in selling expenses and administrative expenses, respectively.

Excluding the change in accounting for goodwill, operating profit would have increased by 64.0%, or Ps. 26.8 million, to Ps.68.6 million for 4Q05 and operating margin would have been 15.5%.

Table 4. Operating Profit
4Q04 4Q05
Million % of Million % of
Ps. Revenues Ps. Revenues % Chg.
Service revenues 385.7 100.0% 442.3 100.0% 14.7%
Cost of services 186.1 48.2% 196.1 44.3% 5.4%
Gross Profit 199.6 51.8% 246.2 55.7% 23.3%
SG&A 157.9 40.9% 161.9 36.6% 2.6%
- Selling 35.4 9.2% 43.9 9.9% 24.0%
- Administrative 93.8 24.3% 100.4 22.7% 7.0%
- Amortization and depreciation 28.6 7.4% 17.6 4.0% -38.5%
Total operating profit 41.8 10.8% 84.3 19.1% 101.9%

Cost of Services

Cost of Services for 4Q05 increased 5.4%, or Ps. 10.0 million, but declined to 44.3% of revenues from 48.2% in 4Q04. This was principally due to an 18.7% or Ps.11.8 million, decline in programming expenses, a 56.3%, or Ps.14.6 million, increase in salaries and maintenance expenses and a Ps.3.8 million, or 6.1%, increase in depreciation and amortization related to the network expansion. The lower programming expenses were associated with the negotiation of one-time volume discounts with Productora y Comercializadora de Television S.A. de C.V ("PCTV"), Cablemas' principal content provider; and lower content prices for Cablemas' Minibasic (Conecta) package.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (including depreciation and amortization) increased 2.6% during 4Q05 principally reflecting:

* Selling Expenses increased 24.0%, or Ps. 8.5 million, to Ps. 43.9
million, principally due to a 31.0% increase in the number of sales and
call center personnel as well as the hiring of salespeople for the IP
telephony business in Tijuana. The number of sales employees increased
from 595 at the end of 4Q04 to 816 at the end of 4Q05.

* Administrative Expenses increased 7.0%, or Ps. 6.6 million, to Ps. 100.4
million, but declined to 22.7% of service revenues in 4Q05 from 24.3% in
4Q04, reflecting economies of scales. Administrative expenses increased
principally due to an increase in office expenses of Ps 7.6 million, or
45.8%.

* Amortization and Depreciation declined 38.5%, or Ps.11.0 million, for
4Q05 reflecting a change in accounting for goodwill requiring that
goodwill be evaluated for impairment instead of amortization as of
January 1, 2005.

Adjusted EBITDA & Margin

Adjusted EBITDA for 4Q05 increased 26.5%, or Ps.35.1 million, to Ps.167.8 million, principally reflecting the improvement in operating income as discussed above. Similarly, the adjusted EBITDA margin increased 350 basis points to 37.9%.

The following table sets forth the reconciliation between net income to adjusted EBITDA:

Table 5. Adjusted EBITDA
4 Q 04 4 Q 05 % Chg.
Net income (loss) (4.0) (62.0) 1441.7%
Add (subtract):
Amortization and depreciation 90.8 83.5 -8.1%
Comprehensive financial results,
net 22.5 79.4 252.9%
Other (income) expense, net (6.0) 13.6 n/a
Special items 9.5 46.2 387.8%
Total income tax, asset tax and
employee profit sharing 7.1 13.8 95.5%
Effects from associated companies
and minority interest 12.8 (6.6) -151.7%

Adjusted EBITDA 132.7 167.8 26.5%

* Income Tax, Asset Tax and Employees Profit Sharing increased 95.5%, or
Ps.6.7 million to Ps.13.8 million for 4Q05 from Ps.7.1 in 4Q04,
principally due to higher non-deductible expenses and a lower positive
effect for changes in the income tax rate, partially offset by a smaller
increase in accruals for differed taxes assets as compared to 4Q04.

* Special Items increased 387.8%, or Ps.36.7 million, to Ps.36.7 million
for 4Q05 principally due to expenses related to the pre-payment of
Ps.25.0 million of bond debt and one-time special items of Ps.18.5
million resulting from the impact of Wilma Hurricane.

* Depreciation and Amortization declined 8.1%, or Ps.7.3 million, for 4Q05
to Ps.83.5 million, principally due to a change in accounting for
goodwill requiring that goodwill be evaluated for impairment instead of
amortization as of January 1, 2005.

