Cablemas 3Q08 Net Revenue and Adjusted EBITDA Up 16.8% and 12.5% YoY
MEXICO CITY, 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-month period ending September 30, 2008.
Cablemas CEO Carlos M. Alvarez Figueroa commented, "This was another quarter of revenue growth. As anticipated, Adjusted EBITDA margin for the first nine months of the year was 37.0% compared to 38.2% in 9M07. We continue to expect fourth quarter performance to be on track."
"We remain focused on expanding our customer base. In fact, this quarter we increased cable television subscribers by 6.6%, high speed internet subscribers by 10.4% and IP telephony lines by 112.8% year-on-year."
"Despite the overall challenging global environment, we continue to see an attractive growth potential in our markets as our service offering has demonstrated to be quite defensive in prior economic downturns. In addition, we have a strong balance sheet with virtually no short-term debt."
Financial and Operational Highlights(1)
(in million
Mexican Pesos) 3Q07 3Q08 % Chg. 9M07 9M08 % Chg.
Financial
Highlights
Net revenue 678.9 792.8 16.8% 2,004.8 2,333.3 16.4%
Operating
profit 125.2 102.5 -18.2% 417.6 373.1 -10.7%
Adjusted
EBITDA(2) 246.0 276.7 12.5% 766.7 863.6 12.6%
Net income 31.9 (64.3) n/a 196.0 10.4 -94.7%
Operating
margin 18.4% 12.9% -552 bps 20.8% 16.0% -484 bps
Adjusted
EBITDA
margin(2) 36.2% 34.9% -133 bps 38.2% 37.0% -123 bps
Net income
margin 4.7% -8.1% -1280 bps 9.8% 0.4% -933 bps
Total Debt 2,330.2 2,469.1 6.0% 2,330.2 2,469.1 6.0%
Net Debt 2,292.0 2,339.9 2.1% 2,292.0 2,339.9 2.1%
Total Debt/LTM 10.4%
Adj. EBITDA(2) 2.4x 2.2x 2.4x 2.2x
Net Debt/ LTM
Adj. EBITDA(2) 2.3x 2.1x 2.3x 2.1x
EBITDA/ Net
interest
expense 3.5x 2.1x 3.8x 3.0x
Operational
Highlights
Homes passed 2,194,662 2,406,430 9.6% 2,194,662 2,406,430 9.6%
Cable
Television
subscribers 770,213 821,191 6.6% 770,213 821,191 6.6%
High-speed
internet
subscribers 213,322 235,422 10.4% 213,322 235,422 10.4%
IP Telephony
lines 34,435 73,284 112.8% 34,435 73,284 112.8%
(1) Unless otherwise stated, all financial figures discussed in this
announcement are unaudited, prepared in accordance with Mexican
Financial Reporting Standards and represent comparisons between the
three-month periods ended September 30, 2008, and the equivalent
three-month period ended September 30, 2007. Results for 3Q07 are
expressed in constant Mexican pesos as of December 31, 2007, while
3Q08 results are in nominal pesos. Tables state figures in millions of
pesos, unless otherwise noted.
(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.
SECOND QUARTER 2008 CONSOLIDATED RESULTS
Net Revenues
Net revenues increased 16.8%, or Ps.113.9 million, during 3Q08 to Ps.792.8 million, as described below:
-- Cable Television: The 9.5% growth in cable television revenues, from Ps.510.9 million to Ps.559.4 million was principally due to a 6.6% YoY increase in the number of subscribers to 821,191 with a penetration rate of 33.4%. Average monthly cable television revenues per subscriber (ARPU) increased year over year to Ps.229.3 from Ps.223.6, principally reflecting the increase in rates at the Minibasic service implemented earlier in the year. Average monthly net churn rates for cable television remained relatively unchanged year-on-year at 2.5%.
