Q4 2020 Cogeco Inc & Cogeco Communications Inc Earnings Call
[music].
Come to the clinical Inc. and clinical Communications Inc. Q4, 2020 earnings conference call.
This conference is being recorded.
I would like to turn the conference over to Patrick.
Senior Vice President and Chief Financial Officer critical input.
<unk> communications.
Well have you do you know.
Good morning, everybody and welcome to our fourth quarter conference call, which for them. Just then I will cover.
Before we begin this call as usual all we'd like to remind listeners that the call is subject to court looking statements, which can be found in the press release issued yesterday, well turn the call over to <unk>.
No people pits and good morning, ladies and gentlemen, and shareholders of Cogeco Communications, Inc. and Cogeco Inc. and thank you for joining us to discuss the results of our fourth quarter and fiscal year ending August 31st 2020.
I would like to first address the styled proposals from Rogers and Altus do acquire boat Cogeco, Inc. and Cogeco communications.
Which were rejected by the company's board of directors, taking into consideration. The members of the oldest families unanimous rejection of the proposal.
I would like to highlight the stewardship deal with their family has provided to the corporations over the last 63 years.
Which I loved the corporations to grow.
And prosper.
Today could you go enjoy a unique and valuable position as the only broadband services company with a significant presence in both Canada and the United States.
As older Pax World there.
Including the November 18, and they.
There is nothing to add on this matter.
I would like to begin the call by highlighting the key strategic initiatives Cogeco Communications made in recent years, which are contributing to the company's growth.
And the fourth quarters results.
Cogeco is clearly positioned itself as a consolidator of regional cable operators.
In the U.S. alone, we made five acquisitions totaling approximately 4 billion Canadian dollars and the last eight years.
The integration of these acquisitions.
Oh well executed.
<unk> demonstrated by consistency it consistently superior organic Croke Park.
Partly due to internet penetration, increasing from 33% to 53%.
And.
Second one of the U.S. industry is EBITDA margins at 45%.
Second the cool bid.
19 pandemic has not stop us from pursuing our activities with the closing of the times Valley acquisition and the U.S. in March.
The closing of the tuck in acquisition in Canada in May.
And the announcement last week of an agreement to acquire a duty telecom for four under than 5 million.
The regional cable company as the third largest cable operator and get back.
And serves approximately 100000 customers.
Third we intend to continue playing an active role as an effective and disciplined regional cable consolidator.
To do so.
We are also counting on ARIA reputation of being irresponsible.
And respectful acquire for all stakeholders involved.
Including the employees the communities, we operate in and the owners of the businesses we acquire.
For.
Our data always thing business Cogeco pure one was sold last year, enabling cogeco communication to focus on its broadband platform.
And to initiate a large share buyback program.
Resulting in 175 million bought back in the first year of the program.
In addition to a dividend.
Which has grown 10% annually.
50 in Canada.
We expanded our one gig service to over 70% of our footprint.
I've just started rolling out our new IP TV service.
I have one a good share of available government funding dedicated to increasing connectivity in unserved and underserved regions.
Finally, cogeco communication is now in a unique narcan a unique north American broadband platform.
With close to half of its revenue generated from its U.S. operation.
And we continue to forge ahead with our plan to enter the mobile services market to provide more choice to Canadian consumers.
Let me continue with a reflection on the key fiscal 2020 accomplishments.
Our focus at the start of the fiscal year was on building on the many transformative projects that we've put in place in 2019.
In refining our strategy for continued long term growth.
We made changes to our leadership team at Cogeco Communications welcoming a new president that Atlantic broadband Frank vendor Boes a day.
The start of the fiscal year, who brings a solid go to market expertise.
And then announcing later in the year and equally capable new president at Cogeco connection Fibrotic Battle.
As we said about ensuring our plans move forward.
We were suddenly phase into spring with the Swift arrival of COVID-19.
[noise] Cogeco subsidiary I've quickly adapted their services through the implementation of personalized measures.
To offer customers more flexibility.
