Q4 2025 Cogeco Inc Earnings Call

Speaker #1: 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 #1: 27 . Providing a new additional . Lever for us in the future . We've seen a reduction in . Competitor promotional activity in the quarter , which has more than offset some minor noise around FWA and wholesale , including our own deployment as a reseller under the Cogeco brand .

Speaker #1: Please go ahead . Mr. Ouimet .

Speaker #1: I'll turn it over to Patrice for more details on our results and guidance at .

Speaker #2: Thank you . Operator . So good morning , everyone . Welcome to our fourth quarter 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 #2: Thank you Fred . So in Canada , Cogeco connections , revenue declined by 1.5% in the fourth quarter , mainly due to lower revenue per customer from fewer video and wireline phone service subscribers .

Speaker #2: We ask that you review the cautionary language in the press releases and annual report issued yesterday regarding the various risks , assumptions and uncertainties that could cause our actual results to differ .

Speaker #2: Partly offset by growth in our internet subscriber base, which added 17,000 new customers during the quarter. Adjusted EBITDA declined by 1.4% in constant currency due to the lower revenue being partially offset by lower operating expenses resulting from our cost reduction initiatives and operating efficiencies.

Speaker #1: Across Quebec . So it's fair to say that on balance , our Canadian competitive environment is evolving in a constructive manner . At present time .

Speaker #1: Our launch of a Canadian Wireless . Service is going ahead of plan and October marked the deployment of this new service across most of our wireline operating footprint .

Speaker #2: We added 10,800 homes , during the quarter , mainly through fiber to the home under a network expansion program , including those related to the Ontario subsidized program in the US , Breslin's revenue declined by 9.2% in constant currency due to the cumulative decline in the subscriber base over the prior year .

Speaker #1: Our positive early sales results on wireless have already enabled us to start pulling back on some of our initial introductory offers on the US side , our year on year financials were impacted by Rpu pressures .

Speaker #1: The cumulative impact of customer losses in the prior quarters , a difficult comparative period last year , and a smaller rate increase this year than in the previous year .

Speaker #1: This resulted in a year on year decline in adjusted EBITDA , which was in line with what we had . Indicated to you last quarter .

Speaker #1: That being said , our additional sales and marketing activities are working . Our subscriber trends are now improving and we're delivering on our long stated goal of growing the the Ohio customer base during the quarter .

Speaker #1: In fact , it's the first time since we acquired the Ohio business four years ago that we One year , lifted by strength in our digital advertising solutions , and continued listener engagement on that .

Operator: Welcome to the Conferencing Center. Please hold for the next available operator. Welcome to the Conferencing Center. Which conference are you joining?

Frederic Perron: Cogeco Earnings call.

Welcome to the conference center. My name is Conference. Are you joining?

Okay, cool. Earnings call.

Operator: Cogeco. Sorry, is it right? Yeah.

Co sorry. Is it right?

Aravinda Galappatthige: Correct.

Operator: Okay, got it, sir. May I have your first name, sir?

Yeah, correct.

Aravinda Galappatthige: Can you spell out David, D, A, V, I, D, and Brown, B, R.

Okay, got it. Sir and may I have your first name, sir. Can you spell out?

Operator: O, W, R. Okay, got it, sir. Thank you. Your company is Cogeco, is that right, sir?

David D., A B., I D., and Brown B. R. O. W. N.

Aravinda Galappatthige: Yeah. Correct.

Okay, got it sir. Thank you. And your companies is Ciara. Is your right sir?

Operator: Okay, I will join you now. Thank you, sir.

Yeah, correct.

Aravinda Galappatthige: Thank you.

Okay, I will join you now. Thank you, sir.

Thank you.

Patrice Ouimet: This reclassification will have no impact on the consolidated level and comparative segments for the prior year. We will also adjust basically the results for the prior year for that. In addition, our IT costs related to Canadian mobility, which were recognized below the EBITDA line as cloud computing costs in fiscal 2025 during the implementation period, will be recognized as OPEX within the Canadian segment starting in Q1, as those systems are now in operation. Overall, we expect the fiscal 2026 Canadian segment's adjusted EBITDA to be impacted by about $20 million versus what we reported in fiscal 2025. Of that, $11 million is simply the reclassification from corporate OPEX to the Canadian business, and the balance is moving from below the EBITDA line to OPEX. That's basically the IT systems I was relating to.

Patrice Ouimet: We nevertheless expect the Canadian operations' growth to largely absorb those additional costs in fiscal 2026 through customer growth and operational efficiencies. As relates to Q1, we expect consolidated revenue and adjusted EBITDA to decline in the mid single-digit range in constant currency. We then expect a material sequential improvement in our year-over-year adjusted EBITDA trends starting in the second quarter as we benefit from already quantified cost savings, rate increases, and improving U.S. customer trends. More specifically, in the U.S., we expect the Q1 year-on-year adjusted EBITDA variation to be slightly better than the Q4 variation that we just reported, followed by solid gradual improvements as we benefit from easier year-on-year comps in addition to the aforementioned factors at the consolidated level in Q1.

Patrice Ouimet: With our restructuring program largely completed, we do not expect material acquisition, integration, and restructuring costs in the quarter, and we expect our financial expense to be about $10 million less than in the prior quarter in Q4, while our depreciation and amortization expense should be about $4 million lower than in Q4. Finally, at Cogeco Inc., we have issued the same financial guidelines as Cogeco Communications Inc. with the exception of net capital expenditures. Fred and I will be happy to take your questions.

Finally at Cogeco, Inc. We have issued the same financial guidelines as Cogeco communications with the exception of net capital expenditures and now Fred and I will be happy to take your questions.

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'll hear a prompt that you had has been raised 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.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press Star followed by 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press Star followed by 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Aravinda Galappatthige with Canaccord Genuity Inc. Your line is now open.

For your first question.

First question comes from Arab Linda <unk> <unk> with Canaccord Genuity. Your line is now open.

Good morning, Thanks for taking my question.

Aravinda Galappatthige: Good morning. Thanks for taking my question. I just wanted to pick up on the comments around the IT spend in wireless. A bit more broadly, given that you've launched now and it's deployed across the footprint, are you able to update us on the total impact on Canadian EBITDA or the expectation that's built into fiscal 2026? I know about that. You talked about the $9 million incremental piece from it, but more broadly, given the pricing changes you've done, just wanted to see how much of a drag it could create in the first half or even for the full year. Maybe stop there.

Just wanted to pick up.

On the so the comments around the it spend in wireless.

More broadly given that you've launched now and it's deployed across the footprint.

Are you able to sort of update us on sort of the total impact on Canadian EBITDA.

The expectation that's built into fiscal.

2026.

I know, Bob you talked about the $90 million incremental piece of my team, but more broadly given sort of the pricing changes you've done just wanted to see how much of a drag it could create in the first half or even for the full year I'm going to stop there.

Sure.

Patrice Ouimet: Sure. Good morning. The reclassification of some OPEX from corporate to our Canadian business and moving some IT costs from below the line to above the EBITDA line will create pressure of about $20 million on our Canadian numbers. Obviously, it doesn't change anything, especially for free cash flow. If you look at the full company, it's two reclassifications. One will basically show the comparative values that will be adjusted in the prior year. That's basically what we're moving from corporate to our Canadian business. The other one will not be reclassified in the past, as this is moving forward. That's the IT cost. That being said, as I was saying earlier, we are expecting growth in our Canadian business otherwise at the EBITDA line. We should normally be able to absorb this.

Good morning, so yeah. So just the reclassification of some opex from corporate to seek to our Canadian business and moving some it costs from below the line to above the EBITDA line will create pressure of about $20 million on our Canadian numbers.

It doesn't change anything at the especially for free cash flow. If you look at the full company for REIT to retail applications.

One will will basically show the comparative values that will be adjusted in the prior year. That's basically what we're moving from corporate to our Canadian business. The other one will not be.

Reclassified Richard.

In the past basically as a this is moving forward thats the it cost that being said as it were.

Saying earlier, we are expecting growth in our Canadian business otherwise at the at the EBITDA line. So we should normally be able to absorb this to your wider question on if I got your question right on wet mobility the ability does for US obviously, we're starting from a basically a.

Patrice Ouimet: To your wider question, if I got your question right, on what mobility does for us, obviously we're starting from basically a very small number. I wouldn't say that the numbers will be meaningful in terms of the benefits in the year because obviously we're starting from a small base, but we do see benefits and we've been very successful with the launch so far and we see a lot of interest from our customers. Again, to remind you, the goal with Mobility is primarily to bundle services for our customers or non-customers that are neighbors of our customers in the regions that we serve. It can be used in acquisition, it can be used in retention as well.

Very small number so I wouldn't say that the numbers will be meaningful in terms of in terms of the benefits in the year, because obviously, we're starting from a small base.

But we do see benefits and we've been very successful with the launch so far and we see a lot of interest from our customers and again to remind you. The goal with mobility is primarily to bundle services for our customers or non customers learn of her neighbors of our customers.

