Q2 2025 Cogeco Communications Inc Earnings Call

Cogeco Cable, Inc.

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 the conference over to Mr. Patrice Ouimet, Chief Financial Officer of Cogeco, Inc. and Cogeco Communications, Inc.

Speaker Change: 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.

Speaker Change: Now more specifically.

Speaker Change: We expect free cash flow to grow materially over the next two years and let me be clear.

Speaker Change: This is not just an aspiration, it's a plant.

Speaker Change: This increase in cash flow will be enabled in particular by the natural end of our Capex investment cycle in rural network built and to a lesser extent network modernization efforts, having reached our objectives.

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

Speaker Change: During the second quarter, we continued to pursue our three year transformation program to further accelerate our performance.

Speaker Change: With the same five priorities, we've been communicating since last year.

That is Canada U S synergies digitization of sales and service interactions.

Speaker Change: Advanced analytics.

Speaker Change: At work expansion completion and wireless ramp up.

Speaker Change: 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.

Speaker Change: Well a lot of organizational synergies are already being captured from this change.

Speaker Change: Just starting to scratch the surface around technical and operational synergies.

Speaker Change: On the wireless front U S volumes are starting to ramp up following an initial tuning period and the preparation for an upcoming Canadian wireless launch is progressing well.

Speaker Change: We've now opened pre registrations for our existing Canadian wireline customers as part of our wireless prelaunch lead generation campaign.

Speaker Change: And demand has exceeded our expectations so far.

Speaker Change: In terms of operational performance second quarter results were ahead of expectations as the teams continue to execute well and as we deferred certain investments to the back half of the year.

Speaker Change: More specifically our transformation efforts contributed to the expansion of our consolidated EBITDA margins.

Speaker Change: Our fiber to the home expansion program added close to 7000, new homes passed in the quarter, mainly in Canada.

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

Speaker Change: And in the U S our customer satisfaction metrics.

Speaker Change: <unk> performance continued to show year over year improvement.

Speaker Change: At Cogeco Connexion, our Canadian Telecommunications business, we grew our internet customer base by a total of 8300 subscribers. This quarter, we've been adding customers under both the cogeco and akio brands over the past year.

Speaker Change: Our Ontario are subsidizing network expansion program will continue throughout fiscal 2025, we didnt expected completion in fiscal 2026.

Speaker Change: 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 than target.

Speaker Change: We've now increased the number of Canadian homes passed by nearly 145000 since the beginning of fiscal 2022.

Speaker Change: Primarily by our fiber to the home and in collaboration with governments.

Speaker Change: At Breeze line EBITDA and constant currency was stable with last year as revenue pressures from industry headwinds were offset by transformation related cost savings.

Speaker Change: We're seeing increasing subscriber subscriber tenure, resulting from higher customer satisfaction and an improved mix of higher margin services as a greater proportion of our breweries wine customers take increasingly fast internet speeds.

Speaker Change: This has helped to offset the decline in subscribers for entry level Internet services due to competition.

Speaker Change: At Cogeco media their radio advertising market faces ongoing challenges. However, our digital advertising solutions continued to be a growing contributor to revenue and our listener engagement remained strong.

Speaker Change: In Montreal for example, seven of the 10, most listened to radio programs in the city come from our stations.

Patrick: And now let me turn the call over to Patrick to provide more details on our financial performance for the quarter, but this thank.

Speaker Change: Thank you Fred So let's start in Canada, So at Cogeco Connexion revenue declined by 9% driven.

Speaker Change: Driven by the lower revenue per customer due to fewer video and wireline phone services service subscribers sorry.

Speaker Change: And the competitive pricing environment, frankly, offset by our growing internet subscriber subscriber base under both the cogeco and oxo brands over the past year and the contribution from the <unk> acquisition.

Speaker Change: Adjusted EBITDA declined by two 8% in constant currency due to lower revenue and higher operating expenses to drive subscriber growth.

Speaker Change: In the U S. <unk> revenue declined by four 5% in constant currency due to the cumulative decline in the subscriber base, especially for entry level services and non Internet services, partially offset by an improving product mix.

