Megacable Holdings, S. A. B. de C. V. (MEGACPO) Earnings Call Transcript & Summary

Good morning, and welcome to Megacable's Third Quarter 2020 Earnings Conference Call. With us this morning from Megacable, we have Mr. Enrique Yamuni, CEO; Mr. Raymundo Fernández, Deputy CEO; and Mr. Luis Zetter, CFO. Let me remind you that 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. Megacable undertakes no obligation to update or revise any forward-looking statement. I will now turn the call over to Mr. Enrique Yamuni. Sir, you may begin.

Thank you very much. Good morning, everyone, and thank you for joining us today. In the middle of the economic showdown -- slowdown caused by the health contingency, Megacable continued to benefit from the telecom sector resilience. Advancing to capture the demand of the new normal, which has recently increased the connectivity needs arising from the expansion of our office and remote school programs. In this regard, during this period, outstood the kickoff of Aprende en Casa, the school program that aimed to replace face-to-face classes with online lessons, which coupled with the vast numbers of customers who adopt their daily routines to the home office mode. Heavily driving our Internet business in the mass market to an all-time high, being this the first time that we posted a larger number of Internet than Video subscribers. Consequently, total subscribers maintained its upward trend, recording a rising demand on all services. ARPU per unique subscriber increased when compared to the same period of last year, while the numbers by service, a slight decrease was recorded as some of these new clients are not yet paying full rates, and most of them were either added in the second part of the quarter. Under these dynamics, quarterly revenue increased year-over-year, while EBITDA recorded a solid double-digit growth and a new record-high figure for the company. This result was driven by cost and expenses efficiency, given our continuous effort towards a lean organization and our ability to adapt to the market circumstances. This is reflected in the annual improvement of the EBITDA margin, which exceeded the expected forecast of the consensus of analysts. In the Corporate segment, recovery is now more visible as the companies in the connectivity segments have posted revenue growth. We continue to work hard to get this segment back on its feet to reduce the exposure towards government-related provisions. Now giving some color on our projects in development, the GPON migration process advances as planned as we have started to migrate some of them to our new FTTH network, some of our customers. Likewise, I would like to take a moment to contextualize the magnitude of this project as it represents a significant investment that will allow us to migrate about 50% of our subscribers to a fiber to the home network before the end of 2021, while significantly increasing the bandwidth capacity of the rest of our HFC network, thus boosting our competitive position for the following years. On the other hand, our XView Plus platform, development is also concluded, and preparations are underway for its launching towards year-end. We are quite positive on this project, but we will be capable of partner stimulating the commercialization of triple and quadruple play packages toward our MVNO platform. Here, it is important to note that in line with the timely development of our projects, mostly those of on final stages, we expect to post the second half of the year CapEx figures significantly above than that of the first 6 months to reach our target set for 2020. However, these present investments will help us improve our service to a more efficient use of our infrastructure and better and more reliable services in all our products and packages, resulting in a significant decrease in CapEx intensity for the medium and long term. Wrapping up. Despite these satisfactory results, we keep minding the difficult economic backdrop, having a close watch on our strategy metrics such as ARPU and churn rates. But we seek to be ready before in any arising challenge. Also, we believe that this new reality changed for good the way we live and the increasing use of the telecom technology is here to stay. So is the move-up of our services in the priority of the family's budget and the business community. I will now turn the call to Raymundo Fernández for further explanations.

