Telecom said it is starting to deploy AI for ‘ARPU management’
By Ahmad Hathout
Cogeco said Friday it launched Welo in the United States, a digital brand equivalent to its wholesale brand Oxio in Canada.
The telecom, which previously teased the brand in the last quarter, said it launched the brand at the end of February. Cogeco executives said they hope the “digital challenger” will be able to replicate the success of Oxio and grow the company’s market share south of the border.
“Our market share is lower than most of the larger U.S. cable players,” President and CEO Frederic Perron said on a fiscal second-quarter earnings conference call Friday. “With Welo on top, we have an opportunity to grow share over time.”
Perron said Cogeco’s U.S. brand Breezeline has about 20 per cent market share in about half of its footprint, “so there’s room to grow.”
Perron added he expects “small volumes” of uptake from subscribers to the new brand in the “next couple of quarters,” which would track with Oxio’s initial ramp-up period in Canada. Cogeco purchased Montreal-based Oxio’s internet business in 2023 as a digital-only second brand leveraging the wholesale internet access regime.
The news comes as Breezeline feels the heat from American competitors. Perron said aggressive promotions, such as a free fibre internet for six months and five-year price locks, “certainly don’t help.”
He noted, however, that the company has had to match “aggressive gift cards” and “months for free” to keep up, but said the company has been able to scale those back.
“So even though we are equipped to compete price-wise, the accumulation of all of those things doesn’t help,” Perron said. “Plus there’s always ongoing fiber upgrades from DSL to fiber for some of our competitors, and that’s a factor as well.”
But there may be a solution: Perron said the company is “starting to deploy” artificial intelligence for revenue management.
“There’s a real breakthrough right now in using AI to predict whether a customer is really likely to churn and optimize the allocation of our retention discounts based on that,” he said. “That’s just one example. So that’s certainly an increasing area of focus for us.”
Chief Financial Officer Patrice Ouimet said the company is starting to see the fruits of its AI tools, but the impact will be “bigger” next year, he noted.
Company-wide, Cogeco reported revenue of $693.5 million, down 3.6 per cent in constant currency. Profit, however, was up five per cent to $83.6 million in the three-month period that ended on February 28.
American telecommunications revenue decreased by 11.6 per cent, or 8.1 per cent in constant currency, to $320.1 million, as Breezeline battled a competitive environment with customers subscribing to internet-only services.
The company lost subscribers across all of its segments. The internet segment shed 5,173 customers, slightly higher than the 5,037 it lost in the same period last year; it lost 5,312 video subscribers, which was lower than the 7,112 it lost last year; and lost 1,026 landline customers, also lower than the 3,206 it lost against the comparable period.
The total Breezeline subscriber base for each segment by quarter-end was 609,751 for internet, 221,877 for video, and 108,950 for landline.
Those losses were offset by growth in Canadian telecommunications revenue, which was up 0.9 per cent – in both actual and constant currency – to $373.5 million, mainly from internet adds. That was offset by a decline in video and landline service subscribers.
The company lost 10,844 Canadian video subscribers, more than the 6,572 it lost in the same period last year. The total base sat at 557,097 by the end of the quarter.
Landline losses were 6,162, up from the 4,799 it lost over the same period. The total base by the end of the quarter was 344,817.
It added 4,639 net new internet subscribers, down from the 8,359 it added last year. The total base by the end of February was 951,718.
