Good morning, everyone, and welcome to the Grupo Televisa's Second Quarter 2022 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. As a reminder, this call is being recorded. I would now like to turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.
Thank you, Paul. Good morning, everyone, and thank you for joining us. With me today are Pepe Toño González, CEO of Cable, Reese Mannino, CEO of Sky, and Carlos Phillips, CFO of Grupo Televisa. During the second quarter, Grupo Televisa's consolidated revenue reached MXN 18.5 billion, representing year-on-year growth of 0.3%, while operating segment income reached MXN 7 billion, equivalent to a year-on-year decline of almost 5%. Revenue growth at our residential operations in Cable and our other businesses segment was partially offset by declining revenue at our enterprise operations in Cable and Sky. Pepe Toño and Reese will elaborate on the operating and financial performance of each of our core consolidated segments in their remarks. Before, let me say that since the last time we spoke, the global economy has gone through significant changes.
GDP growth in the U.S. and Mexico is expected to slow down. The global economic outlook should remain challenged in the near future, while the odds of a global economic recession have increased. We will continue to monitor the evolution of macro variables and will not hesitate to act decisively, taking necessary measures to preserve free cash flow in the event of further deterioration of the economy, as has been the case in previous macroeconomic downturns. It is important to highlight that we have already identified and presented to our board, in yesterday's meeting, the levers we will pull in every single business where we operate in the event of a recession.
As you may recall, during the COVID recession in 2020, excluding the other businesses segment, as most of them were fully closed for a significant portion of the year, Grupo Televisa's segment revenue and operating segment income for our three core operations grew by 2% and 2.1% year-on-year, respectively. We achieved this resilient operating and financial performance by implementing an aggressive cost reduction plan, which translated into MXN 2.2 billion in savings or the equivalent of 3.6% of our OpEx structure. Despite the more challenging global economic landscape, we firmly believe that we have a stronger footing than ever following our merger of our media content and production assets with Univision, as our streaming portfolio is fully complete and very well-positioned to capture the massive global streaming opportunity.
Because both Grupo Televisa and TelevisaUnivision have much stronger balance sheets than in the previous global economic downturns, with leverage ratios of 2.2 times and 5.5 times, respectively. Moreover, we are confident that we will continue to deliver strong revenue growth at TelevisaUnivision and resilient operating performance at Grupo Televisa during the second half of the year. Despite a higher probability of a recession, we still expect growth in 2022 to be back-loaded both at TelevisaUnivision and Grupo Televisa, driven by several factors such as the monetization of the World Cup rights, increased advertising spending in Mexico due to the Qatar World Cup during the fourth quarter, midterm elections in the U.S., solid RGU net adds in the remainder of the year at Cable, and closing pending contracts for new projects at our enterprise operations.
Now let me walk you through TelevisaUnivision's solid second quarter results released yesterday morning. The company delivered another outstanding quarter with revenue of $1.1 billion, growing 11% year-on-year on a pro forma basis, while EBITDA of $373 million declined by 8% as streaming investments ramped up following the launch of the ViX AVOD service on March 31 and ahead of the ViX+ SVOD service launch on July 21. Moreover, during the first half of the year, TelevisaUnivision's revenue has increased by 11%, while EBITDA has increased by around 1%, a remarkable achievement considering the launch of ViX and ViX+, which illustrates the power and uniqueness of our combined assets as well as the focus and discipline of our execution.
During the quarter, revenue growth at TelevisaUnivision was driven by strong increases in consolidated advertising and subscription and licensing revenue of 11% and 10%, respectively. In the U.S., advertising revenue increased by 11% as we continue to benefit from the 2021-2022 upfront, which delivered the highest growth in volume and pricing in history. In addition, TelevisaUnivision experienced strong demand for advanced marketing solutions in the U.S. and the highest scatter pricing for our company in history. In Mexico, advertising revenue increased by 14% year-on-year as the record-setting 2022 upfront produced strong client demand, with seven of the top 10 advertising categories growing their spend during the quarter. Moreover, our number of clients in the second quarter was the highest on record. Subscription and licensing revenue increased by 10% in both the U.S. and Mexico.
This growth was primarily driven by the new contract with YouTube TV, signed in mid-September 2021, and pay television subscriber growth and higher prices in Mexico. Moving on to the performance of our content. In the U.S., our total market share of primetime audiences went up to 7% in the second quarter from 6.8% during the same period of last year. Moreover, our share of Spanish-language primetime viewing rose 40 basis points to 63.2%. In Mexico, our free-to-air television share of primetime audiences from Monday to Friday increased to 58.54% from 55.9% during the second quarter. In the second quarter, 19 of the top 20 programs on Mexico's broadcast television were produced and transmitted by us. Also, we broadcasted eight of the top 10 most-watched soccer matches in the quarter.
