Earnings call transcript: Megacable Q2 2025 shows 34% net income growth

Megacable Holdings reported strong financial results for the second quarter of 2025, with significant growth in revenue and net income. Total revenues increased by 7% year-over-year to 8.7 billion pesos, while net income surged by 34% to approximately 768 million pesos. Despite a slight decline of 0.47% after the announcement, the stock has demonstrated remarkable performance with a 61.79% year-to-date return. According to InvestingPro analysis, the company appears undervalued at its current market capitalization of $1.33 billion, suggesting potential upside for investors.

Key Takeaways

• Revenue grew 7% year-over-year, reaching 8.7 billion pesos.
• Net income increased by 34% to 768 million pesos.
• EBITDA margin expanded to 45.4%.
• The stock price fell by 0.47% following the earnings release.
• The company plans to achieve full fiber operation by 2028.

Company Performance

Megacable Holdings demonstrated robust performance in Q2 2025, with both revenue and net income showing significant year-over-year growth. The company continues to strengthen its position in the Mexican telecommunications market, supported by its advanced fiber network and strategic initiatives in digital services and mobile virtual network operations (MVNO). InvestingPro data reveals an impressive 8.17% revenue growth over the last twelve months, with an attractive EV/EBITDA ratio of 3.38x and a notable dividend yield of 6.49%.

Financial Highlights

• Revenue: 8.7 billion pesos, up 7% YoY
• EBITDA: 4 billion pesos, up nearly 10% YoY
• Net Income: 768 million pesos, up 34% YoY
• EBITDA Margin: Expanded to 45.4% from 44.3% in Q2 2024

Outlook & Guidance

Looking forward, Megacable aims to transition to full fiber operations by 2028 and reduce its CAPEX-to-revenue ratio to below 20% by that time. The company expects to pass 800,000 to 1,000,000 new homes in the second half of 2025, focusing on mass market growth and operational efficiency. With a beta of 0.87 and an overall financial health score of "GOOD" according to InvestingPro, the company demonstrates strong fundamentals and lower volatility compared to the market. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

Enrique Yamuni, CEO of Megacable, expressed satisfaction with the quarterly results, stating, "We’re pleased to report one of the strongest quarters in recent history." He emphasized the resilience of the company’s strategy despite a challenging environment. Raymundo Fernández, Deputy CEO, added, "We are not stopping. This is a living company and needs to grow."

Risks and Challenges

• Competitive Market: Intense competition in the Mexican telecommunications sector could impact market share.
• Economic Conditions: Macroeconomic pressures may affect consumer spending and growth.
• Technological Advancements: Keeping pace with rapid technological changes requires continuous investment.
• Regulatory Changes: Potential regulatory shifts could influence operational flexibility and costs.

Megacable’s Q2 2025 earnings call highlighted the company’s strong financial performance and strategic focus on growth and efficiency, despite a slight dip in stock price post-announcement. The company remains committed to expanding its fiber network and enhancing service offerings to strengthen its market position.

Full transcript - Megacable Holdings SAB De CV (MEGACPO) Q2 2025:

Moderator, Megacable Holdings: Enrique Yamuni, CEO, Mr. Raymundo Fernández, Deputy CEO, and Mr. Luis Zetter Zermeno, CFO. Let me remind you that the information discussed at today’s earnings call may include forward-looking statements on the company’s future financial performance and prospects, which are subject to risks and uncertainties. Megacable Holdings undertakes no obligation to update or revise any forward-looking statement. I will now turn the call over to Mr. Enrique Yamuni. Sir, you may begin.

Enrique Yamuni, CEO, Megacable Holdings: Good morning everyone. Thank you for joining us today. We’re pleased to report one of the strongest quarters in recent history, driven by solid growth in the mass market with net additions rounding the 130,000 for broadband and 45,000 for video, result of the performance across both legacy and newly entered territories. In an industry where average growth fluctuates around 2.5% to 3%, our 10% growth in the mass market segment stands out as a clear indicator of market share gains and deeper penetration. This performance validates our investment decisions and the effectiveness of our long-term strategy. According to the latest data from the World Bank, Internet penetration in Mexico stands at approximately 81%, leaving a wide window for continued growth.

