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Cablemas 2Q08 Net Revenue and Adjusted EBITDA Up 14.1% and 6.1% YoY


MEXICO CITY, Aug. 28 /PRNewswire/ -- Cablemas, S.A. de C.V., (Cablemas), the second-largest cable television operator inMexico based on number of subscribers and homes passed, today announced results for the three-month period ending June 30, 2008.

Cablemas CEO Carlos M. Alvarez Figueroa commented, "We are pleased to report another quarter of strong revenue growth. As expected, Adjusted EBITDA margin was 38.1% compared to 39.1% in 2Q07."

"We continue to grow our customer base. Cable television subscribers rose 6.9%, high speed internet 10.3% and IP telephony 121.9% year-on-year."

"To continue making the most of the opportunities present in our markets, we have decided to step up the roll out of our IP telephony services, and we will be adding new cities in the second half of the year."

    Financial and Operational Highlights(1)
    (in million Mexican Pesos)
                                           2Q07        2Q08       % Chg.
    Financial Highlights
    Net revenue                           674.6        769.6       14.1%
    Operating profit                      158.1        122.8      -22.3%
    Adjusted EBITDA(2)                    270.2        286.6        6.1%
    Net income                             48.6         41.5      -14.5%
    Operating margin                      23.4%        16.0%    -749 bps
    Adjusted EBITDA margin(2)             40.1%        37.2%    -282 bps
    Net income margin                      7.2%         5.4%    -180 bps
    Total Debt                          2,201.7      2,329.3        5.8%
    Net Debt                            2,149.0      1,875.7      -12.7%
    Total Debt/ LTM Adj. EBITDA(2)         2.3x         2.2x
    Net Debt/ LTM Adj. EBITDA(2)           2.2x         1.7x
    EBITDA/ Net interest expense           4.1x         3.7x

    Operational Highlights
    Homes passed                       2,160,634   2,322,186       7.5%
    Cable Television subscribers         753,161     805,390       6.9%

    High-speed internet subscribers      203,890     224,799      10.3%
    IP Telephony lines                    30,202      67,012     121.9%



                                            1H07       1H08      % Chg.
    Financial Highlights
    Net revenue                          1,325.9     1,540.5       16.2%
    Operating profit                       292.4       270.6       -7.4%
    Adjusted EBITDA(2)                     520.7       586.9       12.7%
    Net income                             164.1        74.7      -54.5%
    Operating margin                       22.1%       17.6%    -448 bps
    Adjusted EBITDA margin(2)              39.3%       38.1%    -117 bps
    Net income margin                      12.4%        4.8%    -753 bps
    Total Debt                           2,201.7     2,329.3        5.8%
    Net Debt                             2,149.0     1,875.7      -12.7%
    Total Debt/ LTM Adj. EBITDA(2)           2.3         2.2
    Net Debt/ LTM Adj. EBITDA(2)             2.2         1.7
    EBITDA/ Net interest expense            4.0x        3.8x

    Operational Highlights
    Homes passed                       2,160,634   2,322,186       7.5%
    Cable Television subscribers         753,161     805,390       6.9%

    High-speed internet subscribers      203,890     224,799      10.3%
    IP Telephony lines                    30,202      67,012     121.9%

(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 June 30, 2008, and the equivalent three-month period ended June 30, 2007. Results for 2Q07 are expressed in constant Mexican pesos as of December 31, 2007, while 2Q08 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 14.1%, or Ps.95.0 million, during 2Q08 to Ps.769.6 million, as described below:

-- Cable Television: The 9.1% growth in cable television revenues, from Ps.511.2 million to Ps.557.8 million was principally due to a 6.9% YoY increase in the number of subscribers to 805,390 with a penetration rate of 33.9%. Average monthly cable television revenues per subscriber (ARPU) increased year over year to Ps.232.6 from Ps.228.8, principally reflecting the increase in rates at the Minibasic service implemented earlier in the year. Average monthly net churn rates for cable television increased year-on-year by 29 bps to 2.6%, reflecting the initial reaction to the above mentioned rate increase. On a sequential basis, however, churn declined compared from the 3.0% posted in 1Q08.