Moreover, the audiences of our free-to-air networks are higher than those of our peers on free-to-air and pay television networks combined. While our linear business continues to deliver great success and outperform the market, we could not be more excited about our streaming business and the enormous progress we have made over the last 15 months. Our AVOD service, ViX, has been live for its first full quarter, seeing substantial success with our streaming ad sales efforts, onboarding new streaming-only advertisers while selling ViX into our linear ad buyers. We are very excited about the early results we have seen at ViX. We set some aggressive goals in terms of users and engagement, and both have been performing better than expected. We have great momentum, but it is too early to draw conclusions on trends from these results.
We are just one quarter into this journey, and we're very excited about what we are achieving so far. Looking ahead, we just closed another incredibly successful 2022/2023 U.S. upfront. On the heels of a strong comp from last year, volume grew double digits to the highest level we have produced in seven years. For the second consecutive year, pricing held in line with the market, in the high single-digit range. This follows years of price discounting at Univision and starts to take the value of our content back to the pricing levels where it belongs, made possible by the work we have done to reinvent our ad sales function and the strong momentum of our content. Importantly, we grew in both linear and streaming. Unlike other media companies, we were able to leverage growth in ratings and audiences on linear.
Demand from ViX came from our existing linear advertisers, where the bundle rate approached an outstanding 70%, as well as from new digital-first advertisers. Capturing digital budget where there is secular growth in ad dollars is a huge opportunity for us, and we're executing on it. Our early success is also solid proof of the quality upgrade we made with this new product and new brand. July 21st marked another milestone from our streaming service with the launch of our completely new SVOD service, ViX+, featuring more than 10,000 hours of ad-free premium entertainment programming in its first year and up to 7,000 hours of live sports with a monthly price of $6.99 in the U.S. and MXN 119 in Mexico.
We just announced our first two original series, María Félix: La Doña and La Mujer del Diablo, and both are already receiving rave reviews in the press. We're also taking the best theatrical slate of 2022 from our own studio, Videocine, and putting them exclusively on ViX+. ViX+ completes our comprehensive offering of three distinct platforms, including linear, digital, and audio. We are unique in the industry in that our streaming service is truly complementary to linear. Our linear business is healthy, and we're not looking to cannibalize that. Rather, we have the content library, content production capabilities, and sports rights to fuel content on three distinct platforms. Now let me turn the call over to José Antonio González Anaya, CEO of Cable.
Thank you, Alfonso. During the second quarter of 2022, the residential operations of our cable segment continued a solid turnaround in operating metrics for a third consecutive quarter, which started to translate into residential revenue growth acceleration. In terms of net adds, the second quarter added 304,000 fixed revenue generating units, RGUs. The second consecutive quarter over 300,000, and on top of that, 21,000 mobile RGUs. The quarter closed with 15.2 million total RGUs, 15 million fixed, 200,000 mobile. These increases are the highest since 2018, excluding the pandemic. We are seeing record levels of monthly sales driven by the realignment of our flagship products, the homes passed expansion plan we implemented last year, and a streamlining of our sales processes.
The aggressive actions in our customer retention program, including increasing broadband speeds for selected products in our customer base and a marked improvement in quality of our network, have allowed us to keep churn stable. Video continues to be a success story. For the third quarter in a row, net video adds remained at record levels not seen since early 2018. We added 79,000 video RGUs during the quarter, with triple play packages accounting for close to two-thirds of our sales while strengthening our retention programs. In broadband, we kept up the pace of Q1 and added 78,000 RGUs for a total of 5.8 million. Broadband continues to be the highest margin service, so we continue to enhance its product offering, and we are seeing an increase in double play sales.
The strong operating metrics in the residential segment already started to translate into gradual revenue growth acceleration. Our residential segment revenue growth improved from 3.4% in Q1 to 3.8% in Q2. This has been coupled with cost efficiency projects which have allowed EBITDA to grow faster than revenue. EBITDA growth accelerated from 4.3% in Q1 to 5.0% in Q2. In the case of the enterprise operation, which accounts for around 12% of our cable revenue, the results show the effect of a very tough comparative base last year in which we had the Red Jalisco project. If we exclude this effect, revenue would have grown 1.7% versus the headline number that shows a decline of 18.8%.
As a reminder, Red Jalisco was a project developed for the government of the state of Jalisco to build a fiber network owned by the state. Despite the challenges to grow our enterprise revenue during the first half of the year, we are confident that we will experience strong recovery in the second half with year-on-year growth in the low to mid-single digits as we close new projects. Over the coming quarters, we expect residential RGU net adds to remain solid at similar levels to those of the last few quarters, while residential segment revenue growth acceleration keeps improving gradually. The cycle of ongoing projects and incorporation of new ones to translate into stronger enterprise segment revenue.
Before turning the call back to Alfonso, let me say that we are confident that the expansion to selected locations last year has allowed us to deliver solid operating results, and should continue to do so in the remainder of the year.
