Megacable’s Strategic Investments and Fitch’s Positive Outlook
Fitch Ratings has projected that Megacable Holdings’ market share in Mexico’s fixed telecommunications sector could reach 32.5% by the end of March 2025, following a $2 billion investment over five years to become a nationwide cable provider with 14.1 million subscriptions by that time.
Megacable’s Current Status and Financial Performance
Megacable, a significant player in Mexico’s residential and business telecommunications market, has been modernizing its infrastructure and expanding its network. As of now, Megacable covers 17.6 million households and has installed 102,420 kilometers of cable by the end of Q1 2025. The company’s market share in fixed broadband is 19% nationally, 27% in pay-TV, and around 18% in fixed telephony.
- In 2024, Megacable derived 38% of its revenue from broadband internet, 34% from pay-TV, 9% from fixed telephony, 17% from the business segment, and 2% from mobile telephony.
- Fitch estimates Megacable’s market share could reach 32.5% by the end of March 2025, ensuring its market position and providing stability in income generation.
Fitch’s Positive Outlook and Future Projections
Fitch Ratings has assigned Megacable a ‘AAA(mex)’ credit rating, indicating a stable outlook for the company. This positive assessment supports Megacable’s stock value, which Fitch believes has been undervalued due to adverse conditions affecting the entire telecommunications industry.
- Megacable’s stock was trading at 50.80 pesos per share, down 0.33% during Thursday’s mid-day session on the Mexican Stock Exchange (BMV).
- Despite recent declines in Megacable’s stock value, the company’s revenue has increased by 9% over the past year, driven by a 10.3% growth in unique subscribers.
Fitch projects that Megacable’s 2025 revenue will grow by 12%, with an Ebitda margin of 45% compared to 43.4% the previous year.
Megacable’s Financial Strength and Future Prospects
Fitch believes Megacable’s improving financial performance, resulting from mature investments and balanced management by the current executive team, will enable the company to generate neutral free cash flow in 2025 and positive cash flow by 2026.
- Fitch projects Megacable’s gross leverage ratio to be below 1.5 times in the medium term.
- Megacable’s integration of services, modernization strategy, and network expansion have contributed to a steady increase in subscribers, creating a balanced income mix and good customer diversification.
Key Questions and Answers
- What is Fitch’s outlook for Megacable? Fitch maintains a stable outlook for Megacable, supporting its stock value and projecting its market share to reach 32.5% by March 2025.
- What are Megacable’s current market shares? As of March 2025, Megacable holds a 19% share in fixed broadband, 27% in pay-TV, and 18% in fixed telephony.
- How does Fitch project Megacable’s future performance? Fitch expects Megacable’s annual revenue growth to average around 10.5% from 2025 to 2027, with an Ebitda margin of 45.8% by 2027.
- What factors contribute to Megacable’s positive outlook? Megacable’s strategic investments, infrastructure modernization, and network expansion have led to improved service quality and increased subscriber numbers, ensuring a balanced income mix and good customer diversification.
