Cogeco Q1 2026 Cogeco Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Cogeco Inc Earnings Call
Speaker #1: Cogeco Inc. and Cogeco Communications Inc. Q1 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Ouimet, Chief Financial Officer of Cogeco Inc. and Cogeco Communications Inc.
Speaker #1: Please go ahead, Mr.
Speaker #1: Ouimet. So, good morning, and welcome to our
Patrice Ouimet: Good morning, and welcome to our first quarter results conference call. As usual, before we begin the call, I'd like to remind listeners that today's discussion will include estimates and other forward-looking information. We ask that you review the cautionary language in the press releases and MD&A issued yesterday, as well as in our annual reports regarding the various risks, assumptions, and uncertainties that could cause our actual results to differ. With that, I'll pass the line to Fred Perron for opening remarks.
Patrice Ouimet: Good morning, and welcome to our first quarter results conference call. As usual, before we begin the call, I'd like to remind listeners that today's discussion will include estimates and other forward-looking information. We ask that you review the cautionary language in the press releases and MD&A issued yesterday, as well as in our annual reports regarding the various risks, assumptions, and uncertainties that could cause our actual results to differ. With that, I'll pass the line to Fred Perron for opening remarks.
Speaker #2: First quarter results conference call. So, as usual, before we begin the call, I'd like to remind listeners that today's discussion will include estimates and other forward-looking information.
Speaker #2: We ask that you review the cautionary language in the press releases and the DNA issued yesterday, as well as in our annual reports, regarding the various risks, assumptions, and uncertainties that could cause our actual results to differ.
Speaker #2: With that, I'll pass the line to Fred Perrot for opening remarks.
Speaker #3: Merci, Patrice. Good morning, everyone, and a warm happy New Year. Our consolidated results for the quarter were in line with our plan, as well as what we had mentioned to you last quarter.
Frederic Perron: Merci, Patrice. Good morning, everyone, and a warm, happy New Year. Our consolidated results for the quarter were in line with our plan, as well as what we'd mentioned to you last quarter. We're on track to deliver our guidance for the full year for all KPIs. In the US, our turnaround is working. We've materially improved our subscriber trends for a second consecutive quarter, just as we said we would, translating into our best US customer metrics in the past 15 quarters. We're just getting started. Our goal is now to grow our customer base across our entire US operation on a repeatable basis. We had told you that this was the goal for Ohio in the past, and we're now delivering on that. We're now further raising our ambition in light of our latest plans and progress.
Fréd Perron: Merci, Patrice. Good morning, everyone, and a warm, happy New Year. Our consolidated results for the quarter were in line with our plan, as well as what we'd mentioned to you last quarter. We're on track to deliver our guidance for the full year for all KPIs. In the US, our turnaround is working. We've materially improved our subscriber trends for a second consecutive quarter, just as we said we would, translating into our best US customer metrics in the past 15 quarters. We're just getting started. Our goal is now to grow our customer base across our entire US operation on a repeatable basis. We had told you that this was the goal for Ohio in the past, and we're now delivering on that. We're now further raising our ambition in light of our latest plans and progress.
Speaker #3: And we're on track to deliver our guidance for the full year, for all KPIs. In the US, our turnaround is working. We've materially improved our subscriber trends for a second consecutive quarter.
Speaker #3: Just as we said we would, we're translating into our best U.S. customer metrics in the past 15 quarters. And we're just getting started. Our goal is now to grow our customer base across our entire U.S. operation on a repeatable basis.
Speaker #3: We had told you that this was the goal for Ohio in the past, and we're now delivering on that. So we're now further raising our ambition in light of our latest plans and progress.
Speaker #3: We won't be hitting that new ambition next quarter quite yet, but it is within realistic reach in the medium term. It's important to remind everyone of a few key points about our American business.
Frederic Perron: We won't be hitting that new ambition next quarter quite yet, but it is within realistic reach in the medium term. It's important to remind everyone of a few key points about our American business. First, in half of our US footprint, our penetration is still below 20%, which gives us ample room to keep growing our customer base in those areas and offset any losses in other regions. Second, we're making great progress at selectively upgrading our network in a capital-efficient manner, including the launch of 2.5 gigabit speeds during the quarter, which is helping us protect and grow our business in key areas. Third, we're still in the process of ramping up new sales channels and beefing up important marketing capabilities. We're also launching an oxio-like fully digital second brand next month.
