Megacable Hldgs Sab Ord

Good morning and welcome to Megacable's second quarter 2021 earnings conference call. With us this morning from Megacable, we have Mr. Enrique Iwani, CEO, Mr. Raymundo Fernandez, Deputy CEO, and Mr. Luis Zetter, CFO. Let me remind you that the information discussed in today's earnings call may include forward-looking statements on the company's future financial performance and prospects, which are subject to risks and uncertainties. Mediacable undertakes no obligation to update or revise any forward-looking statement. I will now turn the call over to Mr. Enrique Umani. Sir, you may begin.

Good morning, everyone, and thank you for joining us today.

The overall performance of the quarter was positive again, both operationally and financially. In this sense, we observed that the demand dynamics remained solid as the environment has not changed significantly compared to what we saw last quarter. Proof of this is that our net addition growth across all service segments in this period were in line versus those recorded in the first quarter. It is a fact that pandemic accelerated the adoption of technologies and services that favor remote work and learning. In that sense, our expectation is that these trends will persist and that the services we offer will continue to be fundamental to these activities. As companies, schools, and individuals' new day-to-day routine will in most cases involve hybrid schemes, mixing time in physics purposes, offices, and schools with activities from home, maintaining and increasing the need for home connectivity services. Furthermore, we believe that given the economic difficulties faced in recent months due to the pandemic, telecommunication services have gained value and relevance as much more needed services for the users. On the corporate side, connectivity services have been positioning themselves as a productivity driver. These services have been experiencing the same increase in the need to maintain their business, sometimes even higher. We have high expectations for this segment, as this trend has only just begun with companies embracing more and more IT solutions, propelling higher demand for connectivity. All in all, we are capitalizing on the opportunities that the new models are generating, while transforming those aspects of the business that we need to adapt to the new market conditions. Going to our operating and financial metrics We continue to grow subscribers in the three services in the mass market. Highlighting what we achieved on the video side, our XView Plus platform recorded its best quarter ever. It has become a very important cornerstone in the company's growth. Over this platform, we will seek to tap into the recent video consumption trends on digital media while integrating it into the linear content that we already offer. The previous mentioned coupled with the increase in ARPU per unique subscriber when compared to the same period last year helped us reach a record high figure to the company in quarterly revenues and EBITDA. Under these dynamics, quarterly revenue and EBITDA both posted double-digit growth rate. As a result, The EBITDA margin remained in the desired levels under the current conditions and course of the operation. Now, shedding some color on our projects in development, the GPON migration is moving forward, and we have already migrated over half a million subscribers to the new FTTH network. We continue to work on deploying the new infrastructure and speeding up the migration process. We remain convinced that this migration was the right call as a significant increase in bandwidth consumption due to the new content trends accelerated also by the lockdown measures. Neither bus technology platform to render the required navigation speeds as this project guarantees the coming years. Regarding the efforts to expand our network and service coverage, We will continue with our growth plans in specific regions that represent a sustainable and profitable opportunity. Such plans include increasing our presence in some areas of Mexico City where we seek to cover municipalities adjacent to our current network in the state of Mexico. Likewise, we are expanding our coverage for residential services in some nearby areas of some of our current operations like Zapopan and Monterrey. These territories have attractive market conditions that could represent a good opportunity for the company. The same is valid in the case of the corporate segments expansion plans to certain cities, including Tijuana, Chihuahua, Aguascalientes, and San Luis Potosi, among others. In this sense, our growth plans for these cities initially comprise the corporate segment, but we do not discard the possibility of venturing into the mass segment if those markets fit our long-term strategy. Here, it is important to make it clear that we will not take on any endeavor that could be unreasonable in terms of costs or in terms of the market. Every final decision we take to enter or not into a particular region is based on a true market study. To conclude, under economic recovery amid COVID-19, We will continue to consolidate the attractiveness of the product portfolio we have built. As we have been doing recently on the corporate side, we expect to continue capitalizing on the positive market circumstances to strengthen our position and continue to deliver excellent results and value to our business associates, customers, and shareholders. With this, I pass the the work to Raimundo so he can give you a more in-depth vision of the operations. Thank you. Raimundo, go ahead.

