Q2 2023 Cogeco Inc and Cogeco Communications Inc Earnings Call
Speaker 2: Good day and welcome to Cogeco Inc. and Cogeco Communications Inc. Q2 2023 earnings conference call.
Speaker 2: Today's conference is being recorded.
Speaker 2: At this time, I would like to turn the conference over to Mr. Patríd Ouimé, Senior Vice President and Chief Financial Officer of Cogeco Inc. and Cogeco Communications Inc. Please go ahead, Mr. Ouimé.
Speaker 3: Good morning everybody and welcome to this second quarter conference call which Philippe Jettet and I will take as usual. So before we begin this call I'd like to remind listeners that the call is subject to four looking statements which can be found in our press releases issued yesterday.
Speaker 3: So I'll turn the call over to Siddharth. Good morning everyone and thank you for joining us for the second quarter results of fiscal year 2023.
Speaker 3: We are reporting consolidated results which are in line with our expectations.
Speaker 4: While the industry continues to be impacted by increasing macroeconomic pressures and a more competitive environment, we remain focused on balancing subscriber growth with financial performance while remaining disciplined with our cost structure.
Speaker 4: We continue to execute successfully on our fiber-to-the-home network expansions program, with the addition of 32,000 homes passed during the quarter.
Speaker 4: Which brings us to more than 140,000 home paths over the last 18 months.
Speaker 4: This is a 5% increase to our network during the period.
Speaker 4: Our reliable iSpeed Network, innovative digital product offering, and local customer service have already enabled new internet subscriber additions in these areas.
Speaker 4: which position us well for the future.
Speaker 4: For mobile, we are encouraged by the government's indication that it is looking to support increased competition in the wireless space.
Speaker 4: We remain focused on meeting regulatory requirements, which we expect shortly, leading to the negotiation of wholesale rates with incumbents.
Speaker 4: As a reminder, Cogeco owns such spectrum in 91% of its Canadian footprint, which is a requirement for MVNO access.
Speaker 4: We are also pleased with our March acquisition of OXIO, a telecommunication operation serving about 48,000 residential customers in Quebec, Ontario and Western Canada.
Speaker 4: With this great addition, we now have a second brand in Canada to serve younger and price-conscious customers with a fully digital customer service.
Speaker 4: Looking further into the future, we also intend to explore longer-term opportunities by allocating up to $100 million of capital to new growth opportunities.
Speaker 4: These funds will be invested over a five-year period with the objective of generating attractive long-term returns.
Speaker 4: The goal is to create
Speaker 4: new opportunities for growth in a fast changing environment while building on our innovation.
Speaker 4: operational experience, and minimizing investment risk due to the limited size of each investment.
Speaker 4: Additionally, like the government subsidized fiber expansions that we are undertaking in Canada,
Speaker 4: We remain interested in participating in similar extensions under the Broadband Equity Access and Deployment funding program in the United States.
Speaker 4: Each state will run its own process allocating funds by region, which we expect to begin later in the calendar year.
Speaker 4: In terms of recent notable ESG deployment development
Speaker 4: Cogeco has been ranked for the fourth consecutive year among the world's 100 most sustainable corporations, according to Corporate Nights.
Speaker 4: This ranking results from a rigorous assessment of over 6,000 companies around the world, generating more than US$1 billion in revenue.
Speaker 4: Kojiko's performance was particularly recognized for its board diversity, carbon productivity, and sustainable revenue and investment.
Speaker 4: I would also like to highlight that we recently published our annual ESG and Sustainability Report.
Speaker 4: as well as our climate action plan which detail our environmental, social and governance commitments.
Speaker 4: Initiatives and performance aim at driving sustainable growth and business resilience.
Speaker 4: I will now review our operational results.
Speaker 4: Let's start with our US operations.
Speaker 4: As mentioned earlier, we continued our fibre network expansion where we added 17,000 homes passed this quarter, or 68,000 homes passed over the last 18 months.
Speaker 4: At Breezeline, we continue to focus on growing the customer base.
Speaker 4: And as you see, we have made progress. Outside of Ohio, we grew our internet customer by 1,700, both from our current and newly served areas. COVID-19 pandemic it'song away.
Speaker 4: The product mix has also improved with a greater proportion of new connections taking faster Internet speeds and therefore driving a higher average revenue per unit.
Speaker 4: in Ohio.
Speaker 4: Net glasses stood at 5500.