-- High Speed Internet: The 17.3%, or Ps.20.6 million, rise in high-speed Internet revenues to Ps.139.4 million resulted mainly from a 10.3% increase in the number of subscribers to 224,799, with a penetration rate of 11.4%. High-speed Internet ARPU increased to Ps.205.7 from Ps.196.8 in 2Q07, reflecting an increase in demand for higher speed service. Average monthly net churn rates for high-speed Internet rose 4 bps to 4.55% in 2Q08 due to high competition.

-- IP Telephony: IP telephony revenues for the quarter rose by Ps.23.4 million, to Ps.53.0 million. The number of IP telephony lines in service rose 121.9% to 67,012 from 30,202 at the end of 2Q07. IP telephony ARPU for 2Q08 declined to Ps.288.9 from Ps.315.5 in the year-ago quarter reflecting the ramping up of this service in new cities. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps.292.7 for 2Q08.


    Table 1. Revenues by Service Offering

                                        2Q07               2Q08
                                              % of               % of
                                             Total              Total
                                 Revenue    Revenue   Revenue  Revenue  % Chg.
    Cable Television               511.2     75.8%     557.8    72.5%     9.1%
    High-Speed Internet            118.8     17.6%     139.4    18.1%    17.3%
    IP telephony                    29.7      4.4%      53.0     6.9%    78.8%
    Advertising                     13.4      2.0%      18.1     2.4%    35.5%
    Other(1)                         1.6      0.2%       1.3     0.2%   -20.2%
    Total Net Revenue(2)           674.6    100.0%     769.6   100.0%    14.1%

(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 2. Number of Subscribers and Revenue per Service Offering

                                                                   % Chg. in
                                               2Q07        2Q08    Subscribers
    Minibasic                                214,766     238,031      10.8%
    Basic(1)                                 521,271     549,133       5.3%
    Superbasic(1)                             44,049      42,683      -3.1%
    Premium (1)                               29,194      34,039      16.6%
    Hotel                                     17,124      18,226       6.4%
    Total Cable Television                   753,161     805,390       6.9%
    High-Speed Internet                      203,890     224,799      10.3%
    IP Telephony lines                        30,202      67,012     121.9%

(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

                                          2Q07        2Q08      % Chg.
    Homes passed                       2,160,634   2,322,186      7.5%
    Cable Television
     - Revenue                             511.2       557.8      9.1%
     - Subscribers                       753,161     805,390      6.9%
     - ARPU                                228.8       232.6      1.7%
     - Avg. Monthly Churn                   2.3%        2.6%   +29 bps
    High-Speed Internet
     - Revenue                             118.8       139.4     17.3%
     - Subscribers                       203,890     224,799     10.3%
     - ARPU                                196.8       205.7      4.5%
     - Avg. Monthly Churn                  4.51%       4.55%    +4 bps
    IP Telephony
     - Revenue                              29.7        53.0     78.8%
     - Lines                              30,202      67,012    121.9%
     - ARPU (without migration fee)        315.5       288.9     -8.4%

Operating Profit

Operating profit for 2Q08 decreased by 22.3%, or Ps.35.4 million, to Ps.122.8 million, driven mainly by a Ps.3.7 million decrease in gross profit and a Ps.31.65 million rise in SG&A. Operating margin fell 748 bps to 16.0% from 23.4% in 2Q07.


    Table 4. Operating Profit
                                       2Q07               2Q08
                                Million    % of     Million   % of
                                  Ps.    Revenues     Ps.   Revenues   % Chg.

    Service revenues             674.6    100.0%     769.6   100.0%    14.1%
    Cost of services             317.1     47.0%     415.7    54.0%    31.1%
    Gross Profit                 357.5     53.0%     353.9    46.0%    -1.0%
    SG&A                         199.4     29.6%     231.1    30.0%    15.9%
     - Selling                    60.9      9.0%      67.7     8.8%    11.2%
     - Administrative            122.6     18.2%     135.8    17.6%    10.8%
     - Amortization and
       depreciation               15.9      2.4%      27.5     3.6%    72.8%
    Total operating profit       158.1     23.4%     122.8    16.0%   -22.3%

Cost of Services

Cost of Services for 2Q08 rose 31.1%, or Ps.98.66 million. The increase in cost of services was primarily due to:

-- A Ps. 7.9 million increase in cable TV programming costs, reflecting higher costs and the increase in the number of cable subscribers;

-- A Ps. 21.9 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 10.3% growth in the number of Internet subscribers;

-- A Ps. 40.1 million increase in depreciation & amortization resulting from an increase in fixed assets investments.

