2020 Annual Report

2020 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS MEGACABLE. The revocation of any of the Company's concessions would have a significant adverse effect on its activities, financial position and income statement. ii. Contractual The Group has obligations to do and not to do with financial institutions in relation to current loan contracts. Said contracts include clauses that prohibit the Group from carrying out activities such as the sale of fixed assets or the merger with a third party (except with prior notice and authorization from the financial institution). Additionally, the loan agreement requires the fulfillment of certain financial ratios. b) Contingencies As of the date of issuance of these financial statements, the following relevant lawsuits have been brought against the Group that could represent an economic impact: Various labor lawsuits with an initial claimed amount of $261,897 of which the Group Attorneys have confirmed that the high risk litigation of obtaining an unfavorable judgment amounts to $29,065. The Group set aside an accounting reserve from previous years on this last amount. Appeals and amparo or relief proceedings for claims filed by Televisa against Group subsidiaries, for breach of license contracts and the payment of royalties for the use of signals on demand between 29 September and December 31, 2016. According to the opinion of the external lawyers, there are legal elements to obtain a favorable ruling for the Group. In the case of an audit by the tax authorities, discrepancies could be identified in the criteria applied by the Group to determine its taxes. The tax authorities have not reported any inconsistency in the taxes determined and paid by the Group, except as follows: As of the date of issuance of these financial statements, two of its subsidiaries (Telefonía por Cable, S.A. de C.V. and Mega Cable, S.A. de C.V.) have received notifications from the General Administration of Large Taxpayers (SAT), determining tax credits by the subsidiaries for $4,465,299 for Income Tax (ISR) and Special Tax on Production and Services (IEPS), both include surcharges and fines for fiscal years 2008, 2009 and 2011; however, the Group's Management and its attorneys confirm that they have the necessary elements to obtain a favorable ruling, in the means of defense that it has filed. Impact of COVID - 19. The COVID-19 pandemic has affected our business, financial position, and results of operations as of December 31, 2020 and it is currently difficult to predict the magnitude of the impact it will have for 2021. The Company cannot assure that the conditions of the bank financing markets, capital or other financial markets will not continue to deteriorate as a result of the pandemic, however, bank financing begins to expire in July 2022; or that access to capital and other sources of financing of the Company will not be restricted, which could negatively affect the availability and terms of future loans, renewals or refinancing. Furthermore, the deterioration of global economic conditions as a result of the pandemic could ultimately reduce the demand for the Group's products across its segments as its customers and users reduce or postpone their spending. The Mexican Government is still implementing a plan to reactivate economic activities according to phases based on colors that are determined weekly by state. However, a significant portion of the population continues to implement social distancing and shelter-at-home policies. Our business in the corporate market faced a reduction in the demand for services and may continue to be affected by the reduction in the level of financial activity in the regions in which our clients are located; however, the mass market had a significant increase that covered that shrinking business market. The magnitude of the impact on our business will depend on the duration and intensity of the COVID-19 pandemic, as well as the impact of actions by the federal government, state and local governments, and foreign governments, including the continuation of social distancing policies or reactivation thereof in the future; in addition to consumer behavior in response to the COVID-19 pandemic and the aforementioned government actions. Due to the changing and uncertain nature of this situation, the Group cannot fully estimate the impact that the COVID-19 pandemic will have thereon, but it could continue to affect the business, financial position or the results of operations in the short, medium or long term. 73

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