Telecom has been teasing launch for months
By Ahmad Hathout
Cogeco executives said Wednesday the telecom will fully launch its much-anticipated wireless services as a mobile virtual network operator (MVNO) this fall.
The declaration comes after years of inquiries and after it opened pre-registrations earlier this year for its existing internet customers that executives said yielded demand that exceeded their expectations.
“We already have an initial cohort of users on the service and will broaden sales in 12 markets over the coming weeks, ahead of a full commercial launch later this fall,” Cogeco CEO Frederic Perron said during a third-quarter earnings conference call Wednesday.
Those 12 markets are: Alma, Magog, Rimouski, Saint-Georges, Saint-Hyacinthe, Saint-Sauveur and Trois-Rivières in Québec, and Brockville, Chatham, Cobourg, Cornwall and Welland in Ontario.
Perron only said that the product will be exclusive to its internet customers, will target low-to-mid data users, and will provide a time-limited launch bonus for the first wave of customers, but didn’t elaborate. The company intends to share more details with its customers first.
“We’re a rational player,” Perron said about the limited focus of the rollout, as opposed to going national.
Cogeco, which filed for the trademarks to the new business late last year, has long maintained that any mobile wireless service it launches must make be financially reasonable, hence the MVNO entry. The CRTC mandated access by MVNOs to the wireless networks of the three largest carriers and SaskTel, with the expectation that riders generate enough revenue to build their own networks during the life of the seven-year regime.
Last summer, Cogeco announced strategic partnerships with a national and a regional wireless operator that all but guaranteed it was going to enter the market. In the spring before that announcement, Cogeco’s chief financial officer Patrice Ouimet said the telecom wasn’t far along in MVNO negotiations, which is the only way to get a deal short of final offer arbitration at the CRTC.
By then, the telecom had already launched mobile services under its Breezeline brand in the United States.
The strategy to maintain mobile wireless as a bundled product works so long as Cogeco can keep those internet customers, which it conveyed it is concerned about.
That’s because the CRTC last month ruled for a second time that the three largest telecoms will be able to use the wholesale internet framework, which includes Cogeco’s networks.
“The CRTC is stubbornly maintaining a broken TPIA or resale regime that has completely failed to meet its original objective to help new entrants get into the market,” Perron said Wednesday. “Today, the regime is mainly used by the big three Canadian telecom companies to get even bigger.
“It just doesn’t make any sense,” he added, asking the federal cabinet to step in and overturn the decision. “As you can see from the announcements that we’re making today, including the launch of a completely new wireless service for Canadians, the first major wireless launch in this country in over 10 years, Cogeco intends to remain a growing competitive force in this country. We won’t let the CRTC stop us from providing more choice to Canadians and are prepared to fight for the competition and investments that Canada needs.”
Overall revenue in constant currency was down nearly four per cent to $758.5 million in the quarter that ended May 31, attributed to decreased revenue in its American telecom business from entry-level service purchases and subscribers going internet-only. American telecom revenue was down 6.6 per cent in the quarter to $355.8 million in constant currency.
Canadian telecom revenue declined 1.8 per cent to roughly $375 million from lower video and landline service subscribers and more customers going internet-only.
Total profit across the board was down to $74 million in the quarter due to factors including higher depreciation and amortization and tax-related expenses.
On the Canadian side, the telecom added 9,429 net new internet subscribers, more than the 5,879 it added in the same quarter last year, for a total base of 921,178 at quarter-end. The company lost fewer video subscribers, at 4,200, compared to the 6,006 it lost in the comparable period for a base of 586,069. It also lost viewer landline subscribers, at 2,878, compared to the equivalent period last year (2,971) for a total base of 360,728.
On the American side, it was losses across the board. Breezeline lost 10,425 subscrdibers, more than the 7,897 it lost in the same period last year, for a total base of 622,411. It lost 5,413 video subscribers, fewer than the 6,192 it lost last year, for a base of 240,259. And it lost 3,616 landline subscribers, less than the 3,645 it lost in the same period last year.
Cogeco Media saw revenues increase 4.4 per cent thanks to growth in digital advertising solutions and strong listener engagement.
Photo of Cogeco CEO Frederic Perron, via Cogeco
