Release Date: July 26, 2024
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) achieved a significant milestone by expanding its network to over 98,000 kilometers, marking a year-over-year growth of 23%.
- The company successfully increased its fiber footprint to 72% of its network, enhancing its ability to meet current and future bandwidth demands.
- Megacable Holdings SAB de CV (MHSDF) reported a 10% year-over-year increase in consolidated revenues, reaching MXN8.1 billion, driven by strong performance in both mass and corporate segments.
- The company maintained a solid financial profile with a reasonable leverage ratio, despite a temporary increase in leverage due to investments.
- Megacable Holdings SAB de CV (MHSDF) paid dividends of MXN2.7 billion, maintaining its position as one of the top five companies with the highest dividend yield in the country.
Negative Points
- The company faced a challenging macroeconomic environment, including high interest rates, persistent inflationary pressures, and FX rate volatility.
- There was a slower pace of net subscriber additions due to a weak start of the quarter and a higher churn rate in April, influenced by a pricing adjustment and vacation period.
- EBITDA margin slightly declined to 44.3% from 44.6% in the second quarter of 2023, primarily due to increased costs and a temporary slowdown in revenues.
- Net income decreased to MXN571.3 million from MXN867.8 million in the same period last year, impacted by foreign exchange losses, higher interest payments, and increased depreciation costs.
- The company experienced increased churn rates, particularly in the video segment, rising from 2% to 2.6%, and in the Internet segment, from 1.9% to 2.1%.
Q & A Highlights
Q: Can you clarify the CapEx guidance and the reasons for the sequential weakness in mass segment EBITDA margin?
A: Yes, the CapEx is expected to be between 32% and 34% of revenues, resulting in approximately MXN11 billion. The sequential weakness in EBITDA margin is due to additional SG&A costs related to maintenance, which we expect to decline slightly but remain higher than the first quarter. (Luis Antonio Zetter Zermeno, CFO)
Q: How is the competitive environment affecting ARPU, and what are the expectations for corporate business growth and margins?
A: The competitive environment remains stable with similar offerings across the market. ARPU has been growing consistently, and we expect it to continue. For the corporate segment, margins are expected to normalize, with Metrocarrier and MCM maintaining margins between 40% to 45%. (Raymundo Fernandez, Deputy CEO)
Q: What caused the increased churn in April, and are there any plans for share buybacks given the current stock volatility?
A: The increased churn was mainly from the organic segment due to high penetration and ARPU. We are not currently considering share buybacks, as our focus is on maintaining a healthy financial profile and expanding into new territories. (Raymundo Fernandez, Deputy CEO)
Q: How does the exposure to USD-based costs impact your EBITDA margins, and is the pay-TV service still profitable?
A: Approximately 15% of our costs are USD-based, mainly in programming and some links, but the biggest impact is in CapEx. The pay-TV service remains profitable, and we continue to integrate streaming services to enhance our offering. (Luis Antonio Zetter Zermeno, CFO)
Q: With the expansion nearing completion, how has penetration in new territories evolved, and are there any concerns moving forward?
A: We are proud to have reached 80% completion of new home passes, with penetration evolving as expected. We foresee reduced CapEx pressure and continued subscriber growth, positioning us well for the future. (Raymundo Fernandez, Deputy CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
