Q2 2025 Cogeco Inc Earnings Call
Good day and welcome to the Cogeco Inc. and Cogeco Communications Inc. due to 2025 earnings conference call. Today's conference is being recorded. At this time, I would like to turn a conference over to Mr. Patrice Wimett, Chief Financial Officer of Cogeco Inc. and Cogeco Communications Inc.
Please go ahead, Mr. Wimett.
[inaudible]
Thank you. So good morning, everyone. Welcome to our second quarter results conference call. So as usual, before we begin the call, I'd like to remind listeners that today's discussion will include estimates and other forward-looking information.
We ask that you review the cautionary language in the press releases, MMDNA issued yesterday as well as in their annual reports regarding the various risks, assumptions and uncertainties that could cause actual results to differ.
With that, I will now pass the line to Fred Behal for opening remarks. Thank you. That is good morning, everyone. We're pleased to share our Q2 results today and also provide an update on our transformation.
As a reminder, our plan is to create additional shareholder value by increasing our cash growth, sustaining our dividend growth, and reducing our debt, with the option of also resuming share buybacks at one point in the future.
Now more specifically we expect free cash flow to grow materially over the next two years and let me be clear. This is not just an aspiration. It's a plan.
This increase in cash will be enabled, in particular, by the natural end of a capex investment cycle in rural network built and to a lesser extent network modernization efforts having reached our objectives.
In addition, our relatively low dividend payout ratio as a percentage of cash provides sustainability and room for continued dividend growth.
During the second quarter, we continue to pursue our three-year transformation program to further accelerate our performance.
With the same five priorities we've been communicating since last year. That is Canada US of synergies, digitization of cells and service interactions.
Advanced Analytics Analytics.
Network Expansion Completion, and wireless ramp up.
The merger of our US and Canadian teams is now well behind us and we're very pleased to see the high level of engagement and collaboration of our colleagues on both sides of the border.
While a lot of organizational synergies are already being captured from this change, we're just starting to scratch the surface around technical and operational synergies.
On the water strength.
US volumes are starting to ramp up following an initial tuning period.
And the preparation for an upcoming Canadian wireless launch is progressing well.
We've now opened pre-registrations for our existing Canadian Waterline customers.
As part of our wireless pre-launch lead generation campaign.
and demand has exceeded our expectations so far.
In terms of operational performance
Second part quarter results were ahead of expectations as the teams continued to execute well and as we deferred certain investments to the back half of the year.
More specifically, our transformation efforts contributed to the expansion of our consolidated EBITDA margins
Our fiber to the home expansion program added close to 7,000 new homes passed into quarter, mainly in Canada.
In Canada, we also experienced another quarter of strong internet subscriber metrics, despite ongoing competitive intensity in the market.
And in the US, our customer satisfaction metrics and Ohio performance continue to show your over-year improvements.
At Cogeco Connection, our Canadian telecommunications business, we grew our internet customer bays by a total of 8,300 subscribers to squatter.
We've been adding customers under both the Cogeco and Octuel brands over the past year.
Our Ontario Subsidizing Network expansion program will continue throughout fiscal 2025 with an expected completion in fiscal 2026.
As a reminder, our Quebec Network Expansion Program was largely completed in our previous fiscal year, and we're very satisfied with our customer additions and completed regions of Quebec and Ontario to date.
with higher customer penetration levels then target.
We've now increased the number of Canadian homes passed by nearly 145,000 since the beginning of fiscal 2022, primarily via a fiber to the home and in collaboration with governments.
At Breeze Line, Ebidone constant currency was stable with last year as revenue pressures from industry headwinds were offset by transformation related cost
We're seeing increasing subscriber tenure resulting from higher customer satisfaction and an improved mix of higher margin services.
As a greater proportion of our breeze line customers, taking increasingly fast internet speeds.
This has helped offset the decline in subscribers for entry level internet services due to competition.
At Cogeco Media, the radio advertising market faces ongoing challenges. However, our digital advertising solutions continue to be a growing contributor to revenue, and our listener engagement remains strong.
In Montreal, for example, 7 of the 10 most listened to radio programs in the city come from our stations.