Thank you, Enrique, and good morning, everyone. In the second quarter of this year, we continue to successfully capitalize on market opportunities with products suited for the needs of our subscribers. On the mass market, our attractive packages include a new and unmatched video platform. as well as higher broadband speeds and very accessible rates. While on the corporate side, the connectivity services we offer have been positioned as a productivity driver for many businesses that have adopted IT solutions, a trend that is not only getting started. The previously mentioned, coupled with smart investments in network infrastructure, has resulted in surpassing 4 million unique subscribers with growth across the three services in the mass market, and record figures in revenues and EBITDA with double-digit growth. All these, while shown rates, remain relatively stable and below pre-pandemic levels at 2.0%, 2.2%, and 2.5% for broadband, video, and telephony, respectively, thus supporting subscriber growth. Net additions of unique subscribers for the last 12 months climbed to over 314,000, out of which more than 32,000 were added this period, reaching for the first time the 4 million unique subscriber mark. Regarding our use, we reached 9.9 million, 13.2% more than the 8.8 million of second quarter 2020, as we continue to grow in the three mass market services. This growth was also reflected in the REUS per unique subscriber, which went from 2.3 in the second quarter 2020 to 2.46 this reporting period. These results were driven by the performance obtained at Broadband, which posted net annual and sequential additions of 419,000 and 58,000 subscribers, respectively, to reach 3.6 million subscribers. As Enrique mentioned, the demand for stable, high speed connectivity at competitive prices remains as strong as individuals, households, and enterprises continue transitioning to hybrid schemes of physical premises and home office or virtually all educational, training, and employment activities. In that regard, about 60% of our subscribers receive speeds above 30 megs or half fiber services. compared to just 35% at the end of June last year. Moving on, video subscriber amounted to 3.5 million at quarter end, 196,000 subscribers more on an annual basis, and 21,000 more quarter over quarter. We continue to grow subscribers to a larger extent. to a very competitive offer, as well as a state-of-the-art solution to combine our traditional video offer and new consumer trends through platforms such as XView Plus. In this regard, active users of XView Plus reached over 2 million subscribers at the end of the quarter, adding 984,000 subscribers compared to the same period last year, and 656,000 against the previous quarter. Its best performance since its initial deployment, which speaks on the value that this platform is providing to our users. We are enthusiastic about all the possibilities that this platform will further provide to our video segment in terms of integration and functionality. This is the reason why we will continue to devote great efforts to create strategic alliances with content providers to ensure subscribers enjoy a wider variety of content at any time. Separately, the telephony segment posted 2.8 million subs as of quarter end with 538,000 net ads on a yearly basis and 78,000 sequentially. Mobile services segment recorded 47,000 net additions this quarter on a sequential basis, maintaining its upward trend and surpassing the 250,000 subscribers. In terms of ARPU, during the quarter, the ARPU per unique subscriber was 412.8 pesos, up 2% in an annual basis, and practically in line with the previous quarter. Turning to ARPU by segment, internet and telephone increased 3% and 6% respectively, compared to that of second quarter of 2020. While video decreased 3%, the rise from the offering of triple play deals which represents higher discount to the individual contribution of each service. On a sequential basis, ARPU across all segments remain relatively stable. On the corporate telecom segment, revenues surpass over one billion pesos in the second quarter 2021, increasing 6% over the same period last year, largely in support by the recovery of Metro Carrier and OLA. Regarding Metro Carrier, connectivity services to carriers were the main driver for the period, while revenue coming from the data centers is starting to pick up. On the OLA side, the reactivation of private initiative investment played an important role, supporting the growth of revenue coming from the corporate channels. Finally, MCM posted sequential growth, and we expect to see better figures from here on, regarding the point of migration. More than half a million subscribers have been migrated to the new FTTH network over the series where this process is being carried out. We continue to diligently work despite the delays and challenges we have been facing. With all the attention and resources of the company focused on quality execution, we are sure that the outcome will be positive for our subscribers. Wrapping up, Megacable's operational performance remains positive with growth rates in demand and corporate segments. Our infrastructure continues to handle the sourcing traffic without major issues, and our sales and collection model ability to adapt quickly to the new needs of our subscribers greatly contribute to post-stable retention rates. With this, I conclude my remarks. Now, I would like to hand over the call to Luis, who will shed broader color on financial results.