Speaker Change: <unk> EBITDA was stable driven by cost reduction initiatives and operating efficiencies.

Speaker Change: Turning to our consolidated numbers for Cogeco communications at the consolidated level revenue declined by two 7% and EBITDA was stable in constant currency.

Speaker Change: Decline in revenue was driven by lower revenue in both the U S and Canadian segments, while the stable adjusted EBITDA was due to operating efficiencies and lower corporate costs.

Speaker Change: Diluted earnings per share declined by 20% in reported currency due to higher D&A expenses.

Speaker Change: Higher acquisition integration and restructuring expenses and higher taxes, partially offset by lower financial expenses and the appreciation of the U S dollar.

Speaker Change: 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. <unk>.

Speaker Change: Excluding network expansion projects capital intensity was 19, 4%.

Speaker Change: Free cash flow and constant currency increased by 12, 8% largely due to lower capital expenditures and financial expenses.

Speaker Change: Our net debt.

Speaker Change: Adjusted EBITDA ratio was three four 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.

Speaker Change: We continue to target a net debt to EBITDA ratio in the low three turns range overtime.

Speaker Change: And we declared a quarterly dividend of $92 <unk> per share.

Speaker Change: Could you go ink revenue in constant currency decreased by two 7% and adjusted EBITDA was stable as a result of Cogeco communications performance.

Speaker Change: Medias operations revenue decreased by two 7% due to challenging competitive dynamics in the radio advertising market, partially offset by positive contributions from digital advertising revenue.

Speaker Change: A dividend of 92.2 cents per share. It was also declared for the quarter at Cogeco, Inc.

Speaker Change: Now turning to financial guidelines for Cogeco Communications fiscal year of 2025, 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 in 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 above Q3 of last year.

Speaker Change: At physical connection with the acquisition of <unk> now fully lapped, we expect Q3 revenue to decrease in the low single digits due to customer base.

Speaker Change: The customer base are being offset by a video and wireline for them.

Speaker Change: Cutting and competitive pricing pressures.

Speaker Change: Adjusted EBITDA is expected to decrease in the low to mid single digits, reflecting lower revenue and higher operating expenses, which includes spending related to subscriber growth and transformation initiatives.

Speaker Change: At Breeze line, we expect in constant currency mid single digit decrease in revenue versus last year, reflecting a lower subscriber base and we expect stable EBITDA year over year as operating cost discipline and lower video content costs are expected to offset the revenue decline.

Speaker Change: Below the EBITDA 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.

Speaker Change: Relates to cloud implementation costs.

Speaker Change: In regard to our Q3 financial expense, we expect it to be about $2 million higher than reported in Q2, using todays 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.

Speaker Change: Thank you, ladies and gentlemen, well 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 should you wish to decline from the polling process. Please press star followed by the true. If you are using a speaker phone. Please lift the handset before pressing any keys.

Speaker Change: One moment. Please for your first question.

Speaker Change: Your first question comes from mere Yaghi with Scotiabank. Your line is now open.

Mere Yaghi: Great. Thank you for taking my question and.

Thank you for that.

Mere Yaghi: Detailed outlook for Q3, and the rest of the year.

Mere Yaghi: So I wanted to you know.

Mere Yaghi: Just focus a little bit on the U S side.

Speaker Change: Sorry, you're having much better churn metrics in Ohio.

Mere Yaghi: Can you do for the rest of the.

Mere Yaghi: Our business in the U S to to stem the decline in broadband Disconnections, we saw the year on year Disconnections accelerates a little bit here in Q2, so versus Q1. So can you maybe just discuss what.

Mere Yaghi: What drove that type of deceleration in the disconnection then.

Mere Yaghi: Do you have any.

Mere Yaghi: And to attack the market, we've seen some of your peers in the cable industry.

Speaker Change: Dean on wireless.

Mere Yaghi: To support the cable metric.

Mere Yaghi: You know Comcast is launching a plan.

Mere Yaghi: And shortly.

Mere Yaghi: What can you do to talk on on those metrics to improve them. Thank you.

Fred: Hi, Marc it's Fred.

Fred: Maybe I can unpack that question first by talking about the market in the U S. And then I can talk about some of our performance leavers.

