Earnings call transcript: Megacable Q3 2025 sees steady growth

Megacable reported robust financial results for the third quarter of 2025, with a 9% year-over-year increase in total revenues to 8.9 billion pesos. The company’s EBITDA also rose by 10% to 3.9 billion pesos, reflecting strong operational performance. Despite these positive results, Megacable’s stock experienced a slight decline of 0.47% to 72.59 pesos, amidst broader market pressures. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model, with an impressive year-to-date return of 67.14% and an attractive dividend yield of 6.28%.

Key Takeaways

• Megacable achieved a 9% increase in total revenues YoY.
• EBITDA grew by 10%, with a margin improvement to 44.2%.
• The company expanded its network infrastructure significantly.
• Subscriber base saw healthy growth with 122,000 net additions.

Company Performance

Megacable’s performance in Q3 2025 highlights its resilience and strategic growth initiatives. The company reported a net income of 628 million pesos, supported by an expanding subscriber base and infrastructure investments. InvestingPro data shows the company maintains a strong financial health score of 3.11 (rated as "GREAT"), with an impressive Altman Z-Score of 6.43 indicating robust financial stability. Megacable continues to solidify its position as the second-largest broadband provider in Mexico, despite competitive pressures from rivals like Izzi and Telmex.

Financial Highlights

• Revenue: 8.9 billion pesos, up 9% YoY
• EBITDA: 3.9 billion pesos, up 10% YoY
• EBITDA margin: 44.2%, improved by 50 basis points
• Net income: 628 million pesos
• Net debt-to-EBITDA ratio: Reduced to 1.45x from 1.56x last quarter

Outlook & Guidance

Looking ahead, Megacable expects subscriber growth of 100,000 to 150,000 per quarter in 2026. The company is also planning to reduce CAPEX to 24-26% of revenues by 2026, as it aims to become a full fiber operator. Strategic initiatives in AI, digitalization, and telemedicine are also on the horizon, indicating a focus on value-added services.

Executive Commentary

• Enrique Yamuni, CEO, stated, "We expect to be cash flow positive before dividends payments," highlighting the company’s strong financial position.
• Raymundo Fernández emphasized growth potential, saying, "We still have room to grow. We are at around 81% broadband penetration."
• Yamuni also noted the opportunities presented by AI: "With AI accelerating, there are very big opportunities in the future."

Risks and Challenges

• Market saturation remains a concern, with broadband penetration already at 81%.
• Pricing pressure in the corporate segment could impact margins.
• Competition from established players like Izzi and Telmex poses ongoing challenges.
• Economic uncertainties may affect consumer spending and growth projections.

Megacable’s Q3 2025 earnings call reflects a company in a strong position, yet mindful of the challenges ahead. Its strategic focus on infrastructure expansion and technological innovation positions it well for future growth, even as it navigates a competitive landscape. The company’s attractive valuation metrics, including an EV/EBITDA of 3.53x and P/B ratio of 0.79, suggest significant upside potential. For deeper insights into Megacable’s valuation and growth prospects, including exclusive ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro.

Full transcript - Megacable Holdings SAB De CV (MEGACPO) Q3 2025:

Saul, Moderator, Megacable: CEO, Mr. Raymundo Fernández, Deputy CEO, and Mr. Luis Zetter, 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 risk and uncertainties. Megacable 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, Executive, Megacable: Thank you, Saul. Good morning, everyone, and thank you for joining us today. During the quarter, we remained firmly aligned with our strategy and continued with the execution of our expansion and network evolution projects as planned. This disciplined approach has enabled us to sustain subscriber growth above market levels, positioning Megacable as the second largest operator in the country by number of broadband subscribers. The achievement reflects our commitment to becoming a leader player in Mexico’s telecommunications sector. A key driver of this progress has been the expansion of our infrastructure. During this period, we successfully reached our goal of doubling our infrastructure by number of hubs passed compared to those at the expansion announcement, making a significant milestone three years into the execution of this initiative. Today, our network is capable of serving 82% of our subscriber base through fiber, a tangible result of our strategic investments.

