Cablemas 3Q07 Net Revenue and Adjusted EBITDA Up 12.3% and 2.9% YoY

Cablemas 3Q07 Net Revenue and Adjusted EBITDA Up 12.3% and 2.9% YoY

MEXICO D.F., Nov. 27 /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 nine- month periods ending September 30, 2007.

Cablemas CEO Carlos M. Alvarez Figueroa commented, "Revenue growth this quarter remained strong as we continued to successfully increase market penetration across all services. This quarter, our subscriber base rose 14.0% in cable television, 33.5% in high-speed Internet and 67.0% in IP telephony on a year-on-year comparison."

"As anticipated, adjusted EBITDA margin declined to 35.8% from 39.0% in 3Q06, mainly reflecting the costs from the rollout of IP Telephony services. For the first nine-months of the year, adjusted EBITDA reached 37.7%, in line with expectations."

"We continue making progress with the roll out of IP telephony and to-date we provide service in Ciudad Juarez, Chihuahua, Merida, Cancun, Isla Mujeres, Playa del Carmen and Cozumel. By year-end we expect to be offering IP Telephony in nine cities and to expand the service to 3 additional cities during 2008," closed Mr. Alvarez Figueroa.

Financial and Operational Highlights(1)

(in million Mexican Pesos) 3Q06 3Q07 %Chg.

Financial Highlights

Net revenue 595.1 668.2 12.3%
Operating profit 140.2 117.7 -16.1%
Adjusted EBITDA(2) 232.2 238.9 2.9%
Net income 52.7 28.4 -46.1%
Operating margin 23.6% 17.6% -595 bps
Adjusted EBITDA margin(2) 39.0% 35.8% -326 bps
Net income margin 8.9% 4.2% -460 bps
Total Debt 1,987.6 2,218.0 11.6%
Net Debt 1,827.5 2,180.3 19.3%
Total Debt/ LTM Adj. EBITDA(2) 2.3x 2.3x
Net Debt/ LTM Adj. EBITDA(2) 2.2x 2.2x
EBITDA/ Net interest expense 4.3x 3.4x

Operational Highlights
Homes passed 1,940,785 2,194,662 13.1%
Cable Television subscribers 675,695 770,213 14.0%
High-speed internet subscribers 159,732 213,322 33.5%
IP Telephony lines 20,616 34,435 67.0%

Financial and Operational Highlights(1) 9M06 9M07 %Chg.

Net revenue 1,715.7 1,974.2 15.1%
Operating profit 398.9 401.3 0.6%
Adjusted EBITDA(2) 673.9 745.1 10.6%
Net income 119.9 193.0 61.0%
Operating margin 23.3% 20.3% -292 bps
Adjusted EBITDA margin(2) 39.3% 37.7% -154 bps
Net income margin 7.0% 9.8% +279 bps
Total Debt 1,987.6 2,218.0 11.6%
Net Debt 1,827.5 2,180.3 19.3%
Total Debt/ LTM Adj. EBITDA(2) 2.3x 2.3x
Net Debt/ LTM Adj. EBITDA(2) 2.2x 2.2x
EBITDA/ Net interest expense 3.9x 3.8x

Operational Highlights
Homes passed 1,940,785 2,194,662 13.1%
Cable Television subscribers 675,695 770,213 14.0%
High-speed internet subscribers 159,732 213,322 33.5%
IP Telephony lines 20,616 34,435 67.0%

(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 September 30, 2007, and represent
comparisons between the three-month period ended September 30, 2007,
and the equivalent three-month period ended September 30, 2006.

(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.

THIRD QUARTER 2007 CONSOLIDATED RESULTS

Net Revenues

Net revenues increased 12.3%, or Ps.73.1 million, during 3Q07 to Ps.668.2 million, as described below:

-- Cable Television: The 8.0% growth in cable television revenues, from
Ps.466.3 to Ps.503.7 was principally due to a 14.0% YoY increase in the
number of subscribers to 770,213 with a penetration rate of 34.3%. This
was achieved despite a 5.5% decline in average monthly cable television
revenues per subscriber (ARPU) to Ps.220.4. This decline in ARPU was
primarily the result of a 35.0% increase in Minibasic subscribers, who
pay lower monthly fees, while Basic subscribers increased 6.9%. The
average monthly net churn rates for cable television declined 20 bps to
2.5% for 3Q07 from 2.7% in 3Q06.