Speaker 4: which we would obviously prefer to be a net gain, but is nevertheless an improvement over previous quarters.
Speaker 4: There is still more work on our plate to return to Rotin, our Internet customer base in Ohio.
Speaker 4: and it will take more time to gain greater brand awareness in that market.
Speaker 4: but we remain focused on our plans where every step counts to set the foundation for future growth.
Speaker 4: Breezeline also continued to roll out its IPTV product in Ohio to all its existing customers, identifying and interconnecting its network fully to Breezeline's core.
Speaker 4: also continued to roll out its IPTV product in Ohio to all its existing customers, and densifying and interconnecting its network fully to Breezeline Score. Moving to the Canadian operations.
Speaker 4: We accelerated our construction efforts to connect more homes in unserved and underserved communities in both provinces, where we added about 15,000 homes passed during the quarter and 73,000 homes passed during the quarter and 73,000 homes passed during the quarter.
Speaker 4: homes passed over the last 18 months.
Speaker 4: As a reminder, these fiber-to-the-home expansion projects are mostly done in partnership with governments and deployed in areas which do not currently have high-speed Internet providers.
Speaker 4: We are pleased with the results.
Speaker 4: that we are seeing from these expansion projects, which have contributed to growth in customer editions.
Speaker 4: Overall, our Canadian team did an excellent job executing on effective sales and marketing strategies.
Speaker 4: which led our internet customer base to grow this quarter by 7,800 across our traditional markets and these newly served areas.
Speaker 4: which led our internet customer base to grow this quarter by 7,800 across our traditional markets and these newly served areas. The Canadian business has also improved its ARPU.
Speaker 4: with an improved customer product mix.
Speaker 4: For Cogico Media, our stations remained at the top of the ratings.
Speaker 4: confirming once again our leadership position, even if we are operating in soft advertising markets.
Speaker 4: In the meantime, we continue to expand our multi-platform audio content options with more digital ad tech solutions.
Speaker 5: Now let us...
Speaker 4: Let me turn the call over to Patrice, who will provide more details on our financial performance for the quarter.
Speaker 3: Thank you for that. So before going into the details of our Q2 financial performance, unless otherwise indicated, I'd like to highlight that my comments will be provided on a constant currency basis.
Speaker 3: So in Canada, at Cogical Connections, the revenue was up by 1.7%, resulting mainly from the higher internet service customer base and higher revenue per customer.
Speaker 3: EBITDA was up by 3.1% due to the revenue increase and stable operating expenses.
Speaker 3: In the US, Breezeline's revenue was down 5.2%, mainly driven by customer losses in Ohio over the past year, and an overall decline in video and phone customers. Partially offset by high speed internet service additions outside Ohio over the past year.
Speaker 3: a higher revenue per customer, and a better product mix.
Speaker 3: EBITDA decreased by 7.8% reflecting lower revenue and some margin contraction related to the unusually low spending in marketing and advertising and less staff last year in Ohio while the assets were still operating under the previous owner's brand.
Speaker 3: Turning to Cogical Communications, at the consolidated level, revenue was down by 1.8%, which led to a decline in adjusted EBITDA of 1.9%, mainly due to Breedline's performance that I just explained. Global intensity was 21.2% due to increased activity related to the pandemic.
Speaker 3: rates and a decline in EBITDA.
Speaker 3: excluding network expansion projects, free cash flow would have decreased by 15.3%.
Speaker 3: During the quarter, we continued to be active in our share buyback program at a faster pace than in previous quarters based on the low stock price with a purchase of 845,000 shares for $64 million.
Speaker 3: A dividend of $0.77.6 per share was declared for the quarter, which is an increase of 10% over the prior year.
Speaker 3: We anticipate dividends to represent a payout of about 24% of our free cash flows this year, including network extensions.
Speaker 3: As of the end of the quarter, our net debt to EBITDA ratio was 3.4 times, which includes the impact of the appreciation of the US dollars against the Canadian dollar.
Speaker 3: Our balance sheet remains strong with available liquidity of nearly $1.2 billion at the end of the quarter.
Speaker 3: As it relates to Cogeco Inc., revenue declined by 1.6% and EBITDA by 1.8% as a result of Cogeco Inc.'s performance.
Speaker 3: Radio operations revenue increased by 5.3% versus last year, while the market remained soft.
Speaker 3: As for buybacks, Cogeco acquired 118,000 shares during the quarter and a dividend of 73.1 cents per share was declared for the quarter, which is an increase of 17% versus the prior year.