* Other Expenses, Net were principally due to consulting expenses related
to a business acquisition for Ps.8.8 million.

* Effects from Associated Companies and Minority Interest (income) expense
were as follows:

Associated companies 4Q04 4Q05
PCTV (0.2) (10.3)
Cable y Comunicacion de Morelia
S.A. de C.V. 13.3 4.4
Dicasa S.A. de C.V. ( 0.1)
Miracle TV ( 0.1)
TOTAL 12.9 (6.0)

Comprehensive Financial Results, Net

Comprehensive Financial Results, Net, for 4Q05 increased 252.9%, or Ps.56.9 million, to an expense of Ps.79.4 million from an expense of Ps.22.5 million in 4Q04. This primarily reflected a Ps.37.3 million increase in interest expense resulting from a 92.0% increase in outstanding debt at the end of 4Q05 to Ps.1,874.4 million and from an increase of Ps.13.3 million in financial instruments resulting from currency forwards and a cross-currency swap entered to hedge Cablemas' recent US$175.0 million senior note offering.

The Ps.0.2 million loss from the monetary position principally reflected an accounting adjustment for inflationary accounting of deferred taxes as well as a lower rate of inflation of 1.6% in 4Q05 compared to 1.8% in 4Q04.

Table 6. Comprehensive Financial Results, Net
4 Q 04 4 Q 05 % Chg.
Interest income 4.3 4.0 -5.5%
Interest expense (29.8) (67.1) 124.9%
Financial instruments (13.3)
Foreign-exchange gain (loss), net (2.8) (2.8) 0.5%
Monetary position (loss) gain 5.9 (0.2) -104.2%
Comprehensive financial results, net (22.5) (79.4) 252.9%

Net Income

For 4Q05, Cablemas posted a Ps.62.0 million loss, compared to a Ps.4.0 million loss in 4Q04. This principally reflects increases of Ps.46.2 million in one-time special items and higher interest expenses.

FULL YEAR 2005 CONSOLIDATED RESULTS

Net Revenues

Net revenues increased 15.0%, or Ps. 224.7 million, during FY05 to Ps.1,724.4 million. Based on the impact that Hurricane Isidore, which hit the region in September 2002, had on Cablemas' revenues, Cablemas estimates that, had it not been for Hurricane Wilma, net revenues in FY05 would have been Ps.1,756.4 million, an increase of 17.1% YoY.

* Cable Television: The 11.7%, or Ps.150.1 million, growth in cable
television revenues was driven by a 23.9% increase in the number of
subscribers, despite an 8.3% decline in cable television ARPU to
Ps.222.0. This decline in ARPU was primarily the result of a 40.6%
increase in Minibasic subscribers, who pay lower monthly fees, while
Basic subscribers increased only 18.9%. Average monthly net churn rates
for cable television declined to 2.4% in FY05 from 2.5% in FY04.
Adjusting for the impact of Hurricane Wilma, as previously described,
cable television revenues for FY05 would have increased by 14.0%, or
Ps.179.0 million, to Ps.1,467.0 million, with ARPU down by 6.5%.

* High-Speed Internet: The 42.5%, or Ps.69.8 million, rise in high-speed
Internet revenues resulted from a 78.8% increase in the number of
subscribers, partially offset by a 16.8% decline in high-speed Internet
ARPU to Ps.219.0. The decrease in ARPU was the result of an increase in
low price/low connection speed subscribers. Average monthly net churn
rates for high speed internet increased slightly to 3.3%, up from 3.2%
for the prior year. Adjusting for the impact of Hurricane Wilma, as
described above, high speed internet revenues for FY05 would have
increased by 45.0% to Ps.237.0 million, with ARPU down by 15.7%.

* IP Telephony: IP telephony revenues for the last two months of FY05 were
Ps.5.5 million, or 0.3% of total annual revenue. IP telephony ARPU for
FY05 was Ps.1,138.0, of which around 75.0% represented migration fees
paid to Cablemas by Axtel for new subscribers.

Table 7. Revenues by Service Offering
2004 2005 % Chg.
% of % of
Total Total
Revenue Revenue Revenue Revenue
Cable Television 1288.0 85.9% 1438.1 83.4% 11.7%
High-Speed Internet 164.2 10.9% 234.0 13.6% 42.5%
IP telephony 0.0 5.5 0.3% NA
Advertising 41.0 2.7% 42.5 2.5% 3.7%
Other(1) 6.6 0.4% 4.3 0.2% -35.2%
Total Net Revenue 1499.7 100.0% 1724.4 100.0% 15.0%

(1) Includes revenue relating to rental and sale of cable decoders and
charges relating to customer's change of residence.