Thank you, Raimundo. Good morning, and welcome, everyone. Driven by the revenue improvement recorded at all MAP services, coupled with a steady recovery in the corporate segment, the second quarter consolidated revenue climbed 11% on an annual basis to reach 6.1 billion pesos, marking a new record high for a single quarter. The quarterly MAP segment revenues grew 12% year over year, following the 17%, 3%, and 32% annual growth rates achieved at broadband, video, and telephone services, respectively, supported by a wider subscriber base and pricing adjustment. Corporate telecom increased 6% versus that of the same quarter last year, reflecting more favorable market dynamics that offset the slow recovery in heavily COVID-affected sectors. In this context, mass market stood for 83% of total revenue and corporate reached 17% participation. On the other end, the cost of services recorded an annual increase of 12%. The growth above revenue levels is mainly explained by a higher operation rate in OLA with a higher component of sales of equipment, as well as the cost related to the MVNO business in the mass market. Following the same trend, SG&A was up by 11% in the same period, mainly explained by higher general expenses given the increase in some inputs like gas and electricity. Given the higher revenues and efforts toward operating efficiencies, consolidated EBITDA increased 11% on an annual basis, amounting to 3 billion pesos, with a margin of 49.6%, similar to the levels recorded over the last quarter, while EBITDA of cable operations reached 2.8 billion pesos, with a margin of 51.2%. On day-to-day figures, the consolidated EBITDA margin remained at 50%, even recording a margin expansion compared to the same period last year. On the other end, the EBITDA margin of cable operations also registered higher levels than those of 2020 to stand at 51.6%. Consequently, MEGA posted a net income of 1.1 billion pesos, up 9% against the same period last year. In addition to the aforementioned factors that supported our operational performance, this item benefited from a favorable comprehensive financial result, which more than offset a higher tax effect. Moving into the balance sheet, as of June 30, 2021, the company net debt was 4 billion pesos, roughly 1.3 million pesos higher than the 2.7 billion pesos reported last year. mainly explained by the lower cash balance following the $2.2 billion federal dividend paid carried out this quarter, which was partially compensated by a stronger cash flow generation. Compared to the same period last year, NEP debt is $1.4 billion lower, mainly due to the strong cash generation, despite the fact that the last year's dividend payment was lower than this year. Our financial position remained sound and stable, with liquidity and leverage leverage compared more favorable against the industry. Net debt to EBITDA ratios stood at 0.35 times, and interest coverage ratio was of 15.3 times. Both indicators standing at healthy levels. On the investment front, Quarterly capex amounted to 2 billion pesos, which represents 33.5% of the quarterly revenue. Majority of these resources deployed to move forward are our network growth plan, mainly the GFON transition, as well as the organic growth of the network towards new territories and subscribers equipment. The investment that we are carrying out are of vital importance for the present and future growth of the company. They are the result of an in-depth analysis seeking to maximize value creation and return of investment. To conclude, we are confident that our financial position is strong enough to successfully weather the effects of the pandemic and count on the required resources to continue growing in an increasingly competitive industry. that demand carriers to be at the forefront of technology and service. With this, I conclude my remarks. Now let me turn back the call to the operator to open the line for Q&A.

And at this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question is from Fred Mendez with Bank of America. Please proceed with your question.