We have already captured over 50% of the subscribers originally targeted in those sub-territories, and we continue working diligently to increase penetration and reach the next set of objectives. In parallel, we have made substantial progress in our network evolution project, migrating subscribers to a state-of-the-art fiber network. This effort is part of our clear vision to become a full fiber operator in the medium term, enhancing our competitive edge. We are proud to offer a robust service portfolio with competitive pricing, bandwidth tailored to evolving needs of our customers, and outstanding customer service. This is evidenced by our performance in key indicators such as Net Promoter Score, which continues to improve quarter over quarter. Operationally, we remain focused on driving value to quality service and fair prices.

In this sense, our ARPU increased both sequentially and for the first time in the last 12 months on a yearly basis, thus reflecting the strength of our value proposition and the positive impact of recent commercial adjustments. From a financial standpoint, subscriber growth has consistently translated into revenue growth. Our mass market segment has maintained high single-digit growth, with an acceleration observed during this period. Likewise, consolidated EBITDA has increased its growth pace, resulting in margins expansion on a year-over-year basis, a trend we expect to sustain in the coming quarters. Our capital investment levels are showing a clear deceleration trend, excluding extraordinary investment projects. Our organic CAPEX has declined to mid-teens, aligning with global best-in-class telecom operators and laying the foundation for a more efficient investment structure going forward.

As a result of this lower CAPEX intensity and continued EBITDA growth, we are approaching our cash generation target this year. We expect to be cash flow positive before dividends payments and very close to achieving net cash flow even after dividends. It is also worth noting that throughout this investment cycle, our debt levels have not increased significantly. We maintain a solid balance sheet with one of the lowest leverage ratios in the market. This highlights the efficiency with which we have executed our initiatives and position as well to capitalize on future strategic investment opportunities. Our financial strength has been recognized again by the rating agencies, as HR Ratings confirmed, reaffirmed our AAA rating this quarter, following Fitch Ratings’ rate confirmation in the second quarter. These rating actions reflect the quality of our balance sheet, the consistency of our performance, and the strength of our long-term outlook.

As we approach the final quarter of the year, we remain committed to execute our fiber deployment strategy, consolidate growth in new territories, and drive operational efficiency. Above all, our focus is on maximizing free cash flows and solidifying our position as Mexico’s most reliable telecommunications platform to preserve the strength of the Megacable brand, which millions of households and businesses across Mexico have come to rely on for connectivity and entertainment. All this said, now I pass the call over to Raymundo for operational remarks. Please, Raymundo, go ahead.

Saul, Moderator, Megacable: Thanks, Enrique, and good morning, everyone. As Enrique just noted, this was another quarter of steady progress. Our results reflect the continued momentum of the core business, reaffirming the strength of our strategy and our ability to adapt to shifting market dynamics and evolving customer expectations. Our subscriber base continues to grow both in new territories and in expansion areas where penetration levels keep increasing. More importantly, this growth in our base has consistently translated into revenue increases, particularly during this period where mass market segment revenues accelerated. Let me walk you through the key operational metrics of the quarter. We ended the quarter with nearly 5.9 million unique subscribers and an increase of 9% year over year, equivalent to 506,000 net additions. In this quarter alone, net additions reached 122,000, slightly below last quarter, but well within internal expectations in line with the consistency of our performance.

In the Internet segment, subscribers totaled almost 5.7 million, up 10% versus third quarter 2024, representing 528,000 net additions, of which 129,000 were added this quarter. This performance reflects strong demand for high-speed connectivity, even following the price adjustment implemented at the start of the quarter, highlighting the continued relevance of our value proposal, particularly in price-sensitive markets. Regarding our Video segment, we closed the quarter with nearly 4 million unique content subscribers, including 3.9 million of linear TV and 124,000 users with the streaming service coupled only with our broadband solution. Within the linear TV segment, XView Platform continued to expand, reaching almost 3.7 million users, as 9.9% year over year increased with 333,000 net additions. In Telephony, we surpassed the 5 million subscriber mark, up 11% versus the prior year, equivalent to 490,000 net additions, with 98,000 net additions during the quarter.

