Q2 2025 Cogeco Communications Inc Earnings Call

Operator: Good day, welcome to the Cogeco Inc. and Cogeco Communications Inc. Q2 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Ouimet, Chief Financial Officer of Cogeco Inc. and Cogeco Communications Inc. Please go ahead, Mr. Ouimet.

Speaker Change: Good day, and welcome to the Cogeco Inc. and Cogeco Communications, Inc. Q2 2025 earnings conference call. Today's conference is being recorded. At this time, I would like to turn a conference over to Mr. Patriswimek, Chief Financial Officer of Cogeco Inc., and Cogeco Communications, Inc.

Please go ahead, Mr. Wilmets.

Patrice Ouimet: Thank you. Good morning, everyone. Welcome to our Q2 Results Conference Call. 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 and in the MD&A issued yesterday, as well as in our 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 Frédéric Perron for opening remarks.

Speaker Change: 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.

Speaker Change: We ask that you review the cautionary language in the press releases and MDNA issue yesterday as well as in their annual reports regarding the various risks, assumptions and uncertainties that could cause actual results to differ.

Speaker Change: With that, I will now pass the line to Fred Beval 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.

Frédéric Perron: Thank you, Patrice, and 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 flow, 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 2 years. Let me be clear, this is not just an aspiration, it's a plan. This increase in cash flow 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 flow provides sustainability and room for continued dividend growth.

Fred Perrault: 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.

Fred Perrault: 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.

Fred Perrault: This increase in cash flow 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.

Fred Perrault: In addition, our relatively low dividend payout ratio as a percentage of cash flow provides sustainability and room for continued dividend growth.

Frédéric Perron: During Q2, we continued 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 synergies, digitization of sales and service interactions, advanced 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 wireless front, US volumes are starting to ramp up following an initial tuning period, and the preparation for an upcoming Canadian wireless launch is progressing well.

Fred Perrault: During the second quarter, we continue to pursue our three-year transformation program to further accelerate our performance.

Fred Perrault: 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.

Network Expansion Completion, and wireless ramp-up.

Fred Perrault: The merger of our U.S. 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.

Fred Perrault: 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 wireless front.

Fred Perrault: The U.S. volumes are starting to ramp up following an initial tuning period.

Fred Perrault: And the preparation for an upcoming Canadian wireless launch is progressing well.

Frédéric Perron: We've now opened pre-registrations for our existing Canadian wireline customers as part of our wireless pre-launch lead generation campaign, and demand has exceeded our expectations so far. In terms of operational performance. Q2 results were ahead of expectations as the teams continued to execute well and as we deferred certain investments to H2. 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 in the quarter, mainly in Canada. In Canada, we also experienced another quarter of strong internet subscriber metrics despite ongoing competitive intensity in the market. In the US, our customer satisfaction metrics and Breezeline performance continue to show year-over-year improvement. At Cogeco Connexion, our Canadian telecommunications business, we grew our internet customer base by a total of 8,300 subscribers this quarter.

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,

Fred Perrault: 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.

Fred Perrault: More specifically, our transformation efforts contributed to the expansion of our consolidated

Fred Perrault: Our fiber to-the-home expansion program added close to 7,000 new homes passed in the quarter, mainly in Canada.

Fred Perrault: In Canada, we also experienced another quarter of strong internet subscriber metrics, despite ongoing competitive intensity in the market.

Fred Perrault: And in the US, our customer satisfaction metrics and Ohio performance continue to show your over-year improvements.

Fred Perrault: At Cogeco Connection, our Canadian telecommunications business, we grew our internet customer bays by a total of 8,300 subscribers to squatter.

Frédéric Perron: We've been adding customers under both the Cogeco and Oxio brands over the past year. Our Ontario subsidized 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 in the completed regions of Quebec and Ontario to date, with higher customer penetration levels than target. We've now increased the number of Canadian homes passed by nearly 145,000 since the beginning of fiscal 2022, primarily via Fiber to the Home and in collaboration with governments. At Breezeline, EBITDA in constant currency was stable with last year as revenue pressures from industry headwinds were offset by transformation-related cost savings.

Fred Perrault: We've been adding customers under both the Cogeco and Axial brands over the past year.

Fred Perrault: Our Ontario Subsidized Network expansion program will continue throughout fiscal 2025 with an expected completion in fiscal 2026.

Fred Perrault: 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 in the completed regions of Quebec and Ontario to date.

with higher customer penetration levels than target.

Fred Perrault: We've now increased the number of Canadian homes passed by nearly 145,000 since the beginning of fiscal 2022, primarily via fiber to the home and in collaboration with governments.

Fred Perrault: At Breeze Line, Ebidun Constant Currency was stable with last year, as revenue pressures from industry headwinds were offset by transformation-related cost savings.

Frédéric Perron: 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 Breezeline customers take increasingly fast internet speeds. This has helped offset the decline in subscribers for entry-level internet services due to competition. At Cogeco Média, 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, seven of the 10 most listened to radio programs in the city come from our stations. Now let me turn the call over to Patrice to provide more details on our financial performance for the quarter. Patrice?