And now let me turn the call over to Patis to provide more details on our financial performance for the quarter.
Patrice Ouimet: Thank you Fred. So let's start in Canada. So Cogeco connections revenue declined by 0.9% and driven by the lower revenue per customer due to fewer video and wireline phone service subscribers.
Patrice Ouimet: and a competitive pricing environment, pricedly offset by a growing internet subscriber base under both the Cogeco and Axel brands over the past year, and a contribution from the NRBN acquisition.
Patrice Ouimet: Adjusted EBITDA declined by 2.8% in constant currency due to lower revenue and higher operating expenses to drive subscriber growth.
Patrice Ouimet: In the US, Breeline's revenues declined by 4.5% in constant currency due to the cumulative decline in the subscriber base, especially for entry-level services and non-internet services partly offset by an improving product mix.
Patrice Ouimet: Adjust the da Bada was stable driven by cost reduction initiatives and operating efficiencies.
Patrice Ouimet: Turning to our consolidated numbers for Cogeco Communications at the consolidated level revenue declined by 2.7% and EBITDA was stable in the cost and currency.
Patrice Ouimet: The Declining Revenue was driven by lower revenue in both the US and Canadian segments while the stable adjusted EBITDA was due to operating efficiencies and lower corporate
Patrice Ouimet: Diluted earnings per share declined by 20% and reported currency due to higher DNA expenses.
Patrice Ouimet: Higher acquisition, integration, and restructuring expenses, and higher taxes, partially offset by lower financial expenses and the appreciation of the US dollar.
Patrice Ouimet: Capital Intensity was 21.6% down from 23.4% last year due to lower spending in Canada, partially offset by higher spending in the US.
Excluding network expansion projects, capital intensity was 19.4%.
Patrice Ouimet: Free cash flow and constant currency increase by 12.8% largely due to lower capital expenditures and financial expenses.
Patrice Ouimet: Our net debt to add adjusted EBITDA ratio was 3.4 turns at the end of the quarter, unchanged from Q1, due to the negative impact of exchange rates on our U.S. denominated debt, as it takes more time for EBITDA to fully reflect the FX impact.
Patrice Ouimet: We continue to target a net depth to EBITDA ratio in the low returns range over time.
Patrice Ouimet: And we declared, accordingly, dividend of 92.2 cents per share.
Speaker Change: At Cogeco Inch, revenue and cost incurrency decreased by 2.7% and adjusted the revenue that was stable as a result of Cogeco communication performance.
Speaker Change: Media's operations revenue decreased by 2.7% due to challenging competitive dynamics in the radio advertising market, partially offset by positive contributions from digital advertising revenue.
Speaker Change: And a dividend of 92.2 cents per share was also declared for the quarter at Cogeco Inc.
Speaker Change: Now, turning to financial guidelines for Cogeco Communications fiscal year 2025.
Speaker Change: We are maintaining our annual guidelines, which we first provided to investors in October .
Speaker Change: As it relates to the upcoming Q3, we both, sorry, we expect both consolidated revenue and adjusted EBITDA and constant currency to decrease in the low single digits compared to last year.
Speaker Change: Capital intensity is anticipated to be approximately 350 basis points of the most Q3 of last year.
Speaker Change: At Cogeco Connection, with the acquisition of NRBN Now Fully Lapt, we expect you to re-revenue to decrease in a low single digits.
Speaker Change: Adjusted EBITDA is expected to decrease in the low to mid-single digits, reflecting lower revenue and higher operating expenses, which include spending related to subscriber growth and transformation initiatives.
Speaker Change: At Breeze Line, we expect in constant currency a mid-single digit decrease in revenue versus last year, reflecting a lower subscriber base.
Speaker Change: And we expect stable EBITDA you over a year as operating cost discipline and lower video content costs are expected to offset the revenue decline.
Speaker Change: Below the other line at the consolidated level with our restructuring program largely complete, we expect acquisition, integration, and restructuring costs to be approximately 4 million in Q3, which partially relates to IT cloud implementation costs.