While this service remains primarily complementary within our bundles, its expansion contributes significantly to customer retention. Turning to our mobile virtual network operator business, our MVNO, total lines reached 640,000, with 21,000 net adds this quarter and 128,000 over the last 12 months. Growth remains focused on postpaid offerings, continuing the upward trend since early 2023. We closed the quarter with 14.6 million RUs, up 8% year over year, driven by a steady subscriber growth in the mass market, whilst revenue-generating units per unique subscriber stood at 2.49. ARPU improved to $422.3, up from $418.9 in the same period last year, and $421 last quarter. This figure reflects pricing optimization, despite a bundle mix more inclined towards double play. Our expansion and modernization of the network continue to be core drivers of our growth.

Our infrastructure now extends to 107,000 kilometers, allowing it to serve over 18.7 million homes, up 10% from last year. As of quarter end, over 82% of our subscriber base was already connected via fiber, compared to 73% in the same period last year, a clear indicator of the progress made towards becoming a full fiber operator. Churn levels stood at 2.3% for Internet, 2.7% for Video, and 2.7% for Telephony, reflecting the price adjustment carried out at the beginning of the quarter and despite the upward fluctuation within reasonable levels. It is important to mention that based on seasonal patterns, we anticipate churn to improve throughout next quarters. In a nutshell, our mass market segment remains the primary engine of growth and profitability, driven by expanding coverage and improved operational leverage in both legacy and developing markets.

By contrast, the corporate segment remains soft, consistent with trends seen earlier this year, mostly attributed to an economic slowdown in the corporate segment. Undoubtedly, competitive conditions in this market have intensified, with greater fiber availability. There has been an increase in the supply of available services, which has negatively impacted market prices for these services. On the positive side, the integration of the corporate segment has progressed steadily under the business tech model. As part of this merger, we have focused on evolving the business model, shifting from generating most of our revenue from equipment sales to managed service models, which generate a larger recurring revenue base. This has had a temporary effect on the results of these nine months of 2025. However, we expect greater stability and recurrence in revenue as this consolidation matures.

Before I close, I want to emphasize that these quarterly results were achieved through disciplined execution and quality service, despite an increasingly competitive and price-sensitive market, as our network reliability, coverage, expansion, and bundles continue to differentiate our value proposal. Looking ahead, we remain focused on preserving momentum to the fourth quarter, with showing expected to soften in the next quarters, territory penetration to move forward, and infrastructure deployment to meet customer needs. We are confident in our ability to deliver resilient results as of year-end. Thank you for your attention. I will now turn the call over to Luis for the financial review. Thank you, Raymundo. Good morning, everyone. Let me walk you through our financial performance for the third quarter 2025.

During the quarter, as Enrique and Raymundo mentioned, we continued to execute our long-term strategy with discipline and consistency, enabling us to deliver solid top-line growth and strong profitability. Taking a closer look at our financial performance for the quarter, total revenues reached $8.9 billion pesos, a 9% increase against the $8.2 billion pesos recorded in the third quarter of 2024. This performance was mainly supported by the mass market segment that grew 11% year over year, the highest growth in the last six periods, driven by ongoing subscriber growth and a gradual ARPU improvement. In the same period, corporate segment revenues contracted 5% compared to the third quarter of 2024, mainly explained by the economic deceleration in this segment coupled with higher competition. As a result, mass market operations contributed 85% of total revenues in the quarter and the remainder in the corporate segment.