Fred Perrault: We're seeing increasing subscriber tenure resulting from higher customer satisfaction and an improved mix of higher margin services.

Fred Perrault: As a greater proportion of our breeze-line customers, take increasingly fast internet speeds.

Fred Perrault: This is how to offset the decline in subscribers for entry-level internet services due to competition.

Fred Perrault: 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.

Fred Perrault: In Montreal, for example, 7 of the 10 most listened to radio programs in the city come from our stations.

Fred Perrault: And now, let me turn the call over to Petitist to provide more details on our financial performance for the quarter, Petitist.

Patrice Ouimet: Thank you, Fred. Let's start in Canada. Cogeco Connexion revenue declined by 0.9%, driven by the lower revenue per customer due to fewer video and wireline phone service subscribers, sorry, and a competitive pricing environment, partly offset by a growing internet subscriber base under both the Cogeco and Oxio brands over the past year, and a contribution from the NRBN acquisition. Adjusted EBITDA declined by 2.8% in constant currency due to lower revenue and higher operating expenses to drive subscriber growth. In the US, Breezeline's revenue 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. Adjusted EBITDA was stable, driven by cost reduction initiatives and operating efficiencies. Turning to our consolidated numbers for Cogeco Communications.

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, partly 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, Breedline's revenue declined by 4.5% and 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: Adjusted EBITDA was stable, driven by cost reduction initiatives, and operating efficiencies.

Patrice Ouimet: Turning to our consolidated numbers for Cogeco Communications, at the consolidated level, will revenue the client by 2.7% and EBITDA was stable in constant currency.

Patrice Ouimet: At the consolidated level, revenue declined by 2.7% and EBITDA was stable in constant currency. The decline in 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 costs. Diluted earnings per share declined by 20% in reported currency due to higher D&A expenses, higher acquisition integration and restructuring expenses, and higher taxes, partially offset by lower financial expenses and the appreciation of the US dollar. 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%. Free cash flow in constant currency increased by 12.8%, largely due to lower capital expenditures and financial expenses.

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 costs.

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 U.S.

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 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 US-denominated debt, as it takes more time for EBITDA to fully reflect the FX impact. We continue to target a net debt to EBITDA ratio in the low 3 turns range over time. We declared a quarterly dividend of CAD 0.922 per share. At Cogeco Inc., revenue and constant currency decreased by 2.7%. Adjusted EBITDA was stable as a result of Cogeco Communications' performance. 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. A dividend of CAD 0.922 per share was also declared for the quarter at Cogeco Inc. Now turning to financial guidelines for Cogeco Communications fiscal year 2025.

Patrice Ouimet: Our net debt to a 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 evident our ratio in the low-returns range over time.

Patrice Ouimet: And we declared, accordingly, dividend of 92.2 cents per share.

Patrice Ouimet: At Cogeco Inc, revenue and tossing currency decreased by 2.7% and adjusted the debt was stable as a result of Cogeco Communications performance.

Patrice Ouimet: 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.

Patrice Ouimet: And a dividend of 92.2 cents per share was also declared for the quarter at Cogeco Inc.

Patrice Ouimet: Now turning to financial guidelines for Cogeco Communications, fiscal year 2025.

Patrice Ouimet: We are maintaining our annual guidelines, which we first provided to investors in October. As it relates to the upcoming Q3, we expect both consolidated revenue and adjusted EBITDA in constant currency to decrease in the low single digits compared to last year. Capital intensity is anticipated to be approximately 350 basis points above Q3 of last year. At Cogeco Connexion, with the acquisition of NRBN now fully lapped, we expect Q3 revenue to decrease in the low single digits due to the customer base being offset by video and wireline cord-cutting and competitive pricing pressures. 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. At Breezeline, we expect in constant currency a mid-single-digit decrease in revenue versus last year, reflecting a lower subscriber base.

Patrice Ouimet: We are maintaining our annual guidelines, which we first provided to investors in October .

Patrice Ouimet: As it furthered to the upcoming Q3, we both, sorry, we expect both consolidated revenue and adjusted EBDA and constant currency to decrease in the low single digits compared to last year.

Patrice Ouimet: Capital intensity is anticipated to be approximately 350 basis points above Q3 of last year.

Patrice Ouimet: At Cogeco Connection, with the acquisition of NRBN now fully-lapped, we expect you to re-revenue to decrease in a low single digits due to customer base being offset by video and world-line foreign core cutting.

and competitive pricing pressures.

Patrice Ouimet: 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.

Patrice Ouimet: At Breeze Line, we expect in constant currency a mid-single-digit decrease in revenue versus last year, reflecting a lower subscriber base.

Patrice Ouimet: We expect stable EBITDA year over year as operating cost discipline and lower video content costs are expected to offset the revenue decline. Below the EBITDA line at the consolidated level, with our restructuring program largely complete, we expect acquisition, integration, and restructuring costs to be approximately CAD 4 million in Q3, which partially relates to IT cloud implementation costs. In regard to our Q3 financial expense, we expect it to be about CAD 2 million higher than reported in Q2 using today's FX rates. At Cogeco Inc., we are also maintaining financial guidelines. Now Fred and I will be happy to take your questions.