The regions that we serve it can be used in acquisition it can be used in retention as well.

Thanks, Patrice and then.

Aravinda Galappatthige: Thanks, Patrice. Maybe just turning to the U.S., the wireless sort of experience so far, is there anything, any feedback you can provide or share in terms of how the churn profiles have been impacted by your wireless launch? I realize it's early, so perhaps it's not much, but anything you can share would be interesting.

Maybe just turning to the U S.

Wireless.

So far is there anything any feedback you can provide.

Sure in terms of how the churn profiles had been impacted by a wireless launch I realize it's early so perhaps it's it's a.

It's not much but anything you can share would be interesting.

Frederic Perron: Hi Aravinda, it's Fred. Yes, we've analyzed it, and we see a materially lower churn in the U.S. from customers also taking wireless from us. We have to be cautious because some of that is simply self selection. Customers who like us better, less likely to churn, are more likely to buy wireless anyways. The churn difference is so pronounced that we believe at present time that there's a benefit above and beyond self selection as it relates to churn benefit from wireless.

Hi, Aragon that is Fred.

Yes, we've analyzed it and we see a materially lower churn in the U S. From customers also taking wireless from US now we have to be cautious because some of that is simply self selection, so customers, who like us better or less likely to churn are more likely to buy wireless anyways, but the.

Churn difference is so pronounced that we believe that present time that theres a benefit above and beyond.

Self selection is it relates to churn benefit from wireless.

Okay. Thank you for it and then lastly, just a bigger picture question on this the physical twenty-six guide.

Aravinda Galappatthige: Okay, thank you, Fred. Lastly, just a bigger picture question on the fiscal 2026 guide. I know, Patrice, you talked about what Q1 would be like. Is it fair to suggest that the guide still assumes a close to mid single digit decline in the U.S. as far as EBITDA is concerned and then a little bit of catch up in Canada, or is it low single digits? Both geographies, yeah.

I don't think you've talked about what Q1 would be like.

Is it fair to suggest that our guidance still assumes a close to mid single digit decline in the U S. As far as EBITDA is concerned and then a little bit of catch up in Canada or is it low single digits, but the geographies.

Yes.

Patrice Ouimet: I haven't commented really on what we expect for the full year, but I could say for what we're assuming in the U.S. for the full year at the EBITDA level, obviously in constant currency, we should do better than your assumption of mid single digit given that we see a good improvement in the customer situation because we did lose a lot of customers in the prior year and we're expecting to do a lot better there. We've implemented a lot of tactics as well to achieve this and also to manage how we price our products, how we handle it in retention. Our three year transformation program is continuing and we have further cost improvements that we are planning to bank on. We talked about the chatbots before. We've changed our phone systems as well, our automated phone systems that now have AI components.

Yeah, I haven't commented really on what we expect for the full year, but I could say a four fourth what we're assuming in the U S for the full year at the EBITDA level, obviously in constant currency. It should we should do.

Better than than your assumption of mid single digit.

Given that we see a better.

A good improvement in the customer situation, because we did lose a lot of customers in the prior year and were expecting to do a lot better there.

We've implemented a lot of tactics as well too.

To achieve this and also to manage how.

How we price our products, how we handle it in retention and our program. Our three year transformation program is continuing and we have further cost improvements that we are planning to bank on.

We talked about the chatbot before we've changed our phone systems as well our automated phone systems that now have AI components.

Patrice Ouimet: These are just examples, but there are other elements as well in our programs that will kick in in the year.

These are just examples but there's other other elements as well in our programs that work again in the year. The other thing I would say about the U S. Arvind.

Frederic Perron: The other thing I would say about the U.S., Aravinda, is we've done a lower rate increase over the past year than we had in the prior year in an effort to de-risk the ARPU that obviously you can see in our Q4 results in the U.S., and you'll see in our Q1 results a little bit as well. As we go into the next year, we have an opportunity to do rate increases in some segments that were not captured before. It doesn't mean we'll do very large rate increases, but there are some segments that were previously not fully exploited, and therefore we do see a bit of revenue upside from that starting in the second and third quarter.

As we've done a lower rate increase over the past year than we had in prior year in an effort to to Derisk Dr pool.

That obviously you can see in our Q4 results in the U S and you'll see in our Q1 results a little bit as well, but as we go into the next year.

We have an opportunity to do rate increases in some segments that were not captured before so it doesn't mean, we'll do very large rate increases, but there are some segments that were previously not fully exploited and therefore, we do see a bit of revenue upside from that starting in the second and third quarter.

Thank you.

Aravinda Galappatthige: Thank you. I'll pause the line.

<unk> lives.

Your next question comes from Vince Valentini with TD Bank. Your line is now open.

Operator: Your next question comes from Vince Valentini with TD Cowen.

Frederic Perron: Your line is now open.

Patrice Ouimet: Hey, thanks guys.

Thanks, guys. Thanks for the extra detail on the wireless Canadian net impact, but can I ask one other item on that is.

Vince Valentini: Thanks for the extra detail on the wireless Canadian impact. Can I ask one other item on.

Patrice Ouimet: You seem like you had.

<unk> seemed like you had a very strong start out of the gates as you even say you slow down your new marketing and pricing efforts as a result of that.

Vince Valentini: A very strong start out of the gates. As you even say, you slowed down your marketing and pricing efforts as a result of that, given all the customers you had out of the gates taking a free line.

Given all of the customers you had out of the gates, taking a free line for a year you still have to pay the wholesale piece on that is that not a potential incremental drag on your your EBITDA in the Canadian segment in 2026 as well.

Frederic Perron: For a year, you still have to pay the wholesale fees on that.

Vince Valentini: Is that not a potential incremental drag on your EBITDA in the Canadian segment in 2026 as well?

Yeah, it's it's a well by the way we have different types of products. So we do a we do have our paying customers as well.

Patrice Ouimet: Yeah, by the way, we have different types of products, so we do have paying customers as well. Again, this is linked also with them being customers with Internet and maybe other products as well. The numbers are still small. We're starting. When you compare it to the size of our business in Canada, it's factored in in our guidance. I wouldn't say it's a lot. We have a bit more marketing costs we're doing obviously as we launched, but not that material.

But and again this is linked also with AR with them being our customers with internet than maybe other products as well, but the numbers are still small right. We're starting when you compare it to the size of our business and in Canada.

It's factored into our guidance, but I wouldn't say, it's a it's a lot we have a bit more marketing costs, we're doing obviously as we launch but.

But not that material.

Frederic Perron: Yeah, Vince, the launch promotion was something that was budgeted and is in our forecast. We thought it was an efficient way of getting started. We consider it almost a marketing investment. As you've said, we've already pulled back, and at this time the free line for a year is only available on our talk and text plan without data, which very few customers take.

The the launch promotion was something that was budgeted and is in our forecast. We thought it was an efficient way of getting started so we consider it almost a marketing investment, but as <unk> said, we've already pulled back and at this time there free line for a year is only available on our talk and text plan.

Without data, which very few customers take.

Okay, Thanks, sticking with Canada, and the more disciplined pricing environment Youre seeing.

Patrice Ouimet: Okay, thanks.

Vince Valentini: Sticking with Canada and the more disciplined pricing environment you're seeing, does that not open up some opportunities for rate increases on your platform? I know you don't like to talk about them before they're announced to your customers, but is there any broad sense you can give us as to what you've baked into your guidance for ARPU growth in Canada?

Does that not open up some opportunities for rate increases on your platform and I know you don't like to talk about them before they're announced to your customers, but is there any broad sense you can give us as to what you baked into your guidance for for ARPA growth in Canada.

Yeah. So I think we'll stick with our policy of not talking about it in advance, but I would say generally we do have some price increases that we got a reasonable ah in our different products, especially for our video and Internet.

Patrice Ouimet: Yeah. I think we'll stick with our policy of not talking about it in advance, but I would say generally we do have some price increases that are reasonable in our different products, especially for video and Internet. Normally when we put out guidance like this, we do have an expectation when they obviously they don't cover the full year, and as they're put through during the year. We did have some in recently that will impact the full year, but it varies by product and I'll just add.

So normally we would we put out guidance like this we do have an expectation when they obviously they don't cover the full year.

And.

Put through during the year, we did have some in our recently that will impact the full year, but it varies by product.

I'll just add beyond the rate increases that we do obviously a reality of our business for the past many years is that new customers come in at or lower our pud in existing customers, but with a more rational pricing environment as we're seeing there.

Frederic Perron: Beyond the rate increases that we do, obviously a reality of our business for the past many years is that new customers come in at a lower ARPU than existing customers, but with a more rational pricing environment, we're seeing the ARPU of new customers ticking up a bit in recent months. There's also the stickiness at the end of promotions, which has the possibility to increase as customers are not presented with as aggressive offers from competition.

<unk>, new customers picking up a bit in recent months Theres also the stickiness at the end of promotions, which has the possibility to to increase as customers are not presented with as aggressive offers from competition.

Okay.