On the cost side, cost of services for the quarter totaled $2.4 billion pesos, up 6% year over year, mainly due to a different revenue mix composition in the corporate segment favoring higher margin income streams, while EG&A reached $2.5 billion pesos, increasing 9% primarily from higher labor costs. Both lines remain under control, advancing at the same level or below revenue. Turning to profitability, EBITDA reached $3.9 billion pesos, up 10% year over year, accelerating its growth trend in the annual comparison, along with total revenues. EBITDA margin was 44.2%, slightly below sequentially as a result of seasonal effects, but above the 43.6% recorded in the third quarter of 2024. Again, an expansion of 50 plus basis points, regardless of the contraction in corporate revenue. Notably, margin expansion at newer territories continued, driven by an incremental subscriber base and improved infrastructure utilization.

At the same time, margins in mature regions remain solid and aligned to historical trends. Net income for the quarter was $628 million pesos, accumulating $2.1 billion pesos year to date, a 13% increase versus $1.9 billion pesos recorded in the same nine months of last year. In this context, we remain confident that profitability will strengthen as depreciation stabilizes and newly integrated regions mature. Turning to the balance sheet, net debt declined sequentially, but remained largely in line with the same period of last year, closing at $22.3 billion pesos at quarter end, supported by solid cash generation and the absence of any additional debt. The net debt-to-EBITDA ratio stood at 1.45 times, down from 1.56 times in last quarter and below the 1.54 times of the prior year. In this sense, we continue to maintain one of the strongest leverage profiles of the industry.

Additionally, our interest coverage ratio remains solid at 5.59 times, and the weighted average cost of debt stood at 8.77%, continuing its downward trend. This indicator reinforces the strength of our capital structure and provides flexibility to support our long-term goals. Turning to investment, CAPEX for the quarter totaled approximately $2.4 billion pesos, above the $1.9 billion pesos reported last quarter, mainly due to typical second half seasonality. However, we remain comfortably within our full-year investment guidance. In relation to revenue, CAPEX represented 26.6% in the quarter and 25.1% year to date. We continue to expect the full-year ratio to lie, as we have been mentioning, between 26% and 28% of revenues, consistent with our soft landing investment trend.

Looking ahead, we focus on balancing growth with cautious capital allocation, and our priorities continue to include the generation, increase the generation of positive cash flow in 2026, preserving our investment-grade credit profile, and advancing maturation of recent investment across both new and legacy markets. Lastly, I would like to highlight two items that reflect our continued commitment to transparency and value creation. First, as noted by Enrique Yamuni, HR Ratings reaffirmed our AAA credit rating, following the reaffirmation rate by Fitch Ratings in the second quarter. Both ratings actions validate the strength of our balance sheet and consistency of our financial strategy.

Second, we continue to advance at our sustainability and disclosure activities with the release of our 2024 Integrated Annual Report under GRI and SASB standards, verified by certified professionals in accordance with these standards, as we continuously strive to further strengthen our ESG reporting in anticipation of evolving market standards and practices. In line with this, the impact allocation report of our 2024 local notes is also now available. In summary, our third quarter results reflect the strength of our business model, disciplined financial execution, and a healthy position for long-term growth. Thank you. We are now ready to take your questions. If you have a question, please use the raise your hand button of your Zoom application, or you can also type your question in the Q&A section of the platform. Please make sure that you are not muted when it’s your time to participate.

Our first question comes from the line of Marcelo Santos from JPMorgan. Marcelo, please go ahead.

Hi, good morning. Enrique Yamuni, Luis, and Saul, thank you very much for the opportunity. I have two questions. The first is regarding CAPEX. You made it very clear what’s the outlook for this year. How do you see CAPEX going on 2026 and 2027? The second outlook is a bit about the competitive environment and growth. I mean, you had very good ads, but churn was a bit higher, and SG&A was a bit higher sequentially. Is growth coming at a more expensive cost than what was foreseen? Is this because a bit of the environment? I just wanted to tie these things. Thank you very much.

Luis, you want to go ahead? Yes, on CAPEX, for sure. Marcelo, thanks for your question. As we mentioned, our CAPEX is in a downhill trend. Even when we are going to end this year around 26%, as we expected, our forecast for the future, 2026 and 2027, will be around 24% to 26% of revenues, and declining in 2027 to go between 21% and 23%.