Table 8. Number of Subscribers and Revenue per Service Offering

2004 2005
Number of Revenue % of Number of Revenue % of %Chg.
of Sub- (millions Total of Sub- (millions Total in Sub-
scribers of pesos) Revenue scribers of pesos) Revenue scribers
Minibasic(1) 98,125 104.4 7.0% 137,995 142.72 8.3% 40.6%
Basic(1)(2) 372,131 993.1 66.2% 442,522 1,114 64.6% 18.9%
Additional
packages
(1)(2) 74,325 94.0 6.3% 75,699 89 5.1% 1.8%
Hotel 11,615 31.9 2.1% 16,481 40 2.3% 41.9%
Total Cable
Television 481,871 1,223.4 81.6% 596,998 1,385.9 80.4% 23.9%
High-Speed
Internet 63,792 164.2 10.9% 114,088 234.0 13.6% 78.8%
IP telephony
lines 0 0.0 3,246 5.5 0.3% NA

(1) Figures do not include installation fees, advertising revenues and
other income.

(2) The number and percentage of Basic subscribers includes Basic,
Superbasic and Premium subscribers due to the fact that all Superbasic
and Premium subscribers must also be Basic subscribers.

Table 9. ARPUs and Churn Per Service Offering
2004 2005 % Chg.
Homes passed 1,565,342 1,743,740 11.4%
Cable Television
- Revenue 1,288.0 1,438.1 11.7%
- Subscribers 481,871 596,998 23.9%
- ARPU 242 222 -8.3%
- Avg. Monthly Churn 2.5% 2.4% -10 bps
High-Speed Internet
- Revenue 164.2 234.0 42.5%
- Subscribers 63,792 114,088 78.8%
- ARPU 264 219 -16.8%
- Avg. Monthly Churn 3.2% 3.3% 3.1%
Total ARPU 244.6 221.8 -9.3%
IP Telephony
- Revenue 0 5.5 NA
- Lines 0 3,246 NA
- ARPU 0 1,138 NA

Operating Profit

Operating profit for FY05 increased 40.6%, or Ps.100.8 million, to Ps.349.1 million, principally as a result of a 16.3%, or Ps.129.3 million, increase in gross profit and a 47.4%, or Ps.45.4 million, decline in amortization and depreciation as a result of a change in accounting for goodwill, partially offset by a Ps.28.5 million, or 5.2%, increase in SG&A.

Table 10. Operating Profit
2004 2005 % Chg.
Million % of Million % of
Ps. Revenues Ps. Revenues
Service revenues 1,499.7 100.0% 1,724.4 100.0% 15.0%
Cost of services 707.8 47.2% 803.1 46.6% 13.5%
Gross Profit 792.0 52.8% 921.3 53.4% 16.3%
SG&A 543.7 36.3% 572.2 33.2% 5.2%
- Selling 129.9 8.7% 160.0 9.3% 23.2%
- Administrative 318.1 21.2% 361.8 21.0% 13.8%
- Amortization and depreciation 95.8 6.4% 50.4 2.9% -47.4%
Total operating profit 248.3 16.6% 349.1 20.2% 40.6%

Cost of Services

Cost of Services for FY05 increased 13.5%, or Ps.95.3 million, to Ps.803.1 million, as a result of first-time IP telephony costs of Ps.5.9 million related to the launch of IP telephony through the joint venture established with Axtel and a 23.9% increase in the number of cable television subscribers. As a percentage of service revenues, however, cost of services declined to 46.6% of sales from 47.2% in 2004. This improvement reflected the negotiation of one-time volume discounts with PCTV, Cablemas' main content provider, as well as lower content prices for Cablemas' Minibasic (Conecta) package.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (including depreciation and amortization) increased 5.2%, or Ps.28.5 million, to Ps.572.2 million, during FY05 principally reflecting:

* Selling Expenses increased 23.2%, or Ps.30.1 million, to Ps.160.0
million for FY05 principally due to an increased number of sales
personnel in Cablemas' cable television and high-speed internet sales
and call centers. The number of sales employees increased from 595 at
the end of FY04 to 816 at the end of FY 05.