While encouraging them to make use of our online services, including self serve self installations and self repairs.
We have capitalize on a number of initiatives, which were implemented in the spring to accelerate their digital transformation program as we expect that many customers will continue to use our online tools after the pandemic.
We were able to provide our customers I leave reliable connections. Thanks to the capacity reliability and robustness of our network, which experienced significant and unprecedented peaks of usage up to 70% increase during the day.
Despite the many challenges of the crisis.
Which is still gripping our world.
We have maintained financial discipline.
Resulting in little overall impact on Cogeco communications fourth quarter and annual financial results.
This key accomplishment is a tribute to all of our employees, which I've worked tirelessly.
Throughout the crisis and still today to make sure that we maintain high quality connectivity services.
And increase access to information and entertainment in this time of crisis.
However, the financial results of Cogeco Inc. were more impacted during the second half of the year due to its exposure to the media business as radio advertising revenue was significantly impacted by the pandemic.
On a positive note the revenue decline in the fourth quarter with slightly less than experienced during the third quarter.
And advance bookings for the new fiscal year are improving.
Let us focus on the key initiatives at Cogeco connection.
First by addressing acquisition.
Even though the Canadian market, there's more consolidated than the U.S. market.
We were successful in securing two acquisitions.
In May we closed the Theradoc acquisition, a full telecommunication service provider in certain ticket capex, serving approximately 2000 customer.
But as part of this transaction.
We acquired 15 exclusive of 3.5 gigahertz spectrum licenses covering a large region of rural South and get back, which will help and expanding our network in underserved and Unserved regions.
And launch a wireless service if the regulatory environment is favorable.
We continued our expansion with the announcement last week of an agreement to purchase duty telecom, the third largest cable operator and get back.
This transaction will and then the scale of our Canadian operations and is one and is one of the few remaining sizable opportunities in Canada.
Discoveries.
Strategic acquisition will increase our foot all in Qubec income.
In complementarity with a geographic areas.
[noise], enabling us to further pursue our regional edge out expansion.
And the last year.
D V generated mid single digit revenue growth.
Which we expect to be able to realize over the next few years.
As we other product line out to those of D.V. and invest further in sales and marketing.
We intend to increase the penetration of Internet service is currently sitting at 46.5%.
By continuing to invest in speed upgrades.
And and and why five functionality.
We also expect to introduce our new IP TV product.
And roll out our commercial services product suite.
D as an attractive demographic profile that are aligned with cogeco started get market.
It's competition is also more fragmented with approximately 60% of the footprint covered by DSL competition.
Demonstrating the superior growth opportunity.
Did you secured government subsidies.
To expand its network by approximately an additional five.
2500 households over the over a three year period and is awaiting answers to a number of other projects submitted as part of broadband funding programs.
In addition, we expect to be able to achieve significant cost synergies over the next three years as we entered Connectcar systems integrator.
Integrator I T systems and benefit from further economies of scale.
For the first full year of operations under Cogeco Man It was cold Yukos management.
We expect that the acquisition will add 7% to our Canadian EBITDA.
And from a consolidated basis will add close to 4% to our free cash flow.
[noise], let me continue on the network upgrade and expansion.
And I would first note that we have committed to invest approximately 250 million annually in capital expenditures in Canada to upgrade and expand our networks.
If we exclude larger acquisitions, such as the V. and the wireless initiative.
And as I mentioned earlier in fiscal 2020, we expanded our one gig service to over 70% of our footprint and I've just launch our IP TV service.
In addition.
We are very active in various government programs in Canada.
To provide high speed internet to underserved areas could.
Cogeco was recently awarded 16 projects in Quebec, and Ontario.
And as applied.
Two more than 100, the additional projects.
Which are currently being reviewed.
Good you call was submitted.
It is submitted targeted a regulatory change designed to increase competition in Canada is wireless market as part of this year Tc consultation.
Could you close propose I bread mobile network, operator, H.M. and no model.