Thank you, Pepe Toño. Now, let me turn the call over to Luis Malvido, CEO of Sky. Before that, let me say that Luis took over as CEO of Sky this year, and he has done a wonderful job in putting together a turnaround plan, a strategic plan. He’s going to share with us the details of that plan, which was approved by the board of directors of Sky two days ago. He has put together a new team of executives that are just great. Luis, please take us through your plan.
Thank you very much, Alfonso. Today, I will share with you the key highlights of the strategic program, as well as some examples of the initiatives that are already in progress. After this, I will provide an overview of our second quarter operating and financial results. Moving into our strategic program, we have developed a new vision for Sky that consists in three elements. First, strengthening our core, the core of our business, digitalizing and with simplification products. The second is to evolve our core to become an OTT aggregator. And third, expand the core beyond the core. To deliver on this vision, we've structured the strategic plan upon our four pillars, revenue growth, customer life cycle management, high-quality content and product, and fourth, digital transformation, simplification, and efficiency. Starting with our first pillar, revenue growth is our main priority.
We plan to expand our top line by revamping our commercial strategies in key markets, reinforcing sales channels, and leveraging on strategic alliances to boost our telecom revenue stream. Our first action was to conduct a thorough assessment on the pay TV market in Central America and our operations in the region. Central America is a massive market with over 60 million people and a vast rural population, ideal for DTH, with low pay TV and broadband penetration. Altogether, Sky currently has less than 150,000 customers in these markets, representing less than 3% market share. Clearly, this is a growing market. We have an outstanding opportunity to gain market share and grow in the region. Our strategy aims to strengthen the commercial operations in selected countries that are attractive in terms of market size, growth potential, and macroeconomic stability.
We selected five out of the seven countries in which we are present. Implementing a sound operational revamp and refocusing commercial labors will allow us to increase consolidated top line by about 5% in the next three years. Another significant opportunity comes from strengthening sales channels in Mexico. During the second half, we took control of all digital channels, previously mostly led by our master dealers. We also introduced artificial intelligence tools to optimize other sites and investment in increased sales while improving overall customer experience. Additionally, we implemented Oracle field service to manage installation orders and to improve the installation-to-sale ratio. In the first six weeks from launch, we started to see material improvements from the initial 63% to our target of 90%.
This initiative is part of our plan to evolve the channel mix from the current situation where 90% of our sales come from personalized, door-to-door channels to a new mix where digital channels, telemarketing, and retail point of sales will represent 40% of total trading. This shift together with the new commission model that we'll explain later on, will allow us to boost product mix from the current 90-10 prepaid to postpaid, to a much richer mix of 70/30, again, prepaid/postpaid. As a result, we expect ROAS, ARPU, and early change to improve significantly. In terms of strategic alliances to increase Sky telecom revenue streams, in the second half of this quarter, we will launch a new mobile service built over AT&T network. AT&T has a robust and reliable network with competitive 5G coverage and is the leading player in the mobile industry.
Our initial addressable market will be Sky postpaid customers, and we plan to offer competitive individual and family plans with attractive cross promotions leveraging on our video assets. Regarding our alliance with Altán, for fixed wireless, during the second quarter, Altán completed its financial restructuring process and has new management team. We expect Altán will gradually improve its service and network footprint. This will allow us to reverse the recent negative trend on the fixed wireless business. We are also exploring other partnership alternatives to offer a competitive high-speed broadband services to our pay TV customer base. I expect to provide further details on this in the upcoming quarters. Moving to the second strategic pillar, customer lifetime cycle management, we aim to become a customer-centric organization to anticipate customer needs, expectations, and desires to maximize lifetime value.
We have created a dedicated team and have built the technology to keep, interpret, and act on data at each stage of the customer journey. As part of that effort to improve customer experience, we are working to radically redesign user interface and user experience of our mobile app and web pages to better align digital channels into customer needs and expectations, and maximize leads conversion. In addition, as a first step towards this target, we implemented a new digital customer care channel via WhatsApp with both live and automated bot response. In less than a month, 14% of contacts with postpaid customers is handled by WhatsApp, and we expect this percentage to reach 50% by the end of the year. Another way to improve customer satisfaction is to provide a comprehensive repair service to prepaid customers.
Therefore, we went through an in-depth analysis on our entire field service operation. We found that despite having five times more repair than postpaid customers, we provide a similar number of repair service to both prepaid and postpaid customer segments. This is mainly due to the complexity of our inbound call, routing process in prepaid, as well as a service fee we charge these customers with. The lack of service generates customer dissatisfaction, leading to customer attrition and redundant sales that require significant investment. By improving this repair service, we will incur in additional expenses, of course, but will reduce churn and save significant sales and installation costs. We launched this trial last month, and we are starting to see the benefits of, we forecasted. With these results, we estimate that the net effect could generate annual savings of around MXN 300 million.