Speaker 6: Yeah, the CAPEX trend continues to decline, even though we have an upward in this quarter because of the build of the network and the home pass that we activate. We expected that, we announce that in the second quarter, and we say the second quarter wasn’t typical. The good news is, like Luis is saying, that we continue to have a lower CAPEX-to-revenue ratio this year, around 26% to 28%. That’s what we expect. The message here from the management is that we will have that decline for next year between 24% to 26%.

Saul, Moderator, Megacable: Marcelo, regarding the competitive environment, the highest growth that we have in subscribers, the highest growth rate comes from expansion territories, as there is a greater opportunity for penetration and companies’ expansion on that part, of course. In legacy territories, the good news is that penetration remains stable at around 40% and growing. That means, despite competition, the offer that we have and the strategy of a good product, good network, at the best affordable price is proving to provide 10% growth in revenue, EBITDA, and subscribers all around. We will continue to forecast that for 2026, if you might say. Now, the churn, remember that we have an increase in rates at the beginning of the quarter. That increase in rates puts pressure on the churn. Our level of gross ads is the same. It’s a little bit higher than what we have in the second quarter.

That means we’re improving and having more capacity of bringing in gross ads. We’re not against any increase in rates that we have at the beginning. In some of our high penetrated markets, we have that increase in churn. We expect that churn to stabilize and decline slightly in the quarters to come. That’s our view of what we have. It is a competitive environment. We’ve been having that competitive environment for a long time. We have Izzi, we have Totalplay, we have Telmex competing in our markets. As we said before, we believe that we have the best offer to continue to provide the growth in the markets where we are.

Perfect. Thank you very much.

Thank you, Marcelo. The next question comes from Milena Okamura from Goldman Sachs. Go ahead, Milena.

Hi, everyone. Thank you for taking our questions. The first one is, you mentioned in your early remarks some commercial adjustments that drove your ARPU increase. Can you give us a little bit more detail about these initiatives aside from the price up implemented? How do you expect margins to evolve going forward as you continue to increase your fiber penetration in new areas? Thank you.

Yes, thank you for the question, Milena. Regarding the ARPU, we continue to provide a slight increase in the ARPU that we have there. That’s a combination of several factors. One is the increase in rates that we have on that part. The other one is the increase in apps and services per unique subscribers that we also are successful in that part. That’s coupled with the increase of subscribers bringing a lower ARPU because of the promotionals that we have. All that combination doesn’t allow us to increase more the ARPU, but we believe that we can continue to have that slight trend increasing going forward. Now, in terms of the markets, we still have room to grow. We are at around 81% broadband penetration in our markets. We really believe that we can raise to around 90%, to the low 90% in the years to come.

All the companies will continue to grow in that part. The thing is that who has the better offer price and margins to take part of that growth in the market? So far, we have growth in expansion. That means we’re capturing market from competition. Of course, some of them also will be new market subscribers. We’re capturing subscribers also. One third of our subscribers come from organic systems. That means we’re growing above market growth because of that offer that we have and because we convert. We have all our subscribers, 83% of our base. The majority of those organic subscribers already have access to fiber, brand new CPEs, better quality of the video that we have there, and better offer. That’s what we see that we will continue to grow in the markets to come.

You can expect 2026 and 2027 to continue to provide for Megacable growth between 100,000 to 150,000 subscribers per quarter.

That was clear. Thank you.

Thank you, Milena. The next question comes from Fani Kumar from HSBC. Go ahead, Fani.

Thanks for taking my question. The first one is regarding the comment that you made earlier, saying that if you exclude the special projects, your CAPEX margin is in mid-teens. I wanted to understand, what are you excluding from these? Is it just the expansion project and the migration projects that you have? The second question is, how was this CAPEX, the maintenance CAPEX, let’s say three years ago? Has it come down from 20% to mid-teens, or is it somehow is the trend evolving? What is driving that trend? Thank you.