Patrice Ouimet: Okay, I'm going to switch to the.

Let me switch to U S.

Vince Valentini: U.S., you added, correct me if I heard this right, you added 35,000 new fiber-to-the-home passings just in fiscal 2025.

You added correct me if I heard this right you added 35000, new fiber to the home passing in two that just.

In fiscal 2025.

Yeah.

The the comment that I made.

Frederic Perron: The comment that I made in my section of the introduction is that we have upgraded 35,000 doors from cable to fiber.

In my section of the introduction is that we have upgraded.

35000 doors from from cable to fiber.

Vince Valentini: Right. That's not a total, that's the incremental in the fiscal year. Correct. Two questions on that. Can you give us any sense as to what the total fiber passings are now? Secondly, to get that extra 35,000, was that using the new technology that you sort of talked to us about last November?

But that was that's not a total that's the incremental in the fiscal year.

Correct.

So two.

Two questions on that can you give us any sense as to what the total fiber packings are now and secondly to get that extra 35000 was that using the new technology that you sort of talk to us about our last November.

Frederic Perron: The second part of the question, the answer is yes. That is why you still see good CapEx from us.

The second part of the question and the answer is yes, and that's why you still see a good capex from us.

Patrice Ouimet: Yeah, and we'll continue this in fiscal 2026. Our program to selectively upgrade certain areas in the U.S. with fiber-to-the-home has a good cost benefit to us with this new technology. It doesn't apply everywhere, but there are some areas where it does make a lot of sense. This will continue this year and probably a little bit in fiscal 2027. Again, we can absorb this in our CapEx envelope. Overall, to your question, we don't disclose specifically our fiber component. As you know, most of our network is fiber, but the last mile obviously is we're still predominantly on coax, and it's generally more efficient to upgrade the coax than do an overbuild as we're doing selectively in the U.S. I would say overall, between the network expansions that we're doing, those are generally in fiber-to-the-home.

Yes, you will.

We will continue this in fiscal 'twenty six our program to selectively upgrade certain areas in the U S with fiber to the home Oh is it. It is a good kind of a benefit to us with this new technology. It doesn't apply everywhere, but there are some areas where he does a lot of sense. This will continue this year end.

A little bit in fiscal 'twenty seven.

Again, we can absorb this in our Capex envelope overall to your question, we don't disclose specifically our fibre component as you know most of our network is fiber, but the last mile. Obviously as we're still predominantly on the coax.

And it's generally more efficient to upgrade the coax then do an overbuild is we're doing selectively in the U S. So I would say overall between the network expansions that we're doing those are generally in fiber to the home we've been doing this for more than 10 years.

Patrice Ouimet: We've been doing this for more than 10 years, and the selective upgrades, it's still a small portion of our network that is fully fiber-to-the-home. Again, as we upgrade coax, we're able to deliver in many regions actually two gigs even on coax by doing minor upgrades. We're not even on DOCSIS 4 yet, and we offer two gigs in several regions in Canada. I would say the future will be a mix of fiber-to-the-home, upgrades of coax, and there are different ways of upgrading that. Eventually, we'll have DOCSIS 4 as well, but we did not rush it as we're able to generally have much faster speeds than what customers want. The cost benefit is better for us to do it this way.

And the selective upgrades it's still.

<unk> portion of our network that is fully a fiber to the home.

But again as we upgrade coax were able to deliver.

In many regions actually two gigs even on coax by doing minor, we're not even non DOCSIS for yet and so we offer two gigs in several regions in Canada. So this I would say the future will be a mix of our fiber to the home upgrades of coax and there's different ways of upgrading that eventually will have DOCSIS four.

As well, but we did not Russia as we're able to generally have much faster speeds than what customers want so the cost benefit is better for us to to do it this way.

Alright, sorry, I can ask one more on that because I don't think it's well understood by people.

Vince Valentini: Sorry, I'm going to ask one more on this because I don't think it's well understood by people. The cost per home passed when you did those 35,000 because of that new, more efficient technology. Can you give us an update on what the average cost was per home in terms of the CapEx?

The cost.

Per home passed when you did those 35000 because of that new more efficient technology can you give us an update on on what the average cost was performed in terms of the capex.

Yeah, it varies by region, but I would say it's generally.

Patrice Ouimet: Yeah, it varies by region, but I would say generally it's probably around $400 or so. There are some that are less expensive than this and some more. It's not just one number, and the more dense it is and depending on how the structure of the network is, it is fairly effective. When you look at this versus doing a traditional fiber-to-the-home with the traditional method, you know the numbers for competitors. Generally, this is a lot higher. This is what we do in network extensions as well. When you look also at going through the coax route all the way to DOCSIS 4 with high splits, you can get to these numbers easily as well over time with the CPE changes. That, I would say, is probably a good average to use.

It's.

Around $400 or so.

But really there's a there are some that are less expensive than this in some more so there is a it's not just one number.

And the more dense it is on depending on how the structure of the network is it is yeah. So it is fairly effective when you look at this versus doing through a traditional <unk>.

Fiber to the home with the traditional method you know the numbers for competitors. So generally this is a lot higher. This is what we do in network expansion as well and and when you look also at going through the coax route all the way to DOCSIS four with high splits you can get to these numbers easily as well over time.

I'm with the CPE changes.

So so yeah. So I would say, it's probably a good average to use.

Vince Valentini: Sorry, Patrice, we're talking about the U.S. segment. When you say $400, are you talking US$400?

Troy Patrice when you were talking about the U S segment. When you say 400, or you talking 400 U S dollars.

Patrice Ouimet: Yes, it is U.S. dollars.

Yes, it is U S dollars okay.

Aravinda Galappatthige: Okay.

Vince Valentini: Lastly, just free cash flow.

And then last just free cash flow I'm sure others are asking about there's true, but general sense I want to make sure I'm clear you're you're.

Frederic Perron: I'm sure others are asked about this too, but just in general sense, I.

Vince Valentini: Want to make sure I'm clear. You guys, excluding rural projects, you're guiding to like $625 million to $690 million of free cash flow this fiscal year. You're saying you can only do $600 million in fiscal 2027. Is that because you found new expansion projects so that that bucket of CapEx doesn't go to zero? Or are you deliberately telegraphing that other items within free cash flow are going to go negative, like whether it's EBITDA or cash taxes or interest or something else?

Excluding rural projects, you're guiding to like 625 million to $690 million of.

Our free cash flow this fiscal year, and you're saying you can only do $600 million in fiscal 2027 is that because you have found new expansion projects. So that that that bucket of Capex doesn't go to zero or are you deliberately telegraphing that other items within free cash.

So we're going to are going to go negative.

It's EBITDAR cash taxes or interest or something else.

Patrice Ouimet: No. The other question you could have asked is whether the 600 is actually too low a number. I would say 600 we think is a good number to use. Obviously we'll see where we are a year from now when we provide guidance for fiscal 2027. That's still our plan right now. Within our expansion numbers we have these bigger projects that are generally subsidized. There's still a lot going on in Ontario this year which will finish in 2027. There shouldn't be that much CapEx in fiscal 2027 related to that. That being said, we are generally building in territory as well. There's always new construction, new neighborhoods, new streets. This will continue eventually. We will not break it down as we're going to be done with the bigger project. You'll just see one number. It will not be meaningful to split it out.

No.

Are the other question you could've asked is whether the 600 is actually a too low a number but.

But I would say 600, we think is a is a good number to use obviously, we will see where we are a year from now when we provide guidance for fiscal 'twenty seven, but that's still our plan right now within our expansion our numbers. We have these bigger projects that are generally subsidized.

So there's still a lot going on in Ontario, This year, which will finish in 2007, there shouldnt be that much capex in fiscal 'twenty seven related to that that being said we are generally building in territory as well so theres always new construction new neighborhoods New streets. So this will continue.

We will not break it down is it we're going to be done with the bigger projects. So youll just see one number.

We will not be meaningful to split it out but I would say these will continue and also the other component is as we've built in many areas and were loading customers are.

Patrice Ouimet: I would say these will continue. Also, the other component is as we've built in many areas and we're loading customers, we are adding CPEs for these customers. We have to obviously invest there. Sometimes depending on how we built the network, sometimes we have to install service lines as well. Basically the drops we put from the street to the house, for some of the projects it's pre-installed and for some of them it's not. It's really when customers want to connect, we pass this drop. I would say these CapEx will continue in the future.

We are adding Cps for these customers we have to obviously invest in there and sometimes depending on how we built the network, sometimes we have to install service lines as well basically the drops we put from the street to the house.

For some of the projects, it's pretty installment for some of them. It's not it's really when customers want to connect we pass this dropped so I would say these capex will continue in the future. So it's not telegraphing, an EBITDA pressure or any other pressure yes.

Frederic Perron: It is not telegraphing an EBITDA pressure or any other pressure.

Aravinda Galappatthige: Yes.

Vince Valentini: Appreciate the color, guys.

I appreciate the color guys. Thank you.

Frederic Perron: Thank you.