To address the last stage of the customer lifetime cycle, we have developed a churn management framework based on data analytics, customer segmentations with cost analytics, churn categorization KPI, and a recently created specialized team to manage the process. I look forward to start reporting better trends in churn drivers in the coming quarters. Moving now to the third pillar, high- quality content and product. Sky must maintain its status as a key player in the pay TV market, mainly positioned as the ultimate sport content provider in the region.
To this end, as I mentioned in our previous call, we secured exclusive rights for several important soccer properties, including the rights of the Spanish LaLiga and Copa del Rey, all UEFA national teams tournaments, and also Bundesliga. Sky will also be the only platform with complete coverage of all matches of FIFA World Cup Qatar 2022 at the end of current year. We will use this opportunity to reposition our brand and become the first pay TV operator to offer 4K content in Mexico. We will make all World Cup matches available for free to the entire customer base in both DTH and Blue To Go platforms, only subject to registration. Our goal is to boost loyalty, reduce churn, increase recharges, and promote the OTT platform. We'll also take advantage of this opportunity to enhance customers' contact information.
To this end, we have revamped Blue To Go by adding linear channels to the lineup, improve user interface, and plan to continue enhancing this product before the opening match of the World Cup. Furthermore, in Q1 2023, we will evolve Blue To Go mobile app into a full OTT aggregator. This new platform will provide streaming service, including our current linear offering. All Sky, all Sky exclusive content and also aggregate content from other streaming players with a seamless experience through our connected box. This platform will be the flagship for Sky in the transition to digital. Moving to the last strategic pillar, Digital Transformation, Simplification and Efficiency.
This year, following the philosophy of going digital, stop doing cheaper and doing better, we will carry out an end-to-end process review, searching for the opportunity to reduce expenses in order to protect margins and reallocate resources to strategic priorities. The first process we identify is sales. The automation of sales processes is perfect tool to achieve efficiency through digital technology. Currently, our sales process is completely manual. Paper contracts and photocopies supporting documents are mandatory for customers onboarding. It harms customer experience, generates all kinds of operational inefficiencies, fraud risk and lack of control. To address this challenge, we are in the process of implementing Salesforce and another digital platform. With this implementation, we'll release operational performance improvements, lower costs, and eliminate errors that will start to be tangible in early Q4.
One of the largest efficiency opportunities in Sky comes from changing its sales commission model. The current commission scheme rewards sales volume with small focus on quality. Full commission is paid in advance, and bonuses are mostly driven by volume, not quality. As a result, sales quality has significant room for improvement, mainly in prepaid but also in postpaid. To give you a sense of the size of this opportunity, 37% of prepaid gross additions have less than two recharges within the first four to six months. This new simplified and value-based commission model will reward sales quality. The new commission scheme based on a revenue share model with great incentives to dealers to enhance product mix worth improving customer tenure. I will now shift to discuss our operating performance.
During the second quarter, we implemented several initiatives to improve sales quality, which had an impact on growth and churn. In April, we discontinued Sky's top-selling postpaid package, Sky Básico, and standard definition and double play package due to its very high early churn. We understand that this new customer's reaction was due to lower than expected growth and speed and low standard definition video quality. We temporarily replaced it by launching Sky HD Gold, a package at a promotional price, and recently in July, we introduced Sky Silver HD, only in single play version to address customer impact. In addition to further improve sales quality, we introduced a new variable sales commission plan, conditioning part of the compensation to customer payments. As an extension of that decision, we also discontinued postpaid double play bundle due to high churn levels.
Besides, to boost sales, we launched several attractive promotions during the quarter. In prepaid, starting June, customers get 15 days of additional package, paying only 30 days or 30 days in subscribing to a double play package. In postpaid, customers base subscription with Sky to give to Sky Gold to get 3 months of Sky Platinum, having access to platinum content. In broadband, Altán's financial struggles, leading to a tangible delay in investment, not only affected churn, but also sales. In Q2, we experienced a deterioration in sales due to lack of available areas where to promote our service. As I mentioned before, Altán recently completed its financial restructuring process. This should allow Altán to gradually improve its service and network footprint, which in turn should allow us to continue expanding our pay TV business.
On the cancellation side, in the second quarter, we experienced an increase in volume that is a result of pandemic activation spike and low quality additions during the second half of last year. As a result, we lost 256,000 RGUs during the second quarter.
Furthermore, in July, we did continue our prepaid reactivation promotion from last fall because it's no longer covering its operating and content costs. This decision will generate up to 450,000 cancellations in the three coming quarters, but with no impact on revenues or EBITDA. In terms of financial performance, revenue declined 7.7% compared to last year's second quarter, driven primarily by lower prepaid recharges and decline in postpaid customer base in Mexico and Central America. Operating segment income fell by 23.9% due to lower revenues and an increase in costs and expenses primarily due to the amortization of MXN 120 million in the World Cup rights. Excluding these rights, operating segment income fell by 18.6%. Before turning back to Alfonso, let me emphasize that this is a transformational year for Sky.
