UPDATE 1-Mexico's Megacable posts 15 pct dip in net

* Revenues up over same quarter last year

* Net profit falls 15 percent

* Shares end down 2 pct (Adds analyst's quote, background)

MEXICO CITY, Oct 26 (Reuters) - Megacable, Mexico's largest cable television operator, posted a 15 percent dip in third-quarter net profit on Monday, hurt by higher operating costs and more tax provisions.

Revenues from services were 1.708 billion pesos ($126 million), up 16 percent over the same quarter last year, the company said in a statement.

Megacable's (MEGACPO.MX) net profit for the quarter was 442 million pesos.

Megacable and other Mexican cable companies are rushing to stake out territory in telephone and Internet services that are sold as packages with their traditional video businesses.

Guadalajara-based Megacable said it grew its revenue generating units by 17 percent in the quarter, reaching a total of more than 1.5 million video clients, nearly half a million Internet customers and almost 393,000 telephone clients.

Megacable may become an acquisition target as telecommunications and cable companies make further moves into each others' traditional markets, analysts say.

Mexican lawmakers are expected this year to debate changing rules to allow foreign investors to take controlling positions in the country's fixed-line telecommunications companies.

"While strong operating numbers should support the stock, our thesis on Mega remains hinged more on our expectation that Mega stock should benefit from Mexican Pay-TV consolidation," JP Morgan analyst Rajneesh Jhawar said in a note to clients.

This year, Megacable teamed up with cable operators owned by media giant Televisa (TLVACPO.MX) to offer TV, Internet and phone service bundled together and aimed at low-income earners.

Shares of Megacable ended down 1.99 percent on Monday at 30.97 pesos. ($1=13.5035 pesos at end-Sept) (Reporting by Noel Randewich; Editing by Lincoln Feast)