Operator: Your next question comes from Jerome Dubreuil with Desjardins. Your line is now open.

Your next question comes from Jack Atkins Gray with <unk>. Your line is now open.

It was also a moment thanks for taking my question.

Patrice Ouimet: Thanks for taking my question. First one for me. I'd like you if possible to give a little bit more detail on the turnaround you expect on the top line where we're at mid single digit declines in the quarter, but you're expecting an improvement if I look at the guidance. Maybe more granularity on this. Is it from wireless? Was there a tough comp or maybe an assumption of improvement in competition?

First one for me.

I'd like I'd, let you if possible to give a little bit more detail on the turnaround you expect on the top line you know where were at mid single digit declines in the quarter, but you're you're expecting an improvement.

If I look at the guidance. So maybe more granularity on this is from from wireless was there a tough comp or maybe an assumption of improvement in competition.

Yes, so good morning, Jerome so you're talking of the consolidated level right.

Aravinda Galappatthige: Yes.

Patrice Ouimet: Good morning, Jerome. You're talking at a consolidated level, right?

Yes.

Aravinda Galappatthige: Yes.

Patrice Ouimet: Okay, great. Yeah. I would say if we look at our Canadian business, we've been adding a lot of customers. As you know, we are still planning to continue to grow the Canadian business. This translates into additional revenue. We have visibility on basically our current client base, customer base. We also know when we have new customers, often on promotions, some that roll off promotions as well. This is all factored in and based on this we'll eventually have some price increases as well. I would say the key driver in Canada is really the additional subscribers we're able to load on that we were not doing as much of, let's say, two years ago. That should produce better numbers on the top line in Canada than what we've seen in the past year. In the U.S., I would say similar story on the subscribers.

Okay great.

Yeah. So I would say if we look at our Canadian business, we have been adding a lot of customers. As you know we are still planning to continue to grow the Canadian business. So this translates into additional revenue.

We have the visibility on the basically are in our current client base customer base. We are we also know when we have when we have new customers often on promotions some debt on a roll off promotions as well. So this is all a.

Factored in and based on this.

Well eventually have some price increases as well, but I would say the key driver in Canada is really the additional subscribers, we're able to to low down that we were not doing as much of a lets say two years ago.

That should that should produce better numbers on the top line in Canada, that's what we've seen in.

In the past year.

And then the U S. A I would say similar story on the subscribers. It's just that we're starting from a negative number we do see some improvements from what we reported on in Q4, but we're already well into Q1 right. Now. So we are seeing benefits and we've put a lot of new tactics to play.

Patrice Ouimet: It's just that we're starting from a negative number. We do see some improvements from what we reported on in Q4, but we're already well into Q1 right now. We are seeing benefits and we've put a lot of new tactics to play and go to market and many of them are working well. I would say this is the key element we're seeing for next year. We're still planning to see a negative number in the U.S. in terms of year on year. We still have video cord cutting and home phone cord cutting like the whole industry, but still an improvement overall.

And go to market and many of them are working well. So I would say this is the are the key elements, we're seeing for next year.

So planning to see a negative number in the U S. In terms of your year on year, and we still have video cord cutting and home phone cord cutting like the whole industry, but still an improvement overall, yeah I'll only add Jerome a first on the Canadian side, we've been adding our subs at a good pace for many quarters.

Frederic Perron: Yeah, I'll only add, Jerome, first on the Canadian side. We've been adding subs at a good pace for many quarters now. The pressure in the past was ARPU, and what we're seeing now with a slightly better pricing environment is we're seeing a bit of upside on ARPU, as we were talking about before with Vince, the ARPU of new customers, the ARPU at promo expiry, and the possibility for rate increases. It doesn't take much of an ARPU improvement, given the strong sub loadings, to benefit the revenue overall. In the U.S., we've touched on it earlier, but we had done a materially lower rate increase over the past year, and now the elephant's going through the stake, and we expect better progression in the U.S., especially going to the second quarter.

<unk> now, but the pressure in the past was our pool and what we're seeing now with a slightly better pricing environment.

We're seeing a bit of upside on <unk> as we were talking about before with <unk>.

Vince the ARPA of new customers, the ARPA at promo expiring and the possibility for rate increases and it doesn't take much of an <unk> improvement given the strong sub loadings.

To benefit the revenue overall.

And then in the U S. We've touched on it earlier, but we've done that we had done a materially lower rate increase over the past year and now the allison's going through the snake and we expect a better progression in the U S, especially going through the second quarter.

Okay great.

Patrice Ouimet: Great. Merci. Second one for me. Just continuing on Vince's line of question on the DOCSIS to fiber-to-the-home, upgrade the coax, I should say, to fiber-to-the-home. Is this something you plan to do across your whole footprint? You kind of alluded to the fact that it could be more efficient to do that than taking the DOCSIS roadmap. Is this something you really use as a tactic to maybe counter the fiber deployments?

Second one for me.

Just continuing on the vintages on a question on the DOCSIS.

DOCSIS two to fiber to the home upgrade their coax I should say to the fiber to the home.

Is this something you you plan to do across your whole footprint, you kind of alluded to the fact that it could be more efficient to do that then taking the DOCSIS road map or is this something you really use as a tactic to maybe counter or the fiber deployments.

Thanks for the question Jerome and maybe starting at a at a higher level.

Frederic Perron: Thanks for the question, Jerome. Maybe starting at a higher level, when you look at our total CapEx envelope, so much of it is maintenance, the majority is business as usual maintenance. When you see us reducing our CapEx, that is where the reduction in the efficiency is coming from. Our growth related CapEx, which is everything you're talking about now, continues whether it's expanding our network to new rural areas or upgrading our network in the various ways that you're mentioning. As it relates to network upgrades, we're doing a lot of mid splits. In Canada in particular, we're really improving. It's now over 90% of our doors have a download speed of one gig and sometimes two gigs. We're also really improving the upload speeds as noted by Ookla, for example.

When you look at our total capex envelope. So much of it is maintenance the majority is business as usual and maintenance. So when you see us reducing our capex that is where the reduction in the efficiency is coming from.

Our growth related Capex, which is everything you're talking about now continues whether it's expanding our network to new rural areas or upgrading our network and the various ways that you are mentioning so as it relates to network upgrades that we're doing a lot of mid splits in Canada in particular.

We're really improving it's now over 90% of our doors have a download speed of one gig and sometimes two gig and we're also really improving the upload speeds as noted by who cannot for example, and then in the U S. We have this capital efficient way.

Frederic Perron: In the U.S., we have this capital efficient way of upgrading our coax network to fiber, for example, the 35,000 doors that we've done last year, and our forecast for the coming year also implies that we will continue with both sets of programs that I was talking about for the U.S. and Canada. It's a mix depending on the region, mid splits, even sometimes some high splits in some regions, plus this capital efficient upgrade of coax to fiber.

Of upgrading.

Coax network to fiber for example that 35000 doors that we've done at last year and our forecast for the coming year also implies that we will continue with both sets of programs that I was talking about for the U S and Canada.

It's a mix depending on the region mid split even sometimes on high splits in some regions plus this capital efficient upgrade of ethical access to fiber.

Okay.

Patrice Ouimet: Yeah, definitely that's the plan. As you know us, we've always over the years tried to be very capital efficient and always provide a lot more than what customers are requiring from us in terms of speeds and capacity, and doing it in a capital efficient way rather than over investing in a network that would not necessarily be used. It is in the U.S. More specifically to your question on competition, for sure, in some regions it does help to upgrade to fiber, but obviously we only do it if it makes sense financially. When you take a multi-year view, the otherwise upgrades we would need to do in these particular regions.

Yeah.

Frankly, that's the plan and as you know us well.

We've always over the years trying to be very capital efficient and always provide a lot more than what customers are requiring from us in terms of speeds and capacity and doing it in a capital efficient way rather than over investing in the network that would not necessarily be used so.

It is.

And in the U S more specifically to your question on competition for sure in some regions it doesn't help to to upgrade to fiber.

But obviously, we only do it if it makes sense financially when you take a multiyear view of the otherwise upgrades, we would need to do in these particular regions.

Frederic Perron: Yeah, our U.S. competitive dynamics are getting predictable, much more predictable by state, by market in terms of who's likely to do some upgrades on our competitors who may be tempted to overbuild. We have pretty granular projections at a market by market level, and we're using that to inform where we will upgrade that market to fiber, for example, as a protective measure. For instance.

Our U S competitive dynamics are getting predictable much more predictable by state by market in terms of who's likely to do some upgrades and our competitors who may be tempted to overbuild. So we have a pretty granular projections at a market by market level and we're using that to inform.

Where we will upgrade that market to fiber for example.

As a protective measure four.

For instance.

Absolutely.

Your next question comes from Matthew Griffiths with Bank of America. Your line is now open.

Operator: Your next question comes from Matthew Griffiths with Bank of America. Your line is now open.

Hi, good morning, Thanks for taking the question.