Speaker Change: In regard to our Q3 financial expense, we expected to be about $2 million higher than reported in Q2 using today's FX rights.
Speaker Change: At Cogeco Inc we are also maintaining financial guidelines and now Fred and I will be happy to take your questions.
Speaker Change: Thank you. 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 touchtone phone. You will hear prompt that your hand has been raised.
Speaker Change: Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please let the hands up before pressing any keys.
One moment, please feel your first question.
Speaker Change: Your first question comes from Mayor Yagi with Scotiabank. Your line is now open.
Mayor Yagi: Great. Thank you for taking my question and thank you for
Mayor Yagi: detailed the outlook for history and the rest of the year. So I wanted to, you know, just focus a little bit on the US side.
to start.
Speaker Change: you're having much better turn metrics in Ohio. What else can you do for the rest of the
Speaker Change: business in the US to stem the design in broadband disconnections. We saw the year-on-year disconnections accelerate a little bit here in Q2, so versus Q1, so can you maybe just discuss what drove that acceleration and the disconnections and then.
Speaker Change: Do you have any plan to attack the market? We've seen some of your peers in the cable industry lean on wireless.
Speaker Change: to support the cable metrics, you know, Comcast is launching a plan shortly. You know, what can you do to work on those metrics to improve them? Thank you.
Hi, my heart's red.
Speaker Change: Maybe I can unpack the question first by talking about the market in the US and then I can talk about some of our performance levers.
Speaker Change: So, it's true that we're showing sequential improvement in our US PSUs. I would say that the competition in the market remains elevated.
Speaker Change: We, over time, we do expect FWA to slow down a bit and this is just based on the numbers that the three FWA players report in terms of their future targets.
Speaker Change: You look at those numbers and we should see a deceleration based on what they're forecasting. We have not seen that deceleration yet, but it should come over time.
Speaker Change: We've actually seen over the past few weeks a slight further up tick.
Speaker Change: In competition, as some of the fiber players, for example, in the Northeast, there was one in particular that increased their promotional intensity in recent weeks.
Speaker Change: And we're feeling it in our Q3 PSU right now. Now that being said that may be a tactical and short-lived so I wouldn't read too much into it.
Speaker Change: As it relates to the other part of the question which is what can we do? We're seeing an acceleration of our wireless cells which as you pointed out over time do become.
Speaker Change: does become a contributor to cable co-performance. You've seen it from the big two out there.
Speaker Change: So that's one. The other one is we're exploring how we could possibly use a dual grant strategy to compete in the US market, leveraging, for example, an oxyo-like strategy. We're not ready to announce anything today, but this is something that we're looking at.
Thirdly as the OTT players.
Speaker Change: keep raising their prices and some of these prices are really getting quite high.
Speaker Change: We're seeing green shoots of possibility celebration in US TV court cutting and last but not least there's there's a lot we can do
in terms of continuing to improve.
Speaker Change: are ongoing sales and marketing blocking and tackling which we end the process of doing right now. I would also add in conclusion that we're seeing material improvements in our U.S. customer satisfaction due to a number of operational improvements.
Speaker Change: and that will be a net positive to contributor to our business over time.
Speaker Change: Can I ask from a strategic point of view, do you see some of your peers in the US are leaning on wireless wireless too and me essentially giving a free line of wireless to subsidize
Speaker Change: retention on the cable side. What's your view? Your broad view on going in that direction or sustaining that kind of...
Speaker Change: Sure, so our wireless strategy in the US and by the way Canada won't be that different
Speaker Change: is, uh, is primarily about, uh, turn reduction and discount reduction on the wireline business. So we're not targeting
and the benefit will come
Speaker Change: from the war line as you pointed out so that allows us to be fairly aggressive on wireless we have a fair amount of wiggle room there I'm not going to comment too much on specific pricing strategy
Speaker Change: Certainly giving wireless for free on a promotional time limited basis is always an option and just generally if we need to be aggressive we can be as I said earlier.
Thank you.
Speaker Change: Thank you, and your next question comes from the line of Arab indigola Patich from Canada. Thank you. Thank you.