We won't be hitting that new ambition next quarter quite yet, but it is within realistic reach in the medium term. It's important to remind everyone of a few key points about our American business. First, in half of our US footprint, our penetration is still below 20%, which gives us ample room to keep growing our customer base in those areas and offset any losses in other regions. Second, we're making great progress at selectively upgrading our network in a capital-efficient manner, including the launch of 2.5 gigabit speeds during the quarter, which is helping us protect and grow our business in key areas. Third, we're still in the process of ramping up new sales channels and beefing up important marketing capabilities. We're also launching an oxio-like fully digital second brand next month.
Speaker #3: First, in half of our US footprint, our penetration is still below 20%, which gives us ample room to keep growing our customer base in those areas and offset any losses in other regions.
Speaker #3: Second, we're making great progress at selectively upgrading our network in a capital-efficient manner, including the launch of 2.5-gigabit speeds during the quarter, which is helping us protect and grow our business in key areas.
Speaker #3: Third, we're still in the process of ramping up new sales channels and beefing up important marketing capabilities. We're also launching an Axio-like, fully digital second brand next month.
Speaker #3: Thanks to the above points and more, we're confident about materially improving financial trends for our U.S. business starting in the second half of this year.
Frederic Perron: Thanks to the above points and more, we're confident about materially improving financial trends for our US business starting in the second half of this year. This was already recognized by Moody's and S&P, who both improved their outlook on our debt in recent weeks, while DBRS reaffirmed its stable outlook. In Canada, our performance remains solid and resilient, with positive year-on-year EBITDA trends. We continue to consistently grow our customer base, and our wireless subscriber growth is also going well. Wireline competitive intensity got a little heated in some of our markets during Black Friday and through the holidays, so we expect a more modest wireline customer growth in the upcoming Q2, but this remains manageable overall from a revenue perspective.
Thanks to the above points and more, we're confident about materially improving financial trends for our US business starting in the second half of this year. This was already recognized by Moody's and S&P, who both improved their outlook on our debt in recent weeks, while DBRS reaffirmed its stable outlook. In Canada, our performance remains solid and resilient, with positive year-on-year EBITDA trends. We continue to consistently grow our customer base, and our wireless subscriber growth is also going well. Wireline competitive intensity got a little heated in some of our markets during Black Friday and through the holidays, so we expect a more modest wireline customer growth in the upcoming Q2, but this remains manageable overall from a revenue perspective.
Speaker #3: This was already recognized by Moody's and S&P, who both improved their outlook on our debt in recent weeks, while DBRS reaffirmed its stable outlook.
Speaker #3: In Canada, our performance remained solid and resilient, with positive year-on-year EBITDA trends. We continue to consistently grow our customer base, and our wireless subscriber growth is also going well.
Speaker #3: Wireline competitive intensity got a little heated in some of our markets during Black Friday and through the holidays. So we expect more modest wireline customer growth in the upcoming Q2.
Speaker #3: But this remains manageable overall from a revenue perspective. Before turning to our radio operations, I'd like to reflect on yesterday's report released by the Commission for Complaints for Telecom and Television Services, which ranked Cogeco as the best telecommunications company in Canada in terms of customer complaint reduction.
Frederic Perron: Before turning to our radio operations, I'd like to reflect on yesterday's report released by the Commission for Complaints for Telecom-television Services, which ranked Cogeco as the best telecommunications company in Canada in terms of customer complaint reduction when aggregating brands. In a year where complaints within the telecom industry rose by 17%, Cogeco made significant progress in improving its customer service, which has resulted in a leading 15% reduction in customer complaints versus the prior year, a 25% reduction in billing complaints, and no breaches to the Internet Code. At Cogeco Media, Q1 revenue increased again this quarter on a year-over-year basis, lifted by strength in our digital advertising solutions and continued listener engagement. So in closing, I'd summarize our overall situation by saying that our three-year transformation is on track, that our Canadian performance is resilient and solid, our US.