* Administrative Expenses increased 13.8%, or Ps.43.7 million, to Ps.361.8
million for FY 05 principally due to the addition of 118 administrative
employees and an increase of Ps.16.4 million in office expenses,
particularly building and software maintenance expenses.

* Amortization and Depreciation declined 47.4%, or Ps.45.4 million, to
Ps.50.4 million during FY05, reflecting a change in accounting for
goodwill requiring that goodwill be evaluated for impairment instead of
amortization as of January 1, 2005.

Adjusted EBITDA & Margin

Adjusted EBITDA for FY05 increased 19.5%, or Ps.108.2 million, to Ps.663.8 million, primarily as a result of the improvement in operating income as discussed above. Similarly, the adjusted EBITDA margin increased 150 basis points to 38.5%.

The following table sets forth the reconciliation between net income and adjusted EBITDA:

Table 11. Adjusted EBITDA
2004 2005 % Chg.
Net income (loss) 105.6 78.3 -25.9%
Add (subtract):
Amortization and depreciation 307.3 314.7 2.4%
Comprehensive financial results,
net 62.4 154.8 148.1%
Other (income) expense, net (2.0) 18.1 n/a
Special items 11.6 65.2 461.1%
Total income tax, asset tax and
employee profit sharing 62.3 70.6 13.3%
Effects from associated companies
and minority interest 8.4 (37.8) n/a

Adjusted EBITDA 555.6 663.8 19.5%

* Income Tax, Asset Tax and Employees Profit Sharing increased 13.3%, or
Ps.8.3 million, to Ps.70.6 million in FY05 from Ps.62.3 million in FY04,
principally reflecting higher non-deductible expenses and a lower
positive effect for changes in income tax rates, partially compensated
by a smaller increase in accruals for differed tax assets as compared to
FY04.

* Special Items increased Ps.53.6 million, or 461.1%, to Ps.65.2 million
for FY05 and were principally related to the pre-payment of Ps.25.0
million of bond debt, Ps.18.8 million in fees related to the Axtel joint
venture and Ps.18.5 million of one-time special items resulting from
Hurricane Wilma.

* Depreciation and Amortization increased 2.4%, or Ps.7.4 million, to
Ps.314.7 million for FY05 due to the expansion of Cablemas' network,
partially offset by a Ps.63.0 million decline in amortization which was
the result of a change in accounting for goodwill. This change required
that goodwill be evaluated for impairment instead of amortization as of
January 1, 2005.

* Other Expenses, Net increased Ps.20.1 million, to Ps.18.1 million for
FY05 principally due to consulting expenses related to a business
acquisition for Ps. 8.8 million and Ps.4.1 million in a provision for
obsolete inventories.

* Effects from Associated Companies and Minority Interest increased Ps.
46.2 million to a Ps.37.8 million gain for FY05, and were as follows:

Associated Companies FY04 FY05
PCTV (7.8) (26.2)
Cable y Comunicacion de
Morelia S.A de C.V. 18.2 (17.7)
Miracle TV 0 6.7
Total 10.4 (37.2)

Comprehensive Financial Results, Net

Comprehensive financial results, net, for FY05 increased 148.1%, or Ps.921.4 million, to an expense of Ps.154.8 million from an expense of Ps.62.4 million in FY04. This primarily reflected a Ps.81.4 million increase in interest expense resulting from a 92.0%, or Ps.897.1 million, increase in outstanding debt to Ps.1,874.4 million and a Ps.15.2 million, or 43.4%, decline in gain from the monetary position.

Table 12. Comprehensive Financial Results, Net
2004 2005 % Chg.
Interest income 5.8 5.2 -11.0%
Interest expense -90.3 -171.7 90.1%
Foreign-exchange gain (loss), net -13.0 5.2 n/a
Financial instruments valuation -13.3
Monetary position (loss) gain 35.1 19.9 -43.4%
Comprehensive financial results, net -62.4 -154.8 148.1%

Net Income

Net income for FY05 fell by 25.9%, or Ps.27.3 million, to Ps.78.3 million, down from Ps.105.6 million in FY04. The 40.6% increase in operating profit to Ps.349.1 million was partially offset by higher one-time charges, borrowing costs, and deferred taxes.

CAPEX

Capital expenditures for 4Q05 fell 31.0%, or Ps.87.3 million, to Ps.194.4 million from Ps.281.7 million in 4Q04. Capital expenditures in FY05 increased 39.1%, or Ps.226.4 million, to Ps.805.6 million, from Ps.579.2 million in FY04. The 39.1% YoY increase in capital expenditures principally relates to investments incurred to expand and upgrade Cablemas' network.