Implementation of our strategic program, together with the non-recurring costs and expenses related to the World Cup, should make this year look particularly weak. Still, we are confident that next year we will experience a strong rebound, especially at the EBITDA and free cash flow levels.
Thank you, Luis. Huge challenges, but more importantly, huge opportunities ahead of us at Sky. To wrap up, Bernardo and I remain confident about our growth prospects for 2022. At TelevisaUnivision, solid operating and financial performance during the first half of 2022, the very strong uptrends announced both in the U.S. and Mexico, the new licensing contracts with virtual MVPDs in the U.S., the Qatar World Cup, and the successful launch of our global streaming platform should allow us to deliver double-digit revenue growth for the second consecutive year. At Grupo Televisa, the ongoing strong RGU net adds momentum should continue to gradually accelerate residential revenue growth at Cable over the coming quarters.
While our enterprise segment of Cable and Sky have been facing challenges, we're convinced that the tactics and strategies to be implemented over the coming quarters should contribute to achieve our medium-term goals. Finally, as we presented to our board yesterday, we are ready to take the necessary measures to preserve free cash flow, once the economy deteriorates, as has been the case in previous macroeconomic downturns. Now, we are ready to take your questions. Paul, could you please provide instructions for the Q&A?
Certainly. We will now begin the question-and-answer session. To ask a question, you may press star then one, and then touch tone send. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Once again, to ask a question, that is star then one. At this time, we'll pause momentarily to assemble the roster. Our first question today will come from Alejandro Gallostra with BBVA. Please go ahead.
Hi, good morning, everyone. I have a couple of questions. The first one is regarding the MSO operations in Cable. We're seeing good growth rates along with good net additions. So I'm wondering if this is a turning point in this business segment and if this growth is sustainable going forward. My second question is about Sky. The revenue and EBITDA decline has been accelerating this year. So, is it reasonable to assume that this trend will continue in the second half and potentially in the first half of next year?
If you have a marketing strategy in place to reactivate subscribers as we approach the FIFA World Cup in Q4, or how long should it take for the new business plan to translate into revenue and EBITDA growth? Thank you.
Thank you, Alejandro, for your question. I'll ask José Antonio González Anaya to answer your first question that has to do with MSO growth rates. At EG, we're very happy with the net additions we have experienced in this quarter and last quarter. I'll ask Luis Malvido to answer your second question about Sky trends and the immediate future for our operations at Sky.
Thank you, Alfonso. Thank you for your questions. We believe that these growth rates are sustainable. The significant turnaround that we have seen in the operating metrics has been driven by a few factors. The first, the realignment of our flagship products, as well as the homes passed expansion we implemented last year. We analyzed our product offerings across regions against our competitors and made our products more attractive. We believe our different products are finding their sweet spot in the market, and we think it's a sustainable level somewhere in between the last three quarters. Let me give you a few a little color on it. On the sales part, over two-thirds of our sales are triple play. This means our product mix is approaching the correct one.
We are at record levels of triple play sales. Our sales force is running very strong. Sales remain at record high levels, with the monthly sales only surpassed by a few months during the pandemic. We have simplified our micro and small and medium enterprise product offering to make it very simple, and we have seen very encouraging results only in the last month. On the retention side, we went to the root causes of our churn. We improved our network capacity quality. For example, our saturated interfaces are back to early 2020 level. We've had a series of initiatives to improve the client experience. For example, client calls to our call center have been reduced by 200,000, about 20%. We continue to progress on our digitalization process.
We have a client help center, web-based, that started only this year, and it started with 100,000 interactions, and in the last month, it was over 450 visits in the last month. We simplified our monthly bill. Our sales app has meant that we are losing fewer customers because we have gone completely electronic and the requirements are meaning less mistakes and less documents, the less documents required. Finally, we have increased broadband speed for five products that have added up to 2.2 million clients, which is 35% of our base. We think all of these going forward, we hope that this will continue, that this rate will continue, and we believe the expansion of our footprint will allow us to maintain solid ARPU.
Luis, as to the second question that has to do with Sky trends and the second half of this year.
Yes, sure. The second half will bring the World Cup, and for Sky, this is really material. We currently have our prepaid customer base topping up about 65% of them every month, and we are very confident that this percentage will go significantly up because of the need to watch these matches. We will also make available the World Cup in our Blue To Go platform, and the condition will be, as I said, in the speech, to identify customers, which is not one of our main assets these days. We will have better information of our customers, we will understand the behavior, and especially, we will have the tools to make them or show them promotions to top up and to continue with that.
For these reasons, the World Cup will significantly improve top line during the second half, and we are ready to take advantage of that. At the same time, another opportunity coming in the second half will have some impact on this year, but mostly next year will be the new commission scheme and the digitalization of sales processes. This is due to the fact that we will revamp our sales channels. We are planning, with the new commission scheme, to be more focused on postpaid, and postpaid will bring not only lower churn, but also a higher ARPU. This will start to be visible in Q1 next year.