-- High Speed Internet: The 31.2%, or Ps.29.1 million, rise in high-speed
Internet revenues to Ps.122.5 million resulted mainly from a 33.5%
increase in the number of subscribers to 213,322, with a penetration
rate of 11.8%. This was partially offset by a 4.5% decline in
high-speed Internet ARPU to Ps.195.7, as lower price/ lower-speed
Internet (128 Kbps) subscriptions increased at a faster rate than those
of higher-speed Internet (512 Kbps). Average monthly net churn rates
for high-speed Internet rose 50 bps to 4.3% for 3Q07 from 3.8% in 3Q06,
due to an aggressive competing service offer from Telmex and a slow
client recovery process in the Mayan Riviera following service quality
issues resulting from damages to the network by the passing of
Hurricane Wilma.

-- IP Telephony: IP telephony revenues for the quarter rose 43.0%, or
Ps.9.1 million, to Ps.30.4 million. As of September 30, 2007, there
were 34,435 IP telephony lines in service, up from 20,616 as of
September 30, 2006. IP telephony ARPU for 3Q07 was Ps.296.9. This does
not include migration fees paid to Cablemas by Axtel for new
subscribers which, if included, would increase IP telephony ARPU to
Ps.313.4 for 3Q07.

Table 1. Revenues by Service Offering
3Q06 3Q07
%of %of
Total Total
Revenue Revenue Revenue Revenue % Chg.
Cable Television 466.3 78.4% 503.7 75.4% 8.0%
High-Speed Internet 93.4 15.7% 122.5 18.3% 31.2%
IP telephony 21.3 3.6% 30.4 4.5% 43.0%
Advertising 13.2 2.2% 11.1 1.7% -16.4%
Other(1) 0.9 0.2% 0.5 0.1% -43.6%
Total Net Revenue(2) 595.1 100.0% 668.2 100.0% 12.3%

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

(2) All net revenue figures are net of value-added taxes and other taxes
on sales.

Table 2. Number of Subscribers per Service Offering
% Chg. in
3Q06 3Q07 Subscribers
Minibasic 172,517 232,906 35.0%
Basic(1) 486,834 520,463 6.9%
Superbasic(1) 44,134 43,230 -2.0%
Premium (1) 28,173 30,117 6.9%
Hotel 16,344 16,844 3.1%
Total Cable Television 675,695 770,213 14.0%
High-Speed Internet 159,732 213,322 33.5%
IP Telephony lines 20,616 34,435 67.0%

(1) 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
3Q06 3Q07 % Chg.
Homes passed 1,940,785 2,194,662 13.1%
Cable Television
- Revenue 466.3 503.7 8.0%
- Subscribers 675,695 770,213 14.0%
- ARPU 233.2 220.4 -5.5%
- Avg. Monthly Churn 2.7% 2.5% -20 bps
High-Speed Internet
- Revenue 93.4 122.5 31.2%
- Subscribers 159,732 213,322 33.5%
- ARPU 205.0 195.7 -4.5%
- Avg. Monthly Churn 3.8% 4.3% +50 bps
IP Telephony
- Revenue 21.3 30.4 43.0%
- Lines 20,616 34,435 67.0%
- ARPU (without migration fee) 290 296.9 2.2%

Operating Profit

Operating profit for 3Q07 declined by 16.1%, or Ps.22.5 million, to Ps.117.7 million, driven mainly by a 0.5% reduction in gross profit and an 11.3% increase in SG&A. Operating margin fell 595 bps to 17.6% from 23.6% in 3Q06.

Table 4. Operating Profit
3Q06 3Q07
Million % of Million % of
Ps. Revenues Ps. Revenues %Chg.
Service revenues 595.1 100.0% 668.2 100.0% 12.3%
Cost of services 269.8 45.3% 344.6 51.6% 27.7%
Gross Profit 325.2 54.7% 323.6 48.4% -0.5%
SG&A 185.0 31.1% 205.9 30.8% 11.3%
- Selling 64.1 10.8% 62.3 9.3% -2.9%
- Administrative 104.2 17.5% 125.2 18.7% 20.1%
- Amortization and depreciation 16.7 2.8% 18.5 2.8% 10.5%
Total operating profit 140.2 23.6% 117.7 17.6% -16.1%

Cost of Services

Cost of Services for 3Q07 rose 27.7%, or Ps.74.7 million. The increase in cost of services was primarily due to:

-- A Ps.8.2 million increase in programming costs, principally the result
of the 14.0% increase in cable television subscribers;

-- A Ps.11.0 million increase in payroll due to a rise in the number of
technical employees from 895 people in September 30, 2006 to 1,009 in
September 30, 2007;

-- A Ps.16.3 million increase in Internet costs related to the incremental
cost for bandwidth as the company began offering higher Internet speeds
at the same price to make its service more attractive. The increase
also reflected the 33.5% growth in the number of Internet subscribers;

-- A Ps.27.5 million increase in depreciation & amortization resulting
from the investment in fixed assets and a reduction in the useful life
of distribution lines from 25 years in 3Q06 to 15 years in 3Q07; and

-- A Ps.12.5 million increase in telephony costs resulting from the
investment in infrastructure and technology to roll out IP telephony in
new cities.

Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (including depreciation and
amortization) or SG&A, increased Ps.20.9 million, or 11.3% YoY to Ps.205.9
million. As a percentage of sales, however, SG&A declined 30 basis points
to 30.8%, from 31.1% in 3Q06. The absolute increase in SG&A principally
reflected the following changes:

-- Administrative expenses increased 20.1% to Ps.125.2 million. As a
percentage of revenues, administrative expenses rose to 18.7% in 3Q07
from 17.5% in 3Q06. The rise in administrative expenses was principally
due to:

-- A Ps.9.4 million increase in salaries and fees principally due to
the increase in the number of administrative employees, and a
higher outsourcing of administrative tasks;

-- The impact from the capitalization in 3Q06 of Ps.4.4 million in
software investments made in 1H06 that at the time were recorded
as an expense; and

-- An increase of Ps.4.5 million in communications and travel
expenses, due to more activity resulting from operational controls
and the rollout of IP telephony.

-- Amortization and depreciation rose 10.5%, or Ps.1.8 million, to Ps.18.5
million for 3Q07, principally due to the increase in office equipment.

These increases were partially offset by a 2.9%, or Ps.1.8 million, decline in selling expenses to Ps.62.3 million, principally due to lower fees and advertising expenses. The Company employed 1,401 salespersons as of September 30, 2007 compared to 1,137 as of September 30, 2006.

Adjusted EBITDA

Adjusted EBITDA for 3Q07 increased 2.9%, or Ps.6.8 million, to Ps.238.9 million. The adjusted EBITDA margin fell 326 bps to 35.8%. The following table sets forth the reconciliation between net income and adjusted EBITDA:

Table 5. Adjusted EBITDA
3Q06 3Q07 % Chg.
Net income (loss) 52.7 28.4 -46.1%
Add (subtract):
Amortization and depreciation 92.0 121.2 31.8%
Comprehensive financial results,
net 25.9 53.0 104.9%
Other (income) expense, net (1.6) (5.8) 274.5%
Special items 26.5 0.3 -99.0%
Total income tax and asset tax 42.1 35.5 -15.5%
Employee profit sharing 1.1 0.0 -100.0%
Effects from associated companies (6.2) 6.3 -202.7%
Minority interest (0.3) 0.0 -100.0%

Adjusted EBITDA 232.2 238.9 2.9%

-- Depreciation and amortization increased 31.8%, or Ps.29.3 million, to
Ps.121.2 million, principally due to an increase in fixed asset
investments and a change in the estimate of the useful life of
distribution lines.

-- Special items in 3Q06 included Ps.12.6 million of accelerated
depreciation associated with the costs of cleanup, removal and
rehabilitation of the portion of the network affected by Hurricane
Wilma and Ps.13 million related to an impairment of goodwill.

-- Net comprehensive financial results were an expense of Ps.53.2 million
compared with an expense of Ps.25.9 million in 3Q06, principally
reflecting lower gains from financial instruments and monetary position
as well as lower interest income.

-- During the quarter the company recorded a Ps.35.5 million provision
for income taxes and asset taxes, compared to Ps.42.1 million in 3Q06
as a result of a lower taxable income base.

Comprehensive Financial Results, Net

Net comprehensive financial results were an expense of Ps.53.0 million for the three-months ended September 30, 2007, an increase of Ps.27.1 million over the expense of Ps.25.9 million for 3Q06. The increase primarily reflected higher interest expenses that resulted from the 11.6% increase in debt, lower interest income as a result of the lower cash balance and a higher financial instrument gain in 3Q06, which more than offset the slight increase in gains from monetary position during that period.