Aravinda Galappatthige: Hi, good morning. Thanks for taking the questions. In the second year of your transformation program, I think you've mentioned that you're going to see some more investments to sustain or to move you towards a path to sustainable growth. Not to be too nitpicky or anything, but is that growth at the revenue level or are you talking growth on free cash flow level? Maybe you can elaborate on the investment, like what are you spending money on that you think is going to generate the growth, the sustainable growth going forward? When do you expect that to materialize? If it's top line, if it's obviously free cash flow, it's somewhat baked in already?

In the second year of your transformation program I think you've mentioned that you're going to see.

Investments to sustain our tenant.

Move you towards a path to sustainable growth and.

Not to be too nitpicky, or anything but is that growth like the revenue level or are you talking growth on free cash flow level and maybe you can elaborate on like the investments like what where are you spending money on that you think it's going to generate the growth with sustainable growth going forward.

And when you go back and when do you expect that to materialize into its top line. If it's obviously free cash flow.

Somewhat baked in already.

Yeah, Hi, Matt This is Fred I'll start with the last part of the question whatever investments, we're making we're making are fully baked in to our guidance that there are many things. We do that are not so material at the EBITDAR capex level, what we've already talked a lot about our capex investments anyways.

Frederic Perron: Yeah, hi Matt, it's Fred. I'll start with the last part of the question. Whatever investments we're making are fully baked into our guidance. There are many things we do that are not so material at the EBITDA or CapEx level. We've already talked a lot about our CapEx investments anyways in upgrading our networks, so I'm not going to repeat that. At the EBITDA level a lot of what we're doing is not material. Investments in AI analytics pricing are not that expensive. The two that are material are growing certain sales channels in the U.S. which were underdeveloped. You do need to make an investment in staff and commissions on things like that as well as wireless in Canada. Again, that's baked into the guidance for the coming year as it relates to which growth we want. Certainly we've already been delivering a growth in subs in Canada.

Up grading our networks, so I'm not going to repeat that but at the EBITDA level a lot of what we're doing is not material investments in AI analytics and pricing are not that expensive. The two that are material are growing certain sales channels in the U S, which were underdeveloped you do need to make in <unk>.

Investment in staff and the commissions on things like that as well as wireless in Canada, but again, that's baked into the guidance for the coming year.

As it relates to which growth we want.

Certainly we've already been delivering a growth in subs in Canada.

Frederic Perron: We think ARPU has better upside than in the past. Therefore, I think revenue growth in Canada, and I'm not going to give a super precise time period here, but revenue growth in Canada is certainly within reach. In the U.S. it's about continuing our stabilization of our sub losses. We think that continued sub growth in Ohio is realistic as it relates to the rest of the footprint. We're on track to diminishing those losses and we expect lower losses in the next quarter as well. Overall, in terms of top line for the U.S. we'll have to see. It remains a challenging market, but we certainly don't expect the same challenging top line performance as what we've seen in the past year.

We think our pool.

It has better upside than in the past. So therefore, I think revenue growth in Canada, and I'm not going to get Super precise at time period here, but revenue growth in Canada, certainly within reach in the U S.

About continuing our stabilization of our sub losses that we think that continued sub growth in Ohio.

Is realistic as it relates to the rest of the footprint, we're on track to diminishing those losses.

And we expect the lower losses in the next quarter as well.

Overall in terms of top line for the U S. We'll have to see it remains a challenging market, but we certainly don't expect the same challenging topline performance as what we've seen in the past year.

Okay. That's helpful and then on margins, you're obviously the business is benefiting from the natural mix shift away from.

Aravinda Galappatthige: Okay, that's helpful.

Patrice Ouimet: On margins, obviously the business.

Aravinda Galappatthige: Is benefiting from the natural mix shift away from video and towards Internet. Can you help us understand how much your cost reduction program is contributing to the margin improvement in addition to the natural mix shift that you're seeing?

Video and so on and towards Internet.

But can you help us understand like how much of your cost reduction program that is contributing to the margin improvement.

In addition to the natural mix shift that you're seeing.

Yeah. That's a good question I'm not sure I have the exact answer for you right now on this call, but I would say, it's a mix of two youre right. There is a mix shift towards more intranet, which does increase the.

Patrice Ouimet: Yeah, it's a good question. I'm not sure I have the exact answer for you right now on this call, but I would say it's a mix of two. You're right, there is a mixed shift towards more Internet, which does increase the percentage as we look at the competitive nature of the industry. There's also the ARPU that plays into it. I would say the best way to look at it is to look at our OPEX that does include some video costs in what we report publicly, but you can see that it's been shrinking. We can perhaps take it offline and try to give you a little more information on this. I would say it's really a mix of the two because our cost reductions are quite material, actually, in what we've been doing in the past year.

The the percentage.

As a as we look at the competitive nature of the industry. There is also the <unk> that plays into it.

And so I would say the best way to look at it is to look at our Opex.

That.

Does it include some video class in what we report publicly but you can see that it's been shrinking we can perhaps take it offline and tried to give you a little more information on this but I would say, it's a it's really a mix of the two because our cost reductions are quite material actually and what we've been doing in the past year.

Okay very helpful. And then maybe just one quick one if I could sneak it in the past you've talked about.

Aravinda Galappatthige: Okay, that'd be helpful. Maybe just one quick one if I could sneak it in. In the past you've talked about evaluating whether or not it makes sense to kind of divest some small systems throughout your U.S. footprint. Has that file been closed at this stage or is that still something that is potentially out there?

Evaluating whether or not it makes sense to kind of divest some small systems throughout your U S footprint has that filed and closed at this stage or is that still something that is potentially out there.

Yeah, Matt at the present time, it's closed.

Frederic Perron: Yeah, Matt, at present time it's closed. We've looked at a few options. There were interesting possibilities, but not interesting enough. We judged at the time to strip out an asset because carve outs are always challenging and could be a distraction for the organization in the midst of a big transformation. Who knows? We always keep options open in the future.

We've looked at a few options there were interesting possibilities, but not interesting enough. We judge that the time to to strip out an asset because carve outs are always challenging and could be a distraction for the organization in the midst of a big transformation, but who knows we always keep options open.

And in the future.

Thanks, a lot for the answers I appreciate it.

Aravinda Galappatthige: Thanks a lot for the answers. I appreciate it.

Frederic Perron: Thank you.

Okay.

Your next question comes from Maher Yaghi with Scotiabank. Your line is now open.

Operator: Your next question comes from Maher Yaghi with Scotiabank. Your line is now open.

Aravinda Galappatthige: Merci d'avoir pris ma question. I just wanted to maybe just dial on the homes passed increase in Canada. I mean, in the last two years you've added approximately 70, 75 new homes passed. A lot of it is fiber, as I understand it. Can you, you know, just give us a perspective on the strength that you're seeing in your Internet subscriber gains in Canada, how much they're coming from these fiber edge outs and new homes passed versus Oxio versus Cogeco out-of-territory? Just to understand maybe the return characteristics of these fiber rollouts that you're doing. Thank you.

Yeah, Mike It's Joe.

I just wanted to maybe just.

Hold on.

On the home spots increase in Canada, I mean in the last two years.

Approximately 70 75000, new homes passed.

So and a lot of it this fiber as I understand it so can.

Can you just.

Just give us a perspective on the strength that youre seeing in your internet subscriber gains in Canada, how much theyre coming com these fiber.

Edge outs and.

New homes passed versus OXXO versus cause you call out of territory.

Just to understand maybe the return.

Characteristics of these fiber.

Rollouts that you're doing thank you.

Hi, I'm I heard it's Fred.

Frederic Perron: Hi, Maher, it's Frederic. A few things here. First off, yes, most expansions that we do in both Canada and the U.S. are on fiber. As it relates to the return on those investments, they're quite good, in line with what Patrice has quoted in the past. We do exceed 50% penetration of those new builds because they're rural areas with high demand. As it relates to contribution to our net growth, it varies quarter by quarter between network expansion, Oxio, and the legacy business. All I can say is that for this past Q4, it was mostly, first of all, it was mostly on our own network and less as a reseller that the growth came from. It was actually mostly from legacy areas. In the fourth quarter, network expansion was not the largest contributor to the growth.

Few things here first off yes, Oh, most expansions that we do in both Canada and the U S are on fiber.

As it relates to the return on those investments they are quite good in line with what Patrick has quoted in the past and we do exceed 50% penetration of those new builds because they're rural areas.

With high demand.

As it relates to contribution to our net or gross it varies quarter by quarter between network expansion OXXO and the legacy business and all I can say is that for this past Q4.

It was mostly a first of all it was mostly on our own network and less as a reseller that the growth came from and it was actually mostly from legacy areas. So in the fourth quarter network expansion was not the largest contributor to the growth now as we continue to build in Ontario in fiscal 'twenty six and going in.

Frederic Perron: As we continue to build in Ontario in fiscal 2026 and going into fiscal 2027 as well, we do expect that network expansion will be a more material contributor to our sub growth.

Fiscal 'twenty seven as well.