I’m sorry. I was prioritizing my opinion, but can you rephrase the first question, please?

The first question is, you said that you are excluding some special projects. What are the special projects that you have? Is it just the network migration, or does it also include the customer-premise equipment?

What we consider special projects are both the expansion and the deepened evolution CAPEX projects per se. There are other small investments that come along with those strategies. Basically, those are the two special projects that we mentioned. The expansion project, like Luis was saying, we announced that at the end of 2021. We started getting subscribers at the mid of 2022. We’re very happy that we already doubled the infrastructure of the company, getting more than 9 million home passes in addition. It puts us in a very similar position to that of the competition as a strength company and growing subscribers on that. We are very well in terms of how we’re increasing those subscribers, and that’s reflected on the growth of revenue. That means that in the future, we will slow down kilometers and homes to be activated in the expansion territories, and that’s for sure.

The other project that we have, which is the deepened evolution, we call it, that’s evolving from HFC to deepened to fiber. All our existing territories, we’re very successful also. As I said, all totally, we already have 83% of the company is already on fiber. For the years to come, the evolution from HFC to fiber, it will be smaller. What Luis is saying, our two main projects, the special projects, are decreasing in CAPEX intensity expenditures. This company will never stop investing in CAPEX, that’s for sure, because we’re a technology company. The levels that we expect after we finish those special projects, and that’s around 2028, will be levels between the 15% to 28% CAPEX over revenue.

Enrique Yamuni, Executive, Megacable: In the meantime, it will be declining from the current 25%, 26% to the very low 20%. We will get to below 20% when we finish those projects, when we finish those two special projects.

Saul, Moderator, Megacable: To your second question, the maintenance CAPEX has reduced, yes, because it’s easier or cheaper to maintain network on the deepened side of the house compared to the HFC previous network.

Thank you. Is there any quantity measure? Is there any quantification on what’s the decrease that happened, let’s say, over the last three years?

It was a little bit above 20%, and now it’s on the high teens or mid-teens. That’s basically on the maintenance CAPEX.

Okay. Yeah, thanks, everyone, for answering the questions.

Thank you. Thank you.

Enrique Yamuni, Executive, Megacable: Thank you, Fani. Next question comes from Andres Coelho from Scotiabank.

Guys, good morning. Two quick questions, please. The first one is on the competitive environment. I think Televisa just confirmed that they will invest $600 million this year. I think that’s 20% more than what you are planning to invest, around $500 million. I’m wondering if you are noticing any change in behavior from Televisa, if you think that Televisa can become a little bit more defensive in the territories that you just entered. That’s my first question. Whether this can in any way affect your CAPEX guidance to have Televisa investing more than you. My second question is on the recent natural events in Veracruz and other states. I’m just wondering if you’re expecting any non-recurring impact in the fourth quarter, perhaps in terms of revenues and also in terms of infrastructure. Thank you.

Yes, Andrés, thank you for the questions. Regarding the competitive environment, Televisa is investing more than us because we already invest what we have to invest. We have been investing in fiber before they did on that part. We have a good offer, a good product, and a good price. We do not see why we are going to slow down our CAPEX and our growth in subscriber. Regarding Veracruz, we were affected and hit in some of our markets. One of those markets being Costa Rica, we already have all the system back and working with our subscribers. What we can say is that we’re working in a normal condition.

Understood.

Thank you for the question.

Okay.

Saul, Moderator, Megacable: The next question comes from the line of Emilio Fuentes from GBM. Go ahead, Emilio.

Hi. Thank you for taking my question. I was wondering if you could give us some outlook on how your dividend will evolve going forward, especially given how you’ve been able to pay around 20% of your EBITDA. Now that the company will go into a less intensive investment phase and a more cash-generating phase, should we expect this to go up? Thank you.