Speaker 3: Now in terms of our outlook, we are confirming our fiscal 23 financial guidelines as issued in January for both corporations.
Speaker 3: Although we continue to experience revenue pressure in the U.S., we have implemented several cost mitigation measures to partially offset this.
Speaker 3: At Kojiko Connection, we expect a low to mid single digit growth in revenue for the full year driven by organic growth from our traditional and newly built areas and contribution from the recent acquisition of OXIO.
Speaker 3: For AVIDA, we expect low single-digit growth, which reflects overall higher optics to drive customer growth, and last year was also impacted by favorable year-end adjustments.
Speaker 3: In terms of quarterly cadence, we expect sequential growth in revenue in Q3, with year-over-year percentage increases modestly higher than in Q2.
Speaker 3: As it relates to EBITDA, we expect margin contraction due to overall higher OPEX to drive customer growth, including with our OXO brand which is in a high growth phase.
Speaker 3: Therefore, we expect a small year-over-year decline in Ebidigm Q3, which was already built in our guidance.
Speaker 3: At Breezeline, we expect in constant currency a low single-digit decline in revenue for the full year, while EBITDA is expected to be slightly negative.
Speaker 3: In Q3, we expect a similar mid-single digit decline in revenue as we saw in Q2 due to customer losses in Ohio over the past year, partly offset by growth in Internet customers elsewhere and a better product mix as well.
Speaker 3: As for EBITDA, we expect a low to mid single-digit decline in Q3 from lower revenue, partly offset by lower optics.
Speaker 3: Below EBITDA, I'd like to note that acquisition, integration, restructuring and other costs are expected to be broadly similar to the second half as the first half.
Speaker 3: In terms of CapEx, we've been pleased with the results of our network expansion so far, and our guidance accounts for anticipated increases in the back half of the year, which is typically a busier time to build in the summer months.
Speaker 3: And, as noted in the past, our guidance range already reflects investments related to strategic growth initiatives, including preparing for an eventual launch of mobile services.
Speaker 3: While free cash flow is therefore anticipated to be lower in the second half of the year, it will represent still a strong growth on a year-over-year basis, most notably in Q4. And now, Philippe and I will be happy to take your questions. Thank you.
Speaker 2: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear a three tone prompt acknowledging your request.
Speaker 2: Should you wish to decline from the polling process, please press the star followed by the two.
Speaker 2: If you are using a speakerphone, please lift the handset before pressing any keys.
Speaker 2: If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.
Speaker 2: Our first question comes from Aravinda Galapavich from Candid Court Genuity. Please go ahead.
Speaker 6: Good morning, thanks for taking my questions. I'll just start in Canada. A pretty good broadband net ads number, obviously, that you've reported. It's good to see. Can you just maybe help us understand how that breaks down between.
Speaker 6: of your traditional footprint.
Speaker 6: and your network expansions and then I guess connected to that how you see sort of the sustainability of that strength that we saw in Q2.
Speaker 3: Sure, so it's actually a mix of both. We are now finally reaping the benefits of the network extensions, especially the ones in Quebec, which are not fully done yet, but we're advanced and we have delivered many doors already.
Speaker 3: Ontario will come a bit later as we're in the building mode right now. So we do expect as we deliver doors in these network expansion areas to continue to see the positive effect for quite a long time actually. As for the other areas, we do adjust our marketing and our go-to-market approach on a regular basis as the market evolves.
Speaker 3: So it did contribute to the positive numbers you saw in Q2. Obviously, PSUs in our traditional sectors or Internet additions in our traditional sectors can be volatile from one quarter to another, but our goal is always to produce a positive number as we've been doing in the past.
Speaker 6: Okay, thanks for that. And then I was wondering if you can expand a little bit on how things are going in the US, A, with respect to Ohio, the stabilizing there and sort of, I know you talked about in the last quarter about sort of the rollout of your new IPTV product there. So how are you seeing retention levels and...
Speaker 6: improvements in Ohio that would be helpful. Maybe specifically for Patrice, when I look at the guidance that you've indicated for the U.S., I think prior quarter you mentioned low single digit growth there. We're probably looking for low single digit growth.
Speaker 6: declines there. Maybe just talk to us. Is it just the sub losses or is there anything on the pricing side, competitive side that's sort of adding to sort of that barrier?