Patrice Ouimet: And we expect stable EBITDA you over a year as operating COS discipline and lower video content costs are expected to offset the revenue decline.

Patrice Ouimet: Below the other deadline, 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.

Patrice Ouimet: In regard to our Q3 financial expense, we expected to be about $2 million higher than reported in Q2 using today's FX rates.

Speaker Change: At Cogeco Inc., we are also maintaining financial guidelines, and now Fred and I will be happy to take your questions.

Operator 2: Thank you. Ladies and gentlemen, we will now begin the question and answer session. One moment please for your first question. Your first question comes from Maher Yaghi with Scotiabank. Your line is now open.

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 lift the handset 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.

Maher Yaghi: Great. Thank you for taking my question, and thank you for the detailed outlook for Q3 and the rest of the year, Patrice. I wanted to just focus a little bit on the US side to start. You're having much better churn metrics in Ohio. What else can you do for the rest of the business in the US to stem the decline in broadband disconnections? We saw the year-on-year disconnections accelerate a little bit here in Q2 versus Q1. Can you maybe just discuss what drove that acceleration in the disconnections, and do you have any plan to attack the market? We've seen some of your peers in the cable industry lean on wireless to support the cable metrics. Comcast is launching a plan shortly. What can you do to work on those metrics to improve them? Thank you.

Mayor Yagi: Great. Thank you for taking my question, and thank you for...

Speaker Change: The detailed outlook for history and the rest of the year, but just so I wanted to, you know, just focus a little bit on the US side.

to start.

Speaker Change: You're having much better churn metrics in Ohio. What else can you do for the rest of the...

Speaker Change: Business in the U.S. to stem the decline in broadband disconnections. We saw the...

Speaker Change: Year on year, disconnections accelerate a little bit here in Q2, so versus Q1. So can you maybe just discuss, uh, what drove that acceleration and the disconnection then.

Speaker Change: Do you have any plan to attack the market which has seen some of your peers in the cable industry lean on wireless. [inaudible]

Speaker Change: to support the cable metrics. Comcast is launching a plan shortly. What can you do to work on those metrics to improve them? Thank you.

Frédéric Perron: Hi, Maher. It's Frédéric Perron. 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. It's true that we're showing sequential improvement in our US PSUs. I would say that the competition in the market, Maher, remains elevated. 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. 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. We've actually seen over the past few weeks a slight further uptick in competition as some of the fiber players, for example, in the Northeast.

Hi, my heart's red.

Speaker Change: Maybe I can unpack the question first by talking about the market in the U.S. 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 may remain 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 know, 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 uptick.

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.

Frédéric Perron: There was one in particular that increased their promotional intensity in recent weeks. We're feeling it in our Q3 PSUs right now. Now, that being said, that may be tactical and short-lived, so I wouldn't read too much into it. As it relates to the other part of the question, which is what can we do? We're seeing an acceleration of our wireless sales, which, as you've pointed out over time, does become a contributor to cable co-performance. You've seen it from the big two out there. That's one. The other one is we're exploring how we could possibly use a dual brand strategy to compete in the US market, leveraging, for example, an Oxio-like strategy. We're not ready to announce anything today, but this is something that we're looking at.

Speaker Change: And we're feeling it in our Q3 PSUs 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've pointed out, over time, do become.

Speaker Change: It does become a contributor to cable co-performance. You've seen it from the big two out there.

So, that's one.

Speaker Change: The other one is we're exploring how we could possibly use a dual brand strategy.

Speaker Change: To compete in the U.S. market, leveraging, for example, an oxy-like strategy. We're not ready to announce anything today, but there's something that we're looking at.

Frédéric Perron: Thirdly, as the OTT players keep raising their prices, and some of these prices are really getting quite high, we're seeing green shoots of possible deceleration in US TV cord-cutting. Last but not least, there's a lot we can do in terms of continuing to improve our ongoing sales and marketing blocking and tackling, which we are in the process of doing right now. I would also add, in conclusion, that we're seeing material improvements in our US customer satisfaction due to a number of operational improvements, and that will be a net positive contributor to our business over time.

Thirdly, as the OTT players.

Speaker Change: Keep raising their prices, and some of these prices are really getting quite high. We're seeing green shoots of possible deceleration.

in U.S. TV cord cutting.

Speaker Change: And the last button, at least, there's a lot we can do.

in terms of continuing to improve.

are ongoing, sales and marketing, blocking and tackling.

which we end the process of doing right now.

Speaker Change: 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, and that will be a net positive to contributor to our business over time.

Maher Yaghi: Can I ask from a strategic point of view, do you see some of your peers in the US are leaning on wireless too, and maybe essentially giving a free line of wireless to subsidize the retention on the cable side? What's your broad view on going in that direction, or sustaining that kind of promotional effort long term? Is it feasible for you given your cost structure, and your view on what it takes to reduce churn as fixed wireless continues to be a headwind?

