5G wireless substitution ‘not in the cards,’ says Cogeco’s Audet

Cogeco Inc. CEO Louis Audet said Friday that he’s not concerned about customers substituting wireline Internet service with wireless with the advent of 5G, and that the company has no significant plans to integrate 5G into its services. It’s a technology that will be “extremely expensive to deploy,” he said in a conference call with analysts discussing the company’s second-quarter results. “We have no plans to use it widely in our cable systems because there is no need to do that. However, we will use it occasionally where it makes economic sense to serve certain pockets of our network.” Cogeco is the only publicly traded telecom in Canada not to offer wireless service. In response to a question from Barclays Capital analyst Phillip Huang about whether competitors launching 5G service could lead to wireless substitution from fixed broadband and eat into Cogeco’s market share, Audet said “it’s a question of economics.” He said: “You’re talking about 5G, a very potent tool, a very expensive tool, and not conducive to winning market share when cable has such an inherent economic advantage, both from a capital standpoint and operating standpoint. So that’s just not in the cards.” Cogeco is currently able to offer gigabit service through DOCSIS 3.0 technology and once it fully deploys DOCSIS 3.1, it will be able to offer 10 gigabits-per-second symmetrical speeds “essentially with the same plant” he said. Audet declined to offer details about that deployment. “We do not really discuss what we’re going to do and how we’re going to do it, but what you should know is that most of the preparatory work is done, and it’s now a matter of selecting the geographies where we think it makes sense to do it,” he said. Quebecor Inc.’s Videotron said late last year it had begun implementing the technology. Cogeco expects those investments to be part of its regular capital expenditures, given that “these improvements can be done for between $60 and $70 per home pass. So this is extremely economical as compared to what our competitors have to do,” he said in reference to the high cost of deploying fibre-to-the-home (FTTH). 5G technology is expected to hit the market as soon as late next year, AT&T Inc. said recently, and is gaining momentum among other Canadian telecoms, though how much such services will cost is still unclear. In its quarterly results, Cogeco saw revenue increases of 1.4 per cent in the three-month period ending Feb. 28, to $586.4 million from $578.45 million a year ago. It said in a press release that was “driven by growth in the Communications segment, partly offset by lower revenue in the media activities attributable” to the sale of its out-of-home advertising division, Métromédia, to BCE Inc. Profit was also up 3.4 per cent to $78.2 million from $75.7 million, which Cogeco said was “mainly due to a decrease in depreciation and amortization combined with the improvement of adjusted , partly offset by last year's gain on disposal of Métromédia and an increase in income taxes.” In the company’s telecom segment, revenue was $560.9 million, an increase of $9.4 million or 1.7 per cent, which it said was “driven by growths of 3.1% in the Canadian broadband services operations and 0.7% in the American broadband services operations, partly offset by a decrease of 1.8% in the Business ICT services operations,” which includes its data centre business. Factors contributing to that growth included rate increases for broadband in both Canada and the U.S., growth in Internet service customers, and customers moving to more expensive packages. Cogeco’s total Canadian subscribers stood at 1.9 million, with 737,975 TV subscribers — down from 740,855 last quarter — and 759,152 Internet subscribers, up from 749,275 in Q1.The company said its total TV losses in both Canada and the U.S. for the quarter stood at 4,685, down from 7,761 last year, which it attributed to “the customers' interest in the video product offering, including TiVo's digital advanced video services both in Canada and in the United States, as well as bundles with fast Internet offerings, partly offset by competitive offers in the industry, service category maturity in Canada and the changing video consumption environment.” The company, which partnered with TiVo Inc. after abandoning its IPTV project in 2014, said the TiVo service also played a role in the growth in new Internet subscribers, stating the net additions in both countries, which stood at 15,909 compared to 14,022 last year, “stemmed from the customers' ongoing interest in high speed offerings and in TiVo's services which requires an Internet subscription, the growth in the business sector and the positive impact of the bundle offers.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

5G wireless substitution ‘not in the cards,’ says Cogeco’s Audet

Broadcast | April 7, 2017

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5G wireless substitution ‘not in the cards,’ says Cogeco’s Audet

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