Before turning to our radio operations, I'd like to reflect on yesterday's report released by the Commission for Complaints for Telecom-television Services, which ranked Cogeco as the best telecommunications company in Canada in terms of customer complaint reduction when aggregating brands. In a year where complaints within the telecom industry rose by 17%, Cogeco made significant progress in improving its customer service, which has resulted in a leading 15% reduction in customer complaints versus the prior year, a 25% reduction in billing complaints, and no breaches to the Internet Code. At Cogeco Media, Q1 revenue increased again this quarter on a year-over-year basis, lifted by strength in our digital advertising solutions and continued listener engagement. So in closing, I'd summarize our overall situation by saying that our three-year transformation is on track, that our Canadian performance is resilient and solid, our US.
Speaker #3: When aggregating brands, in a year where complaints within the telecom industry rose by 17%, Cogeco made significant progress in improving its customer service, which has resulted in a leading 15% reduction in customer complaints versus the prior year, a 25% reduction in billing complaints, and no breaches to the Internet Code.
Speaker #3: At Cogeco Media, Q1 revenue increased again this quarter on a year-over-year basis, lifted by strength in our digital advertising solutions and continued listener engagement.
Speaker #3: So, in closing, I'd summarize our overall situation by saying that our three-year transformation is on track, and that our Canadian performance is resilient and solid.
Speaker #3: Our US turnaround is working. And last but not least, we continue to have one of the best balance sheets and cash flow profiles in the industry, which positions us well to keep increasing shareholder value over time, just as we have been.
Frederic Perron: turnaround is working, and last but not least, we continue to have one of the best balance sheets and cash flow profiles in the industry, which positions us well to keep increasing shareholder value over time, just as we have been. On that, I'll turn it over to Patrice for more details about our results.
turnaround is working, and last but not least, we continue to have one of the best balance sheets and cash flow profiles in the industry, which positions us well to keep increasing shareholder value over time, just as we have been. On that, I'll turn it over to Patrice for more details about our results.
Speaker #3: On that, I'll turn it over to Patrice for more details about our—
Speaker #2: So, thank you, Fred. So in Canada, Cogeco Connexion's revenue was stable in the first quarter, as we had a mix of a higher internet subscriber base, which added 8,900 internet subscribers during the quarter.
Patrice Ouimet: Thank you, Fred. In Canada, Cogeco Connexion's revenue was stable in the first quarter, as we had a mix of a higher internet subscriber base, which added 8,900 internet subscribers during the quarter, and lower revenue per customer from fewer video and wireline phone subscribers. Adjusted EBITDA grew by 2% in constant currency due to stable revenue and lower operating expenses, resulting mainly from cost reduction initiatives and operating efficiencies coming from our three-year transformation program. We added 1,100 homes passed during the quarter, mainly with fiber to the home under a network expansion program. In the US, Breezeline's revenue declined by 9.9% in constant currency due to the cumulative decline in the subscriber base over the past year, a smaller rate increase than in the prior year, along with a competitive pricing environment.
Patrice Ouimet: Thank you, Fred. In Canada, Cogeco Connexion's revenue was stable in the first quarter, as we had a mix of a higher internet subscriber base, which added 8,900 internet subscribers during the quarter, and lower revenue per customer from fewer video and wireline phone subscribers. Adjusted EBITDA grew by 2% in constant currency due to stable revenue and lower operating expenses, resulting mainly from cost reduction initiatives and operating efficiencies coming from our three-year transformation program. We added 1,100 homes passed during the quarter, mainly with fiber to the home under a network expansion program. In the US, Breezeline's revenue declined by 9.9% in constant currency due to the cumulative decline in the subscriber base over the past year, a smaller rate increase than in the prior year, along with a competitive pricing environment.
Speaker #2: And lower revenue per customer from fewer video and wireline phone subscribers. Adjusted EBITDA grew by 2% in constant currency due to stable revenue and lower operating expenses, resulting mainly from cost reduction initiatives and operating efficiencies coming from our three-year transformation program.