Hello. Good morning, everyone, and thanks for the call. I have two questions here. The first one regarding the dynamics of prices. In the second queue, you mentioned that 60% of our services are now receiving speed of higher than 10 megabytes versus 35% of SDA, right? So in that case, you would increase your price by something like 4% looking at your journey and your net worth. Given this higher quality product that you are delivering to your clients, don't you think that there is room for further price increase? This would be my first question. And then my second question, just trying to understand the X view. also had a very solid performance, almost doubling year-over-year, reaching 3 million clients. I just want to understand the benefits of having this XPU for the company in terms of churn, in terms of margins. So what does this bring in terms of benefits, given this very solid increase from XPU? Thank you very much.

Luis, did you get the question number one?

The dynamics of possibility of price increase on broadband, especially with the deployment of ZipCon Evolution. the adoption of fiber.

Fred, this is Raimondo. If I understood what Luis is saying, too, for what you put on question number one, you were talking about the dynamic of pricing of broadband, and in general with the services. We believe ARPUs should slightly go unique ARPUs for subscribers. the same way and the same trend that we have. And there are so many reasons to affect that ARPU. One of those is the dynamic of the price increases. We normally have price increases in some of the products and some of the packages. We carry out across the nation several packages according to the needs and the conditions of that market. So we conduct price increases once a year, sometimes twice. normally below inflation or similar to inflation, and according to competition and to the conditions as we say. We believe we have some room to increase, but it will reflect in the same manner that you've been reflecting our ARPU in the past. Why? Because as we continue to grow, let me put you the example of video. Video has a decrease of 3% on the ARPU of that particular segment. As we continue to increase on triple play, the price of video by itself on a single basis or double basis is higher than in triple play. So the ARPU per unit in video seems to be decreased, but the contribution to the triple play package is high in that part. So XView, of course, has a dual mean, and I will try to answer the second question with the first one. has a dual purpose. One is to increase output by being a good aggregator of products like Netflix, Amazon, now HBO Max and the rest that we have, plus the regular and traditional video service that we have with a much more reliable platform, but also will contribute to maintain the levels of churn in the levels that it has by providing a good quality, a brand new product. So at the end, we will have some room for rates to be increased according to competition and according to market, but we will continue to have the conservative policy that we show in the past, so you can expect a slightly increase in the unique art. I don't know if I answered both questions with my comments, Fred, or you want to extend a little bit in what I'm saying. Probably Luis will have it.

No, no, very, very clear, and we thank you very much. And then just a follow-up to make sure that I understood correctly. So basically, I mean, what you're saying is when you look at the Internet, at the broadband service, actually your price increase is higher than what it seems, right? But since you're giving discounts on the triple play, then that does not necessarily reflect this higher price increase on broadband because you're looking at the full picture. Is this a correct statement?

Yes, you could say that. You could look at it that way. What we try to do normally is we look at the market prices of the individual products, and we try to assign to them the right market price. And of course, each of the products has different costs. As we all are aware, the cost of video is way higher than the cost of providing broadband and telephone. So we do not keep a similar margin for different products. We do it the way it should be. According to the market condition, the price of video is $20 or $15, whatever it is, and because it is, this is what we try to reflect. So when we make the triple play, if video comes to that triple play, it is hitting that discount. So it's not hitting broadband as much as it's hitting video, since the base of video was before and we're converting to broadband. Now we have more subscribers on broadband in the larger cities, so you will expect to carry a more steady cost and output. for unique subscribers going into the future.

But you can assume what you are saying is correct about broadband. Perfect. Super clear. Thank you very much. Thank you, Fred. Our next question is from Marcelo Santos with JP Morgan.

Please proceed with your question.

Hi, good morning. Thanks for taking my questions. The first question is if you could please provide the next milestones for the GPON project. So when should things happen and what things should happen from now on? And second, if you could reiterate your CAPEX outlook for this year and the next couple of years, given that the GPON project is going to fade away, so what levels should CAPEX settle down? Thank you.