Enrique Yamuni, Executive, Megacable: We haven’t made any decision yet. Obviously, it will depend on the future, how we see the industry and opportunities going forward. If we do not have anything better to put our money in, obviously, we could always raise our dividends. We don’t see why not. It’s too early to call that.

Very clear. Thank you.

Saul, Moderator, Megacable: Thank you. Thank you, Emilio. The next questions come from Ernesto Gonzalez from Morgan Stanley. Go ahead, Ernesto.

Hi. Thank you for taking our question. Look, I know it’s early to discuss 2026, but given the high levels of penetration in the broadband market in Mexico, is it reasonable to assume that you can maintain the current level of growth for next year? The second question is, can you also discuss the main drivers of why your subscribers churn? Is it because they get better prices elsewhere, because they’re looking for a better network, or any general commentary on churn is appreciated? Thank you.

Thank you, Ernesto. Yes, as we mentioned, 2026, we don’t see why we should slow our growth. We forecast the same growth that we have between 100% to 150% per quarter. That’s what we’re looking for 2026. That’s based in the offer and also because the market at 81% penetration still has room to grow on that part. Regarding the churn, what we see is that a slight amount of our churn goes to competition. What we see is that every churn that we have is economically, that’s the main reason that they can afford to pay. As I said at the beginning of the third quarter, we have an increase in rates that puts pressure on the churn. That’s the reason of the increase in churn.

Really clear. Thank you.

You’re welcome. Thank you, Ernesto. The next question comes from Luca Brandim from Bank of America.

Hi. Good morning. Thank you for taking my question. I have only one here from my side. Can you give us an outlook on the corporate segment? It has slowed down this year, but how can we think about it going forward, especially for 2026, 2027? How much do you think that this segment can grow? Thank you.

Yes, good question, Luca. As I said, the corporate segment has a slowdown. It’s a soft result of what we have. That’s due to two main factors. One is the market. The market has decreased the price of fiber and the price of connectivity. The other one is that we change the way that we sell our infrastructure product. Before, we used to sell a lot of that infrastructure on a cash basis. Now we change that into more products that have served us over a long period of time, bringing a more recurring into the future, more profitable, instead of just selling hardware in that part that we don’t like that part. We make a shift in the strategy of the corporate segment that affects us slightly in the short term, but that sure will bring better results in the future.

Something that I want to say is that even though the corporate segment has a 5% decline year over year, we did not see a decline in the EBITDA of that segment. That means we have a much more better margin with our strategy, regardless of the decrease in the revenue that we have. That’s part of our strategy. We were very happy with that part. We integrate our three companies into MCM Business TechCo. That shift is sure it’s going to pay off in 2026.

Very clear. Thank you for the answers.

Thanks, Luca. The next question comes from Alex Azar from GBM. Go ahead, Alex.

Thank you. Thank you, Saul. Good morning, guys. I just wanted to pick your brains on what’s next. Several questions from my colleagues being on capital allocation, fully penetrated market. What’s on your mind when you see Mexico fully penetrated in terms of cable, perhaps 2027, 2028? How should we think about Megacable in the next five, ten years? Are you guys going to grow more aggressively as an MVNO or perhaps the corporate networks? I just wanted to understand how you’re viewing the company very long term. Thank you, guys.

Enrique Yamuni, Executive, Megacable: Thank you, Alex. Obviously, in the telecom industry, there are very many opportunities in the future, like, as you mentioned, mobile with MVNO. In the corporate market, we have a great, great opportunity in the digitalization of the country, obviously also in education and telemedicine and all that. With the AI accelerating and growing, you know, the growth of the AI and all the applications that will come with that, obviously, there are very big opportunities in the future for the telecom industry to sell, to upsell services and applications for the Mexican homes and for the business community. Also, in the education and medicine industries and services are really big. It’s going to open very big opportunities. We still have a lot to do in digitalization, and this government is putting a big emphasis in that. You know, we have to digitalize the country, banking, you know, everything.