Speaker Change: Good morning. Thanks for taking my questions. Two from me. I just wanted to focus on the profitability side in the US. Obviously, even on a constant currency basis, you've been able to stabilize, have it done.
Speaker Change: Judging by Patrice's comments, I mean, that's going to be sustained into Q3, you know, even with the competitive pressure that you've talked about, do you feel that that, you know, profitability and breeze line can be sustained, especially when you kind of...
You know, there and...
Speaker Change: You know, any tailwinds from wireless and, you know, the streamline structure that you have.
and then secondly, in Canada.
Speaker Change: I just wanted to get a sense of what any changes to turn. I know there was a, you know, one of your price increases occurred in March. Any kind of reaction or impact of that and maybe an update on the competitive conditions there. Thank you.
Speaker Change: Sure, I can talk generally about US commercial trends and then I'll answer your second question about the Canadian Raid Increase as well.
the end of the U.S.
Speaker Change: There are a few things that are giving us good tailings from a profitability perspective of our window.
Speaker Change: The first one is, you know, TV cord cutting is happening at little and sometimes no margin. So you're losing empty calories there. So whereas some of our PSU and certainly revenue declined that we're reporting sometimes.
We lose very little profitability from that.
Speaker Change: We're also seeing that on the Internet side, some of the customers that we're losing tend to be lower RQ because they go towards FWA.
Speaker Change: And we do see that on the legacy base given that we still have a technology advantage in many of the markets where we operate that we're still able to realize healthy and will rate increases.
[inaudible]
I would also add on the cost side.
Speaker Change: that we keep overperforming in terms of our cost reduction and we don't see an end in sight on this one because the cost reduction is happening not just from squeezing but from actually reducing customer demand. So we're seeing material declines.
Speaker Change: in the rate of customers calling us with issues and the rate of customers asking for a truck roll and even do even when they do call us we're seeing a very large increase in the number of chat bought interactions and the increase in chat as well.
Patrice Ouimet: So you put all these things together and I would say we do feel good about U.S. profitability. Pat, this I don't know if you wanted to add anything on that topic. On the second part of your question about Canadian rating increases.
Patrice Ouimet: The rate increase that we implemented in Canada on March 1st was actually slightly smaller than last year. And what we're seeing is it's pretty calm.
Patrice Ouimet: So we're not seeing much turn from it, but we rarely see much turn from it, but we would see more is calls for retention and new discounts, but so far it's been pretty calm.
Great. Thank you very much. I'll pass the line.
Speaker Change: Thank you, and your next question comes on the line of Vince Valentini from Pidi Coen. Please go ahead.
Vince Valentini: Yeah, thanks very much. First question is on your guidance, especially for CapEx and free cash flow.
Speaker Change: I'm using to be trending below the low end of capex and above the high end of the pre-tactual targets you set for the year.
Speaker Change: Is are you highly confident this is just timing and you you have detailed schedules for construction in the second half of the year to catch back up or is it possible that you know we will end up you at least in the better end of both of those ranges.
Speaker Change: I'll throw the second question out at the same time just so you can see you want it. There seems like there's been a fair amount of chatter on...
Speaker Change: on a process to look at divesting your Florida fiber assets. Is there anything you can tell us there is the truth that that's an ongoing process and and if so, any thoughts on how it's going and what the time frame timeline might be. Thank you.
Speaker Change: Sure. Hi, Ben. So on the first question, it's still early. So obviously for CapEx, the free capsule will is directly linked to it.
Speaker Change: and can be volatile during the year especially when we look at the seasons to build
Speaker Change: So there will be higher capex in Q3 as I mentioned earlier and there will be some Q4s as well so I would not assume this early that will come in at the low end of capex but we feel comfortable that will be within the range that we mentioned.
Speaker Change: And I would say probably a similar story on free cash flow obviously next time we do report there's going to be just one quarter left we'll see if we're if we're trending a little better but for now we shall test of all with the ranges we we gave
and on foot.
Speaker Change: Yeah, sure. On the second question on asset pruning, I'll answer it more generally. We have not commented anything to whatever comes out to that.
