By Ahmad Hathout
Cogeco CEO Philippe Jette said Thursday that the company is still in commercial negotiations to access the national wireless networks to launch its first wireless business, adding it is preparing to enter that business in the United States.
The Montreal-based telecom has been trying to negotiate access for months to launch its mobile virtual network operator business. The CRTC said it expected national and regional carriers to negotiate access by August 7 or else propose arbitration at the commission.
But Jette said during the company’s fiscal fourth quarter earnings call Thursday that even if the company locks in a rate for that access, it won’t be a short-term launch for the mobile service.
“If we are successful in MVNO negotiations, we don’t anticipate a material rollout of our Canadian MVNO operations in the short term, as we have some preparation work remaining to complete,” he said.
South of the border, where Cogeco has assets under the Breezeline brand, the company is similarly preparing to enter the mobile wireless business – with some deviations from the Canadian model.
For the U.S. mobile wireless business, Cogeco is focused on running it as an MVNO all the way through, meaning the company won’t be building its own networks from revenues as is required under the seven-year Canadian framework. Basically, Cogeco is expected the “capital light” approach to involve paying a sum and getting most of the services its customers need.
Jette said Cogeco is focused on where it has wireline services to it can maximize market share on bundling. (95 per cent of the company’s broadband footprint in Canada is covered by wireless spectrum it owns.)
He noted that the barrier to entry for MVNOs in the U.S. has been reduced more recently because the national carriers want to enter into negotiations with smaller providers on access.
“It’s much easier than it was a number of years before to strike a good deal, although it’s a very light MVNO, meaning you only need some IT equipment and sales and marketing to jump in to the market,” Jette said.
Jette, who said the company has put more time, effort and dollars into the U.S. negotiations, added the company expects concrete answers to these MVNO questions and dynamics in fiscal 2025.
In the three months that ended August 31, Cogeco saw revenues increase 1 per cent in constant currency to $766.6 million, which was driven by a 4.1 per cent increase in Canadian telecom revenues and offset by the American counterpart’s revenue decline of 2.5 per cent as a result of fewer subscribers.
Profit was down 18.7 per cent to $90.5 million due to higher financial, depreciation, amortization and acquisition and integration costs (Cogeco purchased oxio’s internet business).
Cogeco reported 854,703 internet customers in Canada and 671,762 on the Breezline side, 634,736 video customers in Canada and 288,881 on the U.S. side, and 385,357 phone customers in Canada and 138,088 on American turf.
Despite a tough media climate, Cogeco’s radio activities lifted revenues in that segment by 8.3 per cent to $97 million.
Photo of Cogeco CEO Philippe Jette, by Steve Faguy.