Altogether, the channel mix and the new commission will allow us to make more predictable revenues, bringing more postpaid and of course, more value. At the same time, for the coming years, we will be seeing the new mobile operator that we are launching next September. As I said, this service will be based on AT&T network, and we trust that it will be very well accepted by our customers. We know, we understand that this is a very competitive market.
However, we will be offering a very attractive package to our own customers with, initially to our own postpaid customers with cross-selling promotions, and we are very sure that will bring incremental revenues to Sky. As I said, top-line opportunities come mainly from this kind of beyond the core opportunities, and this one in particular will bring something between 3%-5% revenue growth in the next three coming years, which is again very material. I also mentioned the turnaround in Central America, where at this moment we are dropping in gross assets, dropping in RGUs and of course in a significant drop in revenues in the region.
With our strategy, we'll turn around and the results will start being visible even this year, but it will bring significant impact on next year's top line.
Thank you, Luis. Adding to what Luis has mentioned, I would say, I mean, this is the year for the turnaround of Sky. It will be a weak year, and we'll see the results of all the initiatives that Luis described in the next year.
Okay, thank you very much.
Our next question will come from Lucas Reis with UBS. Please go ahead.
Good morning, and thanks for having my question. We noticed a large contribution from income from JVs and associates. What is the normalized level going forward? Can we assume Claro Brasil division will be the largest contributor to that line? One follow-up here, how about corporate expenses? What is the normalized level? Thank you.
Thank you, Lucas, for your question. I'll ask Carlos Phillips to answer it.
Hi, Lucas. You're correct. In terms of the share of income from associates in joint ventures, the largest share comes from TelevisaUnivision. That's pretty much the majority of that line. The increase, as you know, after the transaction, there were two large effects. The first one is that our share grew from approximately 36% to 45%. It also grew in a larger company, you know, because after the transaction, we used to have 35% of Univision, now we have 45 of TelevisaUnivision, which is a larger company with larger earnings. That's part of that line item. The other one is, as you know, we have those preferred shares in the company that pay a dividend. That's also part of that line item.
The normalized size of that line is gonna be dependent on what the earnings are at TelevisaUnivision, obviously, as we get a share from those. The only one that would be recurring and kind of predictable, I guess, would be the dividend we receive from the preferred equity, which is approximately $41.25 million per year. In terms of your second question, in terms of corporate expenses, as you could see, we had a reduction from last year's quarter of about approximately MXN 95.8 million. The largest components in these corporate expenses are obviously our corporate overhead, the PTU, which is the employee profit-sharing in Mexico, and the employee share-based compensation.
We don't expect any large movements in this line item. Just one thing to keep in mind is that the plan de acciones, the share-based compensation is a non-cash item.
Okay. Thank you very much. That was very clear.
Our next question will come from David Joyce with Barclays. Go ahead.
Thank you. Glad to hear about the new detailed plan for Sky. Where do you expect there to be a larger opportunity from here, with all of these changes? More so in Mexico or more so in Central America, where you've had that stagnant level of subscribers over the long term? I was wondering how the mobile operation, the MVNO on the cable side, will be developing given these changes with Altán as well. Thank you.
Thank you, David. As to Sky's opportunity, I would say it's both in Mexico and Central America, and Luis can add to that.
As I mentioned, Central America is a huge opportunity. Now it's very small compared to the size of our business in Mexico. We believe that we can double their earnings there in three to four years, which is very relevant for the entire company. However, Central America is still small, so even doubling will represent, as I said, up to 5% impact on top line in the business. Having said that, Mexico is our core business and if anything we do here will have a tremendous impact on the long term, on the long-term value. As I said, opportunities in Mexico come from top line, but also from EBITDA and cash flow.
In terms of EBITDA, savings will come from the simplification program we are starting, and the opportunities there are massive. Sky has been a very successful company for decades and we didn't pay much attention to processes because the important thing during these decades was to be fast and to grow. Now is the moment to review processes, the way we do things, to visualize processes and out of that we will bring significant savings to the company. At the same time, all the efficiency in the sales process will bring not only OpEx savings, but also significant CapEx.
Currently, we are, and this year, we are pushing down CapEx from the $257 million we spent last year to below $220 million. We are very confident that next year we can even reduce that figure in order to protect and even grow in cash flow.
Sky in general is a fantastic asset. It generates free cash flow. It's a company that has great brand recognition in Mexico. It has a huge offering of content. It's the platform that has more sports content, relevant sports content, in Mexico by far. As Luis mentioned, it has exclusive rights to the Spanish LaLiga and the Copa del Rey, which is huge in Mexico. All the UEFA national teams tournaments and now the Bundesliga. In terms of sports offering, it's number one by far. It has a national footprint, of course, has a national installation team. I mean, it's an amazing asset. We have to, of course, stabilize it.