Speaker Change: from journalists, but just generally is something we've said before. We're still interested in pruning some assets in the US if we think it makes sense operationally, strategically and financially, and it's still something we're looking at right now. That's all we can comment on at this point.
[inaudible]
Fair enough, thank you.
Thank you.
Aravinda Galappatthige,
Speaker Change: Thank you and your next question comes from the line of through macranals from RBC. Please go ahead.
Drew Mcreynolds: Yeah, thanks very much. Good morning. Um, maybe first for you, Frederick, um, on the wireless strategy and.
You know, your objective of turn reduction.
Can you give us a sense?
Just what kind of wireless penetration generally is required before?
Drew Mcreynolds: You know, you see that inflection point on the term reduction on the cable business and just how you're how you're looking at that from a either penetration or timing perspective.
Patrice Ouimet: And then, you know, secondly, maybe for you Patrice on the level of reinvestment through the transformation that you're making. I don't know if you can quantify this, but ultimately.
Patrice Ouimet: When that transformation begins to wind down, you know, in terms of basis points of margin, what kind of reinvestment comes out of the, you know, out of the numbers that we're seeing right now on a runway basis. You know, in the context of the question is clearly you're seeing.
Patrice Ouimet: Very good efficiency gains which is great to see and just wondering if we get, you know, a step down in all effects or a gradual decline is that re-investment comes out of the equation. Thank you.
Patrice Ouimet: Hi, Drutes Fred. Thanks for the first question on the wireless.
Patrice Ouimet: First, let me start by saying through that in both countries.
Patrice Ouimet: are wireless kind of op-ex investments and there's very little caps, you know, use already see most of it in our current financials. So I wouldn't expect a big increase there and then it's mostly upside from here, therefore.
Patrice Ouimet: And in terms of how fast the upside comes, I think a good proxy to use Drew would be the U.S. cable and the N.O.'s.
Patrice Ouimet: Both in terms of the end penetration that they reach as well as the time that it takes.
Patrice Ouimet: uh for the pay for the pay back to really show so as you look at those you'll see that it's a lower penetration level
Patrice Ouimet: then truly fully converge players who have both infrastructures but it does become a creative over time and when you listen to to charter and Comcast they do talk about how it's a net positive contributor to their ability.
It is an S curve.
Patrice Ouimet: So as you launch a service like that it takes time for your your sales force to get good at selling it.
Patrice Ouimet: The turn benefit kicks in from the very beginning. It's just you don't have the full scale yet to absorb your fixed costs.
Patrice Ouimet: But after a little while, you start reaching a critical mass and then over time your fixed costs, which as I said before are already in our financials, your fixed costs eventually end up being compensated for and the whole thing turns out to be that positive.
So
Sure answer would be its upside from here.
Patrice Ouimet: Patients on the time that it takes to to get that off that that upside and cable MV and those are good proxy.
Patrice Ouimet: So on the second question, we have a number of elements to cover as part of the transformation.
Patrice Ouimet: Some pay off quicker and some pay off later in the three year program. So we're in year one right now. I would say at this point we are obviously investing in certain areas, but it's not major investments and usually paid for by some savings were able to generate.
Patrice Ouimet: So we've already seen this, like you saw the margins improve view over the year especially in the US.
Patrice Ouimet: I know what I've been asked before. Where do we see this going forward? The current level of margins in the US is probably something we can do for the balance of the year. And I'll say reason why in future years it would be lower number. And I'll say reason why in future years it would be lower number. And I'll say reason why in future years
Patrice Ouimet: So as we are able to generate bigger gains from the transformation there could be some upside on margins there.
as to your
Patrice Ouimet: I guess the second part of your question is would we reduce investments we're making now given that they're financed by the benefits we're getting. I wouldn't see a major impact from this going forward. It's just bigger benefits as we're able to activate the different elements of the plan.
Okay, thank you both.
Speaker Change: Thank you and your next question comes from the 9th of Sep any prize from C.A.V.C. Please go ahead.
Hi, good morning.
Speaker Change: I think it's following up on Drew's question there a little bit. It's halfway through the year and either dies up a little over 2% on a consolidated basis.