-- A Ps. 17.2 million increase in telephony costs resulting from the roll out of IP telephony in new cities; and

-- A Ps. 5.2 million increase in payroll due to a rise in the number of technical employees from 1,108 people in June 30, 2007 to 1,269 in June 30, 2008.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.31.65 million, or 15.9% YoY to Ps.231.1 million. As a percentage of sales SG&A increased to 30.0%, from 29.6% in 2Q07. The absolute increase in SG&A principally reflected the following changes:

-- Selling expenses rose 11.2% to Ps.67.7 million. As a percentage of revenues, selling expenses decreased to 8.8% from 9.0% in 2Q07 reflecting the success of the advertising campaign launched earlier in the year to promote the launch of IP telephony and triple play. The Company employed 1,245 salespersons as of June 30, 2008 compared to 1,108 as of June 30, 2007.

-- Administrative expenses increased 10.8% to Ps.135.8 million. As a percentage of revenues, administrative expenses fell to 17.6% from 18.2% in the year-ago quarter. The absolute rise in administrative expenses was principally due to:

-- A Ps. 10 million increase in salaries and fees principally due to the increase in the number of employees resulting from the Company's growth;

-- A Ps. 1.1 million increase in leases of additional warehouses and telephony facilities;

-- Amortization and depreciation rose 72.8%, or Ps.11.6 million, to Ps.27.5 million in 2Q08, principally due to the increase in office equipment and the amortization of intangibles resulting from recent acquisitions.

Adjusted EBITDA

Adjusted EBITDA for 2Q08 increased 6.1%, or Ps.16.4 million, to Ps.286.6 million. The adjusted EBITDA margin decreased 282 bps to 37.2%. The following table sets forth the reconciliation between net income and adjusted EBITDA:


    Table 5. Adjusted EBITDA

                                                2Q07        2Q08    % Chg.
    Net income (loss)                           48.6        41.5    -14.5%
    Add (subtract):
      Amortization and depreciation            112.1       163.8     46.1%
      Comprehensive financial results, net      74.0        27.8    -62.4%
      Other (income) expense, net               (4.7)        1.6       n/a
      Total income tax and asset tax            38.7        45.4     17.2%
      Employee profit sharing                    2.6        (0.6)      n/a
      Effects from associated companies         (1.0)        7.0       n/a
      Minority interest                        (0.01)        0.1       n/a

    Adjusted EBITDA                            270.2       286.6      6.1%

-- Depreciation and amortization increased 46.1%, or Ps.51.7 million, to Ps.163.8 million, principally due to an increase in fixed asset investments.

-- Net comprehensive financial results were an expense of Ps.27.8 million compared with an expense of Ps.74.0 million in 2Q07, principally reflecting higher gains from financial instruments and monetary position.

-- During the quarter, the Company recorded a Ps.45.4 million provision for income taxes and asset taxes, compared to Ps.38.7 million in 2Q07.

Comprehensive Financial Results, Net

Net comprehensive financial results were an expense of Ps. 27.8 million for the three-months ended June 30, 2008, a decrease of Ps.46.17 million over an expense of Ps. 74.0 million for 2Q07. The decrease primarily reflected a Ps.72.2 million financial instrument loss in 2Q08 compared with a Ps.0.6 million loss in 2Q07. 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. The non-monetary financial instruments loss was the result of the Company's hedging strategy. The Ps.23.3 million non-monetary foreign exchange gain reflects the appreciation of the Mexican peso against the US dollar.


    Table 6. Comprehensive Financial Results, Net

                                                2Q07        2Q08       % Chg.
    Interest income                              0.7         3.4       401.0%
    Interest expense                           -66.9       -80.0        19.7%
    Financial instruments (gain)                 0.6        72.2       12652%
    Foreign-exchange (gain) loss, net           -1.5       -23.3        1433%
    Monetary position loss (gain)               -6.8         0.0         n/a
    Comprehensive financial results, net       (74.0)      (27.8)      -62.4%

Net Income

For 2Q08, Cablemas posted a net gain of Ps.41.5 million, compared with a net gain of Ps.48.6 million 2Q07. Net income margin fell to 5.4% from 7.2% for 2Q07.