Speaker Change: Can I ask from a strategic point of view, do you see, you know, some of your peers in the US are leaning on wireless, and essentially giving a free line of wireless to subsidize.

Speaker Change: The retention on the cable side. What's your view? Your broad view on going in that direction or sustaining that kind of

Speaker Change: You know, your view on what it takes to reduce churn as fixed while this continues to be a headwind.

Frédéric Perron: Sure. Our wireless strategy in the US, and by the way, Canada won't be that different, is primarily about churn reduction and discount reduction on the wireline business. We're not targeting hugely positive gross contribution margin on those new wireless ads, and the benefit will come from the wireline, as you pointed out. 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. Certainly, giving wireless for free on a promotional time-limited basis is always an option. Just generally, if we need to be aggressive, we can be, as I said earlier.

Speaker Change: Sure. So our wireless strategy in the US and by the way Canada won't be that different.

Speaker Change: is primarily about turn reduction and discount reduction on the wireline business, so we're not targeting hugely positive growth contribution margin on those new wireless ads.

Speaker Change: I'm not going to comment too much on specific pricing strategy, 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.

Maher Yaghi: Okay. Merci.

Thank you. Thank you.

Frédéric Perron: Thank you.

Operator: Thank you. Your next question comes from the line of Aravinda Galappatthige from Canaccord Genuity. Please go ahead. Your line is open.

Speaker Change: Thank you, and your next question comes from the line of Arab Indigalapati, from Ghanikor, Jr. with ETH, these go ahead.

Aravinda Galappatthige: Good morning. Thanks for taking my questions. Two from me. Just wanted to focus on the profitability side in the US. Obviously, even on a constant currency basis, you've been able to stabilize EBITDA, and judging by Patrice's comments, that's going to be sustained into Q3. Even with the competitive pressure, Fred, that you've talked about, do you feel that that profitability and Breezeline can be sustained? Especially when you layer in any tailwinds from wireless and the streamlined structure that you have. Secondly, in Canada, just wanted to get a sense of any changes to churn. I know one of your price increases occurred in March. Any kind of reaction or impact to that and maybe an update on the competitive conditions there. Thank you.

Ira Vinda-Galapatich: Good morning. Thanks for taking my questions to from me. I just wanted to focus on the profitability side in the U.S. Obviously, even on a constant currency basis, you've been able to stabilize

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, they are in.

Speaker Change: You know, any tailwinds from wireless and, you know, the, the, the, the streamline structure that you have.

Speaker Change: And then secondly, in Canada, just wanted to get a sense of what any changes to China. 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.

Frédéric Perron: Sure. I can talk generally about US commercial trends, then I'll answer your second question about the Canadian rate increase as well. In the US, there are a few things that are giving us good tailwinds from a profitability perspective, Aravinda Galappatthige. The first one is, TV cord-cutting is happening at little and sometimes no margin. You're losing empty calories there. Whereas some of our PSU and certainly revenue decline that we're reporting sometimes, we lose very little profitability from that. We're also seeing that on the internet side, some of the customers that we're losing tend to be lower ARPU because they go towards FWA. 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 annual rate increases.

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 tailwinds from a profitability perspective

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 ARPU.

Speaker Change: because they go towards FWA 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 annual rating increases.

Frédéric Perron: I would also add on the cost side that we keep over-performing in terms of our cost reduction. 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. We're seeing material declines in the rate of customers calling us with issues and the rate of customers asking for a truck roll. Even when they do call us, we're seeing a very large increase in the number of chatbot interactions and the increase in chats as well. You put all these things together, and I would say we do feel good about US profitability. Patrice, I don't know if you wanted to add anything on that topic. No. I think that's it, yes.

Cogeco Communications, Inc.

Speaker Change: I would also add on the cost side that we keep over-performing 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.

Speaker Change: And even when they do call us, we're seeing a very large increase in the number of chat that brought 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, but this I don't know if you wanted to add anything on that topic. On the second part of your question about Canadian rate increases.

Frédéric Perron: On the second part of your question about Canadian rate increases, the rate increase that we implemented in Canada on 1 March was actually slightly smaller than last year. What we're seeing is it's pretty calm. We're not seeing much churn from it, but we rarely see much churn from it. What we would see more is calls for retention and new discounts. So far it's been pretty calm, Aravinda.

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 churn from it, but we rarely see much churn from it. What we would see more is calls for retention and new discounts, but so far it's been pretty calm.

Aravinda Galappatthige: Great. Thank you very much. I'll pass the line.

Great. Thank you very much, I'll pass the lines.

Operator: Thank you. Your next question comes from the line of Vince Valentini from TD Cowen. Please go ahead.

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. You seem to be trending below the low end of CapEx and above the high end of the free cash flow targets you set for the year. Are you highly confident this is just timing and you have detailed schedules for construction in H2 of the year to catch back up, or is it possible that we will end up at least in the better end of both of those ranges? I'll throw the second question out at the same time, just so you can stew on it. There seems like there's been a fair amount of chatter on a process to look at divesting your Florida fiber assets. Is there anything you can tell us there?

