MONTREAL — Cogeco says its customer service problems are finally over.
After a customer management system upgrade went awry in 2018, causing frustration for its Canadian cable and broadband clients, the company says the problems have been resolved, and up to 600 additional short-term staff have completed their work and left the company, at a cost of about $11 million. Its 22 customer management systems have been successfully replaced by one.
"It's behind us," president and CEO Philippe Jetté told journalists on Friday before Cogeco's annual shareholders' meeting in Montreal, his first since taking over from longtime CEO Louis Audet (at left in the photo, shaking hands with Jetté). "Cogeco has a 60-year history of customer service,” Jetté said. "Our priority will remain customer service."
Jetté told Cartt.ca the company has learned many lessons from the botched upgrade and knowing what it knows now, would have done things differently, but the upgrade was necessary to integrate new technology and the new system should be in place for 20 years or more.
Jetté and chief financial officer Patrice Ouimet would not disclose how many customers were lost to Bell as a result of the problems, but did note that "Bell was very aggressive" in trying to get customers to switch.
"Our sales and marketing teams are at full speed," Jetté said. "I'm very optimistic about our ability to bring the customers back." One way to do so is through the rollout of its new MediaFirst IPTV platform by the end of 2019, replacing its existing TiVo-based system. Cogeco still runs its much older video systems, too.
It's the same technolocy platform used by Bell, but Jetté said Cogeco can still differentiate itself from its larger competitor. "The supplier we're using has created a platform that's highly customizable in terms of user interface," he said. "This is how you come to love a service, the way you interact with it."
In its United States division, Cogeco is continuing its rollout of gigabit internet service, and says that 80% of its Atlantic Broadband subsidiary's network will be able to deliver gigabit service by the end of the year. Like with Canada, Cogeco believes customer service will help it retain subscribers as companies like AT&T and Comcast encroach on its markets.
Though Jetté said there were "no imminent announcements of acquisitions" coming, he had a similar cautious hunger for growth south of the border. "There's a lot of potential acquisition targets," he said, echoing what former CEO Louis Audet often said every quarter.
"We are ambitious, and we'd like to grow a little bit faster." The company recently acquired a fibre network in south Florida from FiberLight LLC, and has made expansion in the Florida market one of its priorities for 2019.
Acquisitions outside North America are not on the agenda, Jetté said. Cogeco's last experience with such an international acquisition, Portugal's Cabovisao, did not end well. Cogeco sold it in 2012 for 10% of what it paid for it six years earlier.
The company's activities in business data services are also struggling, with a 3.8% year-over-year drop in annual revenue at Cogeco Peer 1. In a call with analysts, Jetté said "we remain open to all options" on the future of the subsidiary, which operates in a market now dominated by huge global players such as Amazon and Google.
"We have invested a lot of effort to turn it around," Jetté told journalists. "It's a question of timing. Things have not worked in our favour in the first quarter of this year. I think we have a fantastic team, employees that are very committed to serving our customers. We have continued to adjust our operations. Do we have to continue to adjust the portfolio? Possibly."
Peer 1 has 16 data centres in Canada, the U.S. and U.K., down from 21 in 2016 after "an adjustment of capacity" based on customer demand.
As with every year, Cogeco continues to be on the fence when it comes to wireless, but Jetté told shareholders the company is "well positioned to offer more options" in that market and is actively looking to enter it in "a financially disciplined fashion." Cogeco has 23 spectrum licences in the 2,300 and 2,500 MHz bands, but opted out of the ongoing 600 MHz auction, saying the large geographic licence zones on offer from the federal government are incompatible with its strategy.
Jetté said "600 (MHz) is not an absolute must-have for networks." Cogeco wants to set up a wireless network over its wired footprint, where "90% of the (capital expenditure) is already paid," but for roaming clients it would require access to other telecom companies' networks on more favourable terms. "We're evaluating different models," he added. "It's not just a me-too offering, but we're looking for a differentiated offer."
The company also opened up the possibility of investing in underserved remote areas, thanks to promised investments by the Quebec government to improve broadband access. Jetté said the company is looking at areas adjacent to its existing footprint which are lacking broadband access but would not be profitable to connect without government subsidy.
In broadcasting, Cogeco made its largest change in nearly a decade in 2018, acquiring 10 radio stations from RNC Media, expanding its regional network to 23. Beyond integrating the new stations into its Cogeco news network, however, Jetté said there were not many major changes planned at the acquired stations. "We're not going against the current to do rebranding just for rebranding," he said. "Our priority will be to stay number one in those markets."
Michel Lorrain, Cogeco Media's new president, said RNC Media's Planète brand needs a refresh, and no final decision has been made on the future of Saguenay's KYK Radio X brand, now that Quebec City's Radio X is being sold to a different company, but no major changes are expected to branding or format.
The company is also looking to make its audio content more accessible on various platforms, improving its mobile apps and adding new podcasts. Competitor Quebecor recently entered the radio game with its digital-only QUB Radio service, but Lorrain said Cogeco isn't planning a similar service, since it already offers linear programming on its licensed radio stations.
Between Jetté, Lorrain, Cogeco Peer 1 president Susan Bowen, and several other senior managers, Cogeco has seen a major rollover in senior leadership this year. It's the first year its chief executive does not have an Audet last name, though Louis Audet remains on the board of directors. Cogeco also saw the departure of Jan Peeters, its chairman since 2004, resulting in a 100% reduction in the number of bow ties worn at board meetings.
Jetté said that the new leaders want to "pivot the enterprise to a digital transformation," describing it as a "tidal wave throughout the organization."
Concretely, the new leadership is focused on improving customer experience through more self-service, making things easier for customers while saving costs, but in terms of strategy, the new Cogeco looks like the old, which seems to please Audet, the son of founder Henri Audet and the controlling shareholder.
"The transition is advancing well," Audet told shareholders. "We were able to build a solid succession plan."
Photo by Steve Faguy.