As of December 31, 2005 Cablemas had a network of 11,926 km, of which 76% was bidirectional and 85% was operating at or greater than 550 MHz.

Table 13. Capex Breakdown
4Q 04 4Q 05 % Chg. 2004 2005 % Chg.

Expansion and Network Upgrade 110.4 97.7 -11.5% 268.1 417.3 55.7%
Network connection drops 61.6 18.6 -69.8% 154.1 122.4 -20.6%
High-Speed Internet equipment 21.4 44.9 110.0% 39.5 104.7 164.9%
Other(1) 88.3 33.2 -62.4% 117.5 161.2 37.2%
Total 281.7 194.4 -31.0% 579.2 805.6 39.1%

(1) Includes capex related to computer equipment, transportation
equipment, and real estate among others.

DEBT STRUCTURE

Consolidated gross debt as of December 31, 2005 totaled Ps.1,874.4 million, a YoY increase of Ps.897.1 million, or 92%. On November 15, 2005, Cablemas issued US$175.0 million of 9.375% senior notes, the proceeds of which were used to refinance debt and fund capital expenses. (Please see "Recent Events" for more information)

Net debt, which is calculated as total debt minus cash and cash equivalents, increased YoY by 19%, or Ps.180.2 million, to Ps.1,105.7 million. As of December 31, 2005 Cablemas had a cash balance of Ps.768.7 million.

Table 14. Debt Indicators
2004 2005 % Chg.
Total Debt 977.3 1,874.4 92%
Short-Term Debt 52.2 -- -100%

Long-Term Debt 925.1 1,874.4 103%

Cash and Cash Equivalents 51.8 768.7 1384%
Total Net Debt 925.5 1,105.7 19%

Leverage
Total Debt/ LTM Adjusted EBITDA 1.8 2.8x
Total Net Debt/ LTM Adjusted
EBITDA 1.7 1.7x

Interest Coverage
Adjusted EBITDA / Net Interest
Expense 6.6 4.0

US$ dollar denominated debt 80.7 1,874.4
8% 100%
Mexican Peso denominated debt 896.4 0
92% 0%

Cash flow from operations during FY05 declined 28.4%, or Ps.154.1 million, to Ps.389.4 million due to a decrease in working capital as a result of a reduction in financing with suppliers in FY05 and lower net income.

Net borrowings in FY05 increased Ps.901.9 million, or 512.4%, to Ps.919.5 million as cash flow from operations were insufficient to fund higher capital expenditures. Capex for FY05 increased 39.1%, or Ps. 226.4 million, to Ps.805.6 million, principally related to the upgrade and expansion of Cablemas' network.

Table 15. Cash Flow
2004 2005 Change
Cash at the beginning of the year 54.5 51.7 (2.8)
Net Income 105.6 78.3 (27.4)
+ Depreciation and amortization 307.3 314.7 7.4
+ Change in Working Capital 27.7 (69.1) (96.7)
+ Other 102.9 65.5 (37.4)
Cash Flow from Operations 543.5 389.4 (154.1)
- Capex (579.2) (805.6) (226.4)
- Other (1) 15.3 213.7 198.3
Net Investing Activities (563.8) (591.9) (28.1)
+ Debt 18.1 923.1 904.9
+ Other (0.6) (3.6) (3.0)
Net Financing Activities 17.6 919.5 901.9
Cash at the end of the year 51.7 768.7 717.0

(1) In 2005, Cablemas received Ps. 189.2 million from its insurer

CORPORATE DEVELOPMENTS

Debt Offering: On November 15, 2005 Cablemas successfully issued US$175.0 million of 9.375% senior notes. Proceeds from the issuance were and will be used to refinance debt and fund capital expenditures.

The notes received a B1 rating and stable outlook from Moody's and a BB- rating and stable outlook from Standard and Poor's. Shortly after the offering Fitch Ratings gave the bonds a BB- rating.

At closing of the note offering, Cablemas also entered into a cross currency swap to cover such debt at an exchange rate of Ps.10.745 per dollar at a cost of 2.88%.

Impact of Hurricane Wilma On 4Q05 And FY05 Results: On October 22-23, 2005 Hurricane Wilma passed over the Mexican states of Quintana Roo and Yucatan, in the southeast region of Mexico, where Cablemas has operations and network infrastructure in Cancun, Playa del Carmen, Cozumel and Isla Mujeres.