Thank you, and good morning, everyone. In the third quarter of 2020, demand for our services continue to increase, particularly in the mass market, as the compelling value of our portfolio and improved technological capacities allow us to seize the opportunities posed by the pandemic, including the back-to-school season under an online modality. To put this in a better perspective, sequential gross additions accelerated during this period compared to the past quarter. In Internet, it went from 83,000 in the second quarter to 185,000 this quarter; Video, from 28,000 to 100,000; and Telephony from 82,000 to 243,000 in this quarter. At the end of the period, RGUs totaled 9.4 million, a 12% growth or 592,000 net adds when compared to the third quarter 2019. Supported by the company's bundling strategy and also reflected in the RGUs per unique subscriber, which went from 2.3 in the third quarter 2019 to 2.44 this reporting period. Thanks to that strong dynamic, net additions of unique subscribers for the last 12 months climbed to 224,000, out of which 148,000 were added this period, closing the quarter near the 3.9 million unique subscriber mark. These results were highly driven by the performance of Telmex broadband which posted net annual and sequential additions of 347,000 and 185,000 subscribers, respectively, to reach 3.4 million total subscribers. It is relevant to underscore that Mega already reached the point where it has more Internet subscribers than Video, making us no longer a predominantly cable television operator but an Internet telecommunication service provider. This business development follows global trends, where the Internet becomes the main service due to its rapidly growing demand, and to which Mega has answered with greater investment and deployment of the latest technology. In addition, our increased focus on investment in high-speed broadband and related technologies has enabled us to absorb the higher demand from segments requiring higher bandwidth capacity as reflected in the over 55% growth in Internet subscriber, with speeds equal or greater than 50 megabits from September 2019 to September 2020. Moving on. Video subscribers amounted almost 3.4 million at quarter end, 138,000 subscribers more on an annual basis and 100,000 more quarter-over-quarter, attaining one of the strongest growth in our recent history. This performance indicates that this service, contrary to what some may think, still has a growth potential which Mega intends to take advantage of even more with the upcoming launch of new products and services, most notably XView Plus. Regarding additional services, as of the end of the quarter, XView subscribers totaling 1.1 million as of September 30, 2020, increasing 337,000 net additions over the same period last year, but decreasing when compared to the previous quarter. This slight sequential decrease is attributable to nonrecurring onetime factors such as aggressive promotions towards other bundles. Therefore, it is expected to resume its growth trend in the coming months. Our HD service reached over 1.2 million subscriber at quarter end with 321,000 net additions recorded over the last 12 months. These services, besides representing an extra source of revenue, also provide a competitive edge to attract more subscribers and operating packages of active clients. In this sense, we are confident that our enhanced XView Plus platform will contribute to the ARPU growth over the following quarters. Separately, the Telephony segment posted 2.5 million subs as of quarter end with 438,000 net adds on a yearly basis and 243,000 sequentially. We observed a noteworthy market absorption of the MVNO project as it reported 64,000 net additions this quarter, allowing it to beat the 100,000 subs mark with a solid pace to achieve the 150,000 subscriber target set for the first year of operation. Churn rates, on the other hand, remained stable at 1.5%, 1.7% and 2.1% for Broadband, Video and Telephony, respectively, reflecting the positive impact of our marketing endeavors and customer satisfaction with our products, coupled with an increased need of our services. In terms of ARPU during the quarter, ARPU per unique subscriber was MXN 406.5, up 2% in an annual basis, and in the same levels when compared to that of the previous quarter. This performance was mainly driven by a higher number of new subscribers, coupled with price increases and the contribution from additional services, social. It is expected to improve in social. It is expected to improve in subsequent periods. ARPU wide segment slightly decreased when compared to that of the second quarter 2020. This is basically a result of the high number of net adds with promotional rates, some of which were recorded by quarter end. On an annual basis, Internet and Telephony dropped 1% and 3%, respectively, while Video reported contraction below 1%. On the Corporate Telecom segment, revenues reached MXN 903 million in the third quarter of 2020, a decrease when compared to the same period of last year. The company has seen a recovery, especially in the connectivity segment, including MCM with a revenue increase of 7% and Metrocarrier of 3%, driven by a higher demand for our services despite Metrocarrier's continued -- continues to be affected in its comparison against last year figures due to the cancellation of the Mexico Conectado project as of year-end 2019. On the ho1a side, we have increased the volume of transactions during the quarter, aiming towards recovery. However, we have not been able to increase the average ticket as this segment continues to be affected by the government austerity policy, while the private initiative continues to be very cautious in terms of carving out new projects. To conclude, we are certain that the ongoing improvements of our service, the evolution to a fiber to the home network, followed by the upcoming launch of the XView second generation will lay the foundation to keep with increasing demand of high-speed broadband and next-generation video services in the coming years. As such, it should not be perceived as a defensive move towards nowadays competitive environment, but as a future-thinking strategy aimed towards meeting the future necessities of our subscribers. We look forward to the operational efficiencies and customer service improvement that we will achieve through the term in the short and medium term, which will surely provide an incremental value to our business. With this, I conclude my remarks. Now I would like to hand the call over to Luis, who will share broader color on financial results. Luis?