Speaker #2: We added 1,100 home spas during the quarter, mainly with fiber to the home under a network expansion program. In the US, Breezeline's revenue declined by 9.9% in constant currency due to the cumulative decline in the subscriber base over the past year.
Speaker #2: A smaller rate increase than in the prior year, along with a competitive pricing environment. The 1,100 internet subscriber decline represents a significant improvement over the last quarter and last year, while internet subscriber additions in Ohio recorded its best quarter since we acquired that business four years ago.
Patrice Ouimet: The 1,100 internet subscriber decline represents a significant improvement over the last quarter and last year, while internet subscriber additions in Ohio recorded its best quarter since we acquired that business four years ago, with positive growth of 2,600 subscriber additions. Adjusted EBITDA declined by 9.1% in constant currency, mainly due to lower revenue, offset in part by lower operating expenses driven by cost reduction initiatives and operating efficiencies. Note that last year's comparative Q1 period had the highest adjusted EBITDA level of all quarters in fiscal 2025. Turning to our consolidated numbers for Cogeco Communications, at the consolidated level, revenue in constant currency declined by 4.9%, and adjusted EBITDA declined by 3.7%. The adjusted EBITDA decline was driven by a decline in the US, partially offset by growth in Canada.
The 1,100 internet subscriber decline represents a significant improvement over the last quarter and last year, while internet subscriber additions in Ohio recorded its best quarter since we acquired that business four years ago, with positive growth of 2,600 subscriber additions. Adjusted EBITDA declined by 9.1% in constant currency, mainly due to lower revenue, offset in part by lower operating expenses driven by cost reduction initiatives and operating efficiencies. Note that last year's comparative Q1 period had the highest adjusted EBITDA level of all quarters in fiscal 2025. Turning to our consolidated numbers for Cogeco Communications, at the consolidated level, revenue in constant currency declined by 4.9%, and adjusted EBITDA declined by 3.7%. The adjusted EBITDA decline was driven by a decline in the US, partially offset by growth in Canada.
Speaker #2: With positive growth of 2,600 subscriber additions, adjusted EBITDA declined by 9.1% in constant currency, mainly due to lower revenue, offset in part by lower operating expenses driven by cost reduction initiatives and operating efficiencies.
Speaker #2: Note that last year's comparative Q1 period had the highest adjusted EBITDA level of all quarters in fiscal '25. Turning to our consolidated numbers for Cogeco Communications at the consolidated level, revenue in constant currency declined by 4.9%, and adjusted EBITDA declined by 3.7%.
Speaker #2: The adjusted EBITDA decline was driven by a decline in the US, partially offset by growth in Canada. Diluted earnings per share declined by 12.2%, mainly due to a one-time gain recorded in the prior year that was associated with a sale and lease-back transaction.
Patrice Ouimet: Diluted earnings per share declined by 12.2%, mainly due to a one-time gain recorded in the prior year that was associated with a sale and lease-back transaction, as well as lower adjusted EBITDA. Capital intensity was 22.2%, up from 20.4% last year, although we are on track to hit our CapEx guidance for the year. Free cash flow in constant currency declined by 15.9% in the quarter, mainly due to proceeds from last year's sale and lease-back transaction. Our net debt to EBITDA ratio was 3.2 turns at the end of the quarter, up slightly from the 3.1 turn reported in Q4. We continue to target a net debt to EBITDA ratio in the low three turns range. We've declared a quarterly dividend of CAD 0.987 per share, which is up 7% year-on-year.
Diluted earnings per share declined by 12.2%, mainly due to a one-time gain recorded in the prior year that was associated with a sale and lease-back transaction, as well as lower adjusted EBITDA. Capital intensity was 22.2%, up from 20.4% last year, although we are on track to hit our CapEx guidance for the year. Free cash flow in constant currency declined by 15.9% in the quarter, mainly due to proceeds from last year's sale and lease-back transaction. Our net debt to EBITDA ratio was 3.2 turns at the end of the quarter, up slightly from the 3.1 turn reported in Q4. We continue to target a net debt to EBITDA ratio in the low three turns range. We've declared a quarterly dividend of CAD 0.987 per share, which is up 7% year-on-year.