We do expect that network expense expansion will be a more material contributor to our sub growth.

Okay. Thank you.

Aravinda Galappatthige: Okay, thank you. Just to follow up, you know, the launch of Cogeco service under the Cogeco brand outside of your home territory, Oxio was, as you've indicated in the past, has been good success to capture out-of-market Internet subscribers. Maybe can you talk a little bit about the objective of launching Cogeco branded service outside of your home territory in addition to Oxio that was already there?

And just a follow up you.

Uh huh.

The launch of Cogeco service under the critical brands outside of your home territory.

I I you know oxy was.

Uh huh.

<unk> indicated in the past has been good success to capture out of market.

Internet subscribers.

So maybe can you talk a little bit about the.

The objective of launching kosher Cobranded service outside of your home territory. In addition to <unk> that was already there.

Sure first at a higher level.

Frederic Perron: Sure. First, at a higher level, Internet resale in Canada between the different players is a fact of life and it's been a fact of life for quite some time. The two of the big three that we don't already compete with on an infrastructure basis are already reselling our network in Quebec and Ontario and have been doing so for quite some time. I wouldn't say it doesn't appear to be material neither for our growth as a reseller nor for our churn at present time. There seems to be more noise than anything else around all this on your question. More specifically, our strategic intent by opening up Cogeco as a reseller across Quebec is purely optionality in a world where the resale dynamics continue to evolve. As I said, they're not material at present time.

Internet resale in Canada.

Between the different players as a fact of life and it's been a fact of life for quite some time.

The two of the big three that we can be that we don't already compete with on an infrastructure basis are already reselling, our network in Quebec, and Ontario and have been doing so for for quite some time.

I wouldn't say it doesn't appear to be.

Material.

Neither for our growth as a reseller nor for our churn at present time, so there seems to be more noise than anything else around all of this.

On your question more specifically.

Our strategic intent by opening up Coca Cola as our reseller across Quebec is purely optionality.

In a world where their resale dynamics continue to evolve as I said theyre not material at present time, but we have nothing to lose from opening up another few million doors.

Frederic Perron: We have nothing to lose from opening up another few million doors on the Cogeco brand. We, as a smaller company, benefit from asymmetry in this whole game whereby we just cover 2 million homes in Canada and there are 15 million homes. We get an asymmetric advantage. So far it's not much more than optionality. However, if for whatever reason we decide to push harder on this now, the systems are activated and it's pretty quick for us to push harder.

On the Coca Cola brand.

We as a smaller company we benefit from asymmetry.

And this whole game, whereby we just cover 2 million homes in Canada, and there are 15 million homes. So we get an asymmetric advantage.

But so far it's not much more than optionality.

However, if for whatever reason.

We decided to push harder on this now the systems are activated and it's pretty quick for us to push harder.

Aravinda Galappatthige: Okay, can you disclose how many you mentioned that you saw some good success with wireless, with the wireless launch in Canada. Can you share some KPIs on that?

Okay.

Can you disclose how many you mentioned Thats you know you saw some good success with wireless the wireless launch in Canada can you share some some some keep your eyes on that.

Okay.

Yeah. So.

Operator: Yeah.

Patrice Ouimet: Maher, we are not disclosing yet at this point. As you know, we're starting from nothing. It's still a small base. Very happy with so far. I mean it takes time to have critical mass. Over time we do expect at one point to disclose the mobile subs, but it's not something we're planning to do for sure this year and we'll see in the future. It's obviously important to make sure we don't release non-material information that can be used by competition. That's where we are at this point.

We are not disclosing at this point, but as you know we're starting from a friend nothing so it's a it's still a small base very happy with so far but I mean, it takes time to have critical mass. So overtime, we do expect that one point to disclose the the mobile subs, but it's not something we're planning to do for sure.

This year and we will see in the future.

It's obviously important to make sure we don't release non material information.

And that can have a can be used by our competition. So us. So that's where we are at this point I'll only say that.

Frederic Perron: I will say that the strong demand that we're getting, even though it's still going to take time to scale, to Patrice's point at least, it's indicating to us that there's a way for us to run that business without it being a drag at an individual customer level. For example, we could already pull back on some of our intro promotions. I think at a unitary customer level, it's good news.

The strong demand that we're getting even though it's still going to take time to scale to <unk> point at least is indicating to us that there is a way for us to run that business.

Without it being a drag at an individual customer level.

For example, we could always already pulled back on some of our internal promotions.

I think at a unitary customer level, it's a good news.

Okay.

Operator: Okay.

Aravinda Galappatthige: Maybe just to double down on this, the pullback on the promotion kind of came at the same time as Rogers launched fixed wireless access in your territory. Were the two related, why you pulled back on wireless promotion?

Maybe just on.

To double down on this.

The pullback on the promotion it kind of.

You know team at the same time Rogers launched.

Wireless in your territory.

Where the two relate to why you pulled back on wireless.

From Nelson.

Frederic Perron: Absolutely not. We achieved the sub objectives that we wanted to achieve, and that's how we run the business.

Absolutely not.

We achieved a sub objectives that we wanted to achieve and that's that's how we run the business.

Aravinda Galappatthige: I'm trying to square the decision to pull back from offering one year service on wireless as a promotion to existing customers in Canada with the U.S. strategy where it's still going on, and it's been, you know, a year or so, less than maybe a year that you launched it, you're still offering free lines. Can you maybe just compare for us why it's still going on in the U.S. and not in Canada?

So I'm trying to square.

The decision to pull back from offering.

You know one year service on the wireless as a promotion to existing customers in Canada.

The U S strategy, where its still going on and it's been.

A year or so less than maybe a year that you launched it are you still offering free lines. So can you maybe just compare for us why.

It's not you know, it's still going on and you have some and not in Canada.

Frederic Perron: It's purely a function of competitive dynamics and pricing dynamics in the market. Maher, the other players are doing it too in the U.S., the other cable players in particular. That's what we have to do to be in the game at present time south of the border.

Fairly a function of competitive dynamics and pricing dynamics in the market here are the other players are doing it to in.

In the U S. The other cable players in particular, so that's that's why we have to do to be in the game at present time south of the border.

Okay. Thank you very much.

Aravinda Galappatthige: Okay, thank you very much.

Frederic Perron: Thanks.

Thanks.

Operator: Your next question comes from Stephanie Price with CIBC.

Your next question comes from Stephanie price with CIBC. Your line is now open.

Frederic Perron: Your line is now open.

Operator: Hi there, it's Sam Schmidt on for Stephanie Price. I wanted to ask a question around Ohio. The net additions turned positive in the quarter and U.S. subscriber losses also improved sequentially. Can you help unpack what changed there in terms of your strategy as well as in the competitive environment both for Ohio and the U.S. more broadly? Thanks.

Hi, there, it's Sam Schmidt on for Stephanie price I wanted to ask a question around Ohio being net additions turned positive in the quarter.

And U S subscriber losses also improved sequentially can you help unpack what changed there in terms of your strategy as well as on the competitive environment, both for Ohio, and the U S more broadly thanks.

Sure good to meet you and I'll start with Ohio, and then I'll talk about U S competitive dynamics more broadly.

Patrice Ouimet: Sure.

Frederic Perron: Good to meet you. I'll start with Ohio and then I'll talk about U.S. competitive dynamics more broadly. In Ohio, Ohio is, and I think we've disclosed this, % of our doors coming from Ohio. It's roughly 40% of our total U.S. doors that are in Ohio and our penetration is quite low. It's been some time where we see a lot of upside for us in that market and we're starting to execute against that upside. There were some sales channels which were not as developed in the state. We're starting to develop the channels. We keep optimizing our pricing as well and over time we think there are several quarters of growth in Ohio for us as we get closer over the years to what we believe is our.

Ohio, Ohio is and I think we've disclosed this percentage of our doors coming from Ohio, It's roughly 40% of our total U S doors.

That are in Ohio, and our penetration is quite low.

It's been some time, where we see a lot of upside for us in that market and we're starting to execute against that upside. So there were some sales channels, which were not as.

As developed in the states. So we're starting to develop the channels that we keep optimizing our pricing as well and over time. We think there are several quarters of growth in Ohio for us as we get closer over the years to what we believe is our fair share.

Operator: Fair share.

Frederic Perron: U.S. competitive dynamics in general. Last quarter we said that we saw an uptick in competitive dynamics or competitive intensity in the U.S. in three of our states. I would say at present time it's more two of those states, one of them, one of the three has eased back down. Of the two that remain, we have room to believe that one will ease back down of those two as well over the coming months. We also see, interestingly, that fixed wireless access (FWA) is not impacting us as a company as much as it was two, three years ago. We rigorously track churn destination of our customers leaving us by state, and FWA is actually relatively low down the list at this time. You could only speculate why that is.

U S competitive dynamics in general.

Last quarter, we said that we saw an uptick in competitive dynamics or competitive intensity in the U S. In three of our states.

I'd say our present time at present time, it's more two of those states are one of them one of the three has eased back down.