Thank you, Raymundo. Good morning, and welcome, everyone. Driven by the revenue improvement recorded at all massive services, the third quarter consolidated revenue climbed 4% on an annual basis to reach MXN 5.6 billion. The mass segment revenues for the quarter were up 7% year-over-year, following the 9%, 3% and 15% annual growth rates achieved at Broadband, Video and Telephony services, respectively, supported by a wider subscriber base. Corporate Telecom decreased 9% versus that of the same quarter last year, reflecting softer market dynamics, which were not offset by the recovery in the connectivity services segment as Raymundo has explained. In this context, mass market stood for 82.5% of total revenue and corporate reached a 17.3% participation, given the recovery of cost and expenses from a previous favored resolution on an interconnection matter. On the other hand, the cost of services recorded a slight annual decline of 2% and following the same trend, SG&A were down by 4% on the same period. It is worth noting these items contracted while revenue continued to grow as we have consolidated further enhancements in our operating economies. Delivered from both higher revenues and contained expenses, consolidated EBITDA increased 12% on an annual basis, amounting close to MXN 2.8 billion, the largest figure recorded for the company ever with a sum margin of 49.5%, while EBITDA of cable operations reached MXN 2.6 billion with a margin of 51.1%. These positive results enable Mega to quickly bounce back on the profitability track, posting a net income of MXN 1.1 billion, up 8% before that of the same period of last year despite a higher tax rate. Moving into the balance sheet. As of September 30, 2020, the company net debt was MXN 4.9 billion, almost MXN 500 million lower than the MXN 5.4 billion recorded last quarter, mainly explained by the MXN 550 million amortization of the credit contracted in the first quarter of 2020. Consequently, the net debt-to-EBITDA ratio stood at 40 -- sorry, 0.45x, and interest coverage ratio was of 21.4x. Both indicators standing at healthy levels. On the investment front, as Enrique mentioned, the development phase of the GPON project has started to be reflected on CapEx. As over the quarter, the resources allocated to capital expenditure totaled close to MXN 1.8 billion, representing a 31.7% of quarterly revenues. To conclude, despite recording good numbers during the quarter, mostly from a surging demand of mass market services, the uncertainty surrounding the contagion curve of COVID-19 and its effects on the local and global economy requires us to continue to be conservative from providing any guidance for the remaining of the year. Although drawing from the solid fundamentals of the industry, we are confident to end the year with stability and further strength in our technological platform and commercial positioning. With this, I conclude my notes. Now let me turn back the call to the operator to open the line for Q&A.

[Operator Instructions] Our first questions come from the line of Arturo Langa with Itaú BBA.

I was wondering if you could provide us with a bit more detail on how you were able to decrease cost year-over-year in spite of growing consumers and providing them with higher bandwidth capacity? I'd be interested to see what this is attributable to. And I was wondering if this has anything to do, for example, with the submarine cable that you guys deployed in the Baja region? And my second question, if I may, could you also share with us what type of customers are the ones that are contracting pay-TV? And how you're achieving this growth? Is it part of the bundling strategy? Or are you seeing increased penetration rates within your footprint? It'd be interesting to see if these are people coming online, or it's a consequence of people contracting fixed broadband packages. I would appreciate that.

Do you want to start?

Sure. No. Well, the first question was regarding the cost. I didn't say quite catch the...

Yes. He was asking how...

Second one, you were asking how -- he was talking about the decrease in the cost and how -- with the submarine, if we can give more information about that.

Sure. Yes. There is -- and we were mentioning this from previous calls that the savings on the submarine, thanks to the submarine cable, were going to help us. And that is on the link to provide broadband services. And of course, also together with purchase and bidding connections that the company has started to use, have reduced the cost of the links. And even when we have increased our demand from our subscribers and all the operations, of course, that has helped. Also, as we had a higher number of subscribers or net adds, we have been able to capitalize some of the costs associated to the sales and that has helped also. And also, we have been more efficient in terms of the people and the salaries and the RGUs per employee, we have made a great effort there and have come out with great help.

Yes, it's productivity.

Productivity at the end. Yes. So that's kind of basically the major chunks on the cost savings. And the second question, Raymundo?

The other one, Arturo, was relating to the margin, if we can sustain the margin. That's not the question.

No, the second question was regarding your pay-TV subscribers. Where is the growth coming from? Is it part of the bundling strategy? Or are these new clients coming into your subscriber base? And maybe if you could share details on if they're coming from a particular socioeconomic sector or region, that would be helpful.

