Cogeco releases Q2 numbers, plans to enter MVNO market

Cogeco Communications Inc. plans to aggressively enter the mobile virtual network operator (MVNO) sphere now that the situation in the marketplace has stabilized. Company CEO Philippe Jetté made the remarks in a conference call following the release of the corporation’s second quarter numbers. “For mobile, we are encouraged by the government’s indication that it is looking to support increased competition in the wireless space,” he told analysts. “We remain focused on meeting regulatory requirements which we expect shortly leading to the negotiation of wholesale rates with incumbents.” Cogeco is well-positioned to enter the MVNO sector since it already owns spectrum in 91 per cent of its footprint. The Quebec-based company is awaiting further directives from the Department of Innovation, Science and Economic Development (ISED) and the CRTC so it can begin those talks with the Big Three telecoms. Jetté was happy that the drawn-out battle over Rogers Communications Inc.’s takeover of Shaw Communications Inc. has finally been resolved. As part of the deal Shaw sold its Freedom Mobile division to Quebecor Inc.’s Videotron unit, with the aim of being a fourth national wireless player. “It certainly provides for predictability throughout the industry now that this transaction is over and we know what to expect of it,” the CEO stated. “The next steps will actually be better for everyone throughout the industry. The regulator has clearly supported more competition in wireless so I think we will see the next step unfolding with more predictability.” In Q2, revenues increased by 1.1 per cent to hit $736.6 million. Increases in Canadian operations were offset by decreases in American operations, mostly due to customer churn in Ohio. Net capital expenditures were $156.1 million, a jump of 9.8 per cent from a year earlier. This is attributable to accelerated network expansion in Canada. That acceleration is expected to continue, the firm stated. The company has been aggressive in its purchase of shares. “During the quarter we continued to be active in our share buy back program at a faster pace than in previous quarters based on the low stock price with the purchase of 825,000 shares for $64 million,” CFO Patrice Ouimet explained. Earlier in the week, the Globe and Mail published a story speculating that Rogers, which holds a major stake in Cogeco, would be seeking to redeem its shares. Jetté refused to comment on the article. Initial market reaction to the numbers was good. “Domestic subs came in meaningfully better than our expectations,” Aravinda Galappatthige of Canaccord Genuity wrote in a note. “Particularly internet net adds which, in our view, was quite encouraging, but the US continues to underperform.” The corporate executives and Galappatthige were bullish on Cogeco’s purchase of Oxio in a deal which closed last month. The new division operates in Quebec, Ontario and British Columbia and should add one per cent to revenues going forward, Ouimet predicted. Drew McReynolds of RBC Dominion Securities said the results are neutral for the shares. Canadian broadband financials were in line with better revenue generating unit net additions, while American numbers were below the RBC forecast. Ouimet told analysts he expects US losses to continue, although at a reduced rate. He said the January outlook released by the company will stand. Jetté was hopeful about future plans for his corporation. “While the industry continues to be impacted by increasing macroeconomic pressures, and a more competitive environment, we remain focused on balancing subscriber growth with financial performance while remaining disciplined with our cost structure,” he said. –Reporting by Paul Park at ppark@thewirereport.ca and editing by Jenna Cocullo at jcocullo@hotmail.com.

Cogeco releases Q2 numbers, plans to enter MVNO market

News | April 14, 2023

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Cogeco releases Q2 numbers, plans to enter MVNO market

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