-- High Speed Internet: The 9.0%, or Ps.11.2 million, rise in high-speed Internet revenues to Ps.135.7 million resulted mainly from a 10.4% increase in the number of subscribers to 235,422, with a penetration rate of 11.5%. High- speed Internet ARPU declined to Ps.196.5 from Ps.198.9 in 3Q07, reflecting a higher participation of competitively priced double and triple play offerings. Average monthly net churn rates for high-speed Internet declined 31 bps to 4.0% in 3Q08 due to the increase in the participation of a more stable double and triple play client base.
-- IP Telephony: IP telephony revenues for the quarter rose by Ps.31.4 million, to Ps.62.3 million. The number of IP telephony lines in service rose 112.8% to 73,284 from 34,435 at the end of 3Q07. IP telephony ARPU for 3Q08 declined to Ps.290.1 from Ps.302.0 in the year-ago quarter reflecting the ramping up of this service in new cities and growth of competitively priced double and triple play offerings. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps. 296.1 for 3Q08.
Table 1. Revenues by Service Offering
3Q07 3Q08
% of Total % of Total % Chg.
Revenue Revenue Revenue Revenue
Cable Television 510.9 75.2% 559.4 70.6% 9.5%
High-Speed Internet 124.5 18.3% 135.7 17.1% 9.0%
IP telephony 30.9 4.5% 62.3 7.9% 101.8%
Advertising 12.2 1.8% 34.3 4.3% 181.3%
Other(1) 0.5 0.1% 1.1 0.1% 113.6%
Total Net Revenue(2) 678.9 100.0% 792.8 100.0% 16.8%
(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 2. Number of Subscribers and Revenue per Service Offering
% Chg. in
3Q07 3Q08 Subscribers
Minibasic 232,906 255,776 9.8%
Basic(1) 520,463 547,122 5.1%
Superbasic(1) 43,230 37,936 -12.2%
Premium (1) 30,117 37,945 26.0%
Hotel 16,844 18,293 8.6%
Total Cable Television 770,213 821,191 6.6%
High-Speed Internet 213,322 235,422 10.4%
IP Telephony lines 34,435 73,284 112.8%
(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
3Q07 3Q08 % Chg.
Homes passed 2,194,662 2,406,430 9.6%
Cable Television
- Revenue 510.9 559.4 9.5%
- Subscribers 770,213 821,191 6.6%
- ARPU 223.6 229.3 2.6%
- Avg. Monthly Churn 2.50% 2.46% -4 bps
High-Speed Internet
- Revenue 124.5 135.7 9.0%
- Subscribers 213,322 235,422 10.4%
- ARPU 198.9 196.5 -1.2%
- Avg. Monthly Churn 4.3% 4.0% -31 bps
IP Telephony
- Revenue 30.9 62.3 101.8%
- Lines 34,435 73,284 112.8%
- ARPU (without migration fee) 302.0 290.1 -3.9%
Operating Profit
Operating profit for 3Q08 decreased by 18.2%, or Ps.22.8 million, to Ps.102.5 million, driven mainly by a Ps.64.2 million rise in SG&A, which more than offset the Ps.41.5 million increase in gross profit. Operating margin fell 552 bps to 12.9% from 18.4% in 3Q07.
Table 4. Operating Profit
3Q07 3Q08
Million % of Million % of
Ps. Revenues Ps. Revenues % Chg.