Well, it comes from the bundle strategy. We continue to push the triple play package, that increases not only Video, but Telephony too, plus promotions that we did in Telephony accelerate that segment. In terms of Video, as I said, we were very efficient in provide to those that cast only broadband and telephony. We went to our subscribers and get them and offer, then the Video over the period. Also, we saw an increased trend of entertainment. We have a good price in bundle, and people want to stay, the people that stays at home still wanted to use it. Also, we have the back-to-school campaign, or the over TV educational programs from the government, that requires also a good signal on digital and several channels, all together, it's what we did. And we're not only happy about the results of that third quarter. As you know, we have a strong growth of XView over the second quarter, those promotions we aim at, and we slowed that a little bit, but fourth quarter will bring the XView Plus. That new generation of Android TV platform will surely -- will be a killer app for our subscribers. For direct, we also aim to recover subscribers in all the different segments. We don't have -- are just going for the new segments. As you know, we did not increase our footprint significantly. We're aiming towards GPON and increasing HFC with that project. So we slow down. Everything came from organic growth that brings from higher penetration of our existing plans. So that's what we did. In terms of how we did that, we continue to have several channels. We increased our digital channels that will allow subscribers to ask for this service without us having to go to the home through a door-to-door salesman on that part. We have a strategic point-of-sales presence in the major supermarket where people still go not that much in the malls. So all together, it's part of what we're doing in that area. Also, if you see the churn of Video is low. So when you have a recovery system or rate like the one that we have altogether into that growth, historically growth in Video, which we are very happy of that.

Our next questions come from the line of Rodrigo Villanueva of Bank of America.

So my first question is related to the SAC that you just mentioned. You said that you are capitalizing more SAC. I was wondering if you could share with us what percentage of SAC do you capitalize. And if this policy has changed relative to last year? And my second question is related to competition. We have seen Totalplay growing very strongly across the country. So I would like to hear your thoughts regarding how big of a threat do you think they represent to Mega? And if you overlap with them in many markets?

Sure, Rodrigo, and thanks for your questions. And to the first question related to capitalization, we can assure that we have not made any change in the policy. The change was 2, 3 years ago, if you recall, so we follow the same policy this year. And what changed is the amount or the growth in net adds, which actually drives the percentage of capitalization. Certainly, I have no -- I don't have the precise numbers of the questions you're making on in terms of percentage. But for sure, we can have a follow-on call, and I'll give you more precise numbers on that. On Totalplay...

On Totalplay, Rodrigo, this is Raymundo. There is no doubt that they have been growing a lot, both in terms of subscriber and coverage, nationwide from that part. But part of our success in Video and Broadband is that we have a great product and great technology. Our video platform, our XView platform does allow to have no linear channels, interactivity, BOV capacity, everything required, so we don't have -- we are not in disadvantage so far. Also the increase in broadband that we allow, as I said, with speeds of 30, 50 and more. Our network has proven, still on HFC, to be able to handle the demands of our subscribers on that. If you couple that, that we have a very aggressive pricing, it is hard to penetrate in our systems as they have done in other parts. We have no doubt that they have a big footprint in our systems, it does -- it is in 12 of our major systems. On that part, and we compete in those 12 cities. But still, if you consider how many subscribers they have in our area and how many do we have quarter-over-quarter, I think our strategy has proven to be successful because of the growth of subscribers that we report of this quarter. So it's product, service, coupled with bandwidth pricing, I think we are doing the right approach. With XView Plus, we will aim still more over another niche, which is getting more toward -- offer economic levels in some of the areas where they fight with Infinitum and Sky and those. We are also, therefore, they are aiming on that part. XView Plus, it is very creative, a great technology. It is fast. It has a great interface. It's a very friendly user. So -- and we're now doing the, like Enrique says, we already have that product in the market in a full. So it is real. It is working there. And very soon, you will see the migration of our subscribers toward that new platform, which for sure will be of great success for our subscribers. That will be our point.

Very clear. And another question, if I may. Given the upgrade to FTTH, can you share with us the difference in terms of costs for the CPEs relative to the ones that you're using now with HFC?

Well, the exact cost is something that we keep internally on that part. What we can tell you is that there is no increase in cost to what we have right now. More than that, it might be a decrease in some of the products. So you can count that we won't have an increase on the CP compared to what you have seen in the past for Megacable in that period. What I can tell you is that it's of the latest technology. It is very fast. It runs over GPON and it runs also over HFC, and it can handle all the different apps with the Play Store and the Android TV platform. It will be -- we're betting on that application that people will absorb and will be really, really innovative and well taken by our subscribers.