Table 6. Comprehensive Financial Results, Net
3Q06 3Q07 % Chg.
Interest income -5.4 -1.3 -75.0%
Interest expense 60.0 71.4 19.1%
Financial instruments (gain) -18.4 0.0 -100.0%
Foreign-exchange (gain) loss, net 8.1 1.5 -81.3%
Monetary position loss (gain) -18.2 -18.6 2.2%
Comprehensive financial results, net 26.2 53.0 102.5%

Net Income

For 3Q07, Cablemas posted a net gain Ps.28.4 million, a 46.1%, or Ps.24.3 million, decline from a net gain of Ps.52.7 million in 3Q06. Net income margin fell to 4.2% from 8.9% for 3Q06.

9M07 CONSOLIDATED RESULTS

Net Revenues

Net revenues increased 15.1%, or Ps.258.5 million, during 9M07 to Ps.1,974.2 million.

-- Cable Television: The 10.5%, or Ps.142.7 million, growth in cable
television revenues was principally due to a 14.0% YoY increase in the
number of subscribers to 770,213, with a penetration rate of 34.3%.
This was achieved despite a 4.7% decline in average monthly cable
television revenues per subscriber (ARPU) to Ps.226.0. This decline in
ARPU was primarily the result of a 35.0% increase in Minibasic
subscribers, who pay lower monthly fees, while Basic subscribers
increased 6.9%. The average monthly net churn rates for cable
television declined 22 bps to 2.5% for 9M07 from 2.7% in 9M06.

-- High Speed Internet: Revenues rose 33.1%, or Ps.86.9 million, to
Ps.349.1 million. The rise in high-speed Internet revenues resulted
mainly from a 33.5% increase in the number of subscribers to 213,322,
with a penetration rate of 11.8%. This was partially offset by a 6.4%
decline in high-speed Internet ARPU to Ps.199.2, as lower price/lower-
speed Internet (128 Kbps) subscriptions increased at a faster rate than
those of higher-speed Internet (512 Kbps). Average monthly net churn
rates for high-speed Internet rose to 4.3% for 9M07 from 3.8% in 9M06
due to an aggressive competing service offer from Telmex, service
quality limitations in the Mayan Riviera during the reconstruction of
the network damaged by Hurricane Wilma, and a slow client recovery
following the hurricane.

-- IP Telephony: IP telephony revenues for the period rose 68.5%, or
Ps.34.2 million, to Ps.84.1 million. As of September 30, 2007, there
were 34,435 IP telephony lines in service, up from 20,616 as of
September 30, 2006. IP telephony ARPU for 9M07 fell 17.6% to
Ps.290.7. This does not include migration fees paid to Cablemas by
Axtel for new subscribers, which, if included, would increase IP
telephony ARPU to Ps.313.4 for 9M07.

Table 7. Revenues by Service Offering
9M06 9M07
% of % of
Total Total
Revenue Revenue Revenue Revenue % Chg.
Cable Television 1,362.0 79.4% 1,504.7 76.2% 10.5%
High-Speed Internet 262.2 15.3% 349.1 17.7% 33.1%
IP telephony 49.9 2.9% 84.1 4.3% 68.5%
Advertising 38.9 2.3% 33.5 1.7% -13.9%
Other(1) 2.7 0.2% 2.8 0.1% 5.9%
Total Net Revenue(2) 1,715.7 100.0% 1,974.2 100.0% 15.1%

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

(2) All net revenue figures are net of value-added taxes and other taxes
on sales.

Table 8. Number of Subscribers per Service Offering
% Chg. in
9M06 9M07 Subscribers
Minibasic 172,517 232,906 35.0%
Basic(1) 486,834 520,463 6.9%
Superbasic(1) 44,134 43,230 -2.0%
Premium (1) 28,173 30,117 6.9%
Hotel 16,344 16,844 3.1%
Total Cable Television 675,695 770,213 14.0%
High-Speed Internet 159,732 213,322 33.5%
IP Telephony lines 20,616 34,435 67.0%

(1) 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
9M06 9M07 % Chg.
Homes passed 1,940,785 2,194,662 13.1%
Cable Television
- Revenue 1,362.0 1,504.7 10.5%
- Subscribers 675,695 770,213 14.0%
- ARPU 237.1 226.0 -4.7%
- Avg. Monthly Churn 2.7% 2.5% -22 bps
High-Speed Internet
- Revenue 262.2 349.1 33.1%
- Subscribers 159,732 213,322 33.5%
- ARPU 212.8 199.2 -6.4%
- Avg. Monthly Churn 3.8% 4.3% +56 bps
IP Telephony
- Revenue 49.9 84.1 68.5%
- Lines 20,616 34,435 67.0%
- ARPU (without migration fee) 353 290.7 -17.6%

Operating Profit

Operating profit for 9M07 increased by 0.6%, or Ps.2.4 million, to Ps.401.3 million, driven mainly by an 8.4% increase in gross profit, that offset the 14.4% rise in SG&A. Operating margin declined to 20.3% from 23.3% in 9M06, principally due to higher cost of services as a percentage of sales.