Fred: So it's true that we're showing a sequential improvement in our U S. P. S use I would say that the competition in the market remains elevated.

Fred: We over time, we do expect to have double your way to slow down a bit and this is just based on the numbers that the three FW eight players report in terms of their future targets.

Fred: When you look at those numbers and we should see a dollar a deceleration based on where they're at.

Fred: Forecasting we have not seen that deceleration yet, but it should come over time.

Fred: 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 there was one in particular that increased their promotional intensity in recent weeks and we're feeling it in our Q3 P. S use right now not that'd be.

Fred: Being said that maybe a 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 overtime do become does become a contributor to Kate.

Fred: Oh cool performance you've seen it from the big two out there. So that's one.

Fred: One is we're exploring how we could possibly use a dual brand strategy.

Fred: To compete in the U S market leveraging for example, an oxy or like strategy, we're not ready to announce anything today, but is this something that we're looking at thirdly as the OTT players keep raising their prices in some of these prices are really getting quite high.

Fred: We're seeing green shoots of possible deceleration in U S TV cord cutting and last but not least there is there's a lot. We can do in terms of continuing to improve.

Fred: Our ongoing sales and marketing blocking and tackling at which we ended 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 and that will be a net positive to contributor.

Fred: So our business overtime.

Speaker Change: Can I ask it from a strategic point of view.

Fred: Do you see.

Speaker Change: You know some of your peers in the U S are leaning on wireless and media essentially giving a free line of wireless to subsidize.

Fred: Retention on the cable side.

Fred: What's your view your broad view on going in that direction or sustaining that kind of.

Fred: Promotional effort.

Fred: Long term is that a feasible.

Fred: Seasonable for you given your cost structure and.

Fred: Your your view on what it takes to reduce churn and in.

Fred: Fixed wireless continues to be.

Fred: A headwind.

Fred: Sure So our wireless strategy in the U S and by the way Canada won't be that different is two is primarily about a churn reduction in discount reduction on the wireline business. So we're not targeting.

Fred: Hugely positive.

Fred: Gross contribution margin on those new wireless ads.

Fred: And the benefit will come from the wireline 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.

Fred: Certainly, giving wireless for free on our promotional time limited basis is always an option and just generally if we need to be aggressive we can be as I said earlier.

Fred: Correct.

Fred: Thank you.

Speaker Change: Thank you. Your next question comes from the line of I don't mean to go up against from Canaccord Genuity. Please go ahead.

Fred: Good morning, Thanks for taking my questions two from me.

Speaker Change: Just wanted to focus on the profitability side in the U S. Obviously, you've even on a constant currency basis, you've been able to stabilize EBITDA and judging.

Fred: Judging by Patrice and his comments I mean, that's gonna be sustained into Q3.

Speaker Change: Even with the competitive pressure are afraid that you've talked about do you feel that that you know profitability and and Breeze line can be sustained, especially when you kind of you know layer and you know any tailwind from wireless and.

Fred: The streamline structure that you have and then secondly.

Speaker Change: In Canada.

Speaker Change: Just wanted to get a sense of what any changes to churn I know there was a you know what a lot of your price increases occurred in March.

Speaker Change: Any any kind of reaction or impact of that and maybe an update on the competitive conditions. There. Thank you.

Speaker Change: Sure.

Speaker Change: I can talk generally about our U S commercial trends and then I'll answer your second question about the Canadian rate increase as well D. In the U S. There are a few things that are giving us a good tailwind from a profitability perspective that.

Speaker Change: The first one is TV cord cutting is happening at literal and sometimes no margin, so youre, losing empty calories, there so, whereas our some of our PSU and certainly revenue decline that we're reporting sometimes we lose very little profitability from that we're also seeing.

Speaker Change: That on the Internet side, some of the customers that we're losing tend to be lower our pool, because they go towards SWA 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.

Speaker Change: We will rate increases.

Speaker Change: I would also add on the cost side.

Speaker Change: That we keep our over performing in terms of our cost reduction and we don't see an end in sight on this one because of the cost reduction is happening not just from squeezing but from actually reducing customer demand. So we're seeing material declines in the rate of customers, calling us with issues.