Vince Valentini: Yeah, thanks very much. First question is on your guidance, especially for CapEx and free cash flow.

Vince Valentini: I'm using to be trending below the low end of CapEx and above the high end of the free capsule targets you set for the year.

Vince Valentini: Are you highly confident this is just timing and 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 at least in the better end of both of those ranges.

Vince Valentini: I'll throw the second question out at the same time, just so you can see one. There seems like there's been a fair amount of chatter on...

Vince Valentini: On a process to look at divesting your Florida fiber assets. Is there anything you can tell us there? Is there the truth that that's an ongoing process and and it's already thoughts on how it's going and what the time frame timeline might be. Thank you.

Vince Valentini: Is there truth that that's an ongoing process, and if so, any thoughts on how it's going and what the timeline might be? Thank you.

Patrice Ouimet: Sure. Hi, Vince. On the first question, it's still early. Obviously for CapEx, the free cash flow is directly linked to it and can be volatile during the year, especially when we look at the seasons to build. There will be higher CapEx in Q3, as I mentioned earlier. There will be some in Q4 as well. I would not assume necessarily that we'll come in at the low end of CapEx, but we feel comfortable that we'll be within the range that we mentioned. I would say probably a similar story on free cash flow. Obviously, next time we do a report, there's going to be just 1 quarter left. We'll see if we're trending a little better. For now, we feel comfortable with the ranges we gave.

Vince Valentini: Sure. Hi, Vince. So on the first question, it's still early. So obviously for CapEx, the free Casual will is directly linked to it.

Vince Valentini: And can be volatile during the year especially when we look at the seasons to build.

Vince Valentini: So there will be higher capex in Q3 as I mentioned earlier and there will be some in Q4 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.

Vince Valentini: 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 felt comfortable with the ranges we gave.

Frédéric Perron: On for you.

Patrice Ouimet: Yeah, sure. On the second question on asset pruning, I'll answer it more generally. We have not commented anything to whatever comes out 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. It's still something we're looking at right now. That's all we can comment on at this point.

And I'm

Speaker Change: Yep, sure. On the second question, on the asset pruning, I'll enter it more generally.

We have not commented anything to whatever comes out to the...

Vince Valentini: from journalists, but just generally it's something we've said before. We're still interested in pruning some assets in the U.S. if we think it makes sense operationally, strategically and financially.

Speaker Change: And it's still something we're looking at right now. That's all we can comment on at this point.

Vince Valentini: Fair enough. Thank you.

Fair enough, thank you.

Thank you.

Patrice Ouimet: Thank you.

Operator: Thank you. Your next question comes from the line of Drew McReynolds from RBC. Please go ahead.

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. Maybe first for you, Frédéric, on the wireless strategy and your objective of churn reduction, can you give us a sense just what kind of wireless penetration generally is required before you see that inflection point on the churn reduction on the cable business, and just how you're looking at that from either penetration or timing perspective? 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, ultimately, when that transformation begins to wind down, in terms of basis points and margin, what kind of reinvestment comes out of the numbers that we're seeing right now on a run rate basis?

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 Stern Reduction.

Can you give us a sense?

Just what kind of wireless penetration generally is required before...

Drew Mcreynolds: You know, you see that in flexion points 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.

Speaker Change: 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 when that transformation begins to wind down. [inaudible]

Speaker Change: Um, 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.

Drew McReynolds: In the context of the question is clearly you're seeing very good efficiency gains, which is great to see. Just wondering if we get a step down in OpEx or a gradual decline as that reinvestment comes out of the equation. Thank you.

Speaker Change: you know, in the context of the question is clearly you're seeing.

Speaker Change: Very good efficiency gains, which is great to see and just wondering if we get, you know, a step down an off-ex or a gradual decline. Is that re-investment comes out of the equation? Thank you.

Frédéric Perron: Hi, Drew. It's Fred. Thanks for the first question on wireless. First, let me start by saying, Drew, that in both countries, our wireless kind of OpEx investments and there's very little CapEx. You already see most of it in our current financials. I wouldn't expect a big increase there. It's mostly upside from here, therefore. In terms of how fast the upside comes, I think a good proxy to use, Drew, would be the US cable MVNOs, both in terms of the end penetration that they reach as well as the time that it takes for the payback to really show. As you look at those, you'll see that it's a lower penetration level than truly fully converged players who have both infrastructures. It does become accretive over time.

Speaker Change: Hyde Roots, Fred. Thanks for the first question on the wireless.

Speaker Change: First, let me start by saying through that in both countries.

Speaker Change: Our 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.

Speaker Change: And in terms of how fast the upside comes, I think a good proxy to use, Drew would be the U.S. cable and VNOs.

Speaker Change: Both in terms of the end penetration that they reach as well as the time that it takes.

Speaker Change: for the pay back to really show. So as you look at those, you'll see that it's a lower penetration level.

Speaker Change: Then, truly fully converge players who have both infrastructures, but it does become a creative over time, and when you listen to Charter and Comcast, they do talk about how it's a net positive contributor to their EBITDA.