Speaker 3: Great. Okay, so I'll take your questions on this. So in Ohio, obviously, we did make the changeover from WOW to our brand a few quarters ago. And you can see that we're still, we still lost some customers.
Speaker 3: Become known in the market because we have ramped up our marketing activities As we have we are a new name in the in the area and we So we do expect this and we'll see the idea is to to reduce these numbers from what we saw what we've seen in Q2
Speaker 3: We did lose 5500 customers in Ohio in Q2 and we are planning to see lower numbers in Q3 and Q4.
Speaker 3: In terms of the change in color, as part of our guidance for the U.S., it's primarily due to the losses we've seen in Ohio. We are seeing some article pressure.
Speaker 3: obviously in Ohio, in other places as well, as it is more competitive than it used to be, given the fixed wireless increase in intensity in competition. Across the US in general, not as much as we've said in the past, for us it's more in Ohio than elsewhere, but it has an indirect impact in our pool.
Speaker 3: So going forward for the balance of the year, I would say in the U.S. it's a mix of PSUs that are a bit softer than what we had planned initially and a bit of pressure on our pool as well.
Speaker 6: Thanks, which is an end of question for me.
Speaker 6: you know through the change in leadership that you see and What seems to us like serving a renewed? Push to make sure that what's on paper in terms of MPNO is actually implemented. Can you just give us a sense of? What you think sort of the next steps would be I mean?
Speaker 4: What are you waiting for? What do you have to do? How can you think about timelines here? Yes Aravinda, it was just a bit difficult to understand your question But I think you're asking about our next step for MVNO in Canada. Is that it?
Speaker 4: How can we think about timelines here? Yes Aravind, it was just a bit difficult to understand your question, but I think you're asking about our next step for MVNO in Canada Is that it? Yes, that's correct.
Speaker 4: As I said earlier, we do have to qualify for the MVNO framework in Canada.
Speaker 4: With Spectrum, we actually own 91% of Spectrum in our operating footprint.
Speaker 4: The Ts and Cs from the regulator will actually be approved pretty soon. We're all awaiting the green light from this federal program, so it's coming from the CRTC. We would be...
Speaker 4: in negotiating with the three MNOs the all-sale rates.
Speaker 4: and therefore after the subsequent steps you'll find us in the market. So I said on the previous call that
Speaker 4: At the end of this fiscal, we would update and provide more on our commercial plans, but right now it's more negotiating good rates with the existing M&Os in our footprint.
Speaker 6: Okay, great. Thank you. Thank you.
Speaker 2: Thank you. The next question comes from Drew McReynolds of RBC. Please go ahead. How many shots do you have left?
Speaker 7: Thanks very much and good morning. Just a follow up to Erivin's wireless question. Just in the wake of the Roger Shaw Quebec or transaction approval just.
Speaker 7: I'm wondering, Philip, if that at all kind of influences your roadmap here in wireless and from a...
Speaker 7: government support perspective. Obviously the language coming out of ISED and indirectly to CRTC is to certainly support.
Speaker 7: operators, regional operators like yourself, do you sense that this is going to expedite you know the process here towards launch and particularly once you get into negotiations with the incumbents do you think we're going to kind of see quicker and more kind of constructive outcomes here from those negotiations.
Speaker 4: Thank you. Thank you, Drew. So, for the first part of your questions, it certainly provides more predictability throughout the industry now that this transaction is over.
Speaker 4: We know what to expect of it. The next steps will actually be better for everyone throughout the industry. The regulator has clearly supported more competition in wireless. So I think we will see.
Speaker 4: the next step on folding with more predictability. The three players engaged in that very large transactions are focusing on the West, we...
Speaker 4: We have heard some of their plans, more to come, but I think now every player is at a better place understanding.
Speaker 4: the conclusion of the transaction and getting ready for the next steps, negotiating partnerships and rates.
Speaker 3: On OXEO, at the high level it should add about 1% to our revenues at Cogico Connection during the year, but we will have owned it for 6 months basically during our fiscal year.
Speaker 3: On the full year, it's a bit more than 2%. On the EBITDA front, it's not a meaningful number because one thing that's important with OXEO is it's actually growing really fast.
Speaker 3: And with these types of businesses, which generate slightly lower RPUs than are in our traditional business, again it's a different business model that's digital only, less products as well. Typically when you're in a high growth mode you need to invest in acquisition costs, so that's where we are. So that's why the idea...
