Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Megacable Holdings SAB de CV (MHSDF, Financial) reported the highest EBITDA margin in the past 10 quarters, demonstrating strong operational efficiency.
- Subscriber base grew by 10% year-over-year, reaching 5.6 million, with significant growth in Internet and telephony subscribers.
- The company successfully integrated ho1a, Metrocarrier, and MCM into NGN business Techco, aiming to generate greater synergies and maximize profitability.
- Revenue increased by 8% year-over-year, driven by solid performance in the mass market segment, particularly in Internet and telephony services.
- The company approved a dividend payment equivalent to 20% of the previous year's EBITDA, representing an attractive dividend yield of close to 8%.
Negative Points
- Net income decreased year-over-year, impacted by higher depreciation and interest expenses, as well as foreign exchange fluctuations.
- Churn rates increased due to a price adjustment, with Internet churn at 2.1% and telephony at 2.5%.
- Video subscribers decreased by 21,000 this quarter, reflecting a global industry trend towards double play offerings.
- The corporate segment showed only a 1% year-over-year increase, with weaker performance in the special project segment.
- CapEx to revenue ratio was lower, reflecting reduced network construction activity, which may impact future growth if not addressed.
Q & A Highlights
Q: You had a strong margin recovery this quarter. How should we think about margins going forward? Also, what is the CapEx outlook for this year?
A: Luis Antonio Zetter Zermeno, CFO: We foresee a consistent increase in EBITDA margins moving forward. The expectation is for slight margin expansion on a sequential basis. Regarding CapEx, we expect it to be around 28% of revenue for 2025, reflecting both organic growth and special projects.
Q: How are you seeing the competitive environment, especially with some competitors not raising prices this year? What are your expectations for ARPU trends?
A: Raymundo Fernandez Pendones, Deputy CEO: The competitive environment remains challenging, especially with some competitors not increasing rates. However, we have managed to maintain growth through strategic pricing and service bundling. ARPU is expected to remain steady, with potential for slight increases as promotional periods end and new services are introduced.
Q: Churn increased this quarter due to price increases. Is it expected to return to normal levels soon? Also, any views on the proposed changes to telecommunications laws in Mexico?
A: Raymundo Fernandez Pendones, Deputy CEO: We expect churn to stabilize to last year's average levels soon. Regarding the telecommunications laws, we are in discussions with the government and expect a more favorable outcome than initially proposed.
Q: The corporate segment results have been soft recently. Is this due to weaker demand or other factors? How does this relate to the year-over-year EBITDA margin expansion?
A: Luis Antonio Zetter Zermeno, CFO: The corporate segment is expected to grow 5% to 10% in upcoming quarters. The EBITDA margin expansion is primarily driven by improvements in the mass market segment and synergies from integrating corporate brands.
Q: Your taxes have been low due to depreciation. When should we expect higher taxes on cash flow? Also, are you expecting positive free cash flow for the entire year?
A: Luis Antonio Zetter Zermeno, CFO: We expect taxes to remain flat for now, with potential increases as depreciation benefits are fully utilized. We anticipate positive free cash flow for the year, although it may not fully cover the announced dividend.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