FIRST HALF 2008 CONSOLIDATED RESULTS

Net Revenues

Net revenues increased 16.2%, or Ps. 214.6 million, during 1H08 to Ps. 1,540.5 million.

-- Cable Television: The 10.7%, or Ps.108.07 million, growth in cable television revenues was principally due to a 6.9% YoY increase in the number of subscribers to 805,390, with a penetration rate of 33.9%. Average monthly cable television revenues per subscriber (ARPU) rose 1.0% to Ps.233.6. 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 rose 29 bps to 2.6% for 1H08 from 2.3% in 1H07.

-- High Speed Internet: Revenues rose 21.8%, or Ps.50.2 million, to Ps.280.3 million. The rise in high-speed Internet revenues resulted mainly from a 10.3% increase in the number of subscribers to 224,799, with a penetration rate of 11.4%. A 4.0% increase in high-speed Internet ARPU to Ps.209.8 reflecting the increase in bandwidth offered also contributed to the

increase in revenue. Average monthly net churn rates for high-speed Internet rose to 4.55% for 1H08 from 4.51% in 1H07 due to high competition.

-- IP Telephony: IP telephony revenues for the period rose 76.6%, or Ps.41.76 million, to Ps.96.3 million. As of June 30, 2008, there were 67,012 IP telephony lines in service, up from 30,202 as of June 30, 2007. IP telephony ARPU for 1H08 rose 0.1% to Ps.291.4. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps. 296.9 for 1H08.


    Table 7. Revenues by Service Offering

                                     1H07               1H08
                                          % of                % of
                                         Total               Total
                               Revenue  Revenue   Revenue   Revenue  % Chg.
    Cable Television           1,014.7    76.5%   1,122.7     72.9%   10.7%
    High-Speed Internet          230.0    17.3%     280.3     18.2%   21.8%
    IP telephony                  54.5     4.1%      96.3      6.2%   76.6%
    Advertising                   24.4     1.8%      36.5      2.4%   50.0%
    Other(1)                       2.4     0.2%       4.7      0.3%   98.5%
    Total Net Revenue(2)       1,325.9   100.0%   1,540.5    100.0%   16.2%

(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
                                           1H07        1H08    Subscribers
    Minibasic                            214,766     238,031      10.8%
    Basic(1)                             521,271     549,133       5.3%
    Superbasic(1)                         44,049      42,683      -3.1%
    Premium (1)                           29,194      34,039      16.6%
    Hotel                                 17,124      18,226       6.4%
    Total Cable Television               753,161     805,390       6.9%
    High-Speed Internet                  203,890     224,799      10.3%
    IP Telephony lines                    30,202      67,012     121.9%

(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

                                        1H07        1H08     % Chg.
    Homes passed                     2,160,634   2,322,186     7.5%
    Cable Television
     - Revenue                         1,014.7     1,122.7    10.7%
     - Subscribers                     753,161     805,390     6.9%
     - ARPU                              231.3       233.6     1.0%
     - Avg. Monthly Churn                 2.3%        2.6%  +29 bps
    High-Speed Internet
     - Revenue                           230.0       280.3    21.8%
     - Subscribers                     203,890     224,799    10.3%
     - ARPU                              201.7       209.8     4.0%
     - Avg. Monthly Churn                4.51%       4.55%   +4 bps
    IP Telephony
     - Revenue                            54.5        96.3    76.6%
     - Lines                            30,202      67,012   121.9%
     - ARPU (without migration fee)      291.2       291.4     0.1%

Operating Profit

Operating profit for 1H08 declined by 7.4%, or Ps.21.7 million, to Ps.270.6 million, driven mainly by a increases of 16.4% in SG&A and 6.3% in gross profit. Operating margin declined to 17.6% from 22.1% in 1H07, principally due to higher cost of services as a percentage of sales.