Frédéric Perron: When you listen to Charter and Comcast, they do talk about how it's a net positive contributor to their EBITDA. It is an S-curve. As you launch a service like that, it takes time for your sales force to get good at selling it. The churn benefit kicks in from the very beginning. It's just you don't have the full scale yet to absorb your fixed cost. After a little while, you start reaching 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 EBITDA positive. Short answer would be it's upside from here. Patience on the time that it takes to get that upside and cable MVNOs are a good proxy.

It is an S-curve.

Speaker Change: So as you launch a service like that, it takes time for your Salesforce to get good at selling it.

Speaker Change: The term benefit kicks in from the very beginning. It's just you don't have the full scale yet to absorb your fixed cost.

Speaker Change: 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 up into that positive.

So...

A short answer would be its upside from here.

Speaker Change: Patients on the time that it takes to get that upside in cable MV and observed with proxy.

Patrice Ouimet: On the second question, we have a number of elements to cover as part of the transformation. Some pay off quicker and some pay off later in the 3-year program. We're in year 1 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 we're able to generate. We've already seen this, like you saw the margins improve year-over-year, especially in the US. I know 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 don't see a reason why in future years it would be a lower number.

Speaker Change: So on the second question, we have a number of elements to cover as part of the transformation.

Speaker Change: Some payoff quicker, and some payoff later in the three-year program, so we're in year one right now.

Speaker Change: 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.

Speaker Change: I know 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 don't say reason why in future years it would be a lower number. I don't know why in future years it would be a lower number in future years it would be a lower number

Patrice Ouimet: As we are able to generate bigger gains from the transformation, there could be some upside on margins there. As to your, 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.

Speaker Change: So, as we are able to generate bigger gains from the transformation, there could be some upside on margins there.

Speaker Change: As to your, 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...

Speaker Change: Bigger benefits as we're able to activate the different elements of the plan.

Drew McReynolds: Okay. Thank you both.

Okay, thank you both.

Operator: Thank you. Your next question comes from the line of Stephanie Price from CIBC. Please go ahead.

Speaker Change: Thank you, and your next question comes from the 9th of Sep, any prize from CIBC, please go ahead.

Stephanie Price: Hi. Good morning. Maybe following up on Drew's question there a little bit. It's halfway through the year, and EBITDA is up a little over 2% on a consolidated basis versus the full year guide of stable EBITDA. It sounds like you're seeing benefits from the transformation initiative. Just wondering how we should think about the H2 of the year and the puts and takes around EBITDA and expenses in the H2.

Hi, good morning.

Speaker Change: Could be following up on Drew's question there a little bit. It's halfway through the year and and either dies up a little over two percent, a consolidated basis.

Speaker Change: First is the full-your-guide of stable, ebada, and it sounds like you're seeing benefits in the transformation initiative, just wondering how we should think about the second half of the year, and the person takes around ebada and expenses in the back half.

Patrice Ouimet: Yeah. Hi, Stephanie. You're talking at the consolidated level, right?

Speaker Change: Yeah, so you're high, so you're you're talking at the consolidated level, right? Yeah, exactly. Yeah

Stephanie Price: Yeah, exactly.

Patrice Ouimet: Yes. There's different elements in the back half of the year. I've provided a glimpse at Q3. Still a bit early for Q4, but obviously we do have some price increases that we put through in February and March for different products in the two countries. There is some seasonality to some expenses, especially when we look at marketing budgets and back to school, that hit more in Q4. Different elements there. We've actually done better than what we thought initially for Q2, but some of the reason is that we do have expenses that will occur later on. As I said, basically in the opening remarks, we do expect that in Q3, for the EBITDA, it should be negative year over year in Canada and more stable in the US in constant dollars. That gives you a small pressure in Q3.

Yes.

Speaker Change: Yeah, so there's different elements in the back half of the year. I've provided a glimpse at Q3. Still a bit early for Q4, but obviously we do have some price increases that we have put through in February and March.

for different products 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 different elements there. And we've actually done better than what we thought initially for Q2, but some of the reason is that we do have expenses that will occur later on.

So, as I said, basically, in the opening remarks.

Speaker Change: We do expect that in Q3, for the EBITDA, it should be a negative year over year in Canada and more stable in the US and constant dollars.

Speaker Change: And so that gives you a small pressure in Q3. But again, all plan as part of our annual guidance we did provide as a stable. Hopefully that answers your question.

Patrice Ouimet: Again, all planned as part of our annual guidance we did provide as stable. Hopefully, that answers your question.

Stephanie Price: Thanks. Yeah. Maybe one more for me. We've seen a few M&A deals in the US telecom space recently. Just curious if you anticipate any changes to the competitive landscape amid the further consolidation.

Speaker Change: Thanks. Yeah, and then maybe one more for me. We've seen a few M&A deals in the US telecom space recently. Just curious how you, if you anticipate any changes to the competitive landscape amid the further consolidation.

Patrice Ouimet: It's still early days because some of these transactions have not occurred in areas where we operate. The ones that have been announced, where sometimes it is in areas where we operate, have not necessarily closed. I wouldn't say that we saw major changes, and it's very dynamic. Every week there are new types of offers being put out by the different players, in the different states that we operate in. It's still a bit early days.