Table 10. Operating Profit
9M06 9M07
Million % of Million % of
Ps. Revenues Ps. Revenues % Chg.
Service revenues 1,715.7 100.0% 1,974.2 100.0% 15.1%
Cost of services 800.5 46.7% 982.4 49.8% 22.7%
Gross Profit 915.3 53.3% 991.8 50.2% 8.4%
SG&A 516.4 30.1% 590.5 29.9% 14.4%
- Selling 171.3 10.0% 184.9 9.4% 7.9%
- Administrative 301.7 17.6% 360.2 18.2% 19.4%
- Amortization and depreciation 43.3 2.5% 45.5 2.3% 4.9%
Total operating profit 398.9 23.3% 401.3 20.3% 0.6%

Cost of Services

Cost of Services for 9M07 increased by 22.7%, or Ps.181.9 million. The increase in cost of services was primarily due to:

-- A 12.0% increase in programming costs derived from a 14.0% growth in
cable television subscribers;

-- A 29.0% increase in wages and salaries reflecting a lower
capitalization of technical labor costs, as well as an increase in the
number of technical employees as a result of the growth in video
subscribers;

-- A Ps.40.3 million increase in Internet costs, of which Ps.31.8 million
are related to the incremental cost for bandwidth. Higher internet
costs also reflect the 33.5% increase in the number of internet
subscribers during the period; and

-- A Ps.66.6 million increase in depreciation & amortization related to an
increase in fixed asset investments and a change in the estimate of the
useful life of distribution lines. During 9M06 the useful life of these
assets was estimated at 25 years compared with 15 years in 9M07.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.72.2 million, or 14.4% YoY to Ps.590.5 million. As a percentage of sales, SG&A declined 20 basis points to 29.9%, from 30.1% in 9M06. The absolute increase in SG&A principally reflected the following factors:

-- A 7.9%, or Ps.13.6 million, increase in selling expenses to Ps.184.9
million principally related to the expansion of the company's sales
force (1,401 salespersons as of September 30, 2007 as compared to 1,137
as of September 30, 2006), an increase in commissions paid as well as
the number of call centers;

-- A 19.4%, or Ps.58.4 million, increase in administrative expenses,
including Ps.23.8 in wages and salaries, Ps.12.0 million from the
increase in office expenses, mainly software maintenance and renewal of
licenses, Ps.5.0 million from higher professional fees, insurance and
travel expenses, and Ps.9.6 million from increased communication
activities and travel expenses; and

-- Amortization and depreciation rose 4.9%, or Ps.2.1 million, to Ps.45.5
million for 9M07, principally due to an increase in office equipment.

Adjusted EBITDA

Adjusted EBITDA for 9M07 increased 10.6%, or Ps.71.2 million, to Ps.745.1 million. The adjusted EBITDA margin declined 154 bps to 37.7% from 39.3%. The following table sets forth the reconciliation between net income and adjusted EBITDA:

Table 11. Adjusted EBITDA
9M06 9M07 % Chg.
Net income (loss) 119.9 193.0 61.0%
Add (subtract):
Amortization and depreciation 274.7 344.3 25.4%
Comprehensive financial results,
net 117.9 136.3 15.6%
Other (income) expense, net 7.2 (13.5) -289.4%
Special items 74.8 (23.8) -131.8%
Total income tax and asset tax 80.1 105.0 31.1%
Employee profit sharing 3.7 5.2 39.4%
Effects from associated companies (3.4) (1.1) -68.3%
Minority interest (0.8) (0.3) -65.9%

Adjusted EBITDA 673.9 745.1 10.6%

-- Depreciation and amortization rose 25.4%, or Ps.69.6 million, to
Ps.344.3 million, principally due to an increase in fixed asset
investments and a change in the estimate of the useful life of
distribution lines;

-- Special items in 9M07 mainly included funds received from the insurance
company for damages incurred by Hurricane Wilma. Special items in 9M06
included IPO expenses, extraordinary charges related to Hurricane
Wilma, expenses related to the purchase of the financial partners'
equity stake, and consulting fees related to the search for a new
strategic partner;

-- Net comprehensive financial results were an expense of Ps.136.3 million
compared with an expense of Ps.117.9 million in 9M06 as explained
below; and

-- During the period the company recorded a Ps.105.0 million provision for
income and asset taxes, compared to Ps.80.1 million in 9M06 as a result
of a higher taxable income base.