Would enable this is the sustainable entry of new wireless carriers across Canada.
With particular benefit to under underserved regions.
[noise]. This proposal will allow facility base wireline and wireless service providers.
To access portions of the national incumbent wireless networks, while also requiring those regional providers do invest in their own telecommunication infrastructure.
Good you called believed that there has been a number of positive development in the quarter regarding the CRT sees wholesale Internet service 2019 costing decision.
Following an industry cabinet that bill and its Argus.
This isn't the government express its concern that the rate established by this year do you see an August 2019 may undermine undermine.
Investment and I quality networks, particularly in rural and remote areas.
In September the C or D. C approved the request submitted by the cable carriers to stay the implementation of the 2019 announced rate for aggregated to wholesale ice speed access service until it completes its review of.
That order.
Let's now focus on the key initiative at the Atlantic broadband.
Where under the leadership of Fraying vendor post we put several initiatives in motion aim at providing a greater customer experience.
We implemented a new interactive voice response system.
Puts more emphasis on our self install program.
And launch a virtual connect tool, which will reduce the number of customer calls.
We grew our product offering launching our TV online app.
And HBIO, Max as well as adding Showtime anytime.
You do kids.
And I'm is on prime on the TV <unk> the Tivo platform.
We acquired what was formally Tames Valley Communications.
Being approximately 10000 customers within our existing geographic footprint.
Continued our expansion in the Florida markets and executed targeted edge out in all regions.
In addition important organizational changes were made to streamline functions.
Reinforced center of expertise.
And achieve efficiency that's.
That will allow Atlantic broadband to remain a job in the marketplace.
Cogeco communication consolidated financial results.
For the quarter.
Revenue was up 3% and their bid D up 6.2% in constant currency.
When compared to the same period last year.
Reported revenue reached six under than 5.2 million and EBITDA reached 294.5 million generating a margins of 48.7%.
Good you connection achieved an EBITDA growth of 5.7% or 3.4%, if we exclude nonrecurring items.
Which is a very strong performance considering the negative impact of pandemic is having on our economy.
For a second quarter in a row.
Internet connections were very strong.
Atlantic broadband, 7.2% EBITDA growth in constant currency.
And organic growth of 5.9% was even stronger than the third quarter performance.
Primary service unit net adds up 20653, almost tripled in the quarter compared to last year, mainly as a result of significant increase in internet connections as.
As more customers are looking for a highly reliable service when working from home in the context of the COVID-19 pandemic as well as new bulk Activations in Florida.
We announced an increase in the quarterly dividend from 58.
Cents to 64 cents per share representing.
At 10.3% increase over last year.
Let us now look at the individual components.
Cogeco connection reported revenue increased by 1.3% relative to the same quarter last year, mainly.
Mainly due to the customers transition to higher value offerings.
Significant increase in Internet connections for this for a second quarter in a row.
Growth in commercial services and a rate increase.
Cogeco connections EBITDA increased by 5.7% relative to the same quarter of last year as a result of increased revenue and lower operating expenses.
If we exclude non recurring items totally totaling approximately four millions EBITDA would have still grown by 3.4%.
We are happy with the P.S. Yoo performance.
With internet subscribers, increasing by approximately 9000 during the quarter.
Atlantic broadband revenue and constant currency increased by 4.9% in the fourth quarter compared to last year.
While EBITDA increased by 7.2%.
Excluding the impact of the Tames Valley acquisition.
Revenue and EBITDA would have grown by 3.5% and 5.9% respectively.
Organic revenue growth.
Comes mainly from both private residential and business Internet service customers.
And rate increases mostly implemented during the fourth quarter of fiscal 2019.
The superior organic EBITDA growth was mainly due to revenue increasing at a greater pace than operating expense as these are managed diligently.
Atlantic broadband added over 13000, new Internet customers, a sharp increase compared to the prior year.
Let us now take a look at politico Inc. and the fourth quarter consolidated revenue increased by 1.6% and EBITDA increased by 6.1% in constant currency.