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 that we operate in. So it's still a bit early days.

Stephanie Price: Okay. Thank you.

Okay, thank you.

Operator: Thank you. Your next question comes from the line of Jerome Dubreuil from Desjardins. Please go ahead.

Speaker Change: Thank you and your next question comes in the line of Jerome Debril from Dejardin. Please

Jerome Dubreuil: Thanks for taking my question. Fred, you started the call talking about your potential for growing free cash flow over the next 2 years. On the public broadcast of one of the conference you attended earlier this quarter, you were talking about growth of free cash flow of CAD 150 million over the next 2 years. Wondering if you can confirm or maybe discuss that you still have this view here?

Speaker Change: We're about to move on. Thanks for taking my question. Fred, you started the call talking about your potential for growing free cashflow over the next two years.

Speaker Change: And I read on the public broadcast of one of the conference you attended earlier this quarter.

Speaker Change: We're talking about growth of free cash low 150 million over the next two years, wondering if you can confirm or maybe discuss that you still have this view here.

Frédéric Perron: Hi, Jerome. Thanks for the question. Yes. For everyone's benefit, what we were talking about is the growth in cash flow from this fiscal year to fiscal 2027. I would say at this point, Jerome, that indeed CAD 150 million would be a decent assumption to use. The reason for the increase is quite straightforward, which is we got our Ontario network expansion programs that we'll complete by then. We're also quite pleased by how we were able to quietly modernize the rest of our network over time. By the time we reach fiscal 2027, we will have reached our objectives. You put those things together, and as you know, CapEx is relatively under our control. Therefore, CAD 150 million increase by then is not a bad assumption.

Hi, Jerome. Thanks for the question.

Jerome Debril: Yes, so for everyone's benefit, what we were talking about is the growth in cash flow from this fiscal year to fiscal 2027. And I would say at this point, Jill, that indeed 150 million would be a decent assumption to use.

Jerome Debril: The reason for the increase is quite straightforward, which is we've got our Ontario Network expansion programs that will complete by then.

Jerome Debril: 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.

Jerome Debril: is relatively under our control, and therefore $150 million increased by then is not a bad assumption.

Jerome Dubreuil: Great. I guess the obvious strategic follow-up to that is what would be the impact on EBITDA growth over the longer term? What I understand is that most of this is coming from CapEx reduction, and now you have planned deploying with new houses. Now, I totally commend you for only investing on plans that make sense from an ROIC perspective, but do you think there's going to be a noticeable impact on the profitability side?

Jerome Debril: 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 CapEx reduction. And now you have planned deploying with new houses. Now I totally commend you for only investing on plans that make sense from an ROIC perspective, but...

Speaker Change: Do you think there's going to be a noticeable impact on the profitability side?

Frédéric Perron: You mean on the growth?

Beaming on the growth.

Patrice Ouimet: Yes.

Frédéric Perron: Look, I think we have quite a lot of runway for these extension programs to get fully penetrated. We reach very high penetration rates, and they don't happen immediately. 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 will become more and more material over time, and especially in the time horizon that you and I are discussing now. On the modernization CapEx, we're really starting to reach levels that, in many cases, exceed what a customer can even use in terms of speed. That's the reason why modernization CapEx may ease off over time.

Speaker Change: So yeah, look, I think it will take, we have quite a lot of runway.

Speaker Change: For these expansion programs 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 now.

Speaker Change: 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.

Patrice Ouimet: Yeah. Jerome, maybe if I can add also, every year, we will add some parts to our network. In areas where we operate, there's always new neighborhoods that are being built. We're always doing those. Obviously, those are high return investments. We remain available to talk to different people, especially at the government level, when we want to participate in the programs. It's just that there's no big ones coming up from what we're seeing. We're doing some smaller ones. We have one in Virginia right now. It can be at the provincial in Canada or 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. At a smaller level, there are some possibilities.

Speaker Change: In general, maybe I can add also, every year, we will add some parts to our networks, 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, especially at the government level when we want to...

Speaker Change: Participate in the programs, it's 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.

Speaker Change: 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.

It's super cool.

Cogeco Communications, Inc.

Operator: Thank you. Your next question comes from the line of Matthew Griffiths from Bank of America. Please go ahead.

Speaker Change: Thank you, and your next question comes from the line of magic refit from Bank of America. Please go ahead.

Matthew Griffiths: Great. Thanks for taking the question. On the same subject of the network modernization, there was no mention of a DOCSIS 4.0 upgrade. Is that contemplated in that normal course upgrade cycle to the end of 2027? Are you seeing customer usage not requiring that, so you're delaying any spending that would be related to that? Secondly, just on pricing. In Canada, in the materials you called out competitive pricing pressure, which isn't necessarily new. I was wondering if you're seeing that mostly on the new gross adds, or are you seeing the pricing pressure affect your base, where you're getting an increased number of subscribers within your base repricing themselves lower, and that's driving the competitive pricing pressure that you called out? Thanks.

