Cogeco CEO Philippe Jette dismissed fixed wireless access as a competitive threat to its U.S. broadband business and stated the company isn’t interested in launching a mobile MNVO in the country, at least for now.
In the U.S., Cogeco operates Breezeline (formerly Atlantic Broadband), which offers broadband, video and telephony services. It has a similar business in Canada called Cogeco Connexion.
While U.S. mobile players like T-Mobile and Verizon have been vocal about their fixed wireless offerings, Jette said on an earnings call the company is “not concerned” about their efforts. He argued fixed wireless will only be deployed opportunistically and localized in dense urban areas. The CEO also predicted mobile operators will eventually claw back the capacity they’re currently dedicating to fixed wireless in order to get higher returns by using it for their wireless services.
“As you very well know the ARPU per gig on mobile network is much, much, much higher than fixed wireless,” Jette explained. “The high cost of mobile spectrum is sunk, and it won’t go away. So, eventually they’ll have to bring back that capacity in line with the business model that brings the ARPU at the right level.”
Results
His comments came as Cogeco reported results for its fiscal Q1 2022 (the three months to November 30, 2021). Consolidated revenue increased 15.3% year on year to reach CAD745.3 million. Profit for the period amounted to CAD119.1 million, compared to CAD120.4 million in the year ago period.
Breezeline revenue grew 25% year on year to CAD363.5 million. The FQ1 figure factored out to $289.4 million in U.S. dollars, compared to $220.0 million in the year-ago period. The company attributed the growth primarily to its acquisition of broadband assets in Ohio from WideOpenWest, annual rate increases for certain services and higher value product mix.
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However, Breezeline lost 77 internet customers, compared to a gain of 12,409 the year prior, ending the quarter with 716,778 in total. During the earnings call, CFO Patrice Ouimet chalked the subscriber losses up to more seasonal disconnections this year compared to last year during the pandemic, more non-pay disconnects due to the lapse of some Covid relief programs in the U.S., less move activity and competitive offers in portions of its footprint.
All told Breezeline had 1.2 million U.S. customers across its internet, video and telephony businesses as of November 30, 2021. Approximately 41% of its customers subscribed to double play or triple play bundles at the end of the quarter.
Asked whether the company has any interest in adding a mobile MVNO to its Breezeline offerings, Jette said it’s focused on its previously announced fiber expansion plan. “It’s all a question of prioritizations,” he stated. “And right now, the network expansion, the wireline network expansion in the U.S. are top of our list.”
Cogeco’s Canadian broadband business Connexion posted revenue of CAD355 million, which was up 8.2% year on year. It added 2,620 internet customers to end the quarter with a total of 918,304.
This story has been updated to correct Breezeline's FQ1 subscriber loss figure.