Service revenues 678.9 100.0% 792.8 100.0% 16.8%
Cost of services 342.6 50.5% 415.0 52.3% 21.1%
Gross Profit 336.3 49.5% 377.8 47.7% 12.3%
SG&A 211.1 31.1% 275.3 34.7% 30.4%
- Selling 64.4 9.5% 102.2 12.9% 58.7%
- Administrative 128.2 18.9% 142.6 18.0% 11.2%
- Amortization and depreciation 18.5 2.7% 30.6 3.9% 65.2%
Total operating profit 125.2 18.4% 102.5 12.9% -18.2%
Cost of Services
Cost of Services for 3Q08 rose 21.1%, or Ps.72.2 million. The increase in cost of services was primarily due to:
-- A Ps. 20.1 million increase in cable TV programming costs, reflecting higher costs and the increase in the number of cable subscribers;
-- A Ps. 14.2 million increase in Internet costs related to the incremental cost for bandwidth as the company is offering higher Internet speeds at the same price to make its service more attractive. The increase also reflected the 10.4% growth in the number of Internet subscribers; and
-- A Ps. 27.1 million increase in telephony costs resulting from the roll out of IP telephony in new cities.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.64.2 million, or 30.4% YoY to Ps.275.3 million. As a percentage of sales, SG&A increased to 34.7%, from 31.1% in 3Q07. The absolute increase in SG&A principally reflected the following changes:
-- Selling expenses rose 58.7% to Ps.102.2 million. As a percentage of revenues, selling expenses increased to 12.9% from 9.5% in 3Q07 reflecting an increase in commissions paid and the advertising campaign launched earlier in the year to promote the launch of IP telephony and triple play. The Company employed 1,303 salespersons as of September 30, 2008 compared to 1,167 as of September 30, 2007.
-- Administrative expenses increased 11.2% to Ps.142.6 million. As a percentage of revenues, administrative expenses fell to 18.0% from 18.9% in the year-ago quarter. The absolute rise in administrative expenses was principally due to:
-- A Ps. 6.1 million increase in salaries and fees principally due to
the increase in the number of employees resulting from the Company's
growth; and
-- A Ps. 3.4 million increase in administrative expenses in connection
with the rollout of the IP telephony service.
-- Amortization and depreciation rose 65.2%, or Ps.12.1 million, to Ps.30.6 million in 3Q08, principally due to the increase in office equipment and the amortization of intangibles resulting from recent acquisitions.
Adjusted EBITDA
Adjusted EBITDA for 3Q08 increased 12.5%, or Ps.30.7 million, to Ps.276.7 million. The adjusted EBITDA margin decreased 133 bps to 34.9%. The following table sets forth the reconciliation between net income and adjusted EBITDA:
Table 5. Adjusted EBITDA
3Q07 3Q08 % Chg.
Net income (loss) 31.9 (64.3) n/a
Add (subtract):
Amortization and depreciation 120.8 174.3 44.3%
Comprehensive financial results, net 54.2 157.2 190.1%
Other (income) expense, net (3.4) 2.0 n/a
Total income tax and asset tax 35.3 (15.9) n/a
Employee profit sharing 0.6 0.1 -79.7%
Effects from associated companies 6.5 23.5 261.7%
Minority interest 0.1 (0.2) n/a
Adjusted EBITDA 246.0 276.7 12.5%
-- Depreciation and amortization increased 44.3%, or Ps.53.5 million, to Ps.174.3 million, principally due to an increase in fixed asset investments.
-- Net comprehensive financial results were an expense of Ps.157.2 million compared with an expense of Ps.54.2 million in 3Q07, principally reflecting higher interest expenses resulting from the additional debt incurred in connection with the acquisition of Cablemas' 15% stake in Bestel.
-- During the quarter, the Company reversed a Ps.15.9 million income and asset tax provision, compared to a Ps.35.3 provision million reported in 3Q07.
Comprehensive Financial Results, Net
Net comprehensive financial results were an expense of Ps.157.2 million for the three-months ended September 30, 2008, an increase of Ps.103.0 million over an expense of Ps.54.2 million for 3Q07. The increase primarily reflected an interest expense of Ps.136.1 million, compared with Ps.72.5 million in 3Q07.
Table 6. Comprehensive Financial Results, Net
3Q07 3Q08 % Chg.
Interest income -1.4 -1.9 40.8%
Interest expense 72.5 136.1 87.8%
Financial instruments (gain) 0.3 16.6 5550.0%
Foreign-exchange (gain) loss, net 1.5 6.4 321.3%
Monetary position loss (gain) -18.7 0.0 -100.0%
Comprehensive financial results, net 54.2 157.2 190.1%
Net Income
For 3Q08, Cablemas posted a net loss of Ps.64.3 million, compared with a net gain of Ps.31.9 million 3Q07. Net income margin fell to negative 8.1% from positive 4.7% for 3Q07.