    Table 10. Operating Profit
                                       1H07               1H08
                                Million    % of    Million    % of
                                  Ps.    Revenues    Ps.    Revenues  % Chg.
    Service revenues           1,325.9   100.0%    1,540.5   100.0%    16.2%
    Cost of services             638.4    48.1%      810.0    52.6%    26.9%
    Gross Profit                 687.5    51.9%      730.5    47.4%     6.3%
    SG&A                         395.2    29.8%      459.9    29.9%    16.4%
     - Selling                   126.6     9.6%      146.2     9.5%    15.4%
     - Administrative            240.8    18.2%      260.6    16.9%     8.2%
     - Amortization and
       depreciation               27.7     2.1%       53.1     3.4%    91.7%
    Total operating profit       292.4    22.1%      270.6    17.6%    -7.4%

Cost of Services

Cost of Services for 1H08 increased by 26.9%, or Ps.171.6 million. The increase in cost of services was primarily due to:

-- A 5.9% increase in cable TV programming costs, reflecting higher costs and the increase in the number of cable subscribers;

-- A 17.3% increase in wages and salaries reflecting an increase in the number of technical employees as a result of the growth in video and telephony subscribers;

-- A Ps.41.8 million increase in Internet costs, which are related to the incremental cost for bandwidth. Higher internet costs also reflect the 10.3% increase in the number of internet subscribers during the period; and

-- A Ps.26.6 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.64.7 million, or 16.4% YoY to Ps.459.9 million. As a percentage of sales, SG&A rose to 29.9% from 29.8%. The absolute increase in SG&A principally reflected the following factors:

-- A 15.4%, or Ps.19.5 million, increase in selling expenses to Ps.146.2 million principally related to the expansion of the Company's sales force (1,245 salespersons as of June 30, 2008 as compared to 1,146 as of June 30, 2007), an increase in commissions paid.

-- An 8.2%, or Ps.19.8 million, increase in administrative expenses, including Ps.12.5 in wages and salaries, and Ps.3.7 million from the increase in leases of additional warehouses and telephony facilities; and

-- A 91.7%, or Ps.25.4 million, increase in amortization and depreciation, to Ps.53.1 million for 1H08, principally due to an increase in office equipment and the amortization of intangibles resulting from recent acquisitions.

Adjusted EBITDA

Adjusted EBITDA for 1H08 increased 12.7%, or Ps.66.3 million, to Ps. 586.9 million. The adjusted EBITDA margin declined 117 bps to 38.1% from 39.3%. The following table sets forth the reconciliation between net income and adjusted EBITDA:


    Table 11. Adjusted EBITDA
                                                1H07       1H08     % Chg.
    Net income (loss)                          164.1       74.7     -54.5%
    Add (subtract):
      Amortization and depreciation            228.3      316.3      38.5%
      Comprehensive financial results, net      84.2      118.3      40.5%
      Other (income) expense, net              (24.5)       0.1        n/a
      Total income tax and asset tax            71.3       67.0      -6.0%
      Employee profit sharing                   4.61      0.001    -100.0%
      Effects from associated companies         (7.6)      10.4        n/a
      Minority interest                         0.21       0.24      17.0%

    Adjusted EBITDA                            520.7      586.9      12.7%

-- Depreciation and amortization rose 38.5%, or Ps.88.0 million, to Ps.316.3 million, principally due to an increase in fixed asset investments;

-- Net comprehensive financial results were an expense of Ps.118.3 million compared with an expense of Ps.84.2 million in 1H07 as explained below;

-- As a result of applying NIF B3, the account "Special Items" was eliminated with charges now accounted for in "Other (Expense) Income, net".

-- During the period the Company recorded a Ps.67.0 million provision for income and asset taxes, compared to Ps.71.3 million in 1H07.

Comprehensive Financial Results, Net

Net comprehensive financial results was an expense of Ps.118.3 million for 1H08, an increase of Ps.34.1 million from an expense of Ps.84.2 million for 1H07. This mainly reflected an increase in interest income, higher interest expenses as a result of the Ps.127.6 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. The non-monetary financial instruments loss was the result of the Company's hedging strategy. The Ps.6.3 million non-monetary foreign exchange loss in 1H08 reflects the appreciation of the Mexican peso against the US dollar.


    Table 12. Comprehensive Financial Results, Net

                                                1H07        1H08       % Chg.
    Interest income                              2.4         7.0       193.1%
    Interest expense                          -132.6      -161.5        21.8%
    Financial instruments (gain)                28.7        29.9         4.2%
    Foreign-exchange (gain) loss, net           -1.4         6.3          n/a
    Monetary position loss (gain)               18.7         0.0      -100.0%
    Comprehensive financial results, net       (84.2)     (118.3)       40.5%

Net Income

For 1H08, Cablemas posted a net gain Ps.74.7 million, a 54.5%, or Ps.89.5 million, reduction compared to a Ps.164.1 million gain in 1H07. Net income margin lowered to 4.8% from 12.4% for 1H07.