Our next question has come from the line of Marcelo Santos with JPMorgan.

I have 2 actually. The first is regarding the GPON project. And what does it make sense for you to actually go beyond the cities that you currently operate? Since that you're bringing cutting-edge technology, you have many cities that are still under HFC or DSL, a combination of both, so now will be probably a good time if you wanted to enter these new cities to come with this new technology and grab some market, wouldn't it make sense? Kind of the same way that Totalplay is doing, but you could do that as well. That's the first question. And the second question is about a little bit more detail on price increases. So when have you already performed increasing prices? When was that? If you could give us some view on the residential market would be very good.

Sure, Marcelo. Regarding question number one, going beyond the cities. As you know, we are very focused right now. We believe that we can increase our penetration like we did in this quarter over the existing areas. We look into new markets. We always look, and we analyze the ROIs of those markets where we can enter. So far, what we are focused on is to increase our footprint for the Metrocarrier and MCM purpose. We believe the high ticket gives us a good return on that market, and we can compete. We are very efficient on Metrocarrier too and is still growing. Regarding the effect of the Mexico Conectada that affects and the pandemic, we believe the effects of MCM and Metrocarrier doing very well, and we know how to manage that on that area. The strategy of going GPON brings in, a 12-month period, 2020 and 2021, more than 25,000 kilometers of GPON, so it's a very aggressive program, and it does allow us to go in the other markets with a much more aggressive increase in bandwidth and better technology for the rest of Megacable. So at the end, we are very focused into our existing footprint that will have the best technology and the best video and broadband product, whether it's HFC or it's GPON, so we will let you know. We continue. We are not against growing in any market that makes economic sense. But our short-term strategy is that what I'm telling you, growing Metrocarrier and MCM on that part and having the best service and the best market share that you can have and increase in the ARPU in the systems where we are. Regarding the price increases that we did, that one accounts for around 2%, less than that, 1.5% to 2% of our existing revenue. And I -- because we don't raise rates to everybody at the same time in all markets. We have different packages and different rates, whether it's a small town or a larger city than Guadalajara. So that's what we have so far. We will continue to look for price increases in the future, whenever we see is the right time to do that. And also the RGUs that were increasing because of the bundle strategy, we continue to increase the ARPU per unique subscriber, that's where we are focused on to increase that ARPU. We believe the XView platform will help to do that. And once we can -- we continue to have demand for higher bandwidth, will also bring that from the Broadband segment. So price increases rate was at 1.5% to 2% pretty much average.

Our next questions come from the line of Andres Coello of Scotiabank.

Yes. I was wondering if Megacable is among the companies currently participating in the bidding for Axtel? Are you among those interested in buying the company? And my second question is, if you could just mention that the GPON project will comprise 25,000 kilometers. I was just wondering how many homes you intend to pass with GPON. And also, if you can remind us when these projects will be completed? Also, if, as of today, you are already providing fiber to the home to a percentage of your homes, excluding the Axtel residential acquisition, if you can just share with us how many homes have been upgraded to the service with the GPON project?

Enrique, do you want to say something about the Axtel we're bidding for?

Yes. Sure. We are not in the process of bidding for Axtel. We decided that -- well, they're doing a sale to an infrastructure company, maybe. They decided at the end to sell both the whole thing, the whole package services and infrastructure. We will look at who buys that. And if that is -- if our interest, we will lease or buy some of the infrastructure in some of the places that we think did make sense for us. So we decided not to go for the whole thing. We're not focused on that. We think that we would be very much overbuilding or posing and have a duplication of infrastructure if we went for that. And we decided not to. So we are not in that process. The second question was about...

The second is more related, expanding a little bit more of the GPON project. The GPON project, I can tell you that we'll cover with GPON with fiber to become around 4 million home pass in that part. And we continue to grow as we mature in the years to come on that part. Let me tell you, Andres, that GPON, for us, is nothing new. GPON, we built our first GPON system in 2017, 2016 pretty much. And that's because we always wanted to have a foot inside the best technologies. At that time, the technology for DOCSIS and HFC was very competitive and cost-efficient too. With years to pass, we decide, with this project, to accelerate the CapEx in this in a much more aggressive move to go for the market, not as a defensive, but as an aggressive move to go more for the subscribers on that part because we wanted to provide, in all the systems, better bandwidth, higher bandwidth, and get some cost efficiencies on that part. We needed to upgrade the CPEs, both in Video and Broadband. So it makes a lot of sense for us to invest in GPON and reduce the CapEx of what we have on that part. So some of the areas that some of these systems where we're building GPON, they already have some areas of GPON both from Megacable build before the Axtel purchase. Some of them are small areas where we have the local system to manage that kind of technology and preferred technicians. So now that we're migrating subscribers from HFC to GPON in those areas, we have the right personnel and the way to absorb that technology. So I don't know if that answered your question regarding the extent of GPON.

