2020 Annual Report

2020 ANNUAL REPORT MESSAGE FROM THE CEO MEGACABLE. During 2020, changes that we expected to take place in the medium or long term, took place in a blink, in light of the new challenges stemming from the public health crisis. This emergency had a negative effect on the global economy, while on a domestic level we experienced an economic downturn and a negative GDP growth rate, both of which affected consumption levels; however, the needs of consumers changed, with telecommunications services, among others, becoming a priority. The main changes were the accelerated adoption, in a matter of days or weeks, of the home office, distance learning remote healthcare, e-commerce, mobility restrictions, a lower use of automobiles and many other trends. At Megacable, we recorded positive growth in our financial and operational statements for the services we offer the market, and we successfully consolidated major projects. In 2020, we made significant investments that enabled us to offer our customers the best possible connectivity and entertainment services, allowing us to grow and consolidate our position as a fundamental partner, above all motivated by the changes in the daily routine of people given the aforementioned. To the end of 2020, we had a total of 3,932,609 unique subscribers, an 8% increase in a year-on-year comparison, while Revenue Generating Units (RGU's) grew to more than 9.5 million, a 13% increase compared to 2019. This led to a rate of 2.43 RGU's per unique subscriber. For Megacable, 2020 was a year of projection and acceleration. The Company's financial results were positive, recording growth of 4% in consolidated revenue compared to 2019, reaching Ps. 22.383 billion. In terms of results by segment, Internet recorded growth of 9%, stemming from increased demand for this service during lockdown and the Company's competitive offering. The Video segment saw a 3% growth in revenue, while the Telephony segment recorded 15% growth. Revenue Breakdown 83% Corporate Telecom Market Mass Market 17% Consolidated EBITDA grew by 8% compared to 2019 at a margin of 49.3%, reaching a total of Ps. 11.029 billion; while EBITDA for Cable operations stood at Ps. 10.370 billion, an increase of 9% compared to 2019 at a margin of 50.8%. In terms of CAPEX, in 2020 we invested a total of Ps. 8.081 billion, 24% more in a year-on-year comparison, which represents 36% of total revenue in 2020 - a historic investment. One of our major projects during this period was the adoption of GPON technology in twelve cities, offering our customers a newer technology. Approximately half our subscriber base will migrate to this new technology, and our goal is to complete the process in 2021. Following our infrastructure deployment strategy, we activated optic fiber rings between Guadalajara and Puebla, in addition to applying new border routes using proprietary fiber optic cables. In 2020, we began installing a submarine cable in the region of Baja California, which will connect this region with the rest of the country, providing video, voice and high-capacity data services. Through this infrastructure deployment process, we have been able to drive improvements in both our data services and grow as a provider to other telecommunications companies, as well as creating huge cost-savings for the Company. RESULTS BY BUSINESS SEGMENT At Megacable, we know that the needs of our customers are constantly changing and becoming more and more sophisticated, which is why we strive every single day to drive innovation in our services in order to offer them a better experience. We invest in new technology that allows us to make our networks even more efficient. Communication services allow our customers to remain at home, work efficiently, and enjoy unique entertainment content. We also launched our mobile service, which combines our quadruple play offering with positive results and exponential curves. By 2021, we expect to have fully consolidated this business unit. In terms of the video segment, we have been working on developing our XView+ platform, which is based on the Android TV platform, integrating linear content and virtual platforms into one hub, allowing users to easily find what they want to watch. The launch of this platform is scheduled for February 2021 and was carried out succesfully. We continue preparing for the future by making investments that will make a difference in the market. 14

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