Luis, if you agree, I will answer the first one and you the second one. Okay, regarding GPON, we're very happy with GPON. It is a very aggressive project. I'd like to say that this is the network evolution project, and one of that is to set this technology called GPON. We will continue for years to come to evolve our network. The network is a breathing entity, so it will always have to be upgraded and work on that part to keep with the demand for higher bandwidth that our subscribers have. What we agree on the first step is, what we claim, is to have 12 cities with GPOM projects. As we said right now, we already migrated 500,000 out of the 1.3 million that we were planning to migrate. So you can say that we are at 40% pretty much of the GPOM project. We expect to finish this first step We're going to try to finish by the end of the year because we have a much more better quarter than we have before. That's why you have so much of the migration. But probably we will remain 10, probably 15% of that for the first quarter of 2022. That's the milestone of the first step of the GPON price. The rest, we will continue to deploy part of the GPON in some other areas where it makes economic sense. And we will reuse what we're taking away from the GPON area to much more smaller tasks. So what you can see is that the company will always have the best bandwidth and the best product. And on a conservative way, we will carry and try to keep our capex of revenue on a free cash flow basis for the company at all times.

Luis, can you explain a little bit more about the capex? Sure. Sure, Raimundo. Thanks. And Marcelo, thanks for your questions. Regarding CapEx, as we've mentioned in our previous calls, for 2020, we expected to get to $400 million in CapEx, and we didn't reach 2020, because we fell behind a little bit on the GFundMe project, and that carries to 2021. For 2021, we expected to expand our CapEx investments beyond the 2020 $384 million that we spent. So for this year, we are basically on target for those to reach about $400 million and maybe above that $400 million. because we are trying to finish this year the GPOM project, as Raimundo explained. The chipset delays in the world are not helping a little bit on that, but we are going to try to reach as much as possible. We could be on top of the $400 million and maybe beyond that. And for the future, as we explained also in the past, we were thinking on reaching the low 20s by 2024, so 20%, 20-plus percent of our revenues. But in this case, the competition is getting tougher, and the delays in the project, we may be reaching to that situation a couple of years later.

So you can expect a decrease in the percentage of capex, Marcelo. That will always be, but it will take us to reach those levels, what we're saying and what we foresee, to reach the levels of the low 20s. It will take us probably a couple of more years. So instead of going to 2024, it will reach probably 2026. That one thinking about expanding a little bit, operating the network, doing the GPON project, and so on and on. We look more in the mid-25%, around the mid-20s, by 2024, and then decrease to 20% by 2026. That will be more of the milestone that we see for the CAPEX project. For the long term. For the long term.

Perfect. Very clear. Thank you very much. Thank you, Marcelo, for asking. Our next question is from Andres Calo with Deutsche Bank.

Please proceed with your question.

Yeah. Actually, this is Andres Calo with Deutsche Bank. Thank you for taking the question. I have, first of all, a question on M&A. About six months ago or so, Enrique, you said that Megacable was looking at Axtel's infrastructure division, but not Axtel as a whole. So I was wondering if Megacable remains interested or is looking perhaps at the Axtel opportunity. Also asking Enrique, what are your thoughts on Red Compartida? As you know, Red Compartida filed for a concurso mercantil or bankruptcy here under Mexican law. And I was wondering if Megacable could be interested in increasing or taking over or perhaps pausing its relationship with Red Compartida. And I have an additional question. Thank you.