Within this context and based on the most recent figures from the IFT, Megacable Holdings holds an estimated 20% share of the nation’s fixed broadband market, highlighting the significant opportunities that still lie ahead. This operational momentum is translated into sustained revenue growth, a near double-digit increase in EBITDA and annual expansion in EBITDA margin, and a year-over-year increase in net income over 30% altogether. These results reaffirm the disciplined execution of our strategy and underscore the strength and resilience of our business model even in a context still marked by macroeconomic headwinds and tighter public spending. From a strategic perspective, we remain firmly on track towards our goal of becoming a full fiber operator by 2028. Today, more than 80% of our subscribers are already served through fiber, consolidating the transition we have steadily executed over the recent years.

This positions us to deliver best-in-class quality and next-generation digital experiences, improving our competitive edge. Since the announcement of our expansion plan at the end of 2021, we have nearly doubled the size of our network infrastructure, a clear demonstration of our capacity to execute large-scale strategic initiatives with precision. We have reached the milestone of 18 million homes passed footprint, increasing 9 million homes since the expansion project was launched. Reaching this milestone represents a significant achievement for the company. However, we continue to expand our footprint at a more moderate pace, guided by business fundamentals and aligned with emerging market opportunities. New deployments will be targeted based on population and demand growth both in legacy and expansion territories. On the financial side, our EBITDA margin expanded year over year, supported by greater penetration in newly launched territories and sustained efficiencies across our legacy footprint.

While it is typical for margins to peak in the first quarter and normalize over the remainder of the year, we remain on track to surpass our full 2024 margin. Furthermore, EBITDA grew at a near double-digit annual rate, reflecting the combined effect of disciplined cost optimization and the operating revolution inherent in our model. The sustained profitability along with our strong cash generation allowed us to return value to our shareholders through a dividend distribution this past April of approximately $2.9 billion pesos, equivalent to around 20% of 2024 EBITDA, maintaining one of the highest yields in the Mexican market. Although this led to a temporary reduction in cash and a slight uptick in leverage, our debt levels remain comfortably within our target range.

We’re certain that the leverage peak is already behind us and we are well positioned to continue generating positive cash flow, funding future dividends, getting more return on our past investments, and supporting strategic future projects. This prudent financial management was further validated during the quarter as Fitch Ratings reaffirmed our investment grade rating AAA with a stable outlook. This endorsement takes relevance in light of recent downward pressures on industry peers and reflects continued market confidence in our credit fundamentals, long-term stability, and the positive impact of our infrastructure modernization and expansion strategy. On the investment front, CAPEX remained stable after a slow start of the year in terms of kilometers deployed and homes passed, reflecting our focus on optimizing the use of existing infrastructure and consolidating recent deployments.

Going forward, we expect investment activity to gradually increase in the second half of the year and we remain committed to achieving a full-year CAPEX-to-revenue ratio between 27% and 29% over the long term. In the longer term, our goal is to progressively reduce this ratio to below 20% by 2028 as our network expansion matures and additional efficiency gains are realized. Looking ahead, our outlook for the remainder of 2024 remains unchanged, marked by the solid fundamentals of our core segment. In particular, growth in the mass market remains strong, margins continue expanding on our annual basis, and net income maintains its upward trend. More importantly, our strategy continues posting resilient results despite a challenging environment while remaining fully aligned to our long-term vision.

Before handing the call over to Raymundo, I want to emphasize our disciplined and consistent execution of our clearly defined strategy, which for over six consecutive quarters has allowed us to deliver sustained subscriber growth, margin expansion, and stronger cash generation. This performance has been clearly reflected in our share price, which stood at $52.59 as of June 30, 2025, representing a 55% increase from $33.91. At the end of December 2024, our market capitalization reached $45.3 billion. While this is a better valuation of our company, we firmly believe there is still meaningful upside ahead. This figure signaled renewed investor confidence as we remain the best positioned telecommunications operator in Mexico, backed by best-in-class service, high customer satisfaction, state-of-the-art infrastructure, and a long-term commitment to sustainable growth. Raymundo, now you can proceed. Thank you very much.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Thanks Enrique and good morning everyone. During the last quarter, Megacable maintained a solid growth trajectory, reaffirming our commitment to becoming the leading telecommunications operator in the country. Our performance reflects the sustained momentum observed in past periods, including first, subscribers, we continue to expand our user base driven by enhanced service quality and ongoing coverage expansion. Second, revenue and profitability, subscriber growth translated directly into solid financial performance with year-over-year increases in both revenue and net income. Third, operating margin, margin expansion was achieved through disciplined cost management and continued efficiency gains. These results confirm that our strategy is being executed with excellence and operational discipline. Moreover, this performance not only validates the path we’ve taken, but also positions us well for sustainable growth in the future.

