Cogeco reports rise in Q3 revenue as it eyes a ‘landmark year’ in 2022

Cogeco Inc. saw a rise in revenue and profit this spring and though CEO Philippe Jetté did not discuss the company’s potential wireless plans with analysts during a call Thursday morning, he did set the stage for the upcoming year. The Montreal-based company said in its report for the third quarter of the year, ended May 31, 2021, that total revenue rose by 3.7 per cent to almost $649.3 million, up from $626 million in the same period last year, while profit for the period came to nearly $105 million, up 7.7 per cent from the third quarter of 2020 when it earned almost over $97 million. Of that $649.3 million in overall revenue, over $353 million is attributed to Cogeco’s Canadian broadband services -- up 10.2 per cent from last year -- while almost $271 million is credited to its American operations, totalling $624 million of Cogeco Inc.’s revenue. Jetté said during the call with analysts he is satisfied with Cogeco Communications’ performance during the quarter and spoke to fluctuations in customer numbers. “There was a period of time in the early part of the pandemic where our additions to subscribers was higher than usual… We’ve been in this for a while now. I would say we’re more back to normal at this point, but the business is doing well,” he said. In Canada, Cogeco lost customers of its video and telephony service, but saw a net gain of 4,580 internet customers for a total of 909,901 internet clients during the third quarter -- fewer gains than the 5,252 subscribers it picked up during the third quarter of 2020 when more people may have been signing up for home internet as the pandemic initially drove them to work from home. The company credited the internet number to the ongoing interest in high-speed offerings, partly offset by competitive offers in the industry. Otherwise, Cogeco saw a net loss of 7,030 Canadian video customers, leaving it with a total of 680,456 by the end of the quarter, and a loss of 4,863 telephony customers, bringing it down to 412,379 customers of that service. In all, it had just over two million Canadian customers by the end of the quarter. Cogeco saw similar gains and losses in the United States, where it continues to expand with the acquisition of WideOpenWest, Inc. for US$1.125 billion by its subsidiary Atlantic Broadband. It added 6,847 American internet customers during the quarter contributing to a total of 517,851, which it similarly credited to increased demand for high speed home internet offerings due to the pandemic, along with certain sales activities getting on the go again. Meanwhile, the company lost 4,349 American video customers for a total of 309,242, and 1,196 telephony customers for a total of 146,562, respectively. Jetté also had praise for the CRTC’s decisions to revert rates for wholesale-based internet service providers to interim levels from 2016 and to grant a limited number of facilities-based regional mobile virtual network operators mandated access to incumbents’ mobile networks during the call with analysts. “These decisions were balanced, demonstrating a regulatory approach that takes into account the importance of investment to the expansion of communications services and competition,” Jetté said. “They provide more certainty for both our wireline broadband network expansion investments and our plan to enter the wireless market in Canada under the right conditions.” The company said in its report it saw a reduction in revenue of $4.6 million this quarter due to the rates decision as it has to make retroactive payments to wholesale internet access customers for March to October 2016. Looking to 2022, Jetté said it should be a “landmark year” as Cogeco continues to expand its network in Canada and the United States while it eyes a possible entry into the wireless business. Patrice Ouimet, Cogeco Communications’ CFO, said during the call that wireless is one of Cogeco’s capital allocation priorities if they get into it, though he nor Jetté would not comment in detail due to the rules of the CRTC’s ongoing 3,500 MHz spectrum auction. In a note on the results Thursday, Canaccord Genuity analyst Aravinda Galappatthige said though management veered away from addressing wireless prospects, “we see an increasing probability of Cogeco stepping into this arena.” “Much depends on the level of success at the 3500MHz auction; in fact, this could give us a clue as to whether the company intends to stick to its wireline footprint or be more expansive in its wireless aspirations. Either way we think that the new MVNO regime has set the stage,” the note stated. Ouimet said Cogeco would like to invest as it grows if it were to get into wireless and benefit initially from the CRTC’s chosen MVNO regime, perhaps investing in networks later on. - Reporting by Hannah Daley at hdaley@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Cogeco reports rise in Q3 revenue as it eyes a ‘landmark year’ in 2022

News | July 15, 2021

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Cogeco reports rise in Q3 revenue as it eyes a ‘landmark year’ in 2022

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