Well the broadband business had strong results the smaller media business continued to be impacted by the COVID-19 pandemic as the lower level of Economique activity.
Notably in the retail industry.
I had an impact on advertising revenues.
Revenue related to the radio operations decreased by 29% in the fourth quarter compared to the prior year.
Slightly lower decline than in the third quarter.
However, EBITDA improve over last quarter as cogeco maintained pest control measures, while preserving the quality of the content offered to our listeners.
We also avoided significant bad debt expenses through an active management of our accounts.
We will continue to monitor the situation closely in the coming quarters, a significant uncertainty remains for the economy in general and more specifically for certain categories of advertisers.
We do however, expect our media business to be in a strong position from a market share perspective, when the situation eventually stabilize.
We announced an increase of 14.7% than the quarterly dividend from 47.5 cents to 54.5 cents per share.
I will now discuss the financial guidelines.
On a constant currency and consolidated basis, Cogeco communications expect low single digit percentage growth in revenue and EBITDA for fiscal 2021.
Both metrics should increase mainly as a result of organic growth at the Atlantic broadband for both the residential and business sectors.
The continued expansion in Florida.
Annual rate increases.
And the full year effect of the times Valley Communication acquisition completed on March 10 2020.
At Cogeco connection revenue growth should stem from growth in the business sector and internet customer additions.
The capital intensity should remain essentially stable at approximately 20%.
At Atlantic broadband capital expenditures will be driven by our continued Florida network expansion.
And additional investments in our network infrastructure in the areas we serve.
At Cogeco connection.
We expect lower customer premise equipment cost.
As a result of the progressive launch of our IP TV solution.
Offsetted by a gradual acceleration of investment to expand our network footprint across Ontario, and Qubec, where we participated in various government sponsored programs.
Free cash flow on a constant currency.
And consolidated basis is expected to grow at low single digit percentage.
We expect the year over year growth to be stronger in the first year and the first half of the year since the second half will be compared to a stronger second half of fiscal 2020.
At Cogeco Inc., we expect low single digit revenue growth essentially flat EBITDA.
And low single digit free cash flow growth.
Cogeco expect.
Flat the bid as radio results should be weaker as the COVID-19 pandemic continue.
Do impact adversely advertising revenues.
Note that the financial guidelines do not reflect the recently announced acquisition of the telecom.
Guidelines will be updated once the company completes the acquisition most.
Most likely before the end of the calendar year.
As you can see fiscal 21 looks very promising despite the unfavorable economic impacts related to depend and make.
As we will continue to manage our costs closely and pursue profitable growth through various organic initiatives and acquisitions.
Pro forma the retailer come acquisition, our net leverage is estimated at 2.7 times, leaving ample room for other acquisitions and share buybacks.
Through to our commitment to bring new services and competitive choice to our communities, especially an underserved regions. We remain engage in launching a wireless service in Canada. If the regulatory conditions are conducive to meeting our financial return objectives.
Finally, I would like to conclude by saying, Oh, probably not proud I am.
That's we received last July the carrying company certification from imagine Canada.
It's recognize our leadership in community investment and social responsibility, which is a fundamental part of our history and DNA.
And is increasingly important in times of crisis.
And now we will be happy to answer your questions.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad, Let's say your question. Please press the pound key.
Your first question comes from drew Mcreynolds from RBC. Please go ahead. Your line is open.
Thank you very much good morning, and thanks for taking the questions too Big picture ones for it for you.
Philip and then a housekeeping one on the Big picture.
You covered off and reiterated obviously your decided here in Canada that get into wireless.
It's been a position anchor how would you characterize that.
You see sustainable growth in wireline with or without wireless wondering if that position is evolving obviously, given a lot of fiveg initiatives across North America that.
That are underway in convergence and.
Down the road the importance of B to B market in driving.
Incremental revenues overall in the sector.
So would.
Appreciate just an updated thoughts there.
Also you alluded to the uniqueness of the North American platform I, just highlight for US some of the benefits that you see by having a presence both sides of the border there.