Now moving to results during the second quarter, unique subscribers increased almost 565,000 over the last 12 months, reaching 5.7 million at the end of the quarter, representing an 11% year-over-year growth. In the second quarter alone, we added over 129,000 unique subscribers, reflecting strong sequential growth, reinforcing both our progress in consolidating services across new territories and our positioning at legacy markets. REUs increased from 13.2 million in the second quarter 2024 to 14.4 million this quarter, representing a 9% year-over-year growth. Revenue generating units per unique subscriber stood at 2.51 compared to 2.55 in the same period 2024, in line with the rising preference for dual service bundles. Breakdown by segment, our Internet service surpassed 5.5 million subscribers, representing a 12% year-over-year growth, equivalent to nearly 581,000 net additions, of which over 132,000 were added this quarter.

With these numbers at hand, we remain within our established quarterly growth range with a strong position in this business segment. It is also worth highlighting that over 80% of our subscriber base was already served through high quality fiber technology as of quarter, representing a significant improvement when compared to the 71% record in the second quarter 2024, bringing us closer to becoming a full fiber company. In the video segment, we closed the quarter with more than 3.8 million subscribers, slightly above the level recorded in the second quarter 2024 with 45,000 net adds this quarter. As we have previously noted, this mark is no longer expanding. However, the company remains focused on creating value leverage on its XView video platform bundled with the streaming apps, capitalizing on the growing consumer preference for on demand content.

The MVNO segment records a 32% YoY growth driven by the net additions of 151,000 lines over the last 12 months, including 44,000 this quarter, reaching over 619,000 subscribers. This service, which was originally designed to enhance the value of our commercial offering by acting as a retention strategy, now is becoming a relevant stream of revenues. The growth achieved across all mass market segments was carried by a strength infrastructure. Our network expanded by 6% YoY, reaching 104,391 km and enabling coverage of more than 18.1 million homes, representing a 10% increase compared to the same period last year. It is worth noting that 100% of this growth was deployed using fiber technology. The churn rate for Internet and telephony services increases slightly from 2.1% to 2.3% in second quarter 2024 to 2.2% and 2.5% respectively.

In contrast, video saw a significant YoY improvement with churn declining from 2.6% to 2.3% this quarter. As a result, ARPU per unique subscribers improve on a sequential basis to $421 pesos. This recovery reflects both denormalization of seasonal effects observed in the first quarter and the contribution of recent price adjustments across our service portfolio. On a YoY basis, decrease was supported by a higher proportion of subscribers on a double play. Packages in the corporate segment results were softer this quarter. This is due to a decline in the government sector, also the sale of contracts with future revenue recognition, better known as managed services instead of infrastructure sales, and a short term reduction in carrier contracts due to extend future terms with price reductions.

Additionally, although this causes a drop in revenue, the EBITDA contributed by the business sector does not decrease since the new projects are lowering costs and therefore yield higher margins. In summary, I would like to highlight that in a quarter marked by an economic context of mixed signals, our key performance indicators remain solid. The progress achieved during this period confirms the strength of our operational model and effectiveness of our expansion strategy. Looking ahead, we remain focused on consolidating our strategic projects and reinforcing the quality of our service offering with the clear objective of delivering reliable, high performance connectivity solutions that continue to meet the evolving expectations of families and businesses across Mexico. Thank you for your attention. I will now hand in the call to Luis for his financial review.

Luis Zetter Zermeno, CFO, Megacable Holdings: Thank you, Raymundo. Good morning everyone. In the second quarter of the year we remain focused on executing our strategic roadmap, achieving solid top line growth and preserving our operating efficiency in a context of macroeconomic volatility. Total revenues for the quarter reached $8.7 billion pesos, reflecting a YoY growth of 7%. This percentage was supported by strong results at our mass market. Operations expanded by more than 10% YoY following a consistent growth in broadband and telephony services supported by our bundling strategy and incremental fiber adoption across all of our service areas. In contrast, revenues from our corporate telecom segment declined YoY. This is a result mainly due to the hard comparative effect, the strategic focus on higher margin products and achieved our sales that prioritize recurring revenue streams over the one time transactions.

