MEGACPO Pivots from Expansion to Efficiency as Fiber Build Peaks
With CapEx guidance cut and AI-driven productivity gains ahead, Megacable shifts to monetizing its 19.8 million-home fiber footprint.
MEGACPO.MX · Earnings Call · 2026-07-30
From Expansion to Efficiency
Megacable's Q2 2026 report marks a clear inflection: after a four-year, multi-billion-dollar build-out that doubled its footprint to 19.8 million homes passed, the company is now shifting its operating focus from adding scale to extracting more value from the scale already in place. Revenue grew a solid 7% year-over-year to MXN 9.3 billion, and EBITDA rose 6% to MXN 4.2 billion, but the real signals were in the guidance and the language. Management trimmed 2026 CapEx guidance to 23–25% of revenue (from 24–26% previously) and pointed to a further decline to 22–24% for 2027, with organic CapEx now around 15% of revenue. As CEO Enrique Robles put it, “Our broader priority is to capture more value from the investments already made, increase penetration, monetize the network and adapt execution to the specific conditions of each market.” — Enrique Robles · 2026-07-30 This strategic pivot is consistent with the direction signaled in prior calls, but the concrete CapEx cut and the emphasis on cost reduction plan are new. In April, CFO Luis Zetter had already telegraphed the trend, saying, “We are in a reduction, and also with the revenues increasing, we, for sure, continue to state that CapEx will go down as a percentage of revenues.” — Luis Zetter Zermeno, CFO · 2026-04-24 What is different now is the explicit commitment to margin recovery—management expects +50 basis points per year, targeting 47–48% EBITDA margin in the medium term, driven by penetration gains, the transition from linear to app-based video, and aggressive productivity initiatives that have already cut headcount by over 1,300 positions.A One-Time Stumble in ARPU
The quarter's headline ARPU dipped sequentially to MXN 430.8, but management was quick to separate the signal from the noise. The decline was caused by a one-time promotion from last year's Buen Fin campaign—subscribers were granted one free month, recognized in May and June. This distorted revenue growth by roughly 1.3–1.5 percentage points and EBITDA growth by a similar magnitude. Deputy CEO Raymundo Pendones explained: “...we have the promotion for the [ 1G ] promotion. that contributed to subscriber growth at the end of last year. And we take the -- now we have to -- it was so successful that the subscribers, what we provide to them is one for free that has to be provided at the end of a certain period. That period ended in May and June, and it hit us in that part.” — Raymundo Pendones · 2026-07-30 Excluding this effect, the underlying ARPU trend remains stable, and the company expects a rebound in the second half. This is a sharp contrast to the prior call, where the focus was on price increases and ARPU growth; now the narrative is about managing the balance between subscriber gains and monetization.Corporate Recovers, AI and the World Cup Loom
A standout in the quarter was the Corporate segment, which returned to growth (+5% YoY) after several quarters of contraction, driven by a shift from connectivity to managed services. This recovery is expected to continue, though the company remains cautious about the competitive landscape. On the broader macro front, management cited the World Cup as a drain on consumer spending, impacting churn and gross adds—a theme that echoes across the market.This disciplined approach to subscriber quality is exactly the kind of operational World Cup market nuance that sets Megacable apart. Meanwhile, AI features prominently in the efficiency playbook, with the company already deploying virtual agents and network automation. The prior call had already hinted at this direction—Luis Zetter had noted, “We have been mentioning that as the expansion territories improve on the margin, it will impact the overall margin for the company.” — Luis Zetter Zermeno, CFO · 2026-04-24I wouldn't like to see 400,000 gross adds and 390,000 disconnections because of the -- that only contribute to a decrease of the margin.