And just started on the housekeeping item capex intensity at 20% a little bit higher than what we're peddling in or model I'm wondering.
Just to unpack that here in fiscal 2020, wanting and the extent to which it remains.
I don't know, if it's elevated but at that 20% level through the medium term. Thank you.
Thank you drew.
Well on the first topic, we have said many times and demonstrated through our results that who we can continue to grow and for the long term our wireline business broadband continue to.
To grow there is a steady demand and we see it then in times of a pandemic that there is a very solid and growing demand for home connectivity now part of the.
Internet at home a additions is also a move from the mobile only.
Oh usage.
So you you referred to the five G. investment yeah. That's the that's the future of mobile data communication, but.
Inside the home a there is a.
Massive amount of data that more and more devices are consuming and this home needs to be a fed by wired networks. The mobility, a network is convenient way or when you move between homes, but inside the home with all the video with all the Internet the video.
Conferencing business services that we consume more and more there is a very solid demand for wireline.
And broadband network so.
We will continue growing on the wireline side and the opportunity for US is really do add a mobile as a product.
In our portfolio as you know we are a very focused company with three products and the addition of the four to one as to meet our financial objectives right now we're working with.
As you know for some time with their regulatory.
[noise] bodies do do do to make sure that we can.
Fine, Oh, actually and the enlarged or regulatory policies to support.
D or the expansion in regional territories dense urban centers or are well served no we have to turn to a regional wireless and mobile Oh quality.
Quality high quality.
Operations, and Cogeco and other regional operators will be part of that.
The.
The the next part of your question was about the synergies are really about the BB and CCX the way Weve shape. Our operations. We have developed a very significant number of synergies with shared services with expertise centers between the corporate group.
As well as the a b and C C eckstein.
So that the <unk> all.
All these initiatives and the increase in synergies actually translate in a in margins in the margins, we have and we continue to work very very very well together. So this will continue for the long term and in terms of capital intensity.
We we have some projects like the introduction of IP TV that is actually going to lower our costs on the video side and Canadian operations, but.
But we have a significant.
Market.
Expansion, and then jelled programs to better serve the the underserved and unserved areas.
The governments are very very eager to all Canadians and and Americans be connected at their home and cod in colleges to Internet that and we're working really hard to to meet the appetite of that market.
Okay. Thank you Oh.
Your next question comes from Vince Valentini from TD Securities. Please go ahead. Your line is open.
Thanks, very much let me start on Capex as well Sleepiq is it possible to articulate what you think capex intensity would be in 2021. If you didn't have those jokes if you just.
James your operations for.
Current footprint as opposed to adding new households would be would we be seeing a trend down to the 18% to 19% range instead of 20.
Yes, I've been suspicious, yes, absolutely we're doing a bit more than we would have planned initially and that's good news actually we're doing a lot of effort to minimize the maintenance capex. So that's.
Goes through a minimizing the CP costs, increasing self installation, which is good for the customer and good financially as well.
But when we see opportunities for growth in terms of growing our footprint in an attractive way financially which is in part through the government sponsored programs.
And then we do it.
So we definitely would be lower I don't have an exact figure, but probably around 18% or so.
Without this and then four also addressing grooves questions for future years, well see how this plays out we have to put in a number of bids for these projects and those projects are multiyear.
They're all small projects, but they add up together.
And as we have more clarity on what we'll be able to do we'll come back to the market later on in the year to talk about future years, but for now we do have some some expansion.
Capex in addition to what we normally do as expansion in that 22 anymore. Okay.
Okay. Thanks, and then another question on broadband, especially in the us.
I find your presentation, a little understated I mean, you are sub adds are remarkably good to five and a half times higher than what you did in the fourth quarter last year.
And given your the size of your base 13000 is a big number is there anything you can talk to there was there something unusual or is it all contract or something that came through in the quarter or is this just the new trend and and if so do you have any sort of thoughts on how September and and the first quarter are trending or things remain.