The integration of our business units under the MCM Business Techco platform remains underway and we expect it to gradually strengthen our commercial effectiveness and positioning within the segment. As a result of the above, the mass segment continues to be our main source of the top line, representing 85% of total revenues for the quarter, which compares to the 82% share recorded in the same period of 2024. Cost services for the quarter reached $2.4 billion pesos, marking a YoY growth of 3%, while SG&A expenses amounted to $2.3 billion pesos, rising 6% YoY, both behind the pace of revenue growth. These results were supported by lower activity levels in the corporate segment. Both cost lines were effectively kept under control through strict cost discipline.

EBITDA for the quarter reached nearly $4 billion pesos, growing almost 10% YoY and representing a margin of 45.4%, reflecting a solid expansion to the 44.3% margin of second quarter in 2024. These results continue to highlight the structural efficiencies embedded at our platform and the consolidation of our expansion projects. Net income reached around $768 million pesos this quarter, showing improvement over both the first quarter of 2025 and the same period of previous year, growing 6% and 34% respectively. The recovery reflects currency exchange gain and lower financing costs. All in all, we are confident that as we move forward in the consolidation of new territories, we will continue to strengthen both EBITDA and net income generation. Turning to the balance sheet during the quarter, as Enrique mentioned, we executed the payment of a $2.9 billion pesos dividend approved at our annual Ordinary Shareholders meeting.

As a result, our cash position was lower this quarter and net debt closed at $23.4 billion pesos. As expected, the net debt to EBITDA ratio increased from 1.41 times last quarter to 1.656 times this period. Despite this, our leverage profile remains healthy and among the lowest in the industry. At the end of the quarter, our interest coverage ratio was 5.3 times EBITDA, referring to Megacable Holdings’ solid capacity to meet its financial obligations. Additionally, the average interest rate on our debt was 9.1%, a notable improvement compared to 10.7% in the previous year. These downward trends reflect a reduction in interest payments and contribute to improved financial efficiency. Capital expenditures remain at a moderate pace, totaling $1.9 billion pesos this quarter, consistent with CAPEX trends typically observed in second quarters and a more favorable foreign exchange.

This figure represents 22% of revenues for the quarter and 24% for the year, showing a trend in line with our long-term investment plan. Although it is important to note that we will continue to invest in network infrastructure and operational improvements, we anticipate that the annual CAPEX-to-revenue ratio will remain as mentioned before, between 27% to 29%, reflecting the soft landing of our CAPEX program. Finally, the second quarter of 2025 underscored the resilience of our core operations, the strength of our financial discipline, and our ability to navigate both internal transformation and market uncertainties. Consecutive quarters of solid subscriber additions combined with sustained revenue and EBITDA growth not only validate the effectiveness of our strategy but also highlight our strengthened ability to consistently generate free cash flow. This financial performance reinforces our capacity to support shareholder return and maintain long-term financial health.

Before concluding, I would like to mention that we were honored to be included in the 2025 ALODS20 ranking in the Investor Relations and Sustainable categories. These recognitions reflect our unwavering commitment to sustainable value creation, transparent stakeholder communication, and robust governance practices. Additionally, we have published our 2024 Integrated Annual Report aligned with both GRI and SASB standards. Going forward, we will continue to provide accessible, transparent, and timely information to support well-informed decision making by our shareholders. Thank you for your trust. I will now open the floor for questions.

Moderator, Megacable Holdings: If you have a question, please use the raise your hand button on your Zoom application, or you can also type your question in the Q&A section of the Zoom platform. Please make sure that you are not muted when it’s your time to participate. Our first question comes from Marcelo Santos from JP Morgan. Marcelo, please go ahead.

Hi, good morning. Ricky, Raymundo, Luis. Thank you so much for allowing us the opportunity to make questions. I would like to ask a bit about the competitive environment because as you mentioned in the presentation, there was a slight increase in churn versus the first quarter. The first quarter was already a bit higher than before because you had the price increase. Could you just provide your reading on how the situation is unfolding? The second question is more technical. What are the elements that would lead to a CapEx increase in the second half? You are keeping the ads, as far as I understand, you should keep the ads more or less in the range where they are and your network deployment is. You already deployed a lot of networks, so I just wanted to understand better what are the drivers for these higher CapEx.

