Cogeco expects to enter mobile rate negotiations by spring, summer 2022 earliest

Cogeco Inc.’s CEO said it is a multi-step process it has to follow before it can enter the mobile market -- with its 38 new spectrum licences, purchased for $295 million, from the 3500 MHz spectrum auction -- and expects to enter into negotiations over wireless rates with incumbents by spring/summer 2022 at the earliest, once the CRTC finalizes the framework. Cogeco CEO Philippe Jetté made the comments in a Friday morning fourth quarter call with analysts. “We're not expecting this CRTC process to be finished before this winter and it might be prolonged if the CRTC needs even more information from current players. Once we have a framework… we will enter a commercial rates negotiation period... this will take time,” Jetté told analysts. The CEO said that if Cogeco gets a framework that supports a good business case, then it will be set to enter rate negotiations by spring or summer 2022 at the earliest. However, if it continues to see pushback from the incumbents, there is a backstop arbitration process with the CRTC which will add even more time. The mobile virtual network operator (MVNO) arrangements will last for seven years, as per the CRTC's April decision. Jetté told analysts that during that time, as its market penetration rises, the company will deploy capital for network equipment based on its success. “We are not going to aggressively build a network to start before we find success… We would build gradually, as we find success during the seven years. We have to demonstrate to the CRTC that we are investing and that we're not just leasing capacity as in the wireline network,” he said. “And at the end of the seven years, there will be a public process with the CRTC monitoring those investments and making sure that commitments that were made by players are in line. MVNOs have taken more than 30 years to build what they have today. So no one would expect new players to build networks in less than seven years.” Cogeco is one of the companies that could stand to benefit from the CRTC’s new mobile virtual network operator policy -- which mandates that regional carriers with some level of spectrum be allowed to buy access on incumbent wireless networks. “All this framework is supposed to encourage competition and create a framework that is fair and reasonable to bring more choice to the marketplace. So we are still in this process,” Jetté said. Cogeco boosted its profits this quarter by 7.5 per cent -- posting $103.4 million compared to $96.1 million this time last year. It’s total revenue increased by 4.5 per cent from its last fourth quarter, bringing in $632.7 million compared to $605.2 million. It’s total revenue for the entire 2021 fiscal year increased by 8.1 per cent, its report noted, for a total of $2.6 billion. Cogeco noted that cable subsidiary Cogeco Connexion’s acquisition of Quebec-based DERYtelecom, completed in Dec. 2020, added approximately 108,000 customers to its base and generates approximately $105 million in revenue -- a large reason for its fourth quarter revenue increase. Cogeco Connexion serves 916,000 internet service customers, 677,000 video service and 409,000 telephony service customers. The company ended last year's fourth quarter with 619,249 Canadian TV subscribers and with 812,016 Canadian internet subscribers. Moving forward, the company said Cogeco Connexion is connecting 75,000 rural and underserved homes in Quebec and Ontario to high-speed internet through government subsidy programs over the next three years. Finally, it successfully launched EPICO IPTV platform in both provinces. For its subsidiary Atlantic Broadband, Cogeco expects to increase its American revenue base by 27 per cent after its acquisition of Ohio-based WideOpenWest Inc.’s (WOW) broadband systems closed on Sept. 1. With the acquisition, Atlantic Broadband serves 717,000 internet service customers, 360,000 video service and 177,000 telephony service customers. The company expects to launch IPTV by the end of the year with “progressive roll-out” in 2022. Both of Cogeco’s subsidiaries combined, without the WOW acquisition projection taken into account, serve 1,436,201 internet subscribers, 982,708 video and 553,164 telephony customers. According to the company, internet service users in Canada and its growing U.S. customer base offset a decline in its video and telephone subscribers which is attributed to a shift online. “The broadband customer additions in the fourth quarter were lower compared to last year, which benefited from the positive impact of the pandemic but we're strong from a historic perspective. The video product losses were lower than last year mainly resulting from the IPTV introduction and from a more targeted sales and marketing approach by region and by market. The phone losses were in line with historical trends,” Cogeco senior vice-president and CFO Patrice Ouimet said. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca. CORRECTION: An earlier version of this story incorrectly reported that Cogeco hoped to enter the wireless market by spring/summer 2022. Rather, the company hopes to enter a rate negotiation by that time.

Cogeco expects to enter mobile rate negotiations by spring, summer 2022 earliest

News | November 12, 2021

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Cogeco expects to enter mobile rate negotiations by spring, summer 2022 earliest

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