Meaning just as strong as that on on the broadband growth right.
Sure. We were obviously very pleased with what we've been able to achieve a portion of it comes from the coated situation. Obviously, there is more need for a home lines and fast lines.
And as you know, especially in the U.S. our competition outside Florida, It's primarily DSL. So that's a place to add that to our advantage.
We still see some good trends.
Going forward, but obviously, if you think about at home that has decided to upgrade their speeds are unchanged providers.
Austin This well has been done already so we don't expect it's going to be as strong in the coming year, but well have to see where again pleasantly surprised in Q4 two to have those subs. So if you look at the abbey for the coming year, we don't provide exact guidance, but I would probably point towards the pre pre.
This year or 2019, which was a more normal year or you don't have the extra bump coming from the pandemic situation, but its still we still had sizable increases in our internet subs in that year.
Thanks, and one last one.
From a big picture perspective, you are putting up pretty decent.
Organic results, you're touching on acquisitions to grow your footprint to creatively yet your share price is down close to 20% year to date, depending on whether you look at CCRC, Joe which is actually worse than any other cable or a cable shock we track.
Can you give us any color as to when you sit around the boardroom table what would the board members are saying are they just saying it would just be patient, which these results will eventually get rewarded or is there any sense of urgency that maybe some other actions are needed to just surface shareholder value.
Well, we continue to focus on what mother, most which is to continue our growth plans to deliver value for all stakeholders to really stay close to our markets understanding the need.
And that's our customer experience. So these are the fundamentals and we will stay.
Focus on what matters and whats mother is growing our business and improving our service.
Can I just follow up internally, but if that's the case and you still have a fairly clean balance sheet, even after the dairy acquisition.
And cash on your books.
Can you really consider making acquisitions when you're in your share price multiple is this low is is it possible you could just accelerate share buybacks using that balance sheet capability instead of.
Putting more money into premium priced acquisitions.
Oh, yes, so we have been doing both actually a we had a lot of capacity to to a ads in terms of acquisitions, we could finance at Delhi and dollar you West transaction. This if we had one that.
That was a ready to write.
To announce.
And we could do bigger numbers and this as well as well, but that that would be the simple part just raising money a as you know we generate a lot of free cash flows in both countries. This is something we always focus on and we're really able to de lever. So we've been able to be very active in the a and C. IB a in the first year.
We see a we did 90% of the maximum so that was a if I recall the 175 million.
When the coated the hit we slowed down a little bit just to be careful but we still maintain.
Maintain that and since since its September a with the the hostile bid than we had to stop or so so so far we have not reactivated. This week, we are planning to but there is a big big implications. So that's something we'll that well be looking at so definitely very interested in continuing to be.
Active in the in the share buyback in addition to looking at acquisitions.
Thank you.
Sure.
Your next question comes from Jeff Fan from Scotiabank. Please go ahead. Your line is open.
Thanks, Good morning, just to follow up on Vinces question regarding share buyback.
Would you be interested or would you think you have the capacity to go beyond D and C I'd be program to buy back.
More than a substantial portion of your own shares, especially given.
You know the the hospital situation, that's underway and if that doesn't come to any kind of conclusion.
That's the first question and then the second question is just regarding wireless.
I know a lot that is placed on the CR to see come.
Coming to terms with your H.M. and no proposal.
Yes, the CR Tc doesn't side with you on that proposal and they go another path.
What is your plan to you regarding wireless and spectrum.
Chris on the on the first one on the buyback.
In terms of going past or the Unsi I'd be in doing some something more substantial in general we want to keep some capacity to do both because obviously, we want to continue to be an active player in the consolidation of the industry that we've had we've been successful doing it so far.
If you're referring to a special situation, where there would be a block of shares available we could certainly be part of the solution. In this case became available.
But we'll have to see if it does become available at one point.
Yeah on the second one for.
For wireless let's.
As.
We we are focused on our H.M. and no plans.
There is market power that was demonstrated by the CRT see ER twice now to the.