CAPEX

Capital expenditures for 1H08 increased 1.8%, or Ps.10.6 million, to Ps.591.9 million from Ps.581.3 million in 1H07. 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 June 30, 2008, Cablemas had a network of 14,166 km, of which 85% was bidirectional, 89% was operating at or greater than 550 MHz and 77% was operating at or greater than 750 MHz.

DEBT STRUCTURE AND CASH FLOW

Consolidated gross debt as of June 30, 2008, totaled Ps. 2,329.3 million, of which Ps. 2,323.2 million was long-term and Ps. 6.1 million was short term. Consolidated gross debt rose YoY by 5.8%, from Ps.2,201.7 million as of June 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 our 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. On a sequential basis, however, consolidated debt declined by 3.8%, from Ps.2,420.3 as of March 31, 2008.

Net debt, which is calculated as total debt minus cash and cash equivalents, decreased YoY by 12.7% to Ps.1,875.7 million, from 2,149.0 million as of June 30, 2007. As of June 30, 2008, Cablemas had a cash balance of Ps.453.6 million.


    Table 13. Debt Indicators
                                                1H07        1H08      % Chg.
    Total Debt                                2,201.7     2,329.3       5.8%
      Short-Term Debt                           232.9         6.1     -97.4%
      Long-Term Debt                          1,968.7     2,323.2      18.0%

    Cash and Cash Equivalents                    52.7       453.6     761.2%
    Total Net Debt                            2,149.0     1,875.7     -12.7%

    Leverage
      Total Debt/ LTM Adjusted EBITDA            2.3x        2.2x
      Total Net Debt/ LTM Adjusted EBITDA        2.2x        1.7x

    Interest Coverage
      Adjusted EBITDA / Net Interest Expense     4.0x        3.8x

Cash flow from operations during 1H08 increased 40.6%, or Ps.175.7 million, to Ps.608.3 million. Net borrowings increased by Ps.313.3 million. CAPEX for 1H08 increased Ps.10.6 million to Ps.591.9 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
                                              1H07       1H08       Change
    Cash at the beginning of the year         56.0       54.5        (1.5)
    Net Income                               164.1       74.7       (89.5)
      + Depreciation and amortization        231.5      319.6        88.1
      + Change in Working Capital             93.9      109.0        15.1
      + Other                                (56.9)     105.0       161.9
    Cash Flow from Operations                432.6      608.3       175.7
      - Capex                               (581.3)    (591.9)      (10.6)
      - Other                                 44.3      (31.6)      (75.9)
    Net Investing Activities                (536.9)    (623.5)      (86.6)
      + Debt                                 139.3     (569.6)     (708.9)
      + Other                                (38.3)     983.9     1,022.2
    Net Financing Activities                 101.0      414.3       313.3
    Cash at the end of the year               52.7      453.6       400.9

KEY EVENTS

Offer to Purchase Cablemas' 9.375% Senior Guaranteed Notes due November 15, 2015

On June 2, 2008, a Change in Control may have occurred with respect to the Company, as a result of certain amendments to the Irrevocable Trust Agreement Number 15377-8 dated November 22, 2006 between the Company's shareholders and Banco Nacional deMexico, S.A., Institucion de Banca Multiple, Grupo Financiero Banamex, Division Fiduciaria, as trustee. Accordingly, on July 2, 2008 the Company offered to purchase any and all of the Notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest up to, but not including, the Payment Date.

The Offer to Purchase expired on July 30, 2008, with holders of approximately US$300,000 tendering the Notes.


    SECOND HALF 2008 EARNINGS CONFERENCE CALL

    Date:               Friday, August 29, 2008

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

    Dial Information:   888.680.0879 (U.S.) or 617.213.4856 (international)

    Passcode:           66419487

Pre-registration: If you would like to pre-register for the conference call use the following link: https://www.theconferencingservice.com/prereg/key.process?key=PKEKXG4N4 Pre-registering is not mandatory but is recommended as it will provide you immediate entry into the call and will facilitate the timely start of the conference. You will receive a code that allows you to enter the call directly. Pre-registration only takes a few moments, and you may do so at any time, including up to and after call start time. To pre-register, please click the link above. Alternatively, if you would rather be placed into the call by an operator, please call at least 15 minutes prior to call start time.


