Revenue and profit down for Cogeco Q1 as guidance continues

Revenue and profits declined at Cogeco Inc. as the Quebec firm released its first quarter results on Thursday. The company said its guidance issued last November would remain in place. Revenue dropped by 1.9 per cent to $747 million. While Canadian operations were strong, American division Breezeline saw a precipitous decline that led to the overall decrease. Profit fell by 20.5 per cent to $95.8 million, due to increased financial expenses including a pre-tax $16.9 million non-cash loss on debt extinguishment after a US$1.6 billion refinancing. “Since we met last January, we have demonstrated our ability to make progress on our long-term strategic objectives, to meet the growing needs of our customers, and face increased competition and economic uncertainty at the same time,” president and CEO Philippe Jetté told a conference call in French. “We have made significant progress, and the last few months have been marked by major developments that position us well for the future.” Cogeco repurchased $116.5 million worth of shares following the purchase of all of the stock held by Rogers Communications Inc. The shares were bought by the Caisse de dépôt et placement du Québec (CDPQ). CDPQ is now considered an anchor investor in Cogeco. “This unique opportunity to repurchase our shares at an attractive price enables us to build shareholder value while ensuring that we maintain our ability to deliver on our strategic growth plan,” the CEO noted. Jetté is pleased with the results from the purchase of Oxio, an independent ISP. This expanded the company’s footprint beyond Ontario and Quebec and garnered a younger generation of clientele. Cogeco is planning to fast-track the division’s growth for an audience seeking a digital-only service. The telecom executive also stated the firm is ready to enter the mobile virtual network operator (MVNO) market in North America. Cogeco has bought spectrum and its licences now cover all of its Canadian broadband area. It is negotiating with national operators to lease access to their networks. In the United States, the company is going to enter the wireless marketplace as an MVNO. Spectrum purchases are not required south of the border. Jetté cautioned the MVNO service will not be deployed in the short term in Canada, as there is much prep work to be done. No major acquisitions are expected in the near future, he added. The president and CEO concluded his opening remarks by commenting on the CRTC’s upcoming hearing on the regulatory framework for the wholesale internet market. The Big Three telecom providers–BCE Inc., Rogers, and Telus Corp.--are now among the largest users of Cogeco’s grid. “We have seen many internet resellers acquired by these large companies,” he said in French. “This situation is unacceptable, and we will be asking the CRTC to deny the three largest Canadian operators access to the resale regime, which was never designed for them in the first place.” In a note issued following the release of the Q1 results, Canaccord Genuity analyst Aravinda Galappatthige rated Cogeco stock as a hold. –Reporting by Paul Park at ppark@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

Revenue and profit down for Cogeco Q1 as guidance continues

News | January 11, 2024

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Revenue and profit down for Cogeco Q1 as guidance continues

News | January 11, 2024

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