Speaker 2: Thank you. The next question comes from
Speaker 6: Mayor Yaggi of Scotiabank, please go ahead. Yes, thank you for taking my questions. Bonjour, tout le monde. Julie, I just wanted to start maybe with your guidance for the US business. Okay, thank you.
Speaker 3: When I look at the first half of the year on EBITDA, constant currency, you're around minus 5.5%, minus 5.6%. In your prepared remarks, you mentioned that for the year, you expect it to be...
Speaker 6: declining in the small single digit. So that is implying quite a bit of a turnaround in the second half. So I'm trying to understand what will drive the growth in the second half to end up with a small decrease.
Speaker 6: declining in the small single digit. So that is implying quite a bit of a turnaround in the second half. So I'm trying to understand what will drive the growth in the second half to end up with a small decrease for the whole year. Cause when I look at your margins.
Speaker 6: for the US in the second half of 2022.
Speaker 6: they were already down to the levels that you are running at right now. So are we to expect margins to improve in the US in the second half of this year? And if so, under what reason?
Speaker 3: Yes, so we are expecting a margin improvement in the back half of the year. One of the reasons is that we've, as I said in the preferred remarks, we've looked at our cost structures and identified additional cost savings given the pressure on revenue in the U.S.
Speaker 3: That's one reason. There's also, for example, in Ohio we have not put price increases in this year, so there will likely be some later on during the year, which will benefit the back half of the year. So that's another reason. So we do expect to see a stronger Q4.
Speaker 3: and the Q3 that would be a bit better as I said than Q2 basically.
Speaker 6: Okay, and the price increase in Ohio, you're doing it in the midst of price pressure that you're seeing from other participants in the marketplace. Are you worried that this could increase the churn and we could see a reacceleration of subscriber losses in that part of your business?
Speaker 6: And just to go back on maybe one comment you made, you mentioned the small improvements that you expect to steadily see in Ohio, but if we look at the overall US business, are we to expect or should we be on the lookout for broadband net ads to turn positive sometime this year?
in terms of rate increase. We're not expecting this to become another major factor of churn and the rate of the increase is actually lower than the inflation rates that we can...
see and read every day in the US. So we very diligently work our cost structure through OpEx reduction to...
to have a just right increase for that market.
Obviously we'll be able to talk more about pricing strategy later on as we go on because we generally don't talk too much about it before we make our decisions for competitive reasons
And then for the Internet additions in the US, so as you saw this quarter we did have a positive number except for Ohio, so that's why with Ohio it was a negative number. To your question... Yes?
We do expect in Q3 to still be negative net of Ohio because the additions elsewhere will probably be slightly lower than what we'll do in Ohio. Again, it's still early in the quarter so we'll have to see where we end up.
And for Q4, the idea is obviously we're aiming to be neutral, but it's a bit early to talk about it.
Okay, and my last question is on the guidance again.
The 1% contribution from OXEO, is that implied already in your guidance or we should be adding it on top of?
your guidance that you provided for the year. Because you made that transaction after you provided your initial guidance. So I'm trying to figure out if you had already included it in your guidance or not.
Yeah, it is in the guidance. We did see a bit more pressure in the US in terms of revenue since last quarter for the reasons I mentioned. So a bit in Ohio, a bit of ARPU as well. And OXEO is included in our guidance.
Yeah. Okay, so it makes up for the weakness that you felt during the quarter, during the last couple of quarters to pad your, to get into your guidance. Sorry, one last question on CapEx for wireless. Does the 100 million over five years include...
wireless expansion or it's capex for cable? You mentioned the 100 million in your prepared remarks. Is that pure cable or it's some allocation for wireless as well?
Well first on wireless we are working on the capital light model and again this year in our guidance everything is included even in even mobile so there won't be additional capex required for mobile in-ear. We will talk about the future when time comes but we are working on a capital efficient capital light model.
but could.
pay back over the longer term. These dollars will actually have a long-term return model under small investments.
We don't necessarily have a target in mind at this point, so it will just come in the future, but assuming we do make some small investments, they would be accounted for as investments, not CATX.
Okay, okay. Thank you very much. Thank you.
Okay, thank you very much. Thank you. The next question comes from
Jerome Dubérel of Desjardins, please go ahead. Yes, bonjour, thanks for taking my questions. The first one I have is on the BEAT program in the US. You mentioned on the call that you expect this to start a bit later this year.