Comprehensive Financial Results, Net

Net comprehensive financial results was an expense of Ps.136.3 million for 9M07, an increase of Ps.18.4 million from an expense of Ps.117.9 million for 9M06. The increase mainly reflected a decline in interest income, higher interest expense and a loss from monetary position, which more than offset the higher gain from financial instruments and monetary position.

Table 12. Comprehensive Financial Results, Net
9M06 9M07 % Chg.
Interest income -22.5 -3.7 -83.5%
Interest expense 197.1 201.9 2.4%
Financial instruments (gain) -24.2 -28.0 15.8%
Foreign-exchange (gain) loss, net -11.8 2.9 -124.5%
Monetary position loss (gain) -20.8 -36.9 77.5%
Comprehensive financial results, net 117.9 136.3 15.6%

Net Income

For 9M07, Cablemas posted a net gain Ps.193.0 million, a 61.0%, or Ps.73.1 million, improvement compared to a Ps.119.9 million gain in 9M06. Net income margin improved to 9.8% from 7.0% for 9M06.

CAPEX

Capital expenditures for 9M07 declined 5.9%, or Ps.57.4 million, to Ps.907.4 million from Ps.964.8 million in 9M06. Capital expenditures

principally related to investments incurred in connection with the roll out of IP telephony and to expand and upgrade Cablemas' network.

As of September 30, 2007, Cablemas had a network of 13,882 km, of which 83% was bidirectional, 88% was operating at or greater than 550 MHz and 75% was operating at or greater than 750 MHz.

DEBT STRUCTURE AND CASH FLOW

Consolidated gross debt as of September 30, 2007, totaled Ps.2,218.0 million, of which Ps.1,906.9 million was long-term and Ps.311.0 million was short term. Consolidated gross debt rose YoY by 11.6%, from Ps.1,987.6 million as of September 30, 2006.

Net debt, which is calculated as total debt minus cash and cash equivalents, increased YoY by 19.3% to Ps.2,180.3 million, from 1,827.5 million as of September 30, 2006. As of September 30, 2007, Cablemas had a cash balance of Ps.37.7 million.

Table 13. Debt Indicators
9M06 9M07 % Chg.
Total Debt 1,987.6 2,218.0 11.6%
Short-Term Debt - 311.0 N/A

Long-Term Debt 1,987.6 1,906.9 -4.1%

Cash and Cash Equivalents 160.1 37.7 -76.5%
Total Net Debt 1,827.5 2,180.3 19.3%

Leverage
Total Debt/ LTM Adjusted EBITDA 2.3x 2.3x
Total Net Debt/ LTM Adjusted
EBITDA 2.2x 2.2x

Interest Coverage
Adjusted EBITDA / Net Interest
Expense 3.9x 3.8x

Cash flow from operations during 9M07 increased 68.4%, or Ps.235.6 million, to Ps.580.2 million. Net borrowings rose Ps.300.3 million to Ps.270.9 million. CAPEX for 9M07 decreased Ps.57.4 million to Ps.907.4 million. Investments were principally related to the upgrade and expansion of Cablemas' network, customers' premises equipment investments and the roll out of IP telephony.

Table 14. Cash Flow
9M06 9M07 Change
Cash at the beginning of the year 815.1 55.1 (760.0)
Net Income 119.9 193.0 73.1
+ Depreciation and amortization 276.0 348.4 72.4
+ Change in Working Capital (93.0) 30.8 123.8
+ Other 41.8 8.0 (33.7)
Cash Flow from Operations 344.6 580.2 235.6
- Capex (964.8) (907.4) 57.4
- Other (5.4) 38.9 44.3
Net Investing Activities (970.2) (868.6) 101.6
+ Debt (29.3) 308.7 337.9
+ Other (0.2) (37.8) (37.6)
Net Financing Activities (29.5) 270.9 300.3
Cash at the end of the year 160.1 37.7 (122.5)

RECENT DEVELOPMENTS
Acquisition of Comunicacion por Cable de San Buenaventura

In September 2007 Cablemas acquired Comunicacion por Cable de San Buenaventura, a cable TV operator located in Ixtapalupa for a total of US$5.6 million. With this acquisition, Cablemas has added around 5,000 new subscribers and 120 kilometers to its network. The acquisition was financed with current lines of credit.