Speaker #2: As well as lower adjusted EBITDA. Capital intensity was 22.2%, up from 20.4% last year, although we are on track to hit our CapEx guidance for the year.
Speaker #2: Free cash flow in constant currency declined by 15.9% in the quarter, mainly due to proceeds from last year's sale and lease-back transaction. Our net debt to EBITDA ratio was 3.2 turns at the end of the quarter, up slightly from the 3.1 turns reported in Q4.
Speaker #2: We continue to target a net debt to EBITDA ratio in the low three turns range. And we've declared a quarterly dividend of $0.987 per share, which is up 7% year-on-year.
Speaker #2: At Cogeco Inc., revenue in constant currency decreased by 4.5%, and adjusted EBITDA declined by 3.1%, largely explained by Cogeco Communications' results. Media operations revenue increased by 8.1% year-over-year, driven by solid market positioning and growth in digital advertising solutions.
Patrice Ouimet: At Cogeco Inc., revenue in constant currency decreased by 4.5%, and adjusted EBITDA declined by 3.1%, largely explained by Cogeco Communications' results. Media operations revenue increased by 8.1% year-on-year, driven by solid market positioning and growth in digital advertising solutions. We've also declared a quarterly dividend of CAD 0.987 per share at Cogeco Inc., which is also up 7% year-on-year. Now, turning to financial guidelines, we are maintaining our annual guidelines for Cogeco Communications' fiscal 2026 year, which we first provided to investors in October. As it relates to the upcoming Q2, we are expecting consolidated revenue and EBITDA in constant currency to decline in the low to mid-single digits compared to last year. The declines are explained by the US business. We are, however, expecting much stronger financial performance in the US.
At Cogeco Inc., revenue in constant currency decreased by 4.5%, and adjusted EBITDA declined by 3.1%, largely explained by Cogeco Communications' results. Media operations revenue increased by 8.1% year-on-year, driven by solid market positioning and growth in digital advertising solutions. We've also declared a quarterly dividend of CAD 0.987 per share at Cogeco Inc., which is also up 7% year-on-year. Now, turning to financial guidelines, we are maintaining our annual guidelines for Cogeco Communications' fiscal 2026 year, which we first provided to investors in October. As it relates to the upcoming Q2, we are expecting consolidated revenue and EBITDA in constant currency to decline in the low to mid-single digits compared to last year. The declines are explained by the US business. We are, however, expecting much stronger financial performance in the US.
Speaker #2: And we've also declared a quarterly dividend of $0.987 per share at Cogeco Inc., which is also up 7% year-on-year. Now, turning to financial guidelines.
Speaker #2: We are maintaining our annual guidelines for Cogeco Communications' fiscal 2026 year, which we first provided to investors in October. As it relates to the upcoming Q2, we are expecting consolidated revenue and EBITDA in constant currency to decline in the low to mid-single digits compared to last year.
Speaker #2: The declines are explained by the US business. We are, however, expecting much stronger financial performance in the US in the second half of the year, as we'll benefit from improving customer trends and the new wave of inside cost and revenue initiatives.
Patrice Ouimet: In the second half of the year, as we'll benefit from improving customer trends and a new wave of upside cost and revenue initiatives. We expect both financing expense and acquisition integration, and restructuring costs to be similar to Q1, while our depreciation expense should be slightly lower than in Q1. At Cogeco Inc., we are maintaining the financial guidelines as well. And now, Fred and I will be happy to take your questions.
In the second half of the year, as we'll benefit from improving customer trends and a new wave of upside cost and revenue initiatives. We expect both financing expense and acquisition integration, and restructuring costs to be similar to Q1, while our depreciation expense should be slightly lower than in Q1. At Cogeco Inc., we are maintaining the financial guidelines as well. And now, Fred and I will be happy to take your questions.
Speaker #2: We expect both financial expense and acquisition, integration, and restructuring costs to be similar to Q1, while our depreciation expense should be slightly lower than in Q1.
Speaker #2: At Cogeco Inc., we are maintaining the financial guidelines as well. And now Fred and I will be happy to take your questions.
