TV US (Buy, TP: $8.5, +48%) MEGACPO (Buy, TP: MXN75, +42%) Mexican cable: MEGA/TV - Tough trends, Deal optionality worth pursuing
Megacable and Televisa reported Q4s after close with numbers reflecting the competitive nature of the Mexican fixed market. Having steered the market down, Televisa hit estimates though residential cable (Izzy) revenue is just +1% y/y as better RGUs are coming with significant ARPU dilution (-7% y/y) as promotions proliferate. MEGA is fairing better at revenue, with good RGUs in new areas and 7% y/y cable revenue growth helped in turn by price increases (Izzy didn’t increase), though margins were soft.
Megacable Holdings and its subsidiaries are engaged in the installation, operation, maintenance and exploitation of cabling network distribution, internet and telephone systems.
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