NINE MONTHS 2008 CONSOLIDATED RESULTS
Net Revenues
Net revenues increased 16.4%, or Ps.328.5 million, during 9M08 to Ps.2,333.3 million.
-- Cable Television: The 10.3%, or Ps.156.6 million, growth in cable television revenues was principally due to a 6.6% YoY increase in the number of subscribers to 821,191, with a penetration rate of 33.4%. Average monthly cable television revenues per subscriber (ARPU) rose 0.8% to Ps.231.0. This raise in ARPU was primarily the result of the increase in rates at the Minibasic service implemented earlier in the year. The average monthly net churn rates for cable television fell 4 bps to 2.46% for 9M08 from 2.50% in 9M07.
-- High Speed Internet: Revenues rose 17.3%, or Ps.61.5 million, to Ps.415.9 million. The rise in high-speed Internet revenues resulted mainly from a 10.4% increase in the number of subscribers to 235,422, with a penetration rate of 11.5%. A 0.3% increase in high-speed Internet ARPU to Ps.202.8 reflecting the increase in bandwidth offered also contributed to the increase in revenue. Average monthly net churn rates for high-speed Internet fell to 4.0% for 9M08 from 4.3% in 9M07 reflecting a higher participation of more stable double and triple play clients.
-- IP Telephony: IP telephony revenues for the period rose 85.7%, or Ps.73.2 million, to Ps.158.6 million. As of September 30, 2008, there were 73,284 IP telephony lines in service, up from 34,435 as of September 30, 2007. IP telephony ARPU for 9M08 rose 2.3% to Ps.302.3. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps.308.2 for 9M08.
Table 7. Revenues by Service Offering
9M07 9M08
% of Total % of Total
Revenue Revenue Revenue Revenue % Chg.
Cable Television 1,525.5 76.1% 1,682.2 72.1% 10.3%
High-Speed Internet 354.5 17.7% 415.9 17.8% 17.3%
IP telephony 85.4 4.3% 158.6 6.8% 85.7%
Advertising 36.5 1.8% 70.8 3.0% 93.7%
Other(1) 2.9 0.1% 5.8 0.2% 101.3%
Total Net Revenue(2) 2,004.8 100.0% 2,333.3 100.0% 16.4%
(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 and Revenue per Service Offering
% Chg. in
9M07 9M08 Subscribers
Minibasic 232,906 255,776 9.8%
Basic(1) 520,463 547,122 5.1%
Superbasic(1) 43,230 37,936 -12.2%
Premium (1) 30,117 37,945 26.0%
Hotel 16,844 18,293 8.6%
Total Cable Television 770,213 821,191 6.6%
High-Speed Internet 213,322 235,422 10.4%
IP Telephony lines 34,435 73,284 112.8%
(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
9M07 9M08 % Chg.
Homes passed 2,194,662 2,406,430 9.6%
Cable Television
- Revenue 1,525.5 1,682.2 10.3%
- Subscribers 770,213 821,191 6.6%
- ARPU 229.1 231.0 0.8%
- Avg. Monthly Churn 2.50% 2.46% -4 bps
High-Speed Internet
- Revenue 354.5 415.9 17.3%
- Subscribers 213,322 235,422 10.4%
- ARPU 202.2 202.8 0.3%
- Avg. Monthly Churn 4.3% 4.0% -31 bps
IP Telephony
- Revenue 85.4 158.6 85.7%
- Lines 34,435 73,284 112.8%
- ARPU (without migration fee) 295.6 302.3 2.3%
Operating Profit
Operating profit for 9M08 declined by 10.7%, or Ps.44.5 million, to Ps.373.1 million, driven mainly by a increases of 21.3% in SG&A which more than offset the 8.3% increase in gross profit. Operating margin declined to 16.0% from 20.8% in 9M07, principally due to higher cost of services and SG&A as a percentage of sales.
Table 10. Operating Profit
9M07 9M08
Million % of Million % of
Ps. Revenues Ps. Revenues % Chg.