Matthew Griffith: Great. Thanks for taking the question. On the same subject of the network modernization. Sorry.

Matthew Griffith: There's no mention of kind of a doxxas for upgrade. Is that contemplated in that normal course upgrade cycle to the end of 2025, 2027? Or are you seeing?

Matthew Griffith: Customer usage, not requiring that, so you're kind of filling any kind of spending that would be related to that.

Matthew Griffith: And secondly, just on pricing in Canada, you know, in the materials you call their competitive pricing pressure, which, you know, isn't necessarily new. But as 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...

Matthew Griffith: An increased number of subscribers within your base, kind of repracing themselves lower and that's driving the competitive pricing pressure that you called out. Thanks.

Frédéric Perron: Sure. Hi, Matthew. It's Fred. 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. The good news is we're still able to realize annual rate increases. We adjust them, as I mentioned earlier. We made it slightly smaller this year than we did last year. That's in the tweaking space. Nothing major.

Sure, hi Matthew with Fred.

Matthew Griffith: 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.

Matthew Griffith: We addressed them as I mentioned earlier. We made it a slightly smaller this year than we did last year, but that doesn't in the tweaking space.

Matthew Griffith: We use different technologies as you know, so we have our network is

Patrice Ouimet: Sure. On DOCSIS, we use different technologies, as you know. Our network is pretty much very close to being all DOCSIS 3.1. We have, in most places, 1 Gb or more in terms of download speeds. We've been building Fiber to the Home for many years, especially all the new areas. More recently, there are certain areas in the US where we saw, with new technologies, an opportunity to go and do brownfield FTTH builds rather than go through the split and DOCSIS 4.0 way. We can go directly to fiber. We don't do this if it doesn't make sense financially. The costs have come down, and there's new technologies that allow us to do that, so we started doing this.

Matthew Griffith: Pretty much very close to being all DOCSIS 3.1, so we have in most places one gig or more in terms of download speeds.

Matthew Griffith: We've been building fiber to the home for many years, especially all the new areas.

Matthew Griffith: And more recently, there are certain areas in the US where we saw with new technologies and opportunities and opportunities.

to go and do brownfield FTT-H welds.

Matthew Griffith: Rather than go through the split and the axis for weight, we can go directly to fiber. We don't do this if it doesn't make sense financially, but the costs have come down. And there's new technologies that allow us to do that, so we started doing this.

Patrice Ouimet: As for DOCSIS 4.0, it's still something we're planning to do over time, but we're not planning to do a big blitz with this and do it when it makes sense. It's not something that we have yet started to implement, given we didn't have to do it from a demand standpoint. Also, when you look at the equipment costs, usually those come down over time, so it makes sense to wait a bit.

Matthew Griffith: And as for the OXIS 4, it's still something we're planning to do over time, but we're not planning to do a big blitz.

Matthew Griffith: 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.

Matthew Griffith: And also, when you look at the Equipment Costs, usually those come down over time, so it makes sense to wait a bit.

Frédéric Perron: Yeah. I don't know if this was behind the question, Matt, in the CAD 150 million cash flow increase we're talking about, we don't anticipate big surprises coming from DOCSIS 4.0 erasing some of that.

Matthew Griffith: You know, in the 150 million cash for an increase, we're talking about we don't anticipate big surprises coming from, uh, from doxas for erasing some of that.

Matthew Griffiths: Okay. No, good to hear. Maybe if I can just sneak one more in, just on the subscriber trends in the US. I know you've already spoken about improvements in Ohio, and then there's some degradation outside of Ohio. Obviously, fixed wireless access has a role to play in that. 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 bulk agreement or anything that accounts for the losses outside of Ohio in this last period?

Speaker Change: Okay, no good to hear and maybe if I can just sneak one more in just on the subscriber trends in the US and you know you've already spoken about improvements in Ohio and then there's some degradation outside of Ohio.

Speaker Change: And obviously, fixed 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 bulk agreement or anything that. That sounds.

Speaker Change: was that accounts for the, you know, losses outside of Ohio in this last period.

Frédéric Perron: No, our Florida business has been quite stable.

Speaker Change: No, our Florida 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

Matthew Griffiths: Okay.

Frédéric Perron: When I talked earlier about a slight uptick in competition, even going into Q3, it's mostly in Mid-Atlantic and Northeast.

Matthew Griffiths: Okay. Very helpful. Thank you so much.

Okay, okay, very helpful. Thank you so much. Thank you.

Frédéric Perron: Thank you.

Operator: Thank you. There are no further questions at this time. I would now hand the call back to Mr. Patrice Ouimet for any closing remarks.

Speaker Change: Thank you, and there are no further questions that this time I will now hand a call back to Mr. Patrice Lumet for any closing remarks.

Patrice Ouimet: Well, thanks everyone for participating today. As usual, feel free to call us if you have additional questions. Have a good day.

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.

Operator: Thank you. This concludes today's call. Thank you for participating. You may all disconnect.

Speaker Change: Thank you and this concludes today's call. Thank you for participating. You may all disconnect.