Speaker Change: First is the full-your-guide of a stable Yvda, and it sounds like you've seen benefits in the transformation initiative. Just wondering how we should think about the second half of the year, and the
Thank you very much.
Speaker Change: Yeah, so you're you're talking at the consolidated level, right? Yeah, exactly. Yeah
Yeah.
Speaker Change: Yeah, so there's different elements in the in the back half of the year. I've provided a glimpse at Q3. It's still a bit early for a Q4, but obviously we do have some price increases that we split through in February and March for different products in the in the two countries.
Speaker Change: There is some seasonality to some expenses, especially when we look at marketing budgets and back to school.
Speaker Change: that hit more in Q4, so the phenomenon is there, and we've actually done better than what we thought initially for Q2, but some of the reason is that we do have the expenses that we'll look at later on.
So, as I said, basically in the opening remarks...
Speaker Change: We do expect that in Q3 for the EBITDA should be a negative year over year in Canada and more stable in the U.S. and constant dollars.
Speaker Change: And so that gives you a small pressure in Q3 but again I'll plan as part of a guide annual guidance we did provide as a stable. Hopefully that answers your question.
Speaker Change: Thanks. Yeah, and then maybe one more for me. We've seen a few M&A deals in the U.S. telecom space recently. Just curious how you, if you anticipated, it's been any changes to the competitive landscape amid the further consolidation.
Speaker Change: So it's still early days because some of these transactions have not occurred in areas where we operate.
Speaker Change: And the ones that have been announced were sometimes it is in areas where we operate have not necessarily closed.
Speaker Change: So I wouldn't say that we saw major changes and it's a very dynamic every every week. There are new types of offers being put out by the different players in the different states in the different states that we operate in so it's still a bit derby days.
Okay, thank you.
Speaker Change: Thank you, and your next question comes in the line of Jerome De Brule from Des Jardins.
Jerome Debreu: We're about to mow the thanks for taking my question. Fred, you started the call talking about your potential for growing free cashflow over the next two years.
Jerome Debreu: And I reached on the public broadcast of one of the conference you attended earlier this quarter. You were talking about growth of free cash low of 150 million over the next two years. I'm wondering if you can
Jerome Debreu: Confirm or maybe discuss that you still have this view here.
Hi, gentlemen. Thanks for the question.
Jerome Debreu: Yes, so for everyone's benefit, what we were talking about is the growth and cash flow from this fiscal year to fiscal 2027.
Speaker Change: And I would say at this point, Joan, that indeed 150 million would be a decent assumption to use.
Speaker Change: The reason for the increase is quite straightforward, which is we've got our Ontario Network expansion programs that will complete by then.
Speaker Change: We're also quite pleased by how we were able to quietly modernize the rest of our network over time and by the time we reached fiscal 27 we should have reached we will have reached our objectives so you put those things together and you know as you know capex
Speaker Change: is relatively under our control, and therefore $150 million increased by then is not a bad assumption.
Speaker Change: Great, and then I guess the obvious kind of strategic follow-up to that is that what would be the impact on even the growth.
Speaker Change: over the longer term what I understand is that most of this is coming from from CapEx reduction and now you have plan deploying with new houses. Now I totally commend you for only investing it on plans that make sense from an RYC perspective, but
Speaker Change: Do you think there's going to be a noticeable impact on the profitability of this profitability time?
Beaming on the growth.
Speaker Change: Yeah, so yeah look I think it will take we have quite a lot of runway
Speaker Change: For these extension program to get fully penetrated we reach very high penetration rates and they don't happen immediately so we have quite a few years of room there in terms of growth. It's also not our only growth driver we've talked about many others such as we were talking with Drew earlier that wireless.
Speaker Change: will become more and more material over time and especially in the time horizon that you and I are discussing.
Speaker Change: Now, and on the modernization capex, you know, we're really starting to reach levels that in many cases exceed what a customer can even use in terms of speed. So, that does the reason why modernization capex may ease off over time.
Speaker Change: And Joel, maybe I can add also we every year we will add some parts to our network so in areas where we operate there's always new neighborhoods that are being built.