Speaker Change: 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 bot interactions and the increase in chat as well. So you put all these things together and I would say we have a we do feel good about U S profitability.

Speaker Change: But just I don't know if you wanted to add anything on that topic.

Speaker Change: On the on the second part of your question about Canadian rate increases 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.

Speaker Change: So we're not seeing much churn from it.

Speaker Change: But we rarely see much churn from it but we would see more is a cause for retention and new discounts, but so far it's been pretty calm arrogant.

Speaker Change: Great. Thank you very much I'll pass the line.

Speaker Change: Thank you and your next question comes from the line of means 19, a thank you to Cowen. Please go ahead.

Speaker Change: Yeah. Thanks, very much first question is on your guidance, especially for Capex and free cash flow.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: We will end up at least in the better.

Speaker Change: And both of those ranges.

Speaker Change: And I'll throw the second question about the same time, just so you can see one there there seems like there's been a fair amount of chatter on.

Speaker Change: On a process to look at divesting your Florida.

Speaker Change: Fiber assets is there anything you can tell us or is there truth, that's an ongoing.

Speaker Change: Process and if so any thoughts on how it's going and what's the timeframe timeline might be thank you.

Speaker Change: Sure Hi, Ben.

Speaker Change: So on the first question, it's still early so obviously for Capex.

Speaker Change: The free cash flow will.

Speaker Change: Directly linked to it and it.

Speaker Change: Can be volatile during the year, especially when we look at the season to build.

Speaker Change: So there will be higher capex in Q3, as I mentioned earlier.

Speaker Change: And there will be some in Q4 as well so I would not assume necessarily that will come in at the low end of Capex, but we feel comfortable that we'll 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 a report that is 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 we gave.

Speaker Change: And I'm sure on the <unk>.

Speaker Change: Second question on the asset pruning, although answer it more generally.

Speaker Change: We have not commented anything too.

Speaker Change: Whatever comes out.

Speaker Change: From a journalist, but just generally is something we've said before.

Speaker Change: We're still interested in pruning some assets in the U S. If we can if we think it makes sense operationally strategically and financially and it's still something we're looking at right now.

Speaker Change: That's all we can comment on at this point.

Speaker Change: Fair enough. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you and your next question comes from the line of drew Mcreynolds from RBC. Please go ahead.

Drew Mcreynolds: Yes, thanks very much good morning, maybe first.

Speaker Change: For new Frederick.

Speaker Change: On the wireless strategy.

Speaker Change: You know youre objective the churn reduction.

Speaker Change: Can you give us a sense just what kind of wireless penetration generally is required before.

Speaker Change: You see that inflection points on the churn reduction on the cable business.

Speaker Change: And just how you're how you're looking at that from a either penetration or timing perspectives.

Speaker Change: And then secondly, maybe for you Patrice on the level of reinvestment through the transformation that you're making.

Speaker Change: I don't know if you can quantify this but ultimately.

Speaker Change: When that transformation begins to wind down.

Speaker Change: In terms of basis points of margin, what kind of reinvestment comes out of the oven.

Speaker Change: The other the numbers that we're seeing right now on a run rate basis.

Speaker Change: In the context of the question is clearly you are seeing.

Speaker Change: Very good efficiency gains.

Speaker Change: Great to see I'm, just wondering if we get a.

Speaker Change: Step down.

Speaker Change: Down in Opex.

Speaker Change: For a gradual decline is that reinvestment comes out of the equation. Thank you.

Speaker Change: Hi, Andrew its Fred Thanks for the first question on the wireless.

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

Speaker Change: Our wireless kind of Opex investments and Theres very little Capex.

Speaker Change: You've already seen 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, and and in terms of how fast the upside comes I think a good proxy to use a dru would be the U S cable and via notes.

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

Speaker Change: They're paying for the payback to really show. So as you look at those youll see that its a lower penetration level.

Speaker Change: Then truly fully converged players who have both infrastructures.

Speaker Change: But it does become accretive over time, and 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.

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

Speaker Change: 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, but after a little while you start reaching a critical mass and then overtime.

