Cogeco's recent acquisitions drive revenue gains in Q2
MONTREAL - Cogeco Communications Inc. is taking advantage of government financial support to expand its high-speed internet footprint in rural and underserviced areas of Canada as well as in the United States.
The Montreal-based company, which successfully fended off a hostile takeover attempt by Rogers Communications Inc. last year, said it plans net spending in a range of about $230 million to $240 million in network expansions to connect 124,000 homes.
High-speed internet would be expanded to about 59,000 Canadian homes, mainly in Quebec. About 65,000 American homes would added by the end of fiscal 2022.
Cogeco anticipates that additional government support will help further expansion in Ontario.
“Cogeco's deep roots in regions and rural communities should continue to contribute to our success in securing grants to help close the gap in high-speed digital access,” CEO Philippe Jette said Thursday in a conference call to discuss its third-quarter results.
The federal and Quebec governments announced in March $826.3 million in funding to bring high-speed internet to nearly 150,000 Quebec households by September 2022 with Cogeco receiving more than $200 million.
The company's growth plans follow its U.S. subsidiary Atlantic Broadband's acquisition of WOW Ohio systems.
“Fiscal 2022 should be a landmark year with the integration of the recent Ohio acquisition, the continued expansion of our network in Canada and in the United States and a possible entry into the wireless business,” Jette told analysts.
He said the “rare opportunity” to expand in underserved and unserved areas of Canada could not be done without the support of government while U.S. expansion would be in areas with good demographics and growth potential.
Cogeco welcomed two recent decisions by the Canadian Radio-television and Telecommunications Commission, which it described as “balanced” that take into account the importance of expansion investments.
“They provide more certainty for both our wireline broadband network expansion investments and our plan to enter the wireless market in Canada under the right conditions,” Jette said.
He said the CRTC's May decision to maintain the 2016 wholesale rates provides a more stable regulatory framework. The company also welcomed the CRTC's mobile wireless decision to allow regional players investing in telecommunication infrastructure in spectrum to access the wireless networks of Canada's dominant providers.
Cogeco said the new regulatory framework is similar to the one it has long advocated where investments can be gradually deployed as a new entrant gains market share.
Meanwhile, the telecom provider said it expects to benefit from the work-from-home trend it believes will continue as COVID-19 and has high hopes for the coming year now that government lockdowns are easing.
“With the gradual loosening of restrictions and the economy opening up again in Quebec, we are optimistic about the future. So all in all, these results position us well to start our fiscal 2022 on a strong footing,” Jette said.
After markets closed on Wednesday, Cogeco Communications reported a profit attributable to owners of the corporation of $95.7 million or $2.01 per diluted share for the quarter ended May 31. The result compared with a profit of $90.8 million or $1.87 per diluted share in the same quarter a year earlier.
Revenue for what was the company's third quarter climbed 3.1 per cent to $624.3 million from $605.8 million in the same quarter last year.
Excluding currency fluctuations, it says revenue rose 8.8 per cent.