Two public hearings process. So the government does well is very interested to see more options and lower price for consumers.
So the H. amino and our proposal. It's that's just something for Cogeco, it's actually something for a lot of regional operators throughout Canada, and it's about bringing more choices and competition outside of the dense urban centers. So they've been well served that's where the majority.
Canadians were but now we need a as a country to expand us in regional underserved and Unserved areas and Cogeco was so well supported we a have deposited in our.
And our request to the CRT see a the same time over 300 letters from cities and towns and municipalities that actually want a better service more options lower price and are regions. So oh throughout Canada, many others.
There's no other regional operators will actually benefit from that.
And it's a matter of time for this year do you see to to come to conclusion, but honestly we are <unk>.
First convince and second it's a matter of time, so a worst thing with planning.
Great. Thank you.
Your next question comes from Matthew Griffin's from Bank of America. Please go ahead. Your line is open.
Hi, Thanks, Good morning, Thanks for taking the question.
I had two kind of related why not guidance through Canada, you point out growth coming from business and said well with broadband.
And I can't couldn't help but notice the this.
Disclosure around the impact that the aggregative wholesale rates would how if it was finalized and put into place.
<unk> from 10 million and 20.
Teaching estimated 18 in 2020 so.
So notwithstanding the actual rates, but just the activity of the wholesalers seem to be gaining some traction and momentum.
Is this playing into.
The growth overall, the ability to pass on price increases in the Canadian market and maybe you can just speak to those two things would be helpful. Thanks.
Hopefully I will address your two questions about just on the on the increase in the value. The 2019 rates would have a 2019 being the proposed rates that are being reviewed right now but to see RTC.
And that the cabinet basically has commented on a couple of weeks ago, saying that basically is here to see how to review those rates in that.
Let's say some of the.
Operators need to continue to invest in networks and bring a.
Capacity to consumers.
You you have there was actually a couple of elements and the growth in that differential ER and the main one has to do with a speed upgrades that were done by the customers Oh, those <unk> and under the proposed rules or the.
There is not really a variation in the price per speed.
Whereas the right now the rates that were using the 2016 right and there is a different a there's a pricing grid perspective so.
You should not assume that there's then [laughter].
Clear acceleration in the number of subscribers. It mostly has to do with the speeds that people are consuming and there's also a bit are related to.
The not the speed, but the actual consumption per month, that's another element in the in the revenues which generate.
Did I address your two questions I'm not sure I got the second line.
Yeah No. It's you did thank you so its not increased activity just to increase on Ela.
Elements that make up the price. So that's that's cool thank you.
Thank you that's one main reason yes.
Your next question comes from James I'll get to pay from Deutsche Bank. Please go ahead. Your line is open.
Maybe I'll have Chris Thanks for taking my question. So we've seen a free cash flow in the quarter. It was a maybe a bit lighter than your recent expectations from a this summer we've talking about faster network deployments for fiscal 21, but was that also the case in the <unk> in the quarter.
Oh, yes, definitely the quarter, we ended up spending more than we thought in the quarter, but it was for good reasons. So are the two main reason that were more T.S. use than we had initially forecasted. So again, that's good news because we like having more TSC is a.
And that requires some some capex on success based Capex also we had plans for some disruption and construction in Florida, given the situation with the pandemic.
And it turns out that we can we've built a bit faster than we thought so a I would say these are the two main reasons and there's been a bit of.
Equipment purchasing the third reason would be equipment purchasing that we did the again during the pandemic you can we did not experience real shortages and equipment.
But certain categories of equipment, we bought a little more than usual to make sure that we would not be caught a short on inventories.
That's interesting. Thank you and we heard yesterday stronger wording on rural deployments on fixed wireless from from T. Mobile are you seeing an exploration and that technology over your footprint in.
In the U.S. and maybe a few words on that if you have any from a what's the mobile side yesterday.
[noise] well.
Fix and mobile a wireless need spectrum, so you've seen us we have started to.
Acquire spectrum licenses and Weve got or a.