Yes. And just one question sir. I was just wondering, Raymundo, if this project gets to be completed at a certain stage and then you can then or just start migrating subscribers or is that a gradual process? Meaning you will reach the 4 million homes and they upgrade gradually? Or you need to get to a certain point first and then make a significant upgrade of the subscribers?

As it is being built. As we say, right now, we're building those kilometers. It's a project that takes some months to be deployed. And as we are building, we're migrating subscribers, so you don't have to wait for the build-out of the GPON project to have subscribers in the new platform. We are right now migrating. We already start on that part, and we have happy subscribers on GPON and happy subscribers receiving the CPEs of the GPON project that we installed in the other systems. So it's as we speak. I don't know, Enrique, do you want to say something?

Yes. I just want to say that it's a simultaneous process. So we're building and migrating subscribers. We're willing to do 100% of the network to store migrating subscribers. It's a simultaneous process. And also its a simultaneous process to dismantle, the HFC network that we have in those cities. So we are moving that equipment to the other 50% of the network to improve the number of nodes and to improve the bandwidth and to improve the reliability of the network. So we are still getting our money back from that technology. So we had -- that technology has a lot to give still. We can provide 1 gig to the home with that technology. And enough bandwidth to compete with anyone. And those markets will be better served with the equipment that we're moving to those cities. So it's -- I think it was a perfect plan at the perfect moment.

Our next question is come from the line of Cristian Faria with Bradesco.

Actually, I have just one. I'd like to get a better view regarding the level of churn because the company just reported its lowest level since probably 3 or 4 years. And I would like to understand if this is a new normal level? Or if we should see this return to the historical average?

Sure, Cristian. Well, that's the new reality that we have. We expect to keep it. I don't know whether we will be able or not will depend on the market demand on the part surely. But in our opinion, this pandemic accelerate the need for higher bandwidth at home, accelerated the use of education and entertainment on that. So we all expect to grow the market. We've been much more efficient in terms of recovering the subscriber, going to revamp with the right factors. So we expect to have, in the future, a slight increase because of economic conditions. But hopefully, nothing like the level that we have in the past. This, for us, is the new reality. So we continue to be very careful to have the exact amount of gross adds that the market can absorb without sacrificing bad sales. We don't want to be too aggressive that we will go back to higher levels of churn. So we expect to keep it slightly above than what we have right now.

Our next questions come from the line of Alejandro Gallostra with BBVA.

I have 2 questions. First is regarding the fiber to the home deployment, you mentioned that you want to migrate 50% of your customers in the end of 2021. But I would like to know what would be the percentage cover in terms of home staff to the fiber to the home infrastructure? I would also like to know what is the next -- what is the next if you plan to stop at 50% coverage? Or if you plan to keep building the fiber to the home over the next few years, although at a slower pace? And the third, when should we start seeing the benefits of these 70 home deployment when it comes to higher ARPUs or higher subscribers? That's my first question.