Speaker #2: questions. Thank you.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star 4 by the 1 on your telephone keypad. If you wish to cancel your request, please press star 4 by the 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. And your first question comes from the line of Aravinda Galappatthige from Canaccord Genuity. Please go ahead.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star 4 by the 1 on your telephone keypad. If you wish to cancel your request, please press star 4 by the 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. And your first question comes from the line of Aravinda Galappatthige from Canaccord Genuity. Please go ahead.
Speaker #3: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by one on your telephone keypad.
Speaker #3: If you wish to cancel your request, please press star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys.
Speaker #3: One moment, please, for your first question. Thank you. And your first question comes from the line of Aravinda Galapathich from Canaccord Genuity. Please go ahead.
Speaker #3: ahead.
Speaker #4: Good morning.
Aravinda Galappatthige: Good morning. Thanks for taking my questions. Maybe just to clarify on the Q2 guide, Patrice, is it fair to suggest that the U.S. numbers, you don't expect any sort of variance to what we saw in Q1 and Q4, sort of high single-digit declines? And then maybe just to build on that, can you also talk to the sort of degree of improvement that you expect in the second half? I mean, is it within the realm of possibility that you sort of get even towards break-even as you exit fiscal 2026? Maybe I'll just start there.
Aravinda Galappatthige: Good morning. Thanks for taking my questions. Maybe just to clarify on the Q2 guide, Patrice, is it fair to suggest that the U.S. numbers, you don't expect any sort of variance to what we saw in Q1 and Q4, sort of high single-digit declines? And then maybe just to build on that, can you also talk to the sort of degree of improvement that you expect in the second half? I mean, is it within the realm of possibility that you sort of get even towards break-even as you exit fiscal 2026? Maybe I'll just start there.
Speaker #4: Thanks for taking my questions. Maybe just to clarify on the Q2 guide, Patrice, is it fair to suggest that for the US numbers, you don't expect any sort of variance to what we saw in Q1 and Q4—sort of high single-digit declines?
Speaker #4: And then maybe just to build on that, can you also talk to the degree of improvement that you expect in the second half?
Speaker #4: I mean, is it within the realm of possibility that you sort of get even towards breakeven as you exit fiscal '26? Maybe I'll just start there.
Speaker #5: Yes, so good morning, Aravinda. So as part of Q2, with the information we provided at a consolidated level, I think it's a fair assumption to assume that the US business will be in a similar position as in Q1.
Patrice Ouimet: Yes. So good morning, Aravinda. So as part of Q2, with the information we provided at a consolidated level, I think it's a fair assumption to assume that the US business will be in a similar position than in Q1, obviously, plus or minus some changes there, but definitely where we expect the change is in the second half. And when we think about the second half of the year, we've been losing some customers historically in the US, but when you look at the past two reported quarters, the situation has improved quite a bit. So that will play into it. We do have some price increases that kick in in different periods in January. So that will play a role into especially in Q3 and Q4.
Patrice Ouimet: Yes. So good morning, Aravinda. So as part of Q2, with the information we provided at a consolidated level, I think it's a fair assumption to assume that the US business will be in a similar position than in Q1, obviously, plus or minus some changes there, but definitely where we expect the change is in the second half. And when we think about the second half of the year, we've been losing some customers historically in the US, but when you look at the past two reported quarters, the situation has improved quite a bit. So that will play into it. We do have some price increases that kick in in different periods in January. So that will play a role into especially in Q3 and Q4.
Speaker #5: Obviously, plus or minus some changes there, but definitely where we expect the change is in the second half. And when we think about the second half of the year, we've been losing some customers historically in the US, but when you look at the past two reported quarters, the situation has improved quite a bit.
Speaker #5: So that will play into it. We do have some price increases that kick in at a different period in January, so that will play a role, especially in Q3 and Q4.
Speaker #5: And we have a number of other elements in terms of cost improvements and some other revenue measures that are going to kick in during the second half of the year.
Patrice Ouimet: We have a number of other elements in terms of cost improvements and some other revenue measures that are going to kick in during the second half of the year. That's what explains basically the change.
