By Steve Faguy
MONTREAL — Cogeco is launching a wireless service in Canada. Or at least, it’s almost certain. The question now isn’t so much whether it will launch, but how and where.
Speaking to analysts and journalists on Friday ahead of the company’s annual general meeting, Cogeco CEO Philippe Jetté confirmed a dedicated team of 30-40 people is in place working on a wireless network plan, with many other employees contributing to it, and major capital expenditures have been budgeted for the rollout.
The remaining step before the real work begins is to await the CRTC’s determinations on specific rules for mobile virtual network operators, and crucially the wholesale rates it will have to pay to incumbent providers for use of their networks.
But the MVNO framework released so far hasn’t dulled Cogeco’s commitment, even with the new requirement that new providers have an existing mobile network operation before launching an MVNO.
“We remain determined to launch a service in Canada,” Jetté told analysts, promising details before the end of the fiscal year in August. “We see better and better clarity, we see benefits” to wireless, he said.
Cogeco has spectrum covering 91% of its wireline service footprint in Quebec and Ontario, and is already in early discussions with incumbents, though Jetté said it is in those incumbents’ interest to delay Cogeco’s entry into the market as long as possible. He left the door open to Cogeco reaching a network sharing agreement with an incumbent outside the MVNO framework.
It is expected that Cogeco’s wireless service will be limited to its footprint, or the provinces of Quebec and Ontario, targeted at existing wireline customers interested in bundle discounts.
In its first quarter financial report released Thursday evening, Cogeco reported increases in revenue and EBITDA of 6% each, though that increase was dulled when taking currency fluctuations into account.
The company faced a significant challenge in Ohio, where it purchased broadband systems from WideOpenWest (WOW) in Cleveland and Columbus in 2021. Moving customers from WOW to its Breezeline (formerly Atlantic Broadband) brand, which required them changing email addresses and migrating accounts, led to a loss of about 15,000 customers, and unexpected service outages did not help matters. As a result, Cogeco lowered its projections for revenue increases in fiscal 2023 to 0.5 to 2% from 2-4%.
Jetté said he’s confident the growing pains are behind the company and they have succeeded in slowing customer losses in Ohio.
“When you have a carveout, there’s an expectation of losing customers,” he said, noting that the company held off on marketing until it had established the new brand. “We accounted for some loss. It’s frustrating all the time, of course we want to minimize the loss.”
While customer churn was expected, the service outages and decline in overall market conditions in the U.S. were not, he said.
Asked about future acquisitions, Jetté said the company “will continue to be actively looking” for opportunities, though “the size of transactions we’d be looking at now are more on the smaller than the larger side.”
Cogeco is also growing organically, with its U.S. wireline network growing by 4% and the Canadian network by 2%, adding 70,000 homes passed. In this fiscal year, Cogeco Connexion is expecting to grow its territory by 3%, adding 60,000 homes passed, and Breezeline expected to grow 5%, adding 80,000 homes.
Jetté dismissed concerns about new competition from Bell’s fibre IPTV service in Canada, saying there isn’t yet demand for those speeds in the market, “so they have to discount them very heavily.”
He also said he was not worried about the future of the company after Shaw painted a bleak picture of life as an independent telecom provider to the Competition Tribunal if its proposed purchase by Rogers does not go through.
“We have our own plan. We’re taking the time to do things very diligently,” Jetté said. “If you want to go outside of that footprint, that calls for a lot more challenges. We’re starting where we are strong.”
The new wireless framework “is absolutely key to us. Without that framework we’d be investing (just) in wireline networks. Mobile is giving us the opportunity to add another product to our portfolio.”
At Cogeco Media, Jetté said its 21 radio stations still have not seen a full recovery in advertising from tourism, travel and auto industries, but “it will come back slowly.” The CRTC’s recent commercial radio policy review showed the commission understands the legacy system very well, he said, but “it’s much more unknown on the digital side. I think they still need more time to tweak the policies and rules for the digital world more in balance with the traditional world.”
Cogeco’s talk station 98.5 FM in Montreal remains the highest-rated radio station in Canada, and Jetté said the company is continuing its focus on improving its digital offering in radio.
Photo of Cogeco CEO Philippe Jetté in Montreal today, by Steve Faguy
