Megacable Holdings (MEGACPO) Q2 2024 earnings summary

Executive summary

• Achieved 80% completion of network expansion, surpassing 16.5 million homes passed, with a 23% year-over-year increase and strong subscriber growth, especially in new territories.

• Achieved record total revenues of Ps. 8,136 million in 2Q24, up 10.3% year-over-year, with Mass Segment revenues rising 11.0% to Ps. 6,685 million.

• Focus shifted from construction to increasing penetration and maximizing cash flow, with no major new projects planned.

• Maintained a healthy financial profile, with leverage among the lowest in the industry and a strong dividend payout.

• Navigated a challenging macroeconomic environment, including high interest rates, inflation, and FX volatility.

Financial highlights

• Consolidated revenues rose 10.3% year-over-year to MXN 8.1 billion, driven by mass and corporate segments.

• EBITDA increased 10% year-over-year to MXN 3.6 billion, with a margin of 44.3%.

• Net income was MXN 571.3 million, down from MXN 867.8 million last year, impacted by FX losses, higher interest, and depreciation.

• CapEx for the first half reached MXN 5.1 billion (31.6% of revenues), with 2Q24 CapEx at MXN 2.75 billion (33.8% of revenues), reflecting a slowdown in expansion.

• Dividend of MXN 2.7 billion paid, maintaining a top-five dividend yield in the country.

Outlook and guidance

• CapEx expected to be 32%-34% of revenues for 2024 (~MXN 11 billion), declining to ~22% over the next few years and below 20% by 2028-2029.

• EBITDA margin targeted at 45% by year-end and to remain stable in coming years.

• Anticipates gradual reduction in net debt to EBITDA ratio from current 1.57x as investment levels decrease.

• Sustained cash generation anticipated as CapEx moderates.

• No major regulatory changes expected; new government seen as supportive of digitalization.