We shared with you all the turnaround plans, and we believe that next year, as we pass, I mean, of course, we're amortizing the cost of the World Cup. EBITDA will start to stabilize next year, and we'll start generating additional revenue and EBITDA.
Let me add something which is very relevant when it comes to to particularly next year. If you want, Izzi, we will launch, as I said, a new platform, an OTT aggregator. This is not only a new door for new revenue streams, but mostly to protect our customer base. We know that we are every day challenged by cable operators offering broadband and also TV in a bundle. As we don't have this service, we struggle many times to protect our customers. For this reason, offering this Android box, we'll be able to offer to our existing customers initially this box to protect these customers due to the content that Alfonso has explained, because we are very.
Our customers still recognize that nobody has better content than us in the market. Now with this box and saving all the CapEx and OpEx related to the installation of DTH services and kits, will allow us, first, as I said, to protect customers, but also to save a significant amount on OpEx and CapEx. The DTH kit is very expensive, and we spend a significant portion of our CapEx in installations of new customers. During this, we will save this amount of CapEx, and we're still in the process of quantifying the impact because it is a new service and we still need to quantify the size of the opportunity. We are very confident in saving a significant CapEx and OpEx with this new product.
David, as to your second question that had to do with MVNO offerings, I'll ask Pepe Toño to answer that.
Thank you very much. As you may know, Izzi invested in an MVNE in a platform in an infrastructure. This is in the final stages of tests, literally the final weeks of tests. We believe this will provide us with a tremendous amount of flexibility. Right now, the MVNE, MVNO service that we have with Altán restricts us in many ways, most notably the choice of cell phones. In the next couple of months, we will have a relaunching of our mobile services through this MVNE platform that I think will be promising, and we'll be giving more details in the next phone call.
Great. If I could just one more, quickly on the FX impacts on your balance sheets, revenues and expenses, since there's been some movement there. How should we think about that going forward?
Thank you, David. I'll ask Carlos to answer.
Hi, David. As you can see in our press release, during the quarter, we had a MXN 562 million foreign exchange gain. This is due to the net dollar asset position that we have on our balance sheet. This used to be a little bit different, but as a result of the transaction, as you know, we have a large cash balance that's dollar-denominated, as well as investment in Univision, which is dollar-denominated as well and pretty large. This quarter, we had a depreciation of the Mexican peso. Again, this is a net asset position, net dollar asset position we had to gain. That's on the balance sheet side.
In terms of the inflows and outflows, as you can imagine, after the transaction, most of our inflows from our operations are peso-denominated. We have certain dollar-denominated flows from some operating contracts with TelevisaUnivision and the dividend we get from our preferred shares, but it's mostly peso-denominated. On the expense and outflow side, it's mostly, I guess, the most important line item would be CapEx, which, in a significant percentage, is dollar-denominated. But in that sense, we try to use a hedging to manage our exposure to that risk. Again, our large dollar-denominated balance also helps us to have some flexibility on that side, basically.
Okay, great. Thank you very much.
Our next question will come from Marcelo Santos with JP Morgan. Please go ahead.
Hi, good morning. Thanks for taking my questions. I wanted to ask about the pricing environment in Cable. How are you dealing with price increases, especially in this tough environment, tough economic environment? The second question, if you could comment, how is your performance on the new areas that you entered with Cable in the new cities? How is the business plan developing there? Thank you.
Thank you, Marcelo. I'll ask Pepe Toño to answer both questions. What I can say as to your second question, and of course, Pepe Toño can expand on what I say is that, as you know, we grew in terms of homes passed 2 million homes last year where we invested $200 million. This year, we'll continue with 600,000 new homes in addition to the 2 million. We have been growing in terms of penetration. We're happy with the results. It has taken, in some places, longer than we have expected. Now, I think we're looking at the right trends and things are going in the right direction.
I'll ask Pepe Toño to expand on, I mean, to answer your first question and expand on the second one.
Thank you. Thank you very much, Alfonso. I think the price environment in the sector is interesting because there are two opposing forces. On the one hand, we are seeing an increasingly more competitive environment which pushes the prices, you know, downwards or to be steady. On the other hand, we're also seeing, you know, increases in inflation in Mexico, as in the rest of the world. For this year, our competitors increased their price. We have resisted our increases in, you know, to increase our prices. We wanted to keep our products realigned. As I mentioned in my first intervention, we believe, you know, we're finding the sweet spot of where our products should be, you know, quality, speeds and the pricing.
As we move forward, it will depend on how long this inflationary period stays. We may have to adjust. What I can say on the competitive part is that we have reacted swiftly. We tended to have national prices, and now we are monitoring the competition by package and by region and reacting accordingly with success, I believe. I think that's the way we are approaching the price environment coming forward in the next few months. When it's in the new areas, as Alfonso said, I think that they need tremendous success.