The hurricane caused extensive damage and flooding in the area, and as a result the network was down after the hurricane, and repairs were made during November and December. By December 31, 2005, 90% of its subscribers had been re-connected. Preliminary damages have been estimated to be approximately US$22.0 million. Of this amount, US$15.0 million has already been reimbursed by the insurer, US$2.4 million represents the insurance deductible and co- insurance cost, and the remaining US$4.6 million has not yet been paid, is still being reviewed by the company and its insurer and could be revised upwards.

FOURTH QUARTER 2005 EARNINGS CONFERENCE CALL

Date: Wednesday, April 12, 2006

Time: 11:00 AM US EST - 10:00 AM Mexico time

Dial Information: (888) 396-2384 (US); (617) 847-8711 (International)

Passcode: 89568185

Tape Playback: Starting Wednesday, April 12, 2006, at 1:00 PM US EST,
ending at midnight EST on Wednesday, April 19, 2006.
Dial-in Number: (888) 286-8010 (US) or (617) 801-6888
(international). Confirmation Code: 73962280.

About Cablemas

Cablemas is the second-largest cable television operator in Mexico based on number of subscribers and homes passed. As of December 31, 2005, Cablemas' cable network served over 596,998 cable television subscribers, 114,088 high- speed internet subscribers, and 3,246 IP telephony lines, with over 1,743,740 homes passed.

Cablemas is the concessionaire with the broadest coverage in Mexico, operating in 46 cities throughout the country's oil, maquiladora and tourist regions as of December 2005. Cablemas has consistently introduced innovative products in Mexico and is the only cable operator in the country to provide a "Triple Play" bundled service package of cable television, high speed internet and IP telephony. More information about Cablemas can be found at http://www.cablemas.com/.

This document may contain certain forward-looking statements concerning Cablemas' operations, performance, business, financial condition and growth prospects. These statements are based upon beliefs of management as well as a number of assumptions and estimates, which are inherently subject to significant uncertainties, many of which are beyond Cablemas' control. Actual results may differ materially from those expressed or implied by such forward- looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the Mexican economy, including changes in inflation rates or exchange rates, changes in political conditions and government policies in Mexico, increased competition, regulatory developments and customer demand. These statements are made as of the date of this press release and Cablemas undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise in light of these risks and uncertainties, there can be no assurances that the events described or implied in the forward-looking statements contained in this document will in fact transpire.

(1) Unless otherwise stated, all financial figures discussed in this
announcement are unaudited, prepared in accordance with generally
accepted accounting principles in Mexico, expressed in millions of
constant Mexican pesos as of December 31, 2005, and represent
comparisons between the three- and twelve-month periods ended December
31, 2005, and the equivalent three- and twelve-month periods ended
December 31, 2004.

(2) Adjusted EBITDA is calculated by adding amortization and depreciation,
net comprehensive financial results, net other income, special items,
total income tax and asset tax, total employee statutory profit
sharing, effects from associated companies and minority interest to
net income/loss.

CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 2003, 2004 and 2005
(Constant Mexican pesos as of December 31, 2005)

2003 2004 2005

Service revenues Ps 1,161,547,350 1,499,742,230 1,724,446,679
Cost of services 572,774,235 707,753,319 803,101,463

Gross profit 588,773,115 791,988,911 921,345,216

Operating expenses:
Selling 99,187,898 129,870,740 160,004,516
Administrative 253,024,174 318,065,664 361,800,105
Amortization and
depreciation 89,215,686 95,771,931 50,418,943

Total operating expenses 441,427,758 543,708,335 572,223,564

Operating profit 147,345,357 248,280,576 349,121,652

Comprehensive financial
results:
Interest income 11,646,901 5,789,108 5,150,206
Interest expense (53,932,719) (90,302,975) (171,684,925)
Foreign exchange (loss)
gain, net (31,483,053) (12,970,502) 5,202,498
Financial instruments (13,293,620)
Monetary position gain 22,522,216 35,116,177 19,869,213

Comprehensive financial
results, net (51,246,655) (62,368,192) (154,756,628)

Other income (expenses), net 8,850,469 2,019,649 (18,124,205)

Special items (4,521,531) (11,606,691) (65,209,272)

Income before income taxes,
employee statutory profit
sharing,
effects from associated
companies and minority
interest 100,427,640 176,325,342 111,031,547