[laughter], a starting set of spectrum assets. So we are looking at expanding.
Our footprint with fixed wireless access so does that will be mainly for regional and rural areas, where it's faster to reach some groups of housing by wireless and we will.
Naturally grow our fiber optic networks. So eventually.
We will replace those of wireless connection with a much faster fiber optic links to every home and we will just push our wireless equipment further out.
How dare to reach even more remote housing areas. So that's how we plan to use fixed wireless access in Canada, and the U.S., but.
It needs due to.
To start with spectrum that we had started to acquire and accumulate on the.
Oh, a specific to due to the U.S. with T mobile I'm not too sure I cant really comment about their strategy there, but I just described what we're thinking about a fixed wireless access.
Okay. Thank you.
As a reminder to ask a question. Please press star followed by the number one.
Your last question comes from Matthew Lee from Canaccord. Please go ahead. Your line is open.
Hey, good morning, So just on the business front can you maybe give us an update on the U.S.B. to be performing have you started to see a recovery in that market.
Ah, yes, so our total business sector in Q4 was a half a point so that's a half a percentage point a year over year, and that's where the two countries and actually the two countries have grown a little bit during the quarter. So overall, if you look at the surface.
As we offer.
Internet and phone lines I've done fine normally we're growing fast this time, obviously with dependent make we're not growing really but it's a stable business.
And and this is offset was mainly for the last quarter, but the offset on the video side.
First <unk> hotels and restaurants, so when in certain regions or they are close them. We don't provide the service during that period of time.
So it's been spotty during during the last six months, but overall, we are fine we Ah that's something we're watching closely and when you think also about the future of the last thing a business will want to reduce is the internet connection on that the business is not there anymore. So.
So far we've been we've been doing okay, but not growing at the pace we're used to.
That's fair and then in terms of subscribers in Canada. Your numbers. Your second to second half numbers are really all it is there anything driving that beyond the usual demand for speed upgrade or.
Are there any one time items that have driven that subscriber growth.
Yeah. So there is no one time I sound like sometimes we will have big bulk agreements in Florida that will that will be there in the quarter. Its not the case this quarter. So it was more spread towards the.
There are certain areas and.
Again, we we typically grow internet, but it's been faster than usual as you pointed out and we think it's a large part due to the <unk> and that mix. So our competition in the U.S. outside Florida, which is a special case that outside Florida is by far the SL competition.
Ah so that means that the video is carried through satellite.
It means that the Internet, there's limited that typically 15, megabits, whereas we offer a gig to 90% of the territory and into your west.
So that's mainly yet and that's a lot of people moving from slower a.
Competitors and also I would say that I mentioned earlier.
Some people that are mobile only and now are working partially or fully from home and watch a dedicated line because it cuts that's the best way of getting a quick thought on wireless.
Right. It does it does totally to do with the products, we offer a much faster product in most cases its unlimited. It starts at 120. It goes to a gig didn't speed. So the D.S.L. competition in the mobile only competition can cope with that.
All right fair enough and then just lastly.
On the acquisition front into you asked I mean, it looks like the competitive intensity for U.S.K. because it started heating up from an M&A perspective.
Is your pipeline so strong there or are you know maybe has that lightened up.
Ah, yes, so there's a and that's something we've said before it is about 30 to 40 companies that could be of interest. This if they worked for cell and and we we were happy to proceed pulls due diligence.
There's been a reduction in in intensity or in the beginning of the pandemic. So starting in March. So some deals were called and we've seen some deals come back to market you probably saw something else.
So back.
Back to normal and we're always interested in looking for acquisitions.
And the latest one has been in Canada. It was top on our list the DMV acquisition.
And Oh, we are definitely continuing to to be in the market for more acquisitions.
All right. Thank you very much.
We have no further questions in queue I'd like to turn the call back over to the presenters for any closing remarks.
Okay, well. Thank you everyone that there will be a buck or first quarter earnings results in January so first to call us if you have any questions at any time.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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