We have a number of other elements in terms of cost improvements and some other revenue measures that are going to kick in during the second half of the year. That's what explains basically the change.
Speaker #5: So that's what explains
Speaker #5: basically the change. Yeah.
Aravinda Galappatthige: Yeah. And Aravinda, it's Fred, those initiatives that Patrice is alluding to that will kick in in the second half, they're all quantified, they're all on track, they're all in delivery right now. So we feel pretty solid. I know the other part of your question was, can we expect a positive year-on-year EBITDA exit rate in the US by the end of the year? Patrice, I don't know if you want to.
Fréd Perron: Yeah. And Aravinda, it's Fred, those initiatives that Patrice is alluding to that will kick in in the second half, they're all quantified, they're all on track, they're all in delivery right now. So we feel pretty solid. I know the other part of your question was, can we expect a positive year-on-year EBITDA exit rate in the US by the end of the year? Patrice, I don't know if you want to.
Speaker #6: And Aravinda, as Fred, those initiatives that Patrice is alluding to—that will kick in in the second half—they're all quantified; they're all on track.
Speaker #6: They're all in delivery right now, so we feel pretty solid. I know the other part of your question was: Can we expect a positive year-on-year EBITDA exit rate in the U.S. by the end of the year?
Speaker #6: Patrice, I don't know if you want.
Speaker #5: Yeah. I think
Patrice Ouimet: Yeah. I think it's still a bit early days to think about the individual quarters, but definitely trending towards a neutral position for those quarters is a good assumption. I want to say the last quarter. But again, it's still a bit early days to talk about just one particular quarter.
Patrice Ouimet: Yeah. I think it's still a bit early days to think about the individual quarters, but definitely trending towards a neutral position for those quarters is a good assumption. I want to say the last quarter. But again, it's still a bit early days to talk about just one particular quarter.
Speaker #5: It's still a bit early days to think about the individual quarters, but definitely trending towards a neutral position for those quarters is a good assumption.
Speaker #5: Let's say the last quarter, but again, it's still a bit early days to talk about just one particular quarter.
Speaker #4: Thank you. And then for Canada, Fred, I think you alluded to the prospect of maybe just a slightly muted broadband trend in Q2. We obviously did see some activity, even from your end.
Aravinda Galappatthige: Thank you. Then for Canada, Fred, I think you alluded to the prospect of maybe just slightly muted broadband trends in Q2. We obviously did see some activity even from your end. Maybe just sort of characterize for us where you're seeing that pressure. Is it more on the legacy side, or are you perhaps not seeing as much tailwind from the other sources, oxio and your rural expansions? Maybe a little bit more context there. Sure. oxio is still going very strong, mostly in our current footprint at good margins. And that gives us a lot of optimism about launching an oxio-like brand in the US as well, and we can talk about that later. So that's still strong. Network expansion is still early days. Our Ontario programs are being dragged a little bit over time due to permitting things.
Aravinda Galappatthige: Thank you. Then for Canada, Fred, I think you alluded to the prospect of maybe just slightly muted broadband trends in Q2. We obviously did see some activity even from your end. Maybe just sort of characterize for us where you're seeing that pressure. Is it more on the legacy side, or are you perhaps not seeing as much tailwind from the other sources, oxio and your rural expansions? Maybe a little bit more context there.
Speaker #4: Maybe just sort of characterize for us where you're seeing that pressure. Is it more on the legacy side, or are you perhaps not seeing as much tailwind from the other sources?
Speaker #4: Axioo, your rural expansions—maybe a little on your broadband expansion and a bit more context there.
Fréd Perron: Sure. oxio is still going very strong, mostly in our current footprint at good margins. And that gives us a lot of optimism about launching an oxio-like brand in the US as well, and we can talk about that later. So that's still strong. Network expansion is still early days. Our Ontario programs are being dragged a little bit over time due to permitting things.
Speaker #6: Sure. Axioo is still going very strong, mostly in our current footprint, at good margins. And that gives us a lot of optimism about launching an Axioo-like brand in the US as well.
Speaker #6: And we can talk about that later. So that's still strong. Network expansion is still in the early days. Our Ontario programs are being dragged a little bit over time due to permitting things.