Sure, Alejandro. In terms of GPON coverage, you can count that our network will have between 40% to 50% GPON coverage on that part. But also, every growth that we have in the future has been built over GPON mostly. I can tell you that it will be very strange to build over HFC on that area. So the growth that we have will be at least 80% GPON on that area. So GPON will continue to have a better presence, but we would like to send you the message, like Enrique said before, we have a good technology in DOCSIS. A company in the U.S. run on DOCSIS 2, DOCSIS 3.1 and the new generations, and they are very efficient. So what we're doing is getting the best use of both technologies. It's much more efficient to build in GPON and growth on that for the market that we have. But we are using a still very good technology, which is the HFC that we have so far to increase the bandwidth and the efficiency of the other networks. So even though you will have 40%, 50% of the GPON, the other 50% that we'll receive, the equipment and the network that we have in the GPON area will double the capacity of bandwidth in the next 12 months, so when we're reinforcing both systems, 100% of the systems that we have. When you will receive the benefits of the GPON? You will receive benefits of GPON in 2021 on that part. We're coming from increase of the XView platform that will be deployed in all of the systems, that will bring a stability of Video. Hopefully, more Video subscribers. Not hopefully, we will have more Video subscribers. And a better ARPU of those subscribers by absorbing these new package that we have coming from them. We cannot tell that this will be the only effect positive on the Video ARPU because we also have new subscribers to penetrate the market. The market increase with the pandemic. It did increase both in Video and Broadband, mostly in Broadband but also in Video. And those increase in market penetration for all the companies, not only for us, aiming the lower economic levels. So some of our new subscribers has a lower ARPU. What we are making and all the time we're trying to do is get a mix in between the existing subscribers with higher ARPU, bringing from the XView platform and operate to better value. Plus new subscribers coming from a lower ARPU to penetrate those services. So that's why you see that our individual ARPU decreased slightly on time. But the unique ARPU increases over time. So the benefit will be -- will continue to come in terms of that -- of the growth of Megacable of having a better, better and solid foundation of the network and the product that they are providing. All these systems, what we have HFC right now, we are migrating subscribers, not from the -- not only on the GPON areas. We're migrating subscribers on the HFC plan to an NGV plus platform, and NGV platform completely, some of them don't have it right now. They just have an HD platform with no access to nonlinear video. Now they will have access to the most -- a culmination technology of products all together across all the systems in Megacable by the 2021.

And my second question is regarding the percentage of client you have with bundles, either double or triple play versus subscribers who is only pay-TV. Could you give us an update on that, please?

The number of subscribers we have with one service or video service only?

Number of clients, of clients with bundles, the percentage of the...

Bundles with double play and triple?

Subscribers with double play and triple play versus...

We can tell you that less than 10% -- around 10% of our subscribers don't have a double or triple play package.

Yes. About 10% of them is a single -- is a single service subscriber. It is single. Most of them are in double or triple plays. And now there's a 4 play, with the mobile phone.

Mobile phone.

Do we have webcast questions?

Yes. The first question comes from GBM and is what percentage of your subscribers have already migrated to FTTH network? And do you see the company maintaining a 50% EBITDA margin level in the mid- to long term?

Yes. Subscribers already migrated.

Yes. Subscribers migrated to GPON. It's very small. It is small, but it's significant. We have around 150,000 subscribers over the GPON so far. So that proves you that we're moving. I mean even though it is small compared to what we have to migrate because we just started. But we already have 150,000 subscribers over the GPON platform, which is very good in my opinion. And the second one is whether it would be...

We could keep the margin much above 50%. Well, we will be surrounding 48%, 49%, 47% and reaching 50% at some point. But we will manage those ranges of margins as we have been very close in the past. We have another one from Maurice Alvarado from Citi Banamex, and it is, "Accounts receivable show a relevant increase as of September 20. Are you seeing deterioration in the portfolio? And if so, what actions are being taken to recover outstanding balances?" What percentage of the late portfolio over 90 days? That accounts receivable is including the down payments we did for the GPON project. So they will be, therefore, the life of the project will be reducing as we made some progress and recognize CapEx over time. So that's also including those down payment.

And you have to be very clear on this that they get because that's the main...

No, that's the main...

That's the point. It's not an increase in the account receivable because of operational...

The degeneration.

The degeneration of our portfolio. No. It is pretty much what Luis say, that's where we recognize the...

Down payment.

The down payment done to the GPON project.

Those are all the questions we have via webcast. So I'll turn it over to the operator.

There are no further questions on the phone. So I will hand it back to you for any closing remarks.

Okay. Thank you very much for your attention, for your attendance to this call. We will wait for any questions that you may have. And we expect to keep delivering great results to all our shareholders and great services to our customers and subscribers. Thank you very much for your attention, and have a great rest of the week.

Thank you all. We're very happy like Enrique said. All our results, all our strategy is proven too so far, translate into the great EBITDA growth, efficiency in cost themselves and increase in the unique ARPU that we have. And we look into the future to continue to deploy our main 2 prior GPON plus the NGV plus and the recovery -- continued recovery of the corporate segment that we expect. It looks pretty good. So thanks, everybody, for attending. We're very happy again.

Thank you. This does conclude today's call. You may disconnect your lines at this time. Thank you for your participation, and have a great day.