THIRD QUARTER 2007 EARNINGS CONFERENCE CALL

Date: Wednesday, November 28, 2007

Time: 11:30 AM US ET- 10:30 AM Mexico City Time

Dial information: 866-202-4367 (U.S.) or 617-213-8845
(international)

Passcode: 90930122

Replay: Starting Wednesday, November 28, 2007, at 1:30 PM US
ET, ending at midnight US ET on Wednesday,
December 5, 2007, 888-286-8010 (U.S.) or 617-801-6888
(international). Passcode: 20958501.

About Cablemas

Cablemas is the second-largest cable television operator in Mexico based on number of subscribers and homes passed. As of September 30, 2007, Cablemas' cable network served over 770,213 cable television subscribers, 213,322 high-speed internet subscribers, and 34,435 IP telephony lines, with 2,194,662 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 September 30, 2007. Cablemas has consistently introduced innovative products in Mexico and is the first 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 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.

- Unaudited Financial Tables to Follow -

CABLEMAS, S.A. DE C.V.Y SUBSIDIARIAS
Consolidated Balance Sheets
September 30, 2007 and 2006
(Constant Mexican pesos as of September 30, 2007)
(Unaudited)

Assets 2007 2006
Current assets:
Cash and equivalent $37,651,753 $160,113,392
Accounts receivables,
less estimate for past
due accounts for
$9,088,552 in 2007
and $6,656,733 in 2006 48,432,898 33,237,572
Other accounts
receivables, net 177,160,575 274,002,026
Associated companies 341,150 29,003,300
Prepaid expenses 34,600,433 31,083,200

Total current
assets 298,186,809 527,439,490

Financial Instruments 383,330,143 435,442,549

Inventory of components of
signal distribution
systems, net 352,619,938 348,438,910

Investment in associated
companies 105,689,033 81,069,927

Property, signal distribution
systems, and
equipment, net 3,611,186,565 2,987,477,080

Deferred employee statutory
profit sharing 8,981,619 6,666,377

Goodwill, net 1,009,599,497 1,010,690,395

Intangible asset from
pension and seniority
premium plans and severance
compensation for reasons
other than restructuring 19,220,763 22,809,298

Other non-current
assets, net 212,937,896 171,670,431

$6,001,752,263 $5,591,704,457

Liabilities 2007 2006
Current liabilities:
Current installments of:
Bank loans $311,049,163 $0
Obligations under
capital leases 6,221,294 507,037
Notes 67,185,440 70,124,083
Financial instruments 0 0
Accounts payable 211,003,796 230,692,209
Accruals 118,862,752 84,634,362
Accrued liabilities 15,188,740 14,311,959
Taxes payable 4,657,678 7,448,183
Employee statutory profit
sharing 7,454,868 5,739,150
Productora y Comercializadora
de Television, S. A. de C. V.
(associated company) 37,944,614 46,567,824
Subscriber deposits and
advances 24,484,097 27,166,452

Total current
liabilities 804,052,442 487,191,259

Financial instruments 344,915,399 478,241,062
Corporate bond 1,906,940,001 1,987,603,562
Bank loans, excluding
current installments 60,000,000 0
Obligations under capital
leases, excluding current
installments 10,464,583 554,491
Pension and seniority
premiums plans and severance
compensation for reasons
other than restructuring 52,732,386 44,066,772
Income tax 8,668,349 10,919,762
Deferred income tax 417,347,916 320,943,813

Total
liabilities 3,605,121,076 3,329,520,721

Stockholders' equity
Majority stockholders' equity:
Capital stock 739,939,845 734,455,067
Additional paid-in
capital 1,181,974,635 1,144,916,343
Retained earnings 552,124,676 490,549,436
Valuation effects of
financial instruments (71,431,651) (101,519,571)
Effect for labour
obligations (1,540,119) (1,398,530)
Cumulative effect on
deferred taxes 3,395,343 3,395,343
Result from holding
non monetary assets (10,140,444) (10,140,444)

Total majority
stockholders'
equity 2,394,322,285 2,260,257,644

Minority stockholders'
equity 2,308,902 1,926,092

Total stockholders'
equity 2,396,631,187 2,262,183,736

Commitments and contingent
liabilities
$6,001,752,263 $5,591,704,457

CABLEMAS, S.A. DE C.V.Y SUBSIDIARIAS
Consolidated Statements of Income
Nine-month period ending September 30, 2007 and 2006
(Constant Mexican pesos as of September 30, 2007)
(Unaudited)

2007 2006

Service revenues $1,974,219,539 $1,751,250,788
Cost of services 982,398,376 824,327,038

