Key Points:
- Q3 Revenue of $758.3 million (-0.8% compared to Q3 2024)
- Net income: $87.3 million, or $1.94 per diluted share.
- Cash flow from operations: $292.9 million, down from $308.9 million last year.
- Canadian broadband revenue grew by 2.5%, attributed to Internet service growth and rate increases.
- U.S. broadband revenue declined 4.9%, largely due to customer losses and unfavorable foreign exchange rates; pressure on broadband customer growth partially offset by higher service-related revenue.
- Cogeco is now offering a new wireless plan bundled with its Internet service in a handful of Canadian cities; Cogeo Mobile uses leased access to wireless networks operated by Rogers.
Cogeco, the Canadian parent company of U.S. telecommunications firm Breezeline, reported flat revenue growth during its third financial quarter (Q3, coincides with calendar Q2) of the year and lower profit compared to the same period last year.
The Montreal-based telecom operator posted revenue of $758.3 million for the quarter ending May 31, representing a 0.8 percent decline compared to the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $339.9 million, down 1.4 percent year-over-year.
Net income totaled $87.3 million, or $1.94 per diluted share, compared with $95.6 million, or $2.05 per diluted share, during the same quarter in 2024. Free cash flow declined 11.1 percent to $132.5 million, while cash flow from operations dropped to $292.9 million from $308.9 million.
Cogeco’s Canadian broadband unit, operating under the Cogeco Connexion brand, reported a 2.5 percent increase in revenue during Q3. The Canadian broadband business was better than Breezeline, which saw a 4.9 percent decline in revenue, which the company attributed to unfavorable exchange rates and ongoing pressure in the U.S. broadband sector brought on by fixed wireless providers, Starlink and other services.
Despite its subscriber woes in the U.S., Cogeco said Breezeline benefitted from higher revenue per Internet customer, which boosted its broadband margins. Revenue attributed to Breezeline was $1.448 billion during Q3, nearly matching the $1.501 billion brought in from Cogeco in Canada. Breezeline counts more than 622,000 residential and enterprise broadband customers, most of whom have access to Gigabit-speed connections on Breezeline’s fiber network.
Capital expenditures totaled $207 million during the quarter, as Cogeco continued network expansion and rural broadband initiatives in both Canada and the U.S. The company said it remains committed to ongoing infrastructure upgrades and digital transformation projects aimed at improving customer experience and long-term growth.
In Canada, Cogeco is also taking a play out of the U.S. broadband playbook by launching a new wireless phone offering for its broadband customers.
Cogeco Mobile leases access to wireless networks operated by Rogers. Customers in Montreal, Hamilton and Trois-Rivieres can sign up for unlimited talk, texting and data plans through Cogeco Wireless now, and subscribers in 12 other markets will be able to sign up for the service in the coming weeks.
Cogeco reaffirmed its financial guidance for the full year, projecting revenue growth of 1.5 to 3.5 percent and flat adjusted EBITDA.