Okay. Yes, thank you for the question, Andres. We are going to be very clear. We are not interested in Axtell's infrastructure. We think that that would duplicate a lot of our network. We have big networks already of fiber for enterprise services in Axtell. CDMX and Monterrey. We're building other large markets where we don't have presence, like San Luis, as I explained in my introductory remarks. We're building Tijuana, Ciudad Juarez, Chihuahua, San Luis Potosi. Obviously, we have presence in all our cities, like Guadalajara, Hermosillo, Puebla, León, So, we have a big backbone in metro rings to serve the same market that Axtell does. Obviously, they are much more old player in that market and they have a lot of experience, but we do have infrastructure and we have the level to compete with them currently. So we were not interested in trying to acquire Excel. That's in the first question you asked. The second, Red Compartida, we believe that Red Compartida has a big opportunity to still be viable. What Red Compartida is asking is for time. I think the model will work. We will back it up. We will invest as industrial partners We're willing to keep providing services to Red Compartida and finance those for them. That doesn't mean we're taking a hit. I mean, we already took a hit in our balance sheet because of the value of the company. We did that in 2020 because the auditors thought that we should do that. But we think that the project is viable. We think that the government is backing that up. according to the management of Red Compartida. We will wait for the assembly. There's going to be an assembly of general shareholder assembly pretty soon. We think that there we will have more details of what they're planning to do. They are not trying to get, I don't know, it's discounts or whatever you call it in English. or for the debt from banks or from vendors. They are trying to get more time. That's it. And I think it's pretty reasonable what they are asking. And the project is viable. I mean, telecom is the future. Everyone needs spectrum. Everyone needs mobility. And I think that they are in the right business. It's just a matter of time for them to make the company to take the company to maturity. That would be my answer for the first two questions. I believe you have another one.

Yes, thank you very much. Very clear, by the way. My second question is on your remarks regarding cable entering markets, residential markets in adjacent areas of your coverage, Mexico City, Monterrey, and other areas. We know that in those areas, especially in Mexico City, Telmex is still bigger than the incumbent cable provider. So it seems that, including Zapopan, by the way, Telmex is still the largest player there. But I was wondering, Enrique, if it makes sense to entering these areas as opposed to going into streets where no one is currently passing homes. My understanding, maybe you can confirm it, is that we have 10 million homes in Mexico not passed by any fixed network whatsoever. So I was wondering if it really makes sense to duplicate infrastructure as opposed to going into new areas. So I was just wondering about your thoughts in this area. Thank you.

OK, thank you. Yes, very interesting question. Yes, we're doing both, Andres. We're going into areas where there is very low coverage, or no coverage at all, or just one player, or two players, and maybe the community is underserved. We're doing green fields of G-PON there. We're also expanding our network wherever we see an opportunity for other players like Easy or Total Play. But we are very careful with that. We do a very in-depth research to do that. We have already started selling massive services in Mexico City, in the Estado de Mexico, in the areas around our services. our current, or where we have had presence for years, like Clanepantla. So we're doing some areas around Clanepantla and in the edges between Mexico City and Estado de Mexico. We're also starting to sell massive service in Monterrey and Zapopan. It makes sense for us because, I mean, we already have our head in, we have our engineers, we have our crews, we have our Our monitoring, you know, are in place, which is a big central infrastructure that helps us to provide an excellent service. But we are not going massively to, you know, everywhere. We're very, very careful, but we will be successful there. We are the best offer, the company that adds more value to the customer by price and by product. So we're very careful, but we're there. We're there, and we will be very smart on where we compete with others, with the incumbents.

And also, Andres, and this is Raimundo, in some of those areas where you see our market research that we do, we are very careful to see what penetration is. We're very careful to see what the condition of the technology and the network of the other companies are. So we're getting with the state-of-the-art extension of our network, GPON to areas where we believe we can compete. As Enrique said, we already have in those areas metro-urban rings of fiber that connect metro-carrier and MCM. We have hubs, we have infrastructure that can be connected, and we have GPON that serves both on a synergy basis, serves metro-carrier and the massive market. So we are not going to overbuild Torre Diamante in Santa Fe. And being 10 players of fiber in the same building, we are going to be very careful where we put our shareholders' capex and the view of the company on that and where we see the opportunity. Regarding other homes that you see, we are doing that, like Enrique said. We have a huge amount of small towns where we are building. But we are very careful there, too. Economic conditions and security conditions are an issue. When you get to those towns, you don't have the support sometimes of the law to back that up. So we're expert of growing in small towns, but we're also very careful on the big towns like Mexico City and Monterey where we have our method carrier operation. on that part. So trust on what Enrique is saying and us that we're looking for those opportunities to see there. I'm going a little bit and expanding because there are more questions about Altan. The file that Altan has will make it stronger in that part. They will renegotiate the debt that they have mostly with vendors in that part and will give the company the degree that has to meet the business requirements the business project that they have before. We are selling Altan, too. We are a customer of Altan, as well as other companies. Sky, Walmart are major MVNOs of that network. And we will continue and will continue to commercialize our product that will give the company and that will be, and we're doing that because we see that the company with that bridge that they have now on the financial restructuring will allow them to grow to get to the business plan that they have before. That's why we, as an industrial holder or as an MVNO customer, we continue to put the view on the MVNO project going forward as of today, as Enrique said, you know. That would be my extension of Enrique's comment.