I think the market is there. Obviously, it will decelerate in some segments like the connectivity of homes, but we will get to a saturation point, you know, at some certain time. There are a lot more things to do. We don’t know what new things are coming, you know, with AI and the new technologies. For sure, we will find something to do.

Saul, Moderator, Megacable: That’s the remark. At the end, at the end is the $64 million question, what are we going to do? We are really, really, really focused, Alex, in what we announced at the end of 2021 in that part, those main two projects, as we like to say, the deepened evolution that brings us that strength in the network and in the product for the future to come and expanding and being effective in both. That’s where we’re focused at the management right now on that part. For sure, we’re not going to stay on that part. CAPEX will decrease. Free cash flow will increase. Revenues will continue to come. EBITDA will continue to come. The same question that you have, it will be good to know in a year or two what we’re going to do.

For sure, we’re going to continue to be part, as Enrique said, on a market that will continue to move from connectivity to IT solutions and value-added services, both in the corporate segment and the residential and maybe other technologies too.

Enrique Yamuni, Executive, Megacable: We will have the balance sheet to support any endeavor that we will be searching.

Saul, Moderator, Megacable: We won’t be steady, that’s for sure.

If I may add, if I may have a follow-up, and thank you for the color, the market has been pretty hot in terms of AI, data centers. If I’m not mistaken, you have some data centers. How are you thinking on these assets? Are you seeing them as core assets, or would you be thinking of divesting like, you know, Axtel did that under different circumstances? How are you seeing your data centers? Are those core assets, or you can, you know, divest them, or how are you thinking on those? Thank you.

Enrique Yamuni, Executive, Megacable: The data center is an asset that we build to test the waters there. I think that’s going to be really big players in that specialized in data centers. Ours is a very good asset that we have, but I don’t think we will be growing in those kinds of data centers. We will be more focused in edge data centers. We already have built over 300 of those all across the country.

Saul, Moderator, Megacable: Also, like Enrique is telling you and your straight question, it is not core. What we have on those, on both in our main data center, centralized data center and the edge, we have Megacable infrastructure. Those facilities are built mainly as an anchor for Megacable and enough space and kilowatts for other people to be here. We don’t have the mind in investing in fixed data center assets. We want to have a solid core network, both in the long haul and the last mile, being the best fiber company in terms of products and services and put applications on top of that. The other ones, the main anchor for the data center is Megacable. It has a great asset for somebody else in the future because it’s located in the western part of Mexico. There is no other asset like that in this area.

The hyperscalers and the content and the streamers will have to come after going to Querétaro in Mexico. They will have to come to different parts of Mexico, one of those being Guadalajara, and that’s where we have it. That’s the mind that we have for that part. Our infrastructure is for Megacable use. We don’t know whether to maximize that in the future. We will explore that when we finish having our mind in bringing the growth of subscribers, the increase in margin, the decrease in CAPEX, and all the KPIs that we’re telling you we’re focused on that part.

Thank you, Raymundo, Luis, and Enrique Yamuni.

Yeah, thank you, Alex.

Enrique Yamuni, Executive, Megacable: Thank you, Alex.

Saul, Moderator, Megacable: We have one question through the chat. It’s coming from Patrick Broy from DS Advisors. There have been reports that AT&T is looking to sell its mobile business in Mexico. Is that something Megacable will be interested in considering buying?

Enrique Yamuni, Executive, Megacable: Not currently. We’re pretty much focused on our main project, which is finishing our expansion plan. We don’t want to go into a cash positive cycle, and we don’t want to reverse that. Not currently. We are focused on our main projects. Thank you very much.

Saul, Moderator, Megacable: Okay. That was the last question. With no questions in the queue, this session is concluded. I pass the call over to Mr. Enrique Yamuni for final remarks.

Enrique Yamuni, Executive, Megacable: Okay. Thank you very much, as always. It is a pleasure to discuss our results with you. Please contact your Investor Relations department if you have any questions or concerns regarding the company. Have a very wonderful day and a great weekend.

Saul, Moderator, Megacable: Thank you, everybody.

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