Thank you so much.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Sure. Marcelo, thank you for the question regarding the competitive environment. As you are aware, we have strong competition in the market from all our competitors. This is a very competitive market, but we have carried out to be able to increase our gross ads significantly. We have carried out also to increase rates around the tariff during the first and the second quarter, and all this strong and aggressive marketing and commercial efforts will bring us to a slight increase in the ARPU. We still, in the churn, don’t believe that we’re going to increase the levels of churns in the future. We feel this is the level that we should remain.

If you look at video, even stay a little bit below, those are adjustments that we do in this strategy according to the competition, and for us, we’re very happy that they are paying off in terms of the increase in the net ads that we have. All this is coming from that part, what competition is doing. As you know, Telmex is not increasing rates on that part. They have a strong network with fiber on the part and are strongly going towards the double play. The other competitors, one has fiber, the other one doesn’t have the fiber, but they have higher outputs on that part. We have a much better and brand new state-of-the-art network with a better product and really good price, and more than that, we have the right organization to bring those gross ads in the second quarter.

That’s why you have the 32,000 nets. Regardless of everything going forward, we expect still to maintain between 100,000 to 150,000 net ads on a quarterly basis, taking as a base broadband on that part. We’re very happy of the results of this quarter. Regarding the technical increase of CapEx that he asked for the second half.

Luis Zetter Zermeno, CFO, Megacable Holdings: Yes, Marcelo, thanks for the question. We still have kilometers to build and we still have subscribers to migrate with the comic equipment with that. We are behind on the reposition of the fleet. We are starting to include electric cars in our fleet, starting with Mexico City for the benefits it represents. We are a little bit behind and we are going to include that for the remainder of the year as well.

Perfect, thank you.

Raymundo Fernández, Deputy CEO, Megacable Holdings: That’s why we stood up at the 27% to 28% promotion of the CapEx on that part for the second half.

Yes, perfect. Understood. Thank you very much.

Moderator, Megacable Holdings: Thank you, Marcelo. The next question comes from Vitor Tomita from Goldman Sachs. Go ahead, Vitor.

Good morning and thanks for taking our questions. Two questions from our side. The first one is on a bit of a follow up on the CAPEX question. The deployment of new homes passed, it decelerated quite a bit in Q1, then it re-accelerated a bit, the new homes passed in Q2 again. How do you plan for that to evolve in the second half of the year after this stronger quarter? My other question would be more on the dynamics that followed the price up in Q1, also a bit related to the churn point. We noticed that ARPU only benefited from the price up in Q2, rising in Q2, and at least from what we can see, that churn was slightly higher, higher in Q2 even though the net additions were impacted by churn in Q1 and following the price.

I just wanted to have a bit more of a feeling for the timing in which these factors affected your numbers. Thank you.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Yeah, thank you Vito. As you are aware, in our numbers we built around 700,000 new homes passed in the first half of the year. We are expecting to build between 800,000 to 1,000,000, sorry, 800,000 to 1,000,000 for the second half. We will end the year between 1.5 million to 1.6, 1.7 million homes passed. That also affects slightly on the CapEx for the second half as Luis mentioned before, and that’s the right level that we expect to build for this year, between 1.5 to 1.7 million new homes passed. Regarding the ARPU, as we have stated in the past, we continue to provide an increase in the rates to existing subscribers upgraded to new speeds and apps for that part.

We also have promotional subscribers that have a lower ARPU as we capture the market, and we have less video over total amount of unique subscribers that push the ARPU. At the end, we have a slight increase of the ARPU, but we cannot increase the ARPU significantly with those combination of factors that affect the ARPU. I don’t know if that answered the question.

I meant more on the fact of if you could go a bit more on over the seasonality because we saw that you made a price up in the beginning of Q1, but you had a big improvement in Q2 versus Q1. Just wondering if the price up ended up having more effect now in the quarter, had a bit of a delayed effect.

Luis Zetter Zermeno, CFO, Megacable Holdings: There is of course an impact on the churn on the ARPU, but also something that is helping back the ARPU a little bit is the video content because we are now at almost the same level of video subscribers as last year. That also helps a little bit the ARPU and not only the price increase that we have in the first quarter that created the biggest trend.

That’s clear. Thank you very much.

Moderator, Megacable Holdings: Okay, the next question comes from Luca Brandin from Bank of America.

