By Ahmad Hathout
Cogeco CEO Frederic Perron said Thursday that subscriber demand for its upcoming Canadian wireless service has exceeded the company’s expectations.
“We’ve now opened pre-registrations for our existing Canadian wireline customers as part of our wireless pre-launch lead generation campaign and demand has exceeded our expectations so far,” Perron said during the company’s second-quarter earnings call, adding the wireless launch is “progressing well.”
Last quarter, Perron said the company was “on track to launch wireless in Canada over the coming quarters.” The comment followed agreements it made with Canadian network operators to ride on their wireless infrastructure as a mobile virtual network operator. The telecom said it has the “potential to double” its addressable market by adding wireless services “based on customer telecom spend.”
Cogeco already has wireless services in the United States under Breezeline Mobile, which launched last year.
On the wireline side in Canada, the company said its subsidized network expansion program in Ontario will run through its fiscal year 2026, whereas it largely completed the Quebec program in the previous reporting year. Perron said the company is very satisfied with customer penetration levels in both provinces as it increased homes passed with its network in Canada by nearly 145,000 since the beginning of fiscal 2022 – largely with fibre-to-the premises lines.
Perron said costs to deploy have come down, so it makes sense to do direct fibre in new areas.
That said, the company said it’s largely on DOCSIS 3.1 technology, which provides more than 1 Gbps speeds on its hybrid network. He said the adoption of DOCSIS 4.0 – with trials showing the new modem can hit theoretical download speeds of at least 8 Gbps – will come with time.
“We’re not planning to do a big blitz with this and do it when it makes sense,” Chief Financial Officer Patrice Ouimet said. “It’s not something that we have yet started to implement given that we didn’t have to do it from a demand standpoint. And also when you look at the equipment costs, usually those come down over time. So it makes sense to wait a bit.”
South of the border, Breezeline, which operates in 13 states, has seen some “subscriber tenure,” Perron said, with a “greater proportion” of the customers taking up faster internet speeds. He said this has offset the decline in entry level internet services due to competition.
Cogeco Communications is the umbrella corp for Cogeco Connexion in Canada and Breezeline in the U.S. Cogeco consolidated its Canadian and U.S. telecommunications operations, which began last year.
The company recorded total Canadians revenues of $370.2 million by the end of the quarter, February 28, down 0.9 per cent on a constant currency basis. That decline is attributed in part to lower revenue from a decline in video and landline subscribers and competition, but was offset by a higher internet service subscriber base.
Total revenues for the entire business – both Canadian and American – were $732.4 million by the end of the quarter, up slightly to the $730.5 million it had in the same period last year – but down 2.7 per cent on a constant currency basis. Profit for the period was down 17.5 per cent to $79.6 million, attributed in part to the appreciation of the U.S. dollar versus the Canadian dollar, and higher acquisition, integration, restructuring and other costs.
The Canadian segment had a net increase of 8,359 internet subscribers in the quarter, down from the nearly 9,000 it had last year, for a total base of 911,749. The segment had a net loss of 6,572 video subscribers, less than the loss of 8,188 in the same period last year, for a total base of 590,269. It also recorded a net loss of 4,799 landline subscribers in the quarter, compared to the loss of 3,428 over the year for a total base of 363,606.
As of the end of the quarter, the company had a total internet service base of 1.54 million across both Canada and the U.S. (632,836); a total video service base of 836,000 across both Canada and the U.S. (245,672); and total landlines of 482,233 in Canada and the U.S. (118,627). The company had net subscriber losses across all three segments under Breezeline in the quarter: a net loss of 5,037 in internet, 7,112 in video, and 3,206 in landlines.
Its total customer base for both sides of the border was roughly 2.86 million by quarter-end.
On media, the company said it is still encountering a difficult advertising market on radio, but that its listener base remains strong and that its digital ad solutions continue to be a revenue growth contributor.