Speaker Change: So we're always doing those obviously those are high return investments.
and we remain availed by
Speaker Change: Available to talk to different people when especially at the government level when we want to
Speaker Change: Participate in the programs is just that there's no big ones coming up
Speaker Change: from what we're seeing but we're doing some smaller ones like we have one in Virginia right now so it can be at the provincial in Canada our state level. The bigger one that we've been talking about in the past the bead program is something we'll probably not do too much of.
but at the smaller level there are some possibilities.
Yeah, super cool.
[inaudible]
Speaker Change: Thank you, and your next clutching comes from the line of magic refit from Bank of America. Please go ahead.
Matthew Griffith: Great. Thanks for taking the question. On the same subject of the network modernization. Sorry.
Matthew Griffith: There was no mention of kind of a doxxus for upgrade is that contemplated in that normal course upgrade cycle to the end of twenty twenty five twenty twenty seven or are you seeing. [inaudible]
Speaker Change: customer usage not requiring that so you're kind of filling any kind of spending that would be related to that.
and secondly, please.
Speaker Change: Just on pricing in Canada, you know, in the materials you call their, you know, competitive pricing pressure, which, you know, isn't necessarily new. But I was wondering, you know, if you're seeing that mostly on kind of the new gross ads or are you seeing the pricing pressure affect your base where you're getting.
Speaker Change: an increased number of subscribers within your base kind of repricing themselves lower and that's driving the competitive pricing pressure that you called out. Thanks.
Sure. Hi Matthew with Fred.
Fred Perron: So, on the second part of the question, I wouldn't say there's anything dramatically different there. In terms of the competitive pricing pressure, it's the same thing and the same trend. We've been facing for a few years by now. And the good news is we're still able to realize annual rate increases. We adjust them as I mentioned earlier. We made it a slightly smaller this year than we did last year, but that that's...
Fred Perron: in the tweaking space, nothing major. Yeah, so on Daxus, we use different technologies as you know. So we have our network as a...
Fred Perron: pretty much very very close to being all docks is 3.1 so we have in most places one gig or more in terms of download speeds.
Fred Perron: We've been building fiber to the home for many years, especially all the new areas.
Fred Perron: And more recently there are certain areas in the US where we saw with new technologies
to go and do brownfield FTTH belt.
Fred Perron: Rather than go through the the split and the axis for way we can go directly to fiber we don't do this if it doesn't make sense financially. But the cost have come down and there's new technologies that allow us to do that so we started doing this.
Fred Perron: And as we're doctors for it's no something we're planning to do over time but we're not planning to do a big blitz
Fred Perron: with this and do it when it makes sense. It's not something that we have yet started to implement given the
We didn't have to do it from a demand standpoint.
Fred Perron: And also when you look at the equipment costs usually those come down over time so it makes sense to wait a bit. So if I don't know if this was a behind-the-question mask but...
Fred Perron: You know, in the 150 million cash for the increase we're talking about, we don't anticipate big surprises coming from doxies for erasing some of that.
Fred Perron: Okay, don't get to here and maybe if I can just sneak one more in just on the subscriber trends in the US and I know you've already spoken about you know improvements in Ohio and then there's some degradation outside of Ohio.
Fred Perron: And obviously six wireless access has a role to play in that but you know in the past Florida has been a little lumpy and maybe occasionally responsible for some of the outside of Ohio ups and downs that we see. Was there anything to call out on any kind of you know bulk agreement or anything that.
Fred Perron: was that accounts for the you know losses outside of Ohio in this last period.
Fred Perron: No, our Florida business business has been quite stable. So when I talked earlier about a slight optic and competition even going into Q3, it's mostly in mid-Atlantic and
Okay, very helpful. Thank you so much. Thank you.
Speaker Change: Thank you, and there are no further questions that is some, I would now hand a call back to Mr. Patrice Womit for any closing remarks.
Patrice Ouimet: Okay, well thanks everyone for participating today and as usual feel free to call us if you have additional questions. Have a good day.
Speaker Change: Thank you and this concludes today's call. Thank you for participating. You may all disconnect.