Service revenues 2,004.8 100.0% 2,333.3 100.0% 16.4%
Cost of services 981.0 48.9% 1,225.0 52.5% 24.9%
Gross Profit 1,023.8 51.1% 1,108.3 47.5% 8.3%
SG&A 606.3 30.2% 735.2 31.5% 21.3%
- Selling 191.0 9.5% 248.3 10.6% 30.0%
- Administrative 369.0 18.4% 403.2 17.3% 9.3%
- Amortization and depreciation 46.2 2.3% 83.7 3.6% 81.1%
Total operating profit 417.6 20.8% 373.1 16.0% -10.7%
Cost of Services
Cost of Services for 9M08 increased by 24.9%, or Ps.244.0 million. The increase in cost of services was primarily due to:
-- A 10.9% increase in cable TV programming costs, reflecting higher costs and the increase in the number of cable subscribers;
-- A Ps.55.9 million increase in Internet costs, which are related to the incremental cost for bandwidth. Higher internet costs also reflect the 10.4% increase in the number of internet subscribers during the period;
-- A Ps.53.7 million increase in telephony costs resulting from the roll out of IP telephony in new cities; and
-- A 34.3% increase in depreciation & amortization resulting from an increase in fixed assets investments.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.129.0 million, or 21.3% YoY to Ps.735.2 million. As a percentage of sales, SG&A rose to 31.5% from 30.2%. The absolute increase in SG&A principally reflected the following factors:
-- A 30.0%, or Ps.57.3 million, increase in selling expenses to Ps.248.3 million principally related to the expansion of the Company's sales force (1,303 salespersons as of September 30, 2008 as compared to 1,167 as of September 30, 2007), an increase in commissions paid.
-- A 9.3%, or Ps.34.2 million, increase in administrative expenses, including Ps.18.6 in wages and salaries, and Ps.5.1 million administrative expenses in connection with the IP telephony service; and
-- An 81.1%, or Ps.37.5 million, increase in amortization and depreciation, to Ps.83.7 million for 9M08, principally due to an increase in office equipment and the amortization of intangibles resulting from recent acquisitions.
Adjusted EBITDA
Adjusted EBITDA for 9M08 increased 12.6%, or Ps.97.0 million, to Ps.863.6 million. The adjusted EBITDA margin declined 123 bps to 37.0% from 38.2%. The following table sets forth the reconciliation between net income and adjusted EBITDA:
Table 11. Adjusted EBITDA
9M07 9M08 % Chg.
Net income (loss) 196.0 10.4 -94.7%
Add (subtract):
Amortization and depreciation 349.1 490.5 40.5%
Comprehensive financial results, net 138.4 275.5 99.1%
Other (income) expense, net (27.9) 2.0 n/a
Total income tax and asset tax 106.6 51.1 -52.1%
Employee profit sharing 5.2 0.1 -97.5%
Effects from associated companies (1.1) 33.8 n/a
Minority interest 0.3 0.1 -70.4%
Adjusted EBITDA 766.7 863.6 12.6%
-- Depreciation and amortization rose 40.5%, or Ps.141.5 million, to Ps.490.5 million, principally due to an increase in fixed asset investments;
-- Net comprehensive financial results were an expense of Ps.275.5 million compared with an expense of Ps.138.4 million in 9M07 as explained below;
-- During the period the Company recorded a Ps.51.1 million provision for income and asset taxes, compared to Ps.106.6 million in 9M07.
Comprehensive Financial Results, Net
Net comprehensive financial results was an expense of Ps.275.5 million for 9M08, an increase of Ps.137.1 million from an expense of Ps.138.4 million for 9M07. This mainly reflected an increase in interest income, higher interest expenses as a result of the Ps.297.0 million increase in gross debt. In addition, pursuant to NIF B-10, inflation accounting is not applicable for 2008 and thus the result from monetary position is not determined for 2008.
Table 12. Comprehensive Financial Results, Net
9M07 9M08 % Chg.