    Replay:             A replay of the call will be available between 1:30 pm

ET on August 29 and 11:59 pm ET on September 5. The replay is accessible by dialing 888-286-8010 (U.S.) or 617-801-6888 (international) and entering passcode 17366726.

About Cablemas

Cablemas is the second-largest cable television operator inMexico based on number of subscribers and homes passed. As of June 30, 2008, Cablemas' cable network served over 805,390 cable television subscribers, 224,799 high-speed internet subscribers, and 67,012 IP telephony lines, with 2,322,186 homes passed.

Cablemas is the concessionaire with the broadest coverage inMexico, operating in 46 cities throughout the country's oil, maquiladora and tourist regions as of June 30, 2008. Cablemas has consistently introduced innovative products inMexico 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 inMexico, 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

                            June 30, 2008 and 2007

   (2Q07 figures are in thousands of constant Mexican pesos as of December
    31, 2007 while 2Q08 figures are in thousands of nominal Mexican pesos)

                                 (Unaudited)

                ASSETS                           2008            2007

    Current assets:
       Cash and cash equivalents              $453,611          $52,672
       Trade accounts receivable, less
        allowance for doubtful accounts
        of Ps 11,155 in 2008, Ps 10,995
        in 2007                                 40,600           51,713
       Other accounts receivable, net          111,249          178,389
       Associated companies                        355            3,359
       Prepaid expenses                         48,315           41,749

                Total current assets           654,130          327,882

    Financial Instruments                      438,964          348,043


    Inventory of components of signal
     distribution systems, net                 413,600          407,617

    Investment in associated companies         646,085           99,175

    Property, signal distribution
     systems and equipment, net              4,039,333        3,484,212

    Deferred employee statutory profit
     sharing                                    13,400            5,687

    Goodwill, net                            1,076,294        1,025,654

    Intangible asset from pension and
     seniority premium plans and
     severance compensation for
     reasons other than restructuring           11,698           19,680

    Other non-current assets, net              198,056          176,276


                                            $7,491,560       $5,894,226



                LIABILITIES                         2008           2007

    Current liabilities:
       Current installments of:
         Bank loans                                   $333      $226,684
         Obligations under capital leases            5,777         6,255
         Senior notes                               21,364        22,713
       Accounts payable                            315,557       281,764
       Accruals                                     92,064       109,976
       Accrued liabilities                          29,520        19,649
       Taxes payable                                34,988         6,072
       Employee statutory profit sharing             3,539         3,432
       Productora y Comercializadora de
        Television, S. A. de C. V.
        (related company)                           39,826        39,642
       Subscriber deposits and advances             47,087        38,880

            Total current liabilities              590,055       755,067

    Financial instruments                          404,244       339,685
    Senior notes                                 1,802,990     1,956,520
    Bank loans, excluding current installments     515,140           -
    Obligations under capital leases,
     excluding current installments                  5,079        12,211
    Pension and seniority premiums
     plans and severance compensation for
     reasons other than restructuring               55,607        50,113
    Income tax long-term                             3,358         8,894
    Deferred income tax                            477,469       392,959

            Total liabilities                    3,853,942     3,515,449


                 STOCKHOLDERS' EQUITY

       Majority stockholders' equity:
          Capital stock                            760,924       751,417
          Additional paid-in capital             2,278,642     1,200,309
          Retained earnings                        543,919       505,738
          Valuation effects of financial
           instruments                              58,255       (72,540)
          Effect from labor obligations                  -        (1,564)
          Cumulative deffered Income Tax effect      3,448         3,448
          Equity adjustment of non-monetary
           assets                                  (10,298)      (10,298)

            Total majority stockholders' equity  3,634,890     2,376,510

        Minority interest                            2,728         2,267

            Total stockholders' equity           3,637,618     2,378,777

    Commitments and contingent liabilities

                                                $7,491,560    $5,894,226



                  CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES

                      Consolidated Statements of Income

               Six months period ending June 30, 2008 and 2007

   (2Q07 figures are in thousands of constant Mexican pesos as of December
    31, 2007 while 2Q08 figures are in thousands of nominal Mexican pesos)

                                 (Unaudited)


                                                  2008                2007

    Service revenues                       Ps   1,540,473      Ps   1,325,904
    Cost of services                              809,951             638,380

