(Montreal) If Cogeco Communications decides to jump into the wireless telephony market in Canada, it will do so only where it is already present, namely in Quebec and Ontario.
Posted yesterday at 3:21 p.m.
The cable operator is awaiting regulatory clarification from the Canadian Radio-television and Telecommunications Commission (CRTC) before making its decision.
One thing is certain, the Montreal company does not want to expand into Western Canada as Quebecor envisages. “We focus on the territories where we operate [Québec et Ontario]. So, if that materializes, it will be in the places where we already have activities,” indicated its president and chief executive officer, Philippe Jetté, during a conference call aimed at discussing the most recent quarterly results.
Before revealing its game to investors, Cogeco wants to know the regulatory conditions that would allow it to lease access to the networks of major Canadian telecommunications companies. Last year, the CRTC had already ruled that regional operators could access the networks of large telecoms on condition that they themselves have a local frequency spectrum.
“Obtaining a satisfactory wholesale rate to access the network is an important condition for moving forward,” insists Mr. Jetté. The proof that this country believes in competition will depend on the decision of the CRTC. »
Competition in the United States
The leader made the comments on Thursday, the day after the unveiling of the results for the third quarter ended May 31. Analysts’ attention has focused primarily on the company’s forecasts and the outlook for the United States.
While results for the US Breezeline division continue to grow, the company said difficult economic conditions made it difficult to acquire new customers.
Mr. Jetté clarified that the market is “much calmer” after the pandemic momentum which had forced many workers to work from home. “This quieter environment leads to more competition,” he says.
The rise in inflation also leads some customers to reconsider their package of telecommunications services. “Inflation is also putting pressure on our revenues as some customers optimize their plans and there are churns. Some people no longer need the connection they used for work or study. That being said, it’s not a major trend. »
Excluding recent acquisitions, U.S. operations posted revenue growth of 5.6% and earnings before interest, taxes, depreciation and amortization (EBITDA) up 8.9%, notes analyst Tim James of Securities TD.
“Despite the loss of subscribers, the mix of products sold is improving as a greater proposition of new customers choose high-speed internet, resulting in higher average revenue per subscriber,” says James. .
Cogeco Communications also released its financial guidance for fiscal year 2023 along with its third quarter 2022 results. It expects revenue growth of between 2% and 4% and an increase in earnings before interest, taxes, depreciation and amortization. (EBITDA) of between 1.5% and 3.5%.
Management also expects to make capital expenditures of between 750 and 800 million. These investments would reduce cash flow by between 2% and 12% over the next fiscal year.
The investments that Cogeco plans to make to expand its network are a good strategy, believes analyst Maher Yaghi of Scotiabank. “On the other hand, it delays debt reduction, which is an essential step before making an acquisition in the United States. »
Cogeco’s profit reached 105.4 million, compared to 102.8 million for the same period last year. Adjusted diluted earnings per share were $2.16, compared to $2.01.
Revenues, for their part, rose by 16.6% to 728.1 million. In constant dollars, revenues would have increased by 15.2%.
Prior to the earnings release, analysts polled were expecting adjusted earnings per share of $2.28 and revenue of $722 million.
In the afternoon, the action gained 47 cents, or 0.54%, to $87.09 on the Toronto Stock Exchange.