Interest income -3.8 -8.9 137.6%
Interest expense 205.1 297.6 45.1%
Financial instruments (gain) -28.4 -13.3 -53.2%
Foreign-exchange (gain) loss, net 2.9 0.1 -96.2%
Monetary position loss (gain) -37.4 0.0 -100.0%
Comprehensive financial results, net 138.4 275.5 99.1%
Net Income
For 9M08, Cablemas posted a net gain Ps.10.4 million, a 94.7%, or Ps.185.6 million, reduction compared to a Ps.196.0 million gain in 9M07. Net income margin declined to 0.4% from 9.8% for 9M07.
CAPEX
Capital expenditures for 9M08 increased 34.7%, or Ps.304.0 million, to Ps.1,180.3 million from Ps.876.3 million in 9M07. 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, 2008, Cablemas had a network of 14,533 km, of which 85% was bidirectional, 90% was operating at or greater than 550 MHz and 78% was operating at or greater than 750 MHz.
DEBT STRUCTURE AND CASH FLOW
Consolidated gross debt as of September 30, 2008, totaled Ps.2,469.1 million, of which Ps. 2,462.5 million was long-term and Ps.6.6 million was short term. Consolidated gross debt rose YoY by 6.0%, from Ps.2,330.2 million as of September 30, 2007. This was mainly the result of the 5-year term syndicated loan facility for US$50 million entered with JP Morgan on December 21, 2007, which funds were used to finance Cablemas' proportionate ownership share of Cablestar, S.A. de C.V. in the acquisition of the majority of the assets of Bestel, S.A. de C.V.
Net debt, which is calculated as total debt minus cash and cash equivalents, increased YoY by 2.1% to Ps.2,339.9 million, from 2,292.0 million as of September 30, 2007. As of September 30, 2008, Cablemas had a cash balance of Ps.129.2 million.
Approximately 98% of Cablemas' debt is denominated in US dollars. All of the Company's bank debt is hedged by swap agreements on interest and principal payments for the life of the senior notes and the US$50 million loan. The company has not entered into any other derivatives transactions during 2008.
Table 13. Debt Indicators
9M07 9M08 % Chg.
Total Debt 2,330.2 2,469.1 6.0%
Short-Term Debt 164.8 6.6 -96.0%
Long-Term Debt 2,165.5 2,462.5 13.7%
Cash and Cash Equivalents 38.2 129.2 237.9%
Total Net Debt 2,292.0 2,339.9 2.1%
Leverage
Total Debt/ LTM Adjusted EBITDA 2.4x 2.2x
Total Net Debt/ LTM Adjusted EBITDA 2.3x 2.1x
Interest Coverage
Adjusted EBITDA / Net Interest Expense 3.8x 3.0x
Cash flow from operations during 9M08 increased 23.2%, or Ps.126.0 million, to Ps.670.0 million. Net borrowings increased by Ps.345.6 million. CAPEX for 9M08 increased Ps.304.0 million to Ps.1,180.3 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
9M07 9M08 Change
Cash at the beginning of the year 56.0 54.5 (1.5)
Net Income 196.0 10.4 (185.6)
+ Depreciation and amortization 353.8 495.5 141.7
+ Change in Working Capital 30.8 218.7 187.9
+ Other (36.7) (54.6) (17.9)
Cash Flow from Operations 543.9 670.0 126.0
- Capex (876.3) (1,180.3) (304.0)
- Other 39.5 (35.7) (75.2)
Net Investing Activities (836.8) (1,216.0) (379.2)
+ Debt 313.4 (383.3) (696.7)
+ Other (38.4) 1,004.0 1,042.3
Net Financing Activities 275.1 620.7 345.6
Cash at the end of the year 38.2 129.2 91.0
KEY DEVELOPMENTS
Termination of the Commercial Agreement with Axtel
On July 31, 2008 Cablemas terminated its commercial agreement with Axtel to provide IP telephony in the city of Tijuana. As a result of the split of the subscriber base, approximately 14,000 IP telephony lines, 6,000 internet subscribers and 8,000 cable TV subscribers were transferred to Axtel. Cablemas continues to provide IP telephony service in Tijuana through its own infrastructure.
