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Cogeco CEO eager to learn outcome of CRTC review of mobile wireless industry

TORONTO — The CEO of Cogeco Inc.

TORONTO — The CEO of Cogeco Inc. and its internet and cable TV subsidiary said Wednesday that they are eager to learn whether Canada's telecom regulator will grant approval for a type of wireless network that the Montreal-based company has championed for years.

"It will encourage ongoing investments to expand and improve Canada's wireless network, while bringing new wireless services to underserved and unserved Canadians," Cogeco chief executive Philippe Jette told analysts in a conference call.

"We continue to be interested to add mobile services to our offer, given the right circumstances, and maintain healthy competition in this sector."

Jette's comments came ahead of a CRTC announcement about its regulatory policy on mobile network services, to be announced Thursday afternoon.

Cogeco stands apart from most of the other participants in a years-long regulatory review about MVNOs (mobile virtual network operators), which piggyback on other providers' infrastructure through wholesale access rather than building their own networks and is cost prohibitive for smaller companies.  

The CRTC hearings included all of Canada's major internet and wireless providers —  generally opposed to regulated wholesale prices for access to the network infrastructure they own — as well as the smaller companies that argue for a policy more favourable to MVNOs.

Jette said Cogeco's hybrid model would be a "middle ground" between the operators that have built and operate their own networks and the virtual operators. 

Cogeco, which has an extensive network of internet and cable systems through parts of Ontario and Quebec, wants to work with wireless service providers.

The major telecommunications companies generally oppose the Cogeco model.

Jette said he wouldn't predict what the CRTC will decide.

He also had little to say about a plan for Rogers Communications Inc. to buy Shaw Communications Inc. and its Freedom Mobile wireless business, but noted it would be scrutinized by the government and two of its independent regulators.

The Rogers-Shaw deal, as proposed, would create a company that owns Canada's two largest cable systems, the country's No. 1 and No. 4 wireless businesses, one of Canada's two direct-to-home satellite services, as well as a significant stake in Cogeco.

Jette said the proposed merger underscored how urgent it is for the federal government to take steps in the wireless sector to deliver increased competition.

Earlier this year, Cogeco and its founding family successfully fended off a hostile takeover attempt by Altice USA and Rogers that would have split up its assets between them. 

Under a proposal announced last October, Altice wanted to buy all of Cogeco and then sell the Canadian portions to Rogers, which has a large block of Cogeco shares but not enough votes to override the Audet family, which founded Cogeco.

Cogeco Inc. reported late Tuesday that its second-quarter net profit was $110.2 million, down from a year ago, as higher financial and income tax expenses offset revenue gains at its main subsidiary.

Its net profit for the three months ended Feb. 28 was equal to $2.11 per diluted share of Cogeco Inc.

In last year's second quarter, Cogeco Inc.'s net profit was $113.4 million or $2.18 per diluted share of Cogeco Inc. in the second quarter of the company's 2020 financial year.

Cogeco Inc.'s revenue rose to $653.2 million from $610.8 million a year ago, most of it generated by its publicly traded telecommunications subsidiary. 

Cogeco Communications Inc. reported separately that it had revenue of $634.5 million for the three months ended Feb. 28, up from $586.5 million a year earlier. 

Cogeco's cable and internet subsidiary operates in Quebec, Ontario and in eastern U.S. states stretching from Maine in the north to Florida in the south. 

During this year's second quarter, Cogeco Communications earned $110.6 million or $2.14 per Cogeco Communications share, down from $114.0 million or $2.22 per share a year earlier.

Revenue at Cogeco Communications was up mainly because of a friendly takeover of Quebec-based DERYTelecom, which closed in December.

This report by The Canadian Press was first published April 14, 2021.

Companies in this story: (TSX:CGO, TSX:CGA)

David Paddon, The Canadian Press

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