Income taxes:
Current 32,840,742 27,498,278 42,021,004
Deferred 3,258,895 31,782,784 26,483,660

Total income taxes 36,099,637 59,281,062 68,504,664

Employee statutory profit
sharing:
Current 3,549,734 3,929,038 4,281,404
Deferred (816,139) (885,214) (2,196,682)

Total employee statutory
profit sharing 2,733,595 3,043,824 2,084,722

Income before effects from
associated companies and
minority interest 61,594,408 114,000,456 40,442,161

Effects from associated
companies:
Equity in the results of
operations (8,611,191) (10,428,743) 37,231,547
Gain from purchase of
investments -- 1,898,864 --

Total effects from
associated companies: (8,611,191) (8,529,879) 37,231,547

Income before minority
interest 52,983,217 105,470,577 77,673,708

Minority interest (314,779) 169,693 593,122

Majority interest net
income Ps 52,668,438 105,640,270 78,266,830

Basic earnings per share Ps 2.08 4.17 3.09

CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2003, 2004 and 2005
(Constant Mexican pesos as of December 31, 2005)

ASSETS 2003 2004 2005

Current assets:
Cash and cash equivalents Ps 54,461,834 51,735,638 768,744,378
Trade accounts receivable,
less allowance for doubtful
accounts of Ps1,897,831 in
2003, Ps4,142,985 in 2004
and Ps6,286,440 in 2005 3,561,861 12,691,156 18,357,229
Other accounts receivable,
net 142,870,517 178,565,375 170,476,595
Prepaid expenses 16,159,903 13,960,892 24,092,248

Total current assets 217,054,115 256,953,061 981,670,450

Inventory of components of
signal distribution systems,
net 109,827,816 172,867,015 140,257,156

Investment in associated
companies 63,653,497 44,885,063 68,173,893

Property, signal distribution
systems, and equipment, net 1,819,264,399 2,069,024,219 2,369,692,643

Deferred employee statutory
profit sharing 954,585 1,839,799 4,036,481

Goodwill, net 1,078,418,871 1,011,418,603 974,720,501

Intangible asset from pension
and seniority premium plans
and severance compensation
for reasons other than
restructuring 16,377,957 16,357,398 21,356,210

Other non-current assets, net 48,979,832 66,454,972 117,231,533

Ps 3,354,531,072 3,639,800,130 4,677,138,867

LIABILITIES 2003 2004 2005

Current liabilities:
Current installments of:
Bank loans Ps 149,831,202 21,484,501 --
Obligations under
capital leases 26,445,508 33,496,783 --
Notes -- -- 28,713,580
Financial instruments -- 8,566,938 8,809,785
Accounts payable 146,599,457 216,879,313 155,493,953
Accruals 5,879,573 24,418,603 42,826,037
Accrued liabilities 24,996,459 36,431,915 39,543,348
Taxes payable 3,708,735 9,079,968 15,251,188
Employee statutory profit
sharing 1,041,913 2,761,319 3,230,187
Related parties 14,385,423 26,796,471 28,123,512
Subscriber deposits and
advances 34,768,591 41,715,323 62,697,673

Total current
liabilities 407,656,861 421,631,134 384,689,263

Financial instruments -- -- 19,867,861
Notes -- -- 1,874,407,492
Commercial paper obligations 234,771,826 825,760,000 --
Bank loans, excluding current
installments 528,289,951 64,744,623 --
Obligations under capital
leases, excluding current
installments 22,588,122 34,582,359 --
Pension and seniority
premiums plans and severance
compensation for reasons
other than restructuring 22,468,115 26,212,533 39,031,964
Income tax 11,387,088 10,813,949 10,476,603
Deferred income tax 211,031,456 242,814,240 275,957,814

Total liabilities 1,438,193,419 1,626,558,838 2,604,430,997

STOCKHOLDERS' EQUITY

Majority stockholders'
equity:
Capital stock 692,645,202 692,645,202 692,645,202
Additional paid-in
capital 1,079,740,404 1,079,740,404 1,079,740,404
Retained earnings 142,146,055 247,786,325 326,053,155
Cumulative deferred
Income Tax effect -- -- --
Valuation effects of
financial instruments -- (8,566,938) (19,094,026)
Result from holding non
monetary assets -- -- (9,563,185)
Cumulative effect on
deferred taxes -- -- 3,202,059
Seniority premiums plan -- -- (1,318,916)