            Gross profit                          730,522             687,524

    Operating expenses:
      Selling                                     146,162             126,649
      Administrative                              260,606             240,807
      Amortization and depreciation                53,109              27,704

            Total operating expenses              459,877             395,160

            Operating profit                      270,645             292,364

    Other income (expenses),
      Employee statutory profit sharing:
         Current                                   (3,774)             (3,436)
         Deferred                                   3,773              (1,174)

            Total employee statutory
             profit sharing                            (1)             (4,610)
      Other income (expenses)                         (93)             24,464

            Other income (expenses), net              (94)             19,854

    Comprehensive financial results:
      Interest income                               7,013               2,393
      Interest expense                           (161,502)           (132,568)
      Foreign exchange (loss) gain, net             6,331              (1,414)
      Valuation effects of financial
       instruments                                 29,893              28,701
      Monetary position gain                            -              18,696

            Comprehensive financial
             results, net                        (118,265)            (84,192)

    Effects from associated companies:
      Equity in the results of operations         (10,367)              7,593

            Total effects from associated
             companies                            (10,367)              7,593

            Income before income taxes
             and minority interest                141,919             235,619

    Income taxes:
      Current                                      41,833              50,006
      Deferred                                     25,173              21,281

            Total income taxes                     67,006              71,287

            Income before minority interest        74,913             164,332

    Minority interest                                (241)               (206)

            Majority interest net income      Ps   74,672        Ps   164,126

      Basic earnings per share                Ps     0.25        Ps      0.60



                  CABLEMAS, S. A. DE C. V. AND SUBSIDIARIES

           Consolidated Statements of Changes in Financial Position

               Six months period ending June 30, 2008 and 2007

   (2Q07 figures are in thousands of constant Mexican pesos as of December
    31, 2007 while 2Q08 figures are in thousands of nominal Mexican pesos)
                                 (Unaudited)

                                                     2008            2007

    Operating activities:
      Majority interest net income                  $74,672        $164,126
      Add charges (deduct credit) to
       operations not requiring
        (providing) funds:
        Depreciation and amortization               319,579         231,489
        Net gain on insurance recovery                  -           (45,716)
        Increase in allowance for inventory
         of components
           of signal distribution systems               -               410
        Effects from associated companies            10,367          (7,593)
        Accrual for pension, seniority
         premiums and severance                       5,109           1,948
        Deferred income taxes                        25,173          21,281
        Deferred employee statutory profit
         sharing                                     (3,773)          1,174
        Minority interest                               241             206
        Financial instruments                        67,903         (28,623)

            Funds provided by operations            499,271         338,702

      Net financing from (investing in)
       operating accounts:
        Trade and other accounts receivable, net     50,982          59,958
        Prepaid expenses                            (26,551)        (21,913)
        Accounts payable                             39,549          27,089
        Accruals and accrued liabilities             12,551          19,449
        Taxes payable                                26,872         (18,516)
        Subscriber deposits and advances              6,230          (6,638)
        Employee statutory profit sharing              (650)         (3,636)
        Related parties                                  39          38,085

            Funds provided by operating activities  608,293         432,580

    Financing activities:
      Proceeds from (payments of) bank loans, net  (458,708)        137,533
      Proceeds from notes and payments of
       commercial paper obligations, net           (107,120)        (15,775)
      Proceeds from (payments of) capital
       lease obligations                             (3,804)         17,545
      Capital stock increases                         9,507             -
      Additional paid-in capital                  1,078,333             -
      Dividends paid                                (98,615)        (38,212)
      Income tax long-term                           (5,289)            (51)

            Funds provided by financing
             activities                             414,304         101,040

    Investing activities:
      Inventory of components of signal
       distribution systems                         (76,185)       (129,376)
      Capital expenditures                         (500,585)       (446,730)
      Other assets, net                             (15,121)         (5,149)
      Investment in associated companies            (31,613)         (1,402)
      Insurance recovery                                -            45,716

            Funds used in investing activities     (623,504)       (536,941)

            (Decrease) increase in cash and
             cash equivalents                       399,093          (3,321)

    Cash and cash equivalents:
      At beginning of year                           54,518          55,993

      At end of year                               $453,611         $52,672

SOURCE Cablemas, S.A. de C.V.

Tags: ,TLS,CPR,ERN,CCA,OFR,Cablemas-2Q08-ernings

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