Execs optimistic about future with Welo, wireless bundling, AI
By Ahmad Hathout
Cogeco executives said Thursday that the company’s U.S. business, Breezeline, is going through “significant turbulence” as it grapples with competition and inflation.
“The competitive environment has gotten further elevated versus the beginning of our fiscal year,” CEO Frederic Perron said on a third-quarter earnings conference call Thursday.
On top of that, he said Breezeline has had to grapple with inflation that’s over four per cent. “As customers see a higher cost of living on fuel, on groceries, on living in general, we see that they’re trying to optimize their wallets and therefore, we’ve seen harder negotiation behaviours from customers calling our retention line, which is also putting pressures on [average revenue per user],” Perron said.
“Of course, we’re implementing advanced analytics and AI to optimize our retention investments,” he added. “In some cases, though, there’s just so much you can do when the customer has a competitive offer in hand.”
Earlier this year, Cogeco introduced its digital internet brand Welo, the U.S. equivalent of its wholesale-based Oxio product, to gobble up more market share.
“I would say we’re more confident than ever that Welo has the right success conditions for us,” Perron said. “As I mentioned earlier, customer satisfaction’s very high, referral rates are very high, so it’s looking good for Welo, we just have to be a bit patient.”
Breezeline, which operates in 13 states, is still holding on to hope that this product, wireless bundling, and its AI transformation will address the pressures it’s feeling in the U.S.
“We’re really seeing that these things will pay off,” Perron added, noting last quarter that AI is being used to predict whether a customer is likely to churn. “It’s just that they’ll pay off over the course of several quarters, not months, so these are not overnight fixes.”
Consolidated revenue in the quarter that ended May 31 was $696.7 million, down 3.6 per cent in constant currency over the same period last year. The company took a one-time non-cash impairment on the U.S. side, mostly related to assets under construction write-offs, which translated into a net loss of US $1.6 million in the quarter. The company recorded a net loss of $1.7 million.
On the Canadian side, the company saw revenue decline half a per cent to $376.7 million, while the American side suffered a decline of 7.8 per cent in constant currency to $320 million.
On internet in Canada, Cogeco added 4,788 net new internet subscribers, down from the 9,429 it added in the equivalent period last year, for a base of 956,506.
On video, it lost 9,453 subscribers, more than the 4,200 it lost against the equivalent period, for a total base of 547,644.
On landline, it lost 6,559 subscriber, more than the 2,878 it lost last year, for a total base of 338,258.
South of the border, Breezeline lost 4,472 internet subscribers, less than the 10,425 it lost last year, for a total base of 605,279. It lost 1,523 video subscriber, less than the 5,413 it lost last year, for a total base of 220,354. And it lost 529 landline subscribers, less than the 3,616 it lost last year, for a total base of 108,421.