Are we talking about the process starting or actual dollars being allocated? It's the process starting. It's a two-level process in the United States. So it has to be defined at the federal level through the NTIA and then assigned to each state.
and each state will actually define the local rules to funnel the money available in the market.
Right now the US is still at the stage where they are optimizing maps, like terrain maps, and identify how many households are included in every area.
And Geron, typically there's a delay between winning some of these, because these are subsidized bills, between the time you win and we'll see how we do and our interest level depending on the opportunities there, because we still don't have all the details. But once you do win an area, you do need to do some work for the
investments in terms of new networks. Does that include the BEE program or and do you expect some some additional government participation that we may not have factored in so far?
Now the BEAP program will actually be a program that will that was sent on its own part of our major initiatives. Again the fun here is really to focus on the long term. So we would like to
to have three cylinders, a short-term, a mid-term and a long-term funnel of activities or opportunities to generate growth. We're actually initiating a cylinder for the long-term. Small things that could have a payoff later in time.
Okay, thanks. And then last one on wireless. You provided good color on the timeline here, but correct me if I'm wrong, but you also sort of control the timeline of your eligibility, right? Is it You
Is it fast for you to become eligible and maybe have your home mobile network? Or you're just not even sure this is still a requirement from the government? We know it is a requirement. We have clarified that with
about the CRTC and I said it does not need to be very big in scope. We understand exactly what it needs to be and as I said it will come soon enough to qualify and have us negotiate with the MNOs. The key for us is really to have a lot of work to do.
find those rates, those wholesale rates as quick as possible and then we can...
see what other plans will be made up after that. That's all for me, Mr. Buechel. Thank you. Once again, ladies and gentlemen, if you do have a question, please press star one at this time. The next question comes from Matthew Griffiths of
Bank of America, please go ahead. Hi, good morning. Thanks for taking the question. Just one on your comments about, I guess, going forward in the Canadian footprint. You mentioned to expect some higher capex to drive growth in the back half of the year.
I was just wondering, is that related to the new territories that you're opening up or is that mostly related to kind of increased competition that we're seeing in the market? And if it's the latter, do you expect that to continue? Should we be assuming this carries on?
Secondly, on the Oxio acquisition, I was wondering if you could elaborate on your plans for the Oxio. What should we expect to see Code2Code do with that platform? On the expansion, it's actually the former.
So it's related to our expansions. And I would say outside the expansions, our cat-ex level can fluctuate from quarter to quarter, but overall is relatively stable. And the expansions is where there's a lot of outside construction.
Maybe I got that wrong, but sorry if I said CapEx when I was asking the question, but I meant to ask about OpEx.
Okay, okay, sorry. And I think I heard CapEx but I could be wrong as well. So, yes, so basically we do have some investments we're making and one of them is in the OXO brand leads to your other question.
where we're seeing a lot of growth and basically there's a portion of investments that comes with it. Otherwise, it's other elements that we're just seeing for the back half of the year, but we're still remaining within the guidance that we have provided.
Did you want to comment on the OXIO?
So, just before going to OXIO, to us it's really striking always the right balance between growth in terms of PSU and the business overall and returning capital to...
shareholder and increase shareholder value. We do have a number of very good expansion programs contributing in the short and the mid term as well to the growth of the business. We're allocating to these programs as they come with partnership with governments and subsidies.
So that's really good to create waves of growth for the business. Quebec had a couple of waves and we can already see the payoffs now. Ontario is following and we're preparing, as we mentioned, beads in the US. So we're creating these heart paddles of growth for the organization.
In this context, you should think of OXEO as just another wave of growth. They will continue to operate almost independently of the Cogeco brand in the market. We are going to keep their brand. They are operating in five provinces. We will go and capture growth.
If I may follow up on that, so how do you balance, it seems like the industry as a whole is adding this vector of potential growth and if you're all looking at this wholesale vector to support growth, what do you feel the net effects of that would be? Because obviously
this is one vector for you, there's other players that cumulatively it's three vectors of potential decline that are coming at you, how do you see that balancing in the industry?
Well, it's all about your agility in the end, your cost structure. With OXIO, we have a fully digital model. It's a low cost structure, high growth. I feel really good about capturing volume.
and by definition outside of our footprint. So feel good about the possibility there with Doxio. And if I could just sneak one other one in just on the dividend.
Is there a target payout ratio that you guys have in mind as you increase the dividend? Or is it more focused on sustaining the current growth rate going forward?