NINE MONTHS 2008 EARNINGS CONFERENCE CALL
Date: Friday, November 28, 2008
Time: 11:30 AM US ET- 10:30 AM Mexico City Time
Dial Information: 888.679.8035 (U.S.) or 617.213.4848 (international)
Passcode: 7919289
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Replay: A replay of the call will be available between 1:30 pm ET on November 28 and 11:59 pm ET on December 5. The replay is accessible by dialing 888-286-8010 (U.S.) or 617-801-6888 (international) and entering passcode 56298340.
About Cablemas
Cablemas is the second-largest cable television operator in Mexico based on number of subscribers and homes passed. As of September 30, 2008, Cablemas' cable network served over 821,191 cable television subscribers, 235,422 high- speed internet subscribers, and 73,284 IP telephony lines, with 2,406,430 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, 2008. 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. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2008 and 2007
(3Q07 figures are in thousands of constant Mexican pesos as of December 31,
2007 while 3Q08 figures are in thousands of nominal Mexican pesos)
(Unaudited)
ASSETS 2008 2007
Current assets:
Cash and cash equivalents $129,202 $38,235
Trade accounts receivable, less
allowance for doubtful accounts of
Ps 12,029 in 2008, Ps 9,229 in 2007 52,413 49,184
Other accounts receivable, net 129,054 179,907
Associated companies 79 346
Prepaid expenses 45,307 35,137
Total current assets 356,055 302,809
Financial Instruments 554,546 389,272
Inventory of components of signal
distribution systems, net 586,718 358,086
Investment in associated companies 627,641 97,145
Property, signal distribution
systems and equipment, net 4,290,863 3,667,160
Deferred employee statutory profit sharing 14,253 9,121
Goodwill, net 1,076,294 1,025,248
Other non-current assets, net 185,836 216,238
$7,692,206 $6,065,079
LIABILITIES 2008 2007
Current liabilities:
Current installments of:
Bank loans $453 $158,468
Obligations under capital leases 6,150 6,318
Senior notes 67,936 68,227
Accounts payable 422,598 214,248
Accruals 121,236 120,705
Accrued liabilities 35,824 15,424
Taxes payable 44,928 4,730
Employee statutory profit sharing 4,478 7,570
Productora y Comercializadora de Television,
S. A. de C. V. (related company) 40,491 38,533
Subscriber deposits and advances 24,564 24,864
Total current liabilities 768,658 659,087
Financial instruments 426,196 350,262
Senior notes 1,911,166 1,936,498
Accounts payable 6,751 -
Bank loans, excluding current installments 546,985 218,333
Obligations under capital leases,
excluding current installments 4,339 10,627
Pension and seniority premiums plans and
severance compensation for reasons other
than restructuring 46,195 34,031
Income tax long-term 3,358 8,803
Deferred income tax 450,590 436,710
Total liabilities 4,164,238 3,654,351
STOCKHOLDERS' EQUITY
Majority stockholders' equity:
Capital stock 761,100 751,417
Additional paid-in capital 2,298,504 1,200,309
Retained earnings 479,634 537,611
Valuation effects of financial instruments (6,990) (72,540)
Effect from labor obligations - (1,564)
Cumulative deferred Income Tax effect 3,448 3,448
Equity adjustment of non-monetary assets (10,298) (10,298)
Total majority stockholders' equity 3,525,398 2,408,383
Minority interest 2,570 2,345
Total stockholders' equity 3,527,968 2,410,728
$7,692,206 $6,065,079
CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES
Consolidated Statements of Income
Nine-month period ending September 30, 2008 and 2007
(3Q07 figures are in thousands of constant Mexican pesos as of December
31, 2007 while 3Q08 figures are in thousands of nominal Mexican pesos)
(Unaudited)
2008 2007
Service revenues $2,333,289 $2,004,820
Cost of services 1,224,963 980,971
Gross profit 1,108,326 1,023,849
Operating expenses:
Selling 248,333 191,041