Andres. Okay, thank you very much. Great to hear. Our next question is from Carlos Legareta with GBM.

Please proceed with your question.

Hi, thank you. Good morning. Thank you for taking the questions. I have, I think, a very conventional one and sort of an out-of-the-box one. I'll start with the boring one with Metro Carrier. You guys are down, obviously, the revenues are down year to date. But with the entry into new cities in the second half, should we expect a significant pickup during the second half of the year? And for the second question, just think it out loud here, but if you could perhaps help us understand if it's in the interest of the control group to perhaps enlist the company, given how cheap the multiple looks and how attractive the growth opportunity seems. Thank you.

Sure, Carlos. Thank you for the question.

I don't expect for the second quarter to have the huge pickup that you're saying because we are in that process. The main results of the expansion to the city should be figured out and released for 2022. We will open operations this year, but it will be mostly by the end by the end of 2021. Still, I think we're very happy about metro carrier results. We're very happy that the results come from very steady sectors like carriers and corporate. Very few regarding to government still. So carriers trust in our infrastructure. We will continue to invest in inter-urban infrastructure and hubs and places where the carriers will rely on us to bring MetroCarrot back. And you can expect a trend to go into the future, not at the level that you set because of the new cities, but it's going to be a good year for MetroCarrot. And the second one, Victor Luis, I don't know if you want to answer, is regarding the delist. I think that's what Carlos was asking, if we're trying to delist.

So I didn't really get the question, but is that buyback stock or the list? Is that what you're talking about, Carlos, about buyback, the list company?

No, no, no.

I'm thinking about a whole tender for the company.

Oh, a whole.

But I don't think that's in the conversation today.

No, Carlos, we are very, very focused on what we're saying right now. And we are happy with the structure that we have so far. So we will continue to be the same.

We do some buyback with our funds, but not the whole thing.

Not the whole thing. I understand. I appreciate the answer. And our next question is from Leonardo Malato with BTG Pachuel. Please proceed with your question. Hello, Leonardo, are you on the line? You are connected. You may be on mute. Hello?

Hello? Okay, we can hear you. Hi, guys. For your residential segment, I know that you said that you're working on transitioning 40% of your network to fiber, but I was wondering what your plans are for the rest of your network following the completion of this project, and if your expansion to other residential areas, like you said, Tijuana, Ciudad Juarez, would it still make sense to use any coaxial cable at all in your expansion for those areas while other players like TotalPlate, for example, are only expanding, utilizing fiber going forward. Thank you.

Sure, Leonardo. As I said before, the GPON project that we announced comprises 25,000 kilometers of GPON, pretty much. It reaches 26,000, actually. That's what we have. And let's call it the first step of a major migration to GPON. But, as I said, the network is a breathing entity. That means it needs to be upgraded. What we say is that on these fields, we will do GPON. In some of the strategic areas that make sense, we will continue to do GPON, and we will reuse the existing HFC that we have of those 12 cities where it makes sense to be reused. At the end, in the long run, we will be also, in the majority of the markets, a GPON company in that part. But that will be on a mix of JIPON and migration to JIPON from HFC as it makes economic sense and according to market conditions. So the next 20 cities will be migrated to JIPON in some of the strategic areas. And the rest of those areas will be probably between the third and the fifth year of that. In the meantime, we continue to use HFC and the CPEs But the main of the capex that will come from the company, the majority of the capex, for not saying 100% of that, will be GPON. The capex for network. For network. The capex for network. Thank you.