Of the two that remain we have room to believe that one will ease back down of those two as well over the coming months.

We also see interestingly that SWA is not impacting us as a company as much as it was two three years ago.

We rigorously track churn destination of our customers, leaving us by state and <unk> is actually relatively low down the list at this time.

You could only speculate why that is we do know that some of the <unk> W. A players are now focusing more on the <unk> segment.

Frederic Perron: We do know that some of the FWA players are now focusing more on the B2B segment where we're not as present. Even though two of the three FWA players are re-accelerating their sales, sometimes it's in the B2B segment. Otherwise, maybe they've tapped out in their relevant customer segments in our markets. Not exactly sure. The bottom line is FWA is not impacting us as much as before. We still see intense promotions more generally from some of the national wireline players. You net all of that out, I'd say the U.S. competitive environment remains intense but has not worsened from the previous quarter, and there may be some slight improvement coming over the next couple of quarters yet to be seen.

Where we're not as present, so even though two of the three <unk> players or re accelerating their sales sometimes it's in the <unk> segment.

Otherwise, maybe they've tapped out.

And a relevant customer segments in our markets not exactly sure but the bottom line is <unk> is not impacting us as much as before we still see intense promotions more generally from some of the national wireline players. So you net all of that out I'd say.

The U S competitive environment remains intense but has not worsened from the previous quarter and there may be some slight improvements coming over the next couple of quarters yet to be seen.

Yeah.

Thank you that's helpful. And then maybe just one on the Canadian competitive market outside of your network expansion are you seeing increased competition from competitors as they look to build out our footprint through tpa or fixed wireless and then I'll pass the line. Thank you.

Operator: Thank you, that's helpful. Maybe just one on the Canadian competitive market. Outside of your network expansion, are you seeing increased competition from competitors as they look to build out a footprint through TPIA or fixed wireless? I'll pass the line, thank you.

Thank you it's really not.

Frederic Perron: Thank you. It's really not very material for us. Neither TPIA nor FWA in Canada. As I mentioned in an earlier question, TPIA competition has been happening for a long time and it's not really impacting us. FWA is more recent, but it tends to be focused in Quebec, which is 1/3 of our Canadian footprint. We're not really feeling it, as you can see in our strong sub results in Canada. On the positive side, there's been a real material pullback in promotional activity in the core wireline business that more than offsets in a positive way the minor noise that we see in TPIA and FWA.

Very material for us.

Neither <unk>, nor SWA and Canada as I mentioned in an earlier question TPI a.

Competition has been happening for.

A long time, and it's not really impacting us <unk> is more recent but it tends to be focused in Quebec, which is one one third of our Canadian footprint and we're not really feeling it as you can see in our in our strong sub results.

In Canada, and then on the positive side, there has been a real material pullback in promotional activity.

The core wireline business that that more than offsets in a positive way.

A minor noise that we see in TPI and ethically way.

Great. Thank you very much.

Operator: Great. Thank you very much, ladies and gentlemen. As a reminder, should you have a question, please press *1.

Ladies and gentlemen, as a reminder, should you have a question. Please press star one.

Frederic Perron: question, please press star one.

Operator: Your next question comes from Drew McReynolds with RBC. Your line is now open.

Your next question comes from drew Mcreynolds with RBC. Your line is now open.

Yes, thanks very much good morning, two for me.

Patrice Ouimet: Yeah, thanks very much. Good morning. Two for me.

Maybe for you per tree side in terms of the reinvestment levels that you make in the business as part of the.

Frederic Perron: Maybe for you, Patrice.

Patrice Ouimet: In terms of the reinvestment levels that you make in the business as part of the transformation program embedded into fiscal 2026 guidance, do your reinvestments.

Transformation program.

Embedded into fiscal 2026 guidance.

Do your Reinvestments in the business stay stable are you absorbing.

Frederic Perron: In the business stay stable?

Patrice Ouimet: Are you absorbing a sequential increase or likewise, does the reinvestment level begin to ease as part of the transformation program going forward? Secondly, I think there's some language about $100 million in CapEx spent on longer term growth opportunities over 5 years. Just wondering at a high level what kind of growth opportunities you'd be looking to take advantage of with that level of investment. Thank you. Great. Good morning. On the transformation program, I would say when we look at better utilizing different go to market tactics and optimizing our sales channels, we are increasing, and that's embedded in our guidance, we are increasing the use of those channels. Obviously, there's costs related to that and obviously that translates into new customers and new revenue. We'll see going forward as we're successful with it. The payback on these investments is very good.

The sequential increase or likewise.

Restaurant level begin to ease as part of the transformation program going forward and then secondly.

There's some language about $100 million in Capex spent on.

Longer term growth opportunities over five years, just wondering at a high level.

What kind of growth opportunities.

You'd be looking to take advantage of it that that level of investment. Thank you.

Hey, Greg Good morning, so on the transformation program I would say when we look at a better utilizing different go to market tactics and optimizing our sales channels, we are increasing and that's embedded in our in our guidance we are increase.

Single use those those channels, obviously, there's cost related to that.

And obviously that translates into new customers and new revenue.

We will see going forward.

Festival with it obviously the payback on these investments is very good you have to look at the lifetime of a customer.

Patrice Ouimet: You have to look at the lifetime of a customer. From what we're seeing, they're good. I would say we've allocated some dollars in our guidance for this.

So far from what we're seeing there are good but I would say, we've we've allocated some dollars in our guidance for this year. Andrew an example would be when we were talking about earlier in the previous question in Ohio, where we can really grow share to get closer to our fair share. So we're making the investment.

Operator: Yeah.

Frederic Perron: Drew, an example would be what we were talking about earlier in the previous question in Ohio, where we can really grow share to get closer to our fair share. We are making the investment in achieving that, and it's starting to yield some benefit. That investment is increasing but will pay back. Another example is wireless, as Patrice explained earlier.

In achieving that and it's starting to yield some benefit. So there is so that investment is increasing but we will pay back. The other example is wireless.

As as <unk> explained earlier.

And on the second question on the 100 million actually that is something we've had a we put it in the annual report, but we've had it for a few years it's.

Patrice Ouimet: On the second question on $100 million, actually it's something we've had. We put it in the annual report, but we've had it for a few years. Basically, we have mentioned a few years ago that we might invest and it's not CapEx. Actually, those would be the investments in smaller companies to produce growth later on, so more in startup mode. It's not something we've done so far, but it's not new disclosure. Actually, if you go back to last year, we'll see if we do some. I do not expect it to be CapEx and no impact on free cash flow or anything. It would be more an investment on the balance sheet. Thank you for that clarification and maybe one last one.

Basically we have mentioned a few years ago that we might invest in it's not capex actually that those would be investments in smaller companies to produce growth later on.

So more in startup mode. Its.

It's not something we've done so far but it's not new disclosure actually if you go back to last year.

So we'll see if we do something I do not expect it to be capex or not and no impact on free cash flow or anything it would be more in investments on the balance sheet.

Okay. Thank you for that clarification, and then maybe one last one.

Patrice Ouimet: I may have missed this in terms of the rate of network or footprint expansion expected in fiscal 2026 relative to the 50,000 in fiscal 2025. Do you have that for us? Yeah, it would probably be similar. I would say Canada, because we're going to be, it's a mix of what we're doing in Ontario and also, as I said earlier, we're doing in footprints on new neighborhoods and new streets. We'll probably be around 40,000 addition in Canada. U.S. will be lower. We have less of these bigger programs, so probably closer to 10,000 new homes in the U.S. Okay, great. Thanks very much.

And I made a business in terms of the rate of.

Network or footprint expansion.

In fiscal 2026, I'm relative to the 50000.

In fiscal 2025.

Do you have that for us.

Yeah.

Really be similar so I would say, Canada, because we're going to be its a mix of what we're doing in Ontario, and also as I said earlier, what we're doing in footprint. So new neighborhoods in new streets, we'll probably be around in around 40000 addition in <unk>.

Canada U S will be lower we have less of these bigger programs, so probably closer to a 10000 new homes in the U S.

Okay, great. Thanks very much.

Operator: There are no further questions at this time.

There are no further questions at this time I will now turn the call over to Pat for closing remarks.

Patrice Ouimet: I will now turn the call over.

Frederic Perron: To Patrice Ouimet for closing remarks.

Patrice Ouimet: All right, we're right on time. Thank you everyone for these questions and happy to take additional questions if you want to talk to us before our next scheduled call for the Q1 results. Thank you. Have a good day.

Alright for right on time. So thank you everyone for these questions and I'm happy to take additional questions. If you want to talk to us and before our next scheduled call for the Q1 results. Thank you have a good day.

Ladies and gentlemen, this concludes your conference call for today, we thank you for participating in assay you. Please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Yeah.

[noise] [music].

Welcome to Cogeco, Inc, and Cogeco Communications, Inc. Q4, 2025 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Mr. Pepsis, We met Chief Financial Officer of could you Co Inc. And could you Cook Communications Inc. Please go ahead Mr. Ouimet.