Administrative 403,231 369,032
Amortization and depreciation 83,659 46,192
Total operating expenses 735,223 606,265
Operating profit 373,103 417,584
Other income (expenses),
Employee statutory profit sharing:
Current (4,757) (7,507)
Deferred 4,627 2,260
Total employee statutory
profit sharing (130) (5,247)
Other income (expenses) (2,049) 27,867
Other income (expenses), net (2,179) 22,620
Comprehensive financial results:
Interest income 8,942 3,763
Interest expense (297,624) (205,054)
Foreign exchange (loss) gain, net (111) (2,943)
Valuation effects of financial
instruments 13,282 28,407
Monetary position gain - 37,434
Comprehensive financial
results, net (275,511) (138,393)
Effects from associated companies:
Equity in the results of operations (33,846) 1,101
Total effects from associated
companies (33,846) 1,101
Income before income taxes
and minority interest 61,567 302,912
Income taxes:
Current 52,803 41,588
Deferred (1,707) 65,041
Total income taxes 51,096 106,629
Income before minority interest 10,471 196,283
Minority interest (84) (284)
Majority interest net income Ps 10,387 Ps 195,999
Basic earnings per share Ps 0.03 Ps 0.72
CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES
Consolidated Statements of Changes in Financial Position
Nine-month period ending September 30, 2008 and 2007
(3Q07 figures are in thousands of constant Mexican pesos as of December 31,
2007 while 3Q08 figures are in thousands of nominal Mexican pesos)
(Unaudited)
2008 2007
Operating activities:
Majority interest net income $10,387 $195,999
Add charges (deduct credit) to
operations not requiring (providing) funds:
Depreciation and amortization 495,515 353,815
Net gain on insurance recovery (934) (45,248)
Increase in allowance for inventory of
components of signal distribution systems 2,296 406
Effects from associated companies 33,846 (1,211)
Accrual for pension, seniority premiums
and severance 7,395 5,547
Deferred income taxes (1,707) 65,041
Deferred employee statutory profit sharing (4,627) (2,260)
Minority interest 84 284
Financial instruments (90,971) (59,274)
Funds provided by operations 451,284 513,099
Net financing from (investing in)
operating accounts:
Trade and other accounts receivable, net 19,068 60,557
Prepaid expenses (23,543) (15,301)
Accounts payable 146,590 (22,489)
Accruals and accrued liabilities 54,778 25,957
Taxes payable 36,812 (19,857)
Subscriber deposits and advances (16,293) (20,654)
Employee statutory profit sharing 290 502
Related parties 980 22,112
Funds provided by operating activities 669,966 543,926
Financing activities:
Proceeds from (payments of) bank loans, net (426,744) 287,651
Proceeds from notes and payments of
commercial paper obligations, net 47,628 9,764
Proceeds from (payments of) capital lease
obligations (4,172) 16,024
Capital stock increases 9,683 -
Additional paid-in capital 1,098,195 -
Dividends paid (98,615) (38,212)
Income tax long-term (5,289) (142)
Funds provided by financing activities 620,686 275,085
Investing activities:
Inventory of components of signal
distribution systems (249,304) (79,441)
Capital expenditures (916,170) (741,529)
Other assets, net (14,781) (55,290)
Investment in associated companies (36,647) (5,757)
Insurance recovery 934 45,248
Funds used in investing activities (1,215,968) (836,769)
(Decrease) increase in cash and
cash equivalents 74,684 (17,758)
Cash and cash equivalents:
At beginning of year 54,518 55,993
At end of year $129,202 $38,235
Source: Cablemas, S.A. de C.V.
CONTACT: In Mexico: Allan Ituarte Hesles, Planning & IR Manager of
Cablemas, +5255-24-54-58-84, allan.ituarte@admcablemas.com.mx; In the United
States: Susan Borinelli of Breakstone Group, +1-646-452-2332,
sborinelli@breakstone-group.com, for Cablemas
Web site:
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Profile: intent