In some areas, notably where we were the last ones to come in, the ramp up process was slower than we expected and definitely than we wanted. In the last few months, even in those areas, we have seen, you know, an acceleration in the penetration in those areas. In the areas where we were not the last one, you know, the results have been better than expected. We're very happy, and I think we will continue. We will continue to expand opportunistically and, you know, with laser focus on where we have a competitive advantage.
You know, one last thing that I want to mention is that we will increase our homes passed expansion from about 700,000 to 800,000 homes passed this year. This is in a steady state. We hope we can maintain this towards the future and that's a healthy growth path moving forward.
Perfect. Thank you very much. Back to you.
Our next question will come from Alejandro Chavela with Credit Suisse. Please go ahead.
Hi, Alfonso de Angoitia. Thanks for taking the question. Most of my questions have been answered, just one. On cable, can you share more on the terms of your exclusive distribution agreement with ViX? For example, what the wholesale discount is and when the revenue will be recognized for the cost base? Anything on that front would be very helpful. Thanks a lot.
Thanks, Alejandro. Well, I'll ask Pepe Toño to expand on what I'm saying. I think it's great that we'll be able to bundle ViX+ with other products that Izzi is offering, as we have done with other aggregators, but with a special emphasis on this one. ViX+ is a fantastic distribution platform. It will have, as I have mentioned, tremendous amounts of content from our library. It has a 24/7 news program. It has sports. It will have exclusive games of the Mexican Soccer League, among other things. That together with premium content that we're producing specifically for the platform.
It will be the number one platform in terms of content in Spanish in the world and of course in Mexico. It's great that Izzi will be able to to bundle it with its own offerings. I'll ask Pepe Toño to expand on that.
Thank you. Thank you very much, Alfonso. Well, as Alfonso says, we are very excited about the opportunity of partnering with TelevisaUnivision as a distributor of ViX. In fact, our advertising campaign has the slogan that Izzi is the house of ViX in Mexico. I can't provide the numerical details of our deal with them, but I can say that it will help us and it will help them. We have a huge base that will help distribute ViX. We have 6 million customers, so 6 million potential customers who will use ViX. At the same time, it will be a differentiator for us, for people to choose us over our competitors, because as Alfonso said, you know, ViX is a tremendous platform and it's a great platform that will help us expand.
You know, one of the things that we have said is we've had an exclusive deal for the inauguration of ViX in Mexico, and we are taking advantage of that to promote ViX and also to promote our ViX, our business.
Yeah. On top of that, I think, I'm sorry? Alejandro, are you there?
Yeah. Sorry. No, sorry. I was on mute. Yeah. Go ahead.
Yeah. On top of that, of course, all the Blim, which is the previous platform that we had, which Izzi bundles, all those paying subscribers that we have there are going to be transferred into ViX. Those are 700,000 subscribers that were Blim subscribers and that will immediately become ViX+ subscribers. That will add to ViX+'s base.
Great. Thanks so much for the answers.
Our next question will come from Carlos Legarreta with GBM. Please go ahead.
Hi. Thank you. Good morning, gentlemen. I have two questions on the cable side. First of all, what have been the dynamics on the mass market, particularly in markets where your cable competitor is entering? Secondly, was the growth in cable enterprise excluding the Red Jalisco effect in line with the 5% mentioned last quarter? Thank you.
Thank you, Carlos. I'll ask Pepe To ñ o to answer both questions.
Well, thank you, Carlos, for the question. Well, I mean, it's the only historical investment Izzi has made in its network that has meant that we have been able to act swiftly and quickly to areas where we have increased competition. You know, a significant part of our network, you know, over 60% of our network is fiber deep. It allows us, keeping our HFC network, to very quickly, you know, react and have a plan where we can increase speed when we have increased competition. We have done so in, you know, in the areas where our competitors have entered, notably in Mexico City.
Mexico City is fully fiber deep, so that's ready for us to increase speed. I think we have kept our customer base. Our churn has remained stable. Coupled with all the other actions that we have done nationally, you know, I think we are very happy with the fact that we have managed to increase sales significantly while maintaining churn at the stable levels and in fact with signs of a decrease. That's what I have to say. The second part of your question was?
What would have been the growth in the enterprise part without the hub? Yeah.
Yeah. The Red Jalisco was a very large project. It was the main project for the enterprise segment. This quarter, the growth in revenues for the enterprise segment would have been 1.7% instead of the -18.8%. The EBITDA would have been 12.4% instead of the -26%. What we foresee in the next quarters because of the project cycles and the efforts we have made to include new projects is we expect mid-single digit growth quarter-on-quarter in revenues for the next two quarters. One of the things we should say is that Red Jalisco was a very large project with an important EBITDA contribution.
The EBITDA contribution is, you know, still gonna remain a challenge for the rest of the year.
Thank you. That's very helpful.
This will conclude our question and answer session. I'd like to turn the conference back over to the management team for any closing remarks.
Well, I would like to thank everyone for joining us today. As always, feel free to contact us with any additional questions that you may have. Well, I wish you a very happy end of the summer.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.