By Ken Kelley
Cogeco president and CEO Philippe Jetté insists his company will not be restrained by borders.
While the company boasts significant business operations south of the border via Atlantic Broadband, the U.S.-based Cogeco subsidiary scored a blockbuster deal this past June when it acquired WideOpenWest’s broadband systems in Ohio for $1 billion. Passing approximately 688,000 homes and businesses in the Cleveland and Columbus areas, WOW Ohio serves approximately 196,000 Internet, 61,000 video and 35,000 telephony customers.
“We’re very excited about this acquisition,” Jetté told BMO’s Tim Casey, who served as the moderator for the bank’s 22nd annual Media and Telecom conference, held virtually on Tuesday.
“It’s really a continuation of our strategy to expand in what we consider to be an attractive U.S. broadband market. The transaction is adding 38% to our customer base at Atlantic Broadband, and we believe we can bring operational expertise to the asset. We are looking at the purchase from the point of view of growing ARPU as well as increasing market penetration.”
With an approximate 29% market share in Ohio, Jetté said that over the next 12 to 18 months, Atlantic Broadband plans to increase capacity on the network to help support future expansions.
“In addition to appealing to customers with a faster product, we need additional capacity to introduce an IPTV platform. Admittedly, it’s a declining demand over time but it’s still significant enough that customers are looking for all-IP platforms to integrate OTT entertainment as well as video conferencing, along with other features.”
Asked how the company is fending off competitors such as Charter Communications and AT&T in the markets where it competes, the CEO admits it can be tough going up against the legacy providers but that the company has never been one to back down from a challenge.
“It’s a more competitive market, but we’ve never been afraid of competition,” he said.
“We’ve been successful in the Florida market, and have grown and found success in Connecticut with the Thames Valley acquisition. I am not overly concerned with competition from Charter or AT&T. Demographics are also important; we are looking at higher medium income than the other Atlantic broadband territories. [Ohio] is younger and population density is good as well, which makes operating in the territory a bit easier.”
Despite a lower number of competitors here in Canada, Jetté acknowledges the landscape is as competitive as ever. He said the company has found the recipe to be successful to date has been consistently going beyond product-only to grow its market penetration.
“It’s not just about product; it needs to start with great network coverage, a great product, and the features that are needed. But after that, it’s all about operational excellence in the support of customer care, as well as proper network support by minimizing outages, and making sure that we’re there for the customer, where and when they need us. That’s what we have, and that’s what we will grow with.”
Over the past few years, Cogeco has made no bones about wanting to expand into wireless services in Canada. And while this very much remains a priority, the CEO said the company is taking a deliberate and disciplined approach.
“This isn’t a sprint; it’s a long-term investment that we’re building step by step. We’ve accumulated spectrum, both before the most recent auction and at the most recent auction but we’re currently at the step where the CRTC’s MVNO framework is being defined and will [hopefully] be conducive to introduce competition in Canada in the near future,” Jetté said.
“But even after that, we still need to sit down and negotiate commercial rates with one or more MNOs. But we’ve always been interested in adding mobile to our portfolio and that’s what we’ve been working on. We’ve always said that we want to operate mobile service over our current operations to benefit from the fiber optic networks that we’ve built,” he said.
“Mobile alone is very difficult to operate, especially on a smaller scale. So we want to overlay mobile on top of our existing operation footprint to give us a chance to win customers and to grow the business.”
For more from this year’s BMO Media & Telecom Conference, click here for an article on Bell and Rogers and here for one on Corus.
