Cogeco Scores in US, Slips in Canada
Although it's based in Montreal, Cogeco Communications is performing better south of the US border than it is in its Canadian homeland these days.
Cogeco, the fourth-largest cable operator in Canada and the ninth largest in the US, reported stronger than expected subscriber and financial results for its US unit, Atlantic Broadband, during the third quarter ending May 31. But it could not match that performance north of the border, reporting weaker than anticipated results for its Cogeco Connexion subsidiary in Canada.
Overall, Cogeco said it generated C$617.6 million in revenue for the third quarter, up 3.1% from a year ago, or 1.3% after adjusting for C$10.8 million in positive currency exchange effects. Net profit was C$185.0 million, including C$82.6 million from discontinued operations, up from C$70.8 million a year earlier.
Like nearly all MSOs these days, Cogeco is riding the broadband growth wave for all it's worth. Overall, the company added nearly 15,000 Internet customers in the third quarter, up from about 8,000 a year ago and higher than analysts expected. That gain came primarily in the US, where Atlantic Broadband now has about 445,000 broadband subs, spread throughout most of the East Coast from Maine to Florida. Specifically, the company credited most of the increase to its expansion in Florida and its full acquisition of MetroCast in New England.
Also like nearly all MSOs these days, Cogeco suffered greater video sub losses in the third quarter. The cableco said it shed more than 11,000 pay-TV customers in the spring period, widening its loss a bit from 10,000 subs a year earlier. Company officials blamed the higher losses on "highly competitive offers in the industry" and "a changing video consumption environment."
Cogeco, which operates across southern Quebec and Ontario in Canada, did not specify which unit accounted for more of the video sub losses, though it appears they were higher in Canada. It closed the quarter with 965,000 pay-TV customers overall, about two-thirds of them in Canada, and more than 1.2 million broadband subs overall.
Similar to its cable peers elsewhere in North America, Cogeco aims to keep its broadband fires stoked by deploying both DOCSIS 3.1 and more fiber and boosting subscriber speeds to as high as 1 Gig. In the US, Atlantic Broadband has now rolled out D3.1 and FTTH to deliver gigabit speeds to 75% of its 875,000-home footprint and plans to reach 90% coverage by the end of August. Cogeco Connexion aims to do the same on the northern side of the border, where it now offers 1-Gig service to 55% of the 1.76 million households in its footprint and plans to reach 60% by the end of next month.
Hoping to stave off, or at least ease, further video sub losses, both the US and Canadian units are also upgrading to more advanced video delivery platforms. In Cogeco Connexion's case, the company is launching MediaFirst's IPTV platform to offer customizable video content, WiFi devices and voice-activated remotes. And in Atlantic Broadband's case, the company is building out new features from its TiVo partnership, including user interface updates, integration of popular applications and device pairing with Amazon Alexa.
— Alan Breznick, Cable/Video Practice Leader, Light Reading