So just to confirm, new cities are fiber. New cities that we are greenfields, that we are going on into are GPON networks.

Even expansion in current cities is GPON. So what we're doing is relocating the HFC equipment that we are discarding from the GPON project to those areas that will still be HFC for maybe a couple of years. But we will, we have, we're putting in place a program to turn everything GPON over the last five, six years, over the next five, six years, that's for sure. And I mean, HFC is really competitive. We have been very successful competing and fighting competition with existing HFC, not what we have. And what we're doing is getting that, where it's still gonna be HFC, getting that more competitive in a better shape. We can provide speeds of 500 megs or one gig to the home with the existing HFC network. And really, people is using speeds less, 100 megs or less. So we're okay. We're in excellent shape with HFC and GPAP.

And message is we're investing in GPAP. Yeah. That's Enrique, Luis, and myself's point. What we're doing is reusing what we have for the best interest of everybody in the short term.

That's it. Okay. I appreciate that. Thank you. Thank you, Leonardo.

And that is all the questions for the phone line. I will hand it back to management for questions on the webcast.

Okay, thank you. The first one is from HR writing. It's how the financial situation of Constant Reyes is going to affect the ongoing business assumption of its new mobile telephone segment. I believe this has been already answered. So we move to the next one. Is the Jibon project still expected to be completed by the end of 2021? If so, how much will CapEx come down in 2022? Wait, I think we already answered that question. The third one is from corporate advisors. Medartabli has generated strong results and resulting cash flows. As you move past the big cap experience, the balance sheet will have excess liquidity and the company will have more cash than it needs. Any thoughts on a special dividend or a stock buyback?

Really, I mean, that's a matter of board. And we have been very consistent with our dividend policy. I mean, if this is a problem, that's a good problem. We will find a very good solution for that, either a higher dividend or investment. I mean, if we find an investment opportunity in the Mexican market, we will take it. Or maybe, you know, I don't know. You know, telecom is very evolving. New projects in telecom, there might be some in the future. We don't know. But, I mean, we have always found a very good use for money.

And as we said also, capex will decrease in the future, but it will take us another couple of years to get to the levels of the low 20s. So in the meantime, we believe the money is better off expanding the network and growing Mega Cable in a very smart way, like we believe we have done so far. So, as Enrique said, this good position, we will deal with that as soon as we reach that. But right now, in the next years to come, the short years to come, we will be more focused into network evolution, growing the company, expanding before getting to that process.

Okay, the next one comes from Select. And it's, can you give us some color about the mix of four-play, triple-play, double-play, and single-play?

Oh, the majority of our subscribers will be in the triple and double-play. It is already. It is already. We continue to have, and if you see, 55% of our subscribers... are in triple play or now quadruple play. Why quadruple? Because the 250,000 mobiles continue to grow in that part. We strongly believe single play will not be part of our strategy. That's why we will always have a double play between broadband and telephony, CPEs, CAPEX, and at the end, setting the fixed voice over the data makes sense. It contributes to the package of the subscribers, whether they use it or not. And the adoption of the EdgeView platform can also make very attractive the triple play still in the long term. So 55% to 60% will be triple, 40% will be at least double if you want to see that going forward into the future.

Okay, so we have no more questions. I'll turn the call over to Mr. Yamuni for final remarks.

Thank you very much, and it's a pleasure to discuss our results with you. As you know, very often we are reporting, or almost every quarter we are reporting positive results. We're confident that we will continue with that trend. Telecom has changed dramatically over the past 18 months, and we think that we have a unique opportunity ahead of us. We will keep taking it and having the best performance that we can deliver to our shareholders and our customers and our employees. Thank you very much for your attention. Thank you very much for your interest. Please contact our investor relations department if you have any questions or concerns regarding the company, and have a wonderful day and a wonderful weekend.

This concludes today's conference, and you may disconnect your lines at this time.

Thank you for your participation.