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 President and CEO Philippe Jetté during a conference call to discuss its quarterly results. That’s why we started to negotiate, because we respect the criteria (of the CRTC). »
Cogeco needed 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, specifies the head of public affairs for the company, Marie-Hélène Labrie. “This service represents our first steps in terms of mobile services which will be gradually developed. »
Negotiations between Cogeco and the major telecom networks remain a key step in the success of an eventual larger breakthrough in wireless, according to Mr. Jetté. Questioned by analysts, the leader 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.
The CRTC has given the parties until August 7 to reach an agreement, otherwise the tribunal “will consider using all the tools at its disposal to ensure compliance with its framework”, according to the order published in May.
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.
Whatever it does 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 went from 91% to 95% wireless coverage on our network [de câblodistribution] “, underlines Mr. Jetté.
Difficulties in the United States
Cogeco announced financial results that beat analysts’ expectations the day before after the markets closed, but the company’s activities in the United States continue 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 foresee a positive figure when the previous results are announced”.
Chief Financial Officer Patrice Ouimet said the numbers are volatile from quarter to quarter for subscribers outside of Ohio, suggesting that too much emphasis should not be placed on a single quarter.
Competition is vigorous south of the border, notes the analyst.
Cable companies like Comcast continue to compete vigorously with smaller providers to compensate for a weaker market and a more intense competitive environment.
Maher Yaghi, Scotiabank analyst
For all of its activities, the company recorded a net profit down 3.7% to 101.5 million. Diluted adjusted earnings per share is $2.34. Revenues, for their part, increased by 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.