Speaker Change: Our fixed costs, which as I said before are already in our financials.

Speaker Change: Your fixed costs eventually end up being compensated for and then.

Speaker Change: The whole thing turns EBITDA positive.

Speaker Change: No.

Speaker Change: Short answer would be it's upside from here.

Speaker Change: Patients on the time that it takes two to get that up that that upside in our cable envy and those are a good proxy.

Speaker Change: So on the second question.

Speaker Change: We have a number of elements to cover as part of their transformation.

Speaker Change: <unk> pay off quicker than some pay off 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 so we've already seen this like you saw the margins improve year over year, especially in the U S. A.

I don't know I have been asked before where do we see those going forward. The current level of margins in the U S 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 as we are able to generate bigger gains from the transformation there could be some upside down 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, where 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.

Speaker Change: Activate a different elements of the plan.

Speaker Change: Okay. Thank you both.

Speaker Change: Thank you and your next question comes from the line of Stephanie price from CIBC. Please go ahead.

Stephanie Price: Hi, good morning.

Speaker Change: Maybe following up on <unk> question, there a little bit.

Speaker Change: Roughly through the year and EBITDA is up a little over 2% on the consolidated basis versus the full year guidance of stable EBITDA and it sounds like you're seeing benefits from the transformation initiatives I'm. Just wondering how we should think about the second half of the year and the puts and takes around around EBITDA and expenses in the back half.

Speaker Change: Yeah, So hi, Stephanie so youre talking of the consolidated level right, Yeah exactly yes.

Speaker Change: Yes.

Speaker Change: Yes, so there are different elements in the back half of the year I've provided a glimpse at Q3.

Speaker Change: Still a bit early for Q4, but obviously, we do have some price increases that we've put through in February and March for.

Speaker Change: There are different products in the in the two countries there are.

Speaker Change: There is some seasonality to some expenses, especially when we look at the marketing budgets and back to school are that hit more in the Q4, so different elements there.

Speaker Change: 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.

Speaker Change: So as I said basically in the in the opening remarks.

Speaker Change: We do expect that in Q3.

Speaker Change: For the end of that should be.

Speaker Change: A negative year over year.

Speaker Change: In Canada and more stable in the U S. In constant dollars and so that gives you a small pressure in Q3, but again our plan is part of.

Speaker Change: Guidance annual guidance, we did provide as a stable hopefully that answers your question.

Speaker Change: Thanks, and then maybe one more for me.

Speaker Change: A few M&A deals in the U S Telecom space recently.

Speaker Change: Curious how you if you anticipate any changes to the competitive landscape on the further consolidation.

Speaker Change: So it's still early days because of some.

Speaker Change: Some of these transactions have not procured in areas, where we operate.

Speaker Change: The the the ones that have been announced where sometimes it is in areas, where we operate have not necessarily closed.

Speaker Change: I wouldn't say that we saw a major changes and it's a very dynamic every every week. There are new types of offers being put out by the different players.

Speaker Change: And in different states in the different states that we operate in so it's still a bit early days.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you and your next question comes from the line of Cherilyn Djibril Someday Chardan. Please go ahead.

Speaker Change: The volatile demand. Thanks for taking my question. Fred you started the call talking about your potential for growing our free cash flow over the next two years.

Speaker Change: And I read on the public broadcast of the conference you attended.

Speaker Change: Earlier this quarter you were talking about growth of free cash flow of $150 million over over the next two years wondering if you can confirm.

Speaker Change: Confirm or maybe discuss that you still have this view.

Hi, gentlemen, thanks for the question.

Speaker Change: Yes, so for everyone's benefit what we were talking about is the growth in cash flow from this fiscal year to fiscal 2020 seven and I would say at this point John that indeed, 150 million would be a decent assumption to use they're.

Speaker Change: The reason for the increase is quite straightforward, which is when we got our Ontario and network expansion programs that will complete by then.

Speaker Change: So quite pleased about how we were able to quietly modernize our the rest of our network over time and by the time, we reach fiscal 'twenty seven 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 a is not a bad assumption.

Speaker Change: Great and then I guess, the obvious kind of strategic follow up to that is that.