Okay.

Thank you operator, so good morning, everyone welcome to our fourth quarter conference call. So as usual before we begin the call I'd like to remind listeners that today's discussion will include estimates and other forward looking information. We ask that you review the cautionary language in the press releases and annual report issued yesterday regarding the various risks assumptions and uncertain.

[music].

Things that could cause our actual results to differ.

But with that I'll pass the line to <unk> for opening remarks.

Thank you Beth and good morning, everyone.

For Cogeco communications, the fourth quarter marked the end of year one of our three year transformation program focused on the synergies digital analytics network expansion and wireless and we're pleased to report that we're on track year one was.

And mainly focused on Opex and Capex synergies and we delivered on those targets as you can see by our 110 basis points year on year improvement in adjusted EBITDA margin and our $38 million year on year increase in free cash flow and constant currency.

It's worth mentioning that the capex efficiency, enabling our growth in free cash flow comes mainly from maintenance synergies.

We're continuing to make important investments in growing and enhancing our networks.

A recent report by Uccle for example noted a significant increase in our Canadian upload speeds as a result of our ongoing network upgrade initiative.

And in the U S. We've upgraded over 35000 of our cable doors to fiber during the fiscal year. In addition to adding nearly 50000, new homes passed or across our north American footprint.

<unk> two and three of our transformation will now add more emphasis on our topline performance.

As per our original plan.

This will include additional investments in growing previously underdeveloped sales and marketing channels in the U S. In the context of the evolving competitive environment.

As well as scaling wireless in Canada.

When we met last quarter, we said that we were expecting strong continued Canadian customer growth combined with some improvements in our U S subscriber metrics and we're pleased to be delivering on that expectation.

We just had our best Canadian Internet customer growth in 13 years.

This growth was driven mostly by market share gains in our legacy footprint on our own network.

The completion of new rural expansion programs in Ontario has yet to accelerate true fiscal 'twenty, six and 27, providing a new additional lever for us in the future.

We've seen a reduction in competitor promotional activity in the quarter, which has more than offset some minor noise around <unk> and wholesale.

Including our own deployment as a reseller under the critical brand across Quebec. So.

It is fair to say that on balance our Canadian competitive environment is evolving in a constructive manner at present time.

Our launch of the Canadian Wireless service is going ahead of plan.

And October marked the deployment of this new service across most of our wireline operating footprint.

Our positive early sales results on wireless have already enabled us to start pulling back on some of our initial introductory offers.

On the us side, our year on year financials were impacted by ARPA pressures, the accumulative impact of customer losses in the prior quarters, a difficult comparative period last year and a smaller rate increase this year than in the previous year.

This resulted in a year on year decline in adjusted EBITDA, which was in line with what we had indicated to you last quarter.

That being said, our additional sales and marketing activities are working hard.

Our subscriber trends are now improving and we are delivering on our long stated goal of growing beyond the Ohio customer base during the quarter.

In fact, it's the first time since we acquired the Ohio business four years ago that we achieved customer growth in that state.

We expect continued improvements in our U S subscriber metrics over the coming quarters.

On October eight we launched a completely revamped pricing strategy for the U S.

This new approach gives them more value predictability and transparency to our customers, including full price protection for the first two years.

This is just one of many tactics that we're deploying to be more aggressive and more innovative in our U S go to market.

Okay.

Today, We're also publishing our consolidated guidance for the new fiscal year for our CCA and CGM more broadly.

<unk> offers a continued growth in free cash flow and constant currency despite competition driven topline pressures.

Our adjusted EBITDA guidance of zero percent to minus 2% year on year reflects additional investments in scaling previously underdeveloped sales and marketing channels in the U S and growing our Canadian wireless business.

As previously explained.

We believe these investments presents attractive upside for us and are confident that investors will get disproportionate returns from them over time.

We're still planning to grow our free cash flow to $600 million next year in fiscal 2027, which is a good base for further dividend growth as we are announcing today as well as further deleveraging.

Finally, turning over to Cogeco media, while the competitive dynamics in the radio advertising market remain Q4 revenue increase year on year lifted by strength in our digital advertising solutions and continued listener engagement.

On that I'll turn it over to Patrick for more details on our results and guidance. Thank you Fred.

In Canada physical connections revenue declined by one 5% in the fourth quarter, mainly due to lower revenue per customer from fewer video and wireline phone service subscribers, partially offset by growth in our internet subscriber base, which added 17000, new customers during the quarter.

Adjusted EBITDA declined by one 4% in constant currency due to the lower revenue being partially offset by lower operating expenses, resulting from our cost reduction initiatives and operating efficiencies.

We added 10800 homes per <unk> during the quarter, mainly through fiber to the home under our network expansion program, including those related to the Ontario subsidized program.

In the U S. <unk> revenue declined by nine 2% in constant currency due to the cumulative decline in the subscriber base over the prior year.

Walter rate increase in versus the prior year, along with a competitive pricing environment.

The 6300.

A decline in Internet subscribers was an improvement over the previous quarter, while internet subscriber additions in Ohio recorded their first ever positive growth of 1300 new subscribers.

Adjusted EBITDA declined by seven 9% in constant currency due to lower revenue offset in part by lower operating expenses driven by cost reduction initiatives and operating efficiencies.

Note that last years comparative Q4 period was the highest EBITDA level of all quarters for that year, largely due to the reorganization of our operating entities.

Now turning to our consolidated numbers for clinical communications.

At the consolidated level revenue in constant currency declined by five 3% and adjusted EBITDA declined by three 3%.

This result is mainly due to the revenue pressure in the U S, partially offset by strong execution on operating efficiencies as well as customer growth in Canada.

Diluted earnings per share declined by six 2% in reported currency, mainly due to lower EBITDA and higher financial and restructuring costs.

Capital intensity was up 20 was up 21, 8% versus 24% last year.

Free cash flow and constant currency decreased by 27, 4% in the quarter, but was up by seven 9% for the full year.

Our net debt to adjusted EBITDA ratio was $3 one turn at the end of the quarter unchanged from the level reported in Q3.

We have increased our dividend by 7%, having declared a quarterly dividend of $98 seven per share and as Brent mentioned with anticipated strong free cash flow in fiscal 'twenty six 'twenty seven we expect to continue to increase dividends meaningfully in the future.

At political Inc. Our revenue in constant currency decreased by 5% and adjusted EBITDA declined by three 9% with growth in radio partially offsetting revenue declines at Cogeco Communications.

Media operations revenue increased by eight 5% driven by growth in digital advertising revenue.

We have also increased the dividend at Cogeco, Inc. By 7% in lockstep with that at Cogeco Communications.

Let's now discuss our fiscal 'twenty six guidance, which we are introducing today.

On a constant currency and consolidated basis, Cogeco communication expects revenue to decrease between one and 3% compared to the prior year as growth in Canada is offset by competitive pressures in the U S.

Adjusted EBITDA is anticipated to decrease between zero and 2% versus last year as we continue to face revenue pressures in the U S and <unk>.

Our investing in new sales and marketing capabilities, especially in the U S. As part of our three year transformation program.

All while generating additional operational efficiencies.

We will also incur some costs related to our Canadian wireless operations, including some it costs recognized in adjusted EBITDA, starting in fiscal 'twenty, six and I will get back to this in a second.

Turning to our capital expenditures, we are expecting to spend between $560 million and $600 million, including a $100 million to $140 million in growth oriented network expansions.

Resulting in a capital intensity of between 19% and 21% or 15%, 17%, excluding those network expansion projects.

Free cash flow and free cash flow, excluding network expansions are expected to increase between zero and 10% compared to fiscal 'twenty five.

Our full year current tax rate is forecast to be 11, 5%.

In terms of segments and important item to note is that beginning in Q1 and fiscal 'twenty six Canadian mobility, which had been included in our corporate segment. During the startup phase will now be recorded in our Canadian segment, given the recent full scale launch of the product.

This reclassification will have no impact on the consolidated level and comparative segments for the prior year.

And we will also adjust basically the results for the prior year for that in addition, our it costs related to Canadian mobility, which were recognized below the EBITDA line as cloud computing costs in fiscal 'twenty five during the implementation period will be recognized as opex within the Canadian.

Segment, starting in Q1 as those systems are now in operation.

So overall, we expect the fiscal 'twenty six Canadian segment's adjusted EBITDA to be impacted by about $20 million versus what we reported in fiscal 'twenty five.

Of that $11 million is simply the reclassification from corporate Opex to the Canadian business and the balance is moving from below the EBITDA line to Opex. That's basically the it systems that was relating to.

We nevertheless expect the Canadian operations growth to largely absorbed additional costs in fiscal 2006 through customer growth and operational efficiencies.

As it relates to Q1, we expect consolidated revenue and adjusted EBITDA to decline in the mid single digit range in constant currency.

We don't expect a material sequential improvement in our year over year adjusted EBITDA trends starting in the second quarter as we benefit from already quantified cost savings.

It increases and improving U S customer trends.