Cogeco Communications has taken a discreet first step into mobile telephony in Sept-Îles to meet the conditions of the Canadian Radio-television and Telecommunications Commission (CRTC), but management is sparing of details on its strategy until it has not entered into an agreement with a major telecom company to access its network.
“We have a mobile network in Sept-Îles that offers services to consumers, confirms the president and chief executive officer, Philippe Jetté, during a conference call to discuss his quarterly results. This is why we started to negotiate, because we respect the criteria (of the CRTC). »
Cogeco had to offer mobile service to take advantage of the new CRTC regulatory framework that requires large telecommunications companies to lease access to their network from other providers.
The service has been offered “recently” through the Internexe brand, resulting from an acquisition made in 2020, said the company’s head of public affairs, Marie-Hélène Labrie. “This service represents our first steps in terms of mobile services which will be gradually developed. »
The negotiation between Cogeco and the major telecom networks remains a key step in the success of an eventual larger breakthrough in wireless, according to Mr. Jetté. Asked by analysts, the manager did not want to give more details on the strategy until an agreement is reached. In January, the CEO mentioned a launch by the end of the year.
Until then, Cogeco is keeping its cards in its game. “More information to come in the next quarter,” says Mr. Jetté.
Cogeco has been considering for nearly five years the possibility of entering the mobile telephony market, but management has always maintained that its decision would depend on the regulatory framework allowing it to lease access to the network of the major Canadian telecommunications companies, namely Bell, Telus and Rogers.
Regardless of what it would do in wireless, the company believes cable still has growth potential. “Cable can still continue to grow independently,” says Jetté.
The company also invested nearly $60 million to acquire spectrum in Quebec during the third quarter, which ended May 31. “We’ve gone from 91% to 95% wireless coverage on our [cable] network,” says Jetté.
Cogeco released financial results that beat analysts’ expectations the day before after markets closed, but the company’s U.S. business continues to face headwinds.
In the third quarter ended May 31, the company lost 6,734 subscribers in the United States, including 4,053 in Ohio. Difficulties in Ohio, where the company is integrating its WideOpen West acquisition, were expected, but Scotiabank analyst Maher Yaghi is disappointed to see the number negative in other U.S. regions as well, “because management was letting expect a positive number when the previous results are released”.
Chief Financial Officer Patrice Ouimet said the numbers are volatile from quarter to quarter for subscribers outside of Ohio, suggesting not to place too much emphasis on a single quarter.
Competition is vigorous south of the border, notes the analyst.
For all of its activities, the company recorded a net profit down 3.7% to 101.5 million. Adjusted diluted earnings per share is $2.34. Revenues, for their part, rose 1.9% to 742 million.
Prior to the earnings release, analysts had expected earnings per share of $1.99 and revenue of $741 million, according to financial data firm Refinitiv.
The stock fell 78 cents, or 1.13%, to $68.43 at the close of trading on the Toronto Stock Exchange.