Hi, good morning everyone. Thank you for taking my questions. I have two here on my side as well. The first one is on corporate. You mentioned you had less revenues from contracts with immediate recognition, with more now being time based. Is that only a matter of the difference between the contracts, or were there also some changes in the accounting that you do for those contracts? If you can comment as well, how can we think about the corporate going forward? Could we see an acceleration from this quarter, or should we expect something similar going forward for the rest of the year? The second question, for the past few quarters you guys have been able to beat your guidance of at least 100,000 net adds per quarter. Thinking for the long term, for how long do you think you can maintain this pace?

Is that something that you think you can maintain for the next two years, three years, or how do you see that? Thank you.

Luis Zetter Zermeno, CFO, Megacable Holdings: Thank you, Luca. Starting with the first and related to corporate revenues, there’s nothing to do with accounting. Recognition is more the contracts that we have been now getting from the market. Last year it was, there were many projects that were basically infrastructure and implementations. This year we have reached large contracts, but more on over time over 36 months of services and managed services. It’s more the effect of the type of contracts that we are achieving.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Which are reflected on the higher margin that the corporate segment represents. If you can see, Luca, the EBITDA growth that the company presents is higher than the revenue regardless of the drop of the.

Luis Zetter Zermeno, CFO, Megacable Holdings: Of the.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Of the corporate segment, that means that we are focusing on high margin customers.

Luis Zetter Zermeno, CFO, Megacable Holdings: Okay.

Raymundo Fernández, Deputy CEO, Megacable Holdings: That has an effect in the revenue in the short term in terms of the revenue recognition, but it does not affect because the services that we are providing, the remain of these services that we are providing, still have a higher margin. We’re happy with that strategy. We are not against selling those kind of product or services, but we prefer to focus into these ones that have a higher yield. We expect for the second half to increase the revenues coming from that segment, in that part revert the trend.

On that.

Luis Zetter Zermeno, CFO, Megacable Holdings: And.

Raymundo Fernández, Deputy CEO, Megacable Holdings: The second question was the guidance that whether we can remain the guidance pretty much the growth that we have in IT ads for the at least. I will tell you that for the next two years we will have a trend like what we’re expecting so far. We reach the 18 million homes passed. We will continue as we say, this is not going to stop there. What the trend that we see is going forward getting to below 20% CAPEX in 2028. That will not stop to bring around a million homes passed every year pretty much in expansion. This is a living company and needs to grow according to population and the needs of the mind of other ones. There are competitors that have around 40% more homes passed than we have so far. We have still room to route in Megacable in the Mexican market.

We are not stopping at anything. What we’re stopping is the first part of the plan that was doubling the size. We already meet that at going an 18 million homes passed. What we’re doing now is growing in a base between 100,000 to 150,000 subscribers per year. We expect that 100,000 to 150,000 per quarter. We expect that to continue for the next two to three years pretty much. You can bet on that.

Very clear. Thank you for the answers.

Moderator, Megacable Holdings: Okay, the next question comes from Alex Azar. Alex, go ahead.

Luis Zetter Zermeno, CFO, Megacable Holdings: Hola.

Gracias. Hi. Hi guys. Good morning. Quick questions. The first one is on the corporate segment. I was just wondering if you can remind us or update us on your savings efficiency strategy. If I’m not mistaken, you were to unlock some efficiencies from the integration of subsidiaries and when should we start seeing those and when do you think we’ll have those at the peak level or fully realized? That would be my first question. The second one is I understand that you’re still fulfilling your expansion plan and increasing the penetration of the network, but the numbers, as some of my colleagues mentioned, are in line or above your expectations. I was just wondering if you guys can maybe give us more color on post 2027, 2028, what are you guys thinking?

Megacable or the company is going to move forward when you achieve the expansion plan, are you looking to increase the mobile penetration of your subscribers or maybe corporate solutions? Those would be my questions. Thank you very much.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Thank you, Alex. Related to the corporate segment strategy, as we said before, we’re focusing to more managed service contracts that has a higher margin but a revenue recognition in the future compared to sales of infrastructure with lower margin. That’s part of what is affecting the revenue numbers of this quarter on that part, but not the EBIT as we say. We have a very clear strategy with the merge of all the business unit. We have a company named MCM Business Techco in which we sell connectivity and IT solutions and colocation in all our edge and data centers. We believe that we can grow that business unit in the future by the merge of those three or four components.