Gross profit 991,821,163 926,923,750

Operating expenses:
Selling 184,853,692 180,865,197
Administrative 360,170,054 301,673,700
Amortization and
depreciation 45,486,931 43,515,678

Total operating
expenses 590,510,677 526,054,575

Operating profit 401,310,486 400,869,175

Comprehensive financial results:

Interest income 3,705,731 22,510,790
Interest expense (201,924,170) (197,109,388)
Foreign exchange (loss)
gain, net (2,897,765) 11,811,331
Financial instruments 27,973,301 24,164,957
Monetary position gain 36,862,996 20,763,460

Comprehensive
financial
results, net (136,279,907) (117,858,850)

Other income
(expenses), net 13,539,618 (7,150,521)

Special Items 23,801,396 (74,775,693)

Income before
income taxes,
employee
statutory profit
sharing, 302,371,593 201,084,111

Income taxes:
Current 40,952,982 61,475,600
Deferred 64,048,208 18,634,393

Total income
taxes 105,001,190 80,109,993

Employee statutory
profit sharing
Current 7,392,592 6,091,786
Deferred (2,225,440) (2,386,368)

Total employee
statutory profit
sharing 5,167,152 3,705,418

Income before
effects from
associated
companies and
minority
interest 192,203,251 117,268,700

Effects from associated
companies 1,083,924 3,415,900

Income before
minority
interest 193,287,175 120,684,600

Minority interest (279,843) (819,946)

Majority
interest
net income $193,007,332 $119,864,654

CABLEMAS, S.A. DE C.V.Y SUBSIDIARIAS
Consolidated Statements of Changes in Financial Position
Nine-month period ending September 30, 2007 and 2006
(Constant Mexican pesos as of September 30, 2007)
(Unaudited)

2007 2006

Operating activities:
Net income $193,007,332 $119,864,654
Add charges (deducted credit) to
operations not requiring
(providing) funds:
Depreciation and amortization 348,414,764 276,039,441
Increase in allowance for inventory of
components of signal distribution systems - 2,719,920
Effects from associated companies (1,192,510) (3,415,900)
Goodwill deterioration - 13,549,900
Goodwill cancellation - 8,072,825
Accruals for pensions and severance
packages 5,462,447 2,515,311
Deferred income taxes 64,048,208 18,634,393
Deferred employee statutory profit
sharing (2,225,440) (2,386,368)
Financial instruments (58,369,020) 1,241,797
Minority interest 279,843 819,946

Funds provided by operations 549,425,624 437,655,921

Net financing from (investing in)
operating accounts:
Trade and other accounts receivable,
net 60,032,654 (107,013,092)
Prepaid expenses (15,067,518) (5,537,424)
Accounts payable (39,748,824) 65,881,610
Accruals and accrued liabilities 25,560,632 11,607,445
Taxes payable (19,553,707) (8,723,136)
Subscriber deposits and advances (20,338,615) (39,313,883)
Employee statutory profit sharing 494,081 2,314,080
Related parties 39,377,236 (12,255,729)

Funds provided by operating
activities 580,181,563 344,615,791

Financing activities:
Proceeds from (payments of) bank loans,
net 283,260,161 -
Proceeds from corporate bond 9,614,644 (30,336,209)
Income tax (139,413) (188,913)
Dividends Paid (37,628,272) -
Proceeds from financial leases 15,779,258 1,061,528

Funds provided by financing
activities 270,886,378 (29,463,594)

Investing activities:
Acquisition of distribution systems and
equipment (78,228,492) (202,439,709)
Inventory of components of signal
distribution systems (774,767,996) (714,990,006)
Other assets, net (54,445,726) (47,366,110)
Investment in associated companies (5,669,587) (5,367,082)
Insurance 44,557,404 -

Funds used in investing activities (868,554,397) (970,162,907)

Decrease (increase) in cash and cash
equivalents (17,486,455) (655,010,710)

Cash and cash equivalents:
At beginning of year 55,138,208 815,124,102

At end of year $37,651,753 $160,113,392

First Call Analyst:
FCMN Contact:

Source: Cablemas

CONTACT: In Mexico, Sebastian Castro Brotto, Budget and IR Manager of
Cablemas, (5255) 24-54-58-84, sebastian.castro@admCablemas.com.mx; or in the
United States, Susan Borinelli, +1-646-452-2332,
sborinelli@breakstone-group.com, or Maura Gedid, +1-646-452-2335,
mgedid@breakstone-group.com, both of Breakstone Group for Cablemas

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

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