Speaker Change: What would be the impact on EBITDA growth.

Over the longer term what I understand is that most of this is coming from from Capex reduction.

Speaker Change: Now you have plan deploying what with new houses now I totally commend you for only investing on plans that makes sense from an ROIC perspective, but do you think theres going to be a no noticeable impact on the profitability the profitability side.

Speaker Change: You mean on the growth.

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

Speaker Change: These expansion 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 that why.

Speaker Change: Airless will become more and more material over time.

Speaker Change: And especially in the time horizon that you and I are discussing now.

Speaker Change: And on the Modernisation Capex, we're really starting to reach levels that in many cases exceed what a customer can even use in terms of speed. So [laughter], where that that's the reason why it modernization capex may it may ease off overtime and Joe maybe if I can add also we are every year.

Speaker Change: Here, we will add.

Speaker Change: 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 available.

Speaker Change: Available to talk to different people in a way that especially at the government level when we want to.

Speaker Change: Participate in our programs. It's just that there is no big ones coming up 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 and Canada our state level.

Speaker Change: The bigger one that we've been talking about in the past. The beta program is something we'll probably not do too much of a but at a smaller level there are some possibilities.

Speaker Change: No Super cool.

Speaker Change: [noise].

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

Speaker Change: Oh, great. Thanks for taking the question on.

Speaker Change: On the same subject is the network monetization our network modernization sorry.

Speaker Change: There was no mention of kind of a DOCSIS four upgrade is that contemplated in that normal course upgrade cycle to the end of 'twenty 'twenty five 'twenty 'twenty seven or are you seeing cut.

Speaker Change: Customer usage, not requiring that so you're kind of delaying any spending that would be related to that.

Speaker Change: And secondly, just on pricing in Canada.

Speaker Change: Materials, you called out competitive.

Speaker Change: Competitive pricing pressure, which isn't necessarily new but I was wondering if youre seeing that mostly on kind of the new gross adds or are you seeing the pricing pressure affect your base, where you're getting an increased number of.

Speaker Change: Of our subscribers within your base kind of repricing themselves are lower and that's driving the competitive pricing pressure that you called out thanks.

Matthew: Sure Hi, Matthew with Fred.

Matthew: 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.

Matthew: It's the same thing in 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 in the tweaking space.

Matthew: Nothing major.

Matthew: Sure.

Matthew: DOCSIS.

Matthew: So DOCSIS, we use different technologies as you know.

Matthew: So our we have our network is pretty much very close to being all DOCSIS three one so we have in most cases, one gig or more in terms of download speeds.

Matthew: We've been building our fiber to the home for many years, especially all the new areas and more recently there are certain areas in the U S, where we we saw with new technologies and the opportunity to go and do brownfield F. T H builds rather than go through the split.

Matthew: Access for ways, we can go directly to fiber we don't do this if it doesn't make sense financially.

Matthew: But the costs have come down and there's new technologies that allow us to do that so we started doing this and as for DOCSIS four it's still something we're planning to do over time, but we're not planning to do a big Blitz.

Matthew: 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: And also when you look at the equipment costs, usually those will come down overtime. So it makes sense to wait a bit. So if I don't know if this was a behind the question, Matt, but you know in the $150 million cash flow increase we're talking about we don't anticipate big surprises coming from from Dod.

Matthew: <unk> four erasing some of that.

Speaker Change: Okay, no good to hear and maybe if I can just sneak one more in just on the subscriber trends in the U S and I know you.

Speaker Change: You've already spoken about improvements in Ohio, and then there's kind of 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.

Speaker Change: Bulk agreement or anything that.

Speaker Change: Was that accounts for the.

Speaker Change: You know losses outside of Ohio in this last period.

Speaker Change: No are our Florida business business has been quite stable.

Speaker Change: So when I talked earlier about a slight uptick in competition, even going into Q3, it's.

Speaker Change: It's mostly in the mid Atlantic and northeast.

Speaker Change: Okay. Okay very helpful. Thank you so much thank you.

Speaker Change: Thank you and there are no further questions at this time I would now hand, the call back to Mr. <unk> for any closing remarks.

Speaker Change: 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.