Not only connectivity, people want collaboration, they want licenses for cyber security, they want surveillance and all the support that they can have to grow on the IT systems and that connected to the connectivity that we have tied to the connectivity make a strong offer that we are going forward and that’s why we grow without the revenue of the infrastructure we are selling. What are you selling going forward? Not in the actual time. We’re happy with this segment and growing as I mentioned before. Now regarding the plan, the plan stays the same as we are right now. We’re a company that has 80% of the network already converted to fiber that will be a full fiber company by 2028, but really going over about 90%, 95% way before that. We are protecting all the existing markets that we have.

We’re very happy also that in the organic markets that were or not converted we have increased subscribers. We have not lost subscribers in organic in all our markets. Regarding the high penetration we have, that tells all of you about the resilience of the strategy, the product, the service that we have provided. Right now the expansion is picking up. We have strong EBITDA coming from expansion and growing as we speak. Part of the ARPU also is that we have subscriber on expansion with promotionals growing compared to the organic. That’s why ARPU doesn’t grow. What are we looking in 2027, 2028? A company that will have a better financial structure on the balance sheet on that part, the one that makes more sense. Keeping the dividend, keeping value for shareholders, increasing the value of the stock. Like we say, like Enrique mentioned in his bishop and remarks.

We’re very happy that finally the market is beginning to recognize the intrinsic value of this company, going from $33 to $54 this year. We believe that that’s still not the real value reflected of our company. The trend of the plan will back the price of the share. What’s happening 2027, 2028, we will be open here in the management with the board to see what’s the best for shareholders and this organization. Right now we’re focused on what we are telling you about.

Okay, thank you. Thank you, Raymundo. About the savings plan from the corporate segment, when should we start looking at those? When are those going to be fully realized?

You can see the savings right now. That’s why the margin of the whole company grew 10% year over year. All that we’re saying is focusing on better contract. We are also reflecting the synergies of merging all of those three companies. We’re way much more efficient, and that’s contributing to the growth of the margin. The company has already merged in that part.

Luis Zetter Zermeno, CFO, Megacable Holdings: All the seven payments are already out. It’s part. It will be finished and will be very visible by the end of the year.

Okay, thank you, Luis Zetter Zermeno.

Okay.

Moderator, Megacable Holdings: The next question comes from the line of David Lopez from New Street Research. David, please go ahead.

Luis Zetter Zermeno, CFO, Megacable Holdings: Hi, thank you for taking my question and congratulations on a strong set of results. I had a question on leverage.

I was wondering what is the optimal.

Net debt to EBITDA level in the medium term for Megacable? Would you like to distribute all the excess cash or, I think you just mentioned, on value creation and shareholder remuneration.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Would share buyback be an option in the future?

Luis Zetter Zermeno, CFO, Megacable Holdings: Thank you. As you’ve seen, we are reaching 1.56 times of leverage of EBITDA. We think that the number is among the best in the industry or the best in the industry. We feel comfortable between 1.1 times EBITDA and 1.5. I don’t think there’s any issue with that. There’s no mandate, there’s no specific leverage ratio demanded by the board or specified by the board. They tell us use the money on the best opportunities, and that’s what has been done.

Enrique Yamuni, CEO, Megacable Holdings: I think that we will maintain healthy debt ratio combined with a good return for the shareholders. By that I mean dividend ratio that, you know, is attractive for the investors and also taking opportunities from the market if they arise to expand the company. You know, good opportunities. We are or our eyes are open for that. We are willing to do whatever is better for the shareholders and the value of the company. We will not have any restrictions of any ratio of deprivation. Although our board has always been fans of healthy balance sheet.

Okay, thank you.

Luis Zetter Zermeno, CFO, Megacable Holdings: Very clear. Thanks. You’re welcome, David.

Moderator, Megacable Holdings: Okay. With no more questions in the queue, the question and answer session has concluded. I pass the call over to Mr. Enrique Yamuni for final remarks.

Enrique Yamuni, CEO, Megacable Holdings: Thank you. The final reminder, please use a razor. As always, it is a pleasure to discuss our results with you. Please contact our Investor Relations department if you have any questions or concerns regarding the company. Have a wonderful day and a very good weekend for all of you. Thank you very much. Thank you.

Raymundo Fernández, Deputy CEO, Megacable Holdings: Thank you all.

Luis Zetter Zermeno, CFO, Megacable Holdings: Thanks everybody.

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