Total majority
stockholders' equity 1,914,531,661 2,011,604,993 2,071,664,693

Minority stockholders'
equity 1,805,992 1,636,299 1,043,177

Total stockholders'
equity 1,916,337,653 2,013,241,292 2,072,707,870

Commitments and contingent liabilities

Ps 3,354,531,072 3,639,800,130 4,677,138,867

CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES
Consolidated Statements of Changes in Financial Position
Years ended December 31, 2003, 2004 and 2005
(Constant Mexican pesos as of December 31, 2005)

2003 2004 2005

Operating activities:
Net income Ps 52,668,438 105,640,270 78,266,830
Add charges (deducted
credit) to operations not
requiring(providing)
funds:
(Gain) loss on sale of
equipment (9,714,707) (1,034,875) 2,647,155
Depreciation and
amortization 205,530,328 244,327,304 314,658,257
Goodwill deterioration 35,000,000
Gain from insurance claim (31,055,219)
Increase in allowance for
inventory of components
of signal distribution
systems 3,101,115 2,553,588 2,704,896
Effects from associated
companies 8,611,191 10,428,743 (37,231,547)
Amortization of goodwill 55,296,376 62,983,334 --
Pension seniority
premiums and severance 7,514,789 3,764,977 9,747,231
Deferred income taxes (7,570,959) 31,782,784 26,483,660
Deferred employee
statutory profit sharing (816,139) (885,214) (2,196,682)
Minority interest 314,779 (169,693) (593,122)
Financial instruments -- -- 9,583,620

Funds provided by
operations 314,935,211 459,391,218 408,015,079

Net financing from
(investing in) operating
accounts:
Trade and other accounts
receivable, net (27,595,992) (44,824,153) 2,422,707
Prepaid expenses (3,677,066) 2,199,011 (10,131,356)
Accounts payable (118,378,240) 70,279,856 (61,385,360)
Accruals and accrued
liabilities 26,994,850 29,974,486 21,518,867
Taxes payable (9,771,395) 5,371,233 6,171,220
Subscriber deposits and
advances (3,099,602) 6,946,732 20,982,350
Employee statutory profit
sharing 665,734 1,719,406 468,868
Related parties 6,216,802 12,411,048 1,327,041

Funds provided by
operating activities 186,290,302 543,468,837 389,389,416

Financing activities:
Proceeds from (payments
of) bank loans, net 536,729,870 (591,892,029) (86,229,126)
Proceeds from notes and
commercial paper
obligations, net 234,771,826 590,988,174 1,077,361,072
Proceeds from (payments
of) capital lease
obligations 10,574,748 19,045,512 (68,079,142)
Pension, seniority
premiums and severance
payments (3,842,167) -- (3,245,528)
Income tax (355,226) (573,139) (337,346)

Funds provided by
financing activities 777,879,051 17,568,518 919,469,930

Investing activities:
Inventory of components of
signal distribution
systems (3,074,456) (65,592,787) 29,904,963
Proceeds from sale of
signal distribution
system equipment 23,131,147 3,071,843 10,282,215
Capital expenditures (459,964,924) (489,340,574) (770,160,392)
Other assets, net (5,690,899) (24,258,658) (65,318,777)
Acquisition of subsidiary
companies, net of cash (179,936,992) 8,339,691 (2,719,154)
Investment in associated
companies (37,429,030) -- (17,791,169)
Reimbursement of capital -- -- 34,751,828
(Decrease) increase in
goodwill (327,679,453) 4,016,934 --
Insurance recovery -- -- 189,199,878

Funds used in investing
activities (990,644,607) (563,763,551) (591,850,608)

Decrease (increase) in
cash and cash
equivalents (26,475,254) (2,726,196) 717,008,740

Cash and cash equivalents:
Received upon acquisition
of subsidiary companies 15,558,648 -- --
At beginning of year 65,378,440 54,461,834 51,735,638

At end of year Ps 54,461,834 51,735,638 768,744,378

The accompanying Notes form an integral part of the consolidated financial
statements.

Source: Cablemas, S.A. de C.V.

CONTACT: In Mexico - Marilyn Billot, Budget and IR Manager of Cablemas,
+5255-24-54-58-84, marilyn.billot@admCablemas.com.mx; or In the United States
- Susan Borinelli, +1-646-452-2332, sborinelli@breakstone-group.com, or
Michael Fehle, +1-646-452-2336, mfehle@breakstone-group.com, both of
Breakstone Group

Web site: http://www.cablemas.com/

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