The boss of Cogeco believes that the telecommunications company now has all the elements to integrate the mobile telephony market in Canada. Without having a launch date, he indicates that the timeline can be measured in quarters rather than years.
Posted at 6:22 a.m.
Updated at 4:38 p.m.
Frédéric Lacroix-Couture
The Canadian Press
This summer, the Montreal company announced strategic partnerships with a national wireless network operator – which currently remains unknown – and Eastlink for the implementation of mobility services in the country.
“Through these partnerships, we now have all the components necessary to launch wireless services in Canada using a low-capital MVNO (mobile virtual network operator) approach and we are currently focused on integrating these elements,” said Cogeco President and CEO Frédéric Perron on Friday.
“We have not yet set an official launch date. We can say that the timeline will be measured in quarters and not in years,” he continued, during a call with analysts to discuss the fourth quarter financial results.
Cogeco signed two separate agreements, each lasting five years. The one with Eastlink, a Nova Scotia telecommunications company, concerns the provision of the company’s wireless technology platforms. While with the national operator, the partnership includes access to its wireless network.
During the announcement last August, Cogeco called these agreements an important step in its plan to offer wireless services to more than 4.2 million Canadians residing in its cable coverage area in Ontario and Quebec.
Before these partnerships, Cogeco launched a mobile telephone service in Sept-Îles in 2023 in order to meet certain conditions of the CRTC regulatory framework.
Last March, the Montreal company announced its entry into the wireless market in the United States through its American division, Breezeline. It said it was launching its service in 13 states on the American east coast, where the company already provides internet, video and telephone services.
Perspectives 2025
Cogeco presented its financial projections for the 2025 financial year on Friday, which will mark the start of a three-year transformation program to “put the company on a path to sustainable growth”.
In 2025, Cogeco expects its revenues to remain stable, while growth in the number of Internet service subscribers will offset a decrease in the number of subscriptions to video and wireline telephone services.
Mr. Perron spoke of a year of reinvestment, after seeing that the company was lagging behind other operators in different sectors, although operations were strong.
The company mentions that its net capital expenditures are expected to be between 660 million and 735 million, including net investments of approximately 140 million to 190 million for the expansion of its network.
This is another consecutive year in which the company expects a high level of total capital spending, noted Maher Yaghi, an analyst at Scotiabank.
“We believe the company’s strategy to organically grow its presence is good, but during this development period the company’s free cash flow will remain tight,” he said in a note.
Cogeco expects free cash flow to decrease by 0% to 10% “due to free cash flow being stronger than expected in fiscal 2024.”
The company reported results below analysts’ expectations for its quarter that ended August 31. Its profit decreased by 10% compared to the same period last year to 81.4 million, while its revenues remained relatively stable at 768.7 million.
The company reported diluted earnings per share of $1.99, compared to analysts’ expectations of $2.25, before the results were released, according to financial data firm Refinitiv.
For the entire 2024 financial year, Cogeco made a profit of 349.4 million, which compares to a profit of 350.2 million for the 2023 financial year.
In the context where “all financial projections established for fiscal 2024 were met or exceeded”, the quarterly dividend increased by 8.0% to 92.2 cents per share.