Speaker #6: So that will take some time before it kicks in. As it relates to the legacy business, the way I would characterize it is the end of our Q1 and the Q2 that we're in right now appears to be a period of experimentation.
Aravinda Galappatthige: So that will take some time before it kicks in. As it relates to the legacy business, the way I would characterize it is the end of our Q1 and the Q2 that we're in right now appears to be a period of experimentation by the different players, whether it's dabbling into resale or some promotional activity during Black Friday. So it's been a little up and down. The past couple of weeks have been better, and therefore we're calling for a more muted growth in Q2, but I wouldn't see it as the new normal. Thanks. And just lastly, maybe just on the take-up on the wireless side of the business in Canada, again, very early days, but you ran a fairly attractive promotion for a while. Any kind of feedback that you care to share would be useful. Thank you.
So that will take some time before it kicks in. As it relates to the legacy business, the way I would characterize it is the end of our Q1 and the Q2 that we're in right now appears to be a period of experimentation by the different players, whether it's dabbling into resale or some promotional activity during Black Friday. So it's been a little up and down. The past couple of weeks have been better, and therefore we're calling for a more muted growth in Q2, but I wouldn't see it as the new normal.
Speaker #6: By the different players, whether it's dabbling into resale or some promotional activity during Black Friday, it's been a little up and down. The past couple of weeks have been better.
Speaker #6: But, and therefore, we're calling for a more muted growth in Q2. But I wouldn't see it as the new...
Speaker #6: normal. Thanks.
Aravinda Galappatthige: Thanks. And just lastly, maybe just on the take-up on the wireless side of the business in Canada, again, very early days, but you ran a fairly attractive promotion for a while. Any kind of feedback that you care to share would be useful. Thank you.
Speaker #4: And just lastly, maybe just on the take-up on the wireless side of the business in Canada—again, very early days—but you ran a fairly attractive promotion for a while.
Speaker #4: Any kind of feedback that you care to share would be appreciated.
Speaker #4: useful. Thank you. Yes.
Speaker #6: Yeah, Wireless Canada is going really well. Our baseline pricing is in line with the rest of the market. Where we had promotions, it was an introductory promotion because we were launching the product in the fall.
Patrice Ouimet: Yeah. Wireless Canada is going really well. Our baseline pricing is in line with the rest of the market. Where we had promotions, it was an introductory promotion because we were launching the product in the fall, but it was a promotion for one year on the first line only. And the sales are going so well right now that we've already done two pullbacks on that introductory offer, so we don't offer a free line for a year anymore. So we're already in the process of pulling back on those introductory promotions because the sales are going so well.
Fréd Perron: Yeah. Wireless Canada is going really well. Our baseline pricing is in line with the rest of the market. Where we had promotions, it was an introductory promotion because we were launching the product in the fall, but it was a promotion for one year on the first line only. And the sales are going so well right now that we've already done two pullbacks on that introductory offer, so we don't offer a free line for a year anymore. So we're already in the process of pulling back on those introductory promotions because the sales are going so well.
Speaker #6: But it was a promotion for one year on the first line only. And the sales are going so well right now that we've already done two pullbacks on that introductory offer.
Speaker #6: So, we don't offer a free line for a year anymore. So we're already in the process of pulling back on those introductory promotions because the sales are going so well.
Speaker #4: Thanks. I'll pass the
Aravinda Galappatthige: Thanks. I'll pass the line.
Aravinda Galappatthige: Thanks. I'll pass the line.
Speaker #4: line. Thank
Speaker #3: You. And your next question comes on the line of Vince Valentini from TD Securities. Please go ahead.
Operator: Thank you. Your next question comes from the line of Vince Valentini from TD Securities. Please go ahead.
Operator: Thank you. Your next question comes from the line of Vince Valentini from TD Securities. Please go ahead.
Speaker #3: ahead. Hey, thanks very
Vince Valentini: Hey, thanks very much. First, let's stick with that wireless. Can you give us any color on what strong means to you? Are you over 20,000 subscribers in wireless in Canada? I mean, I think we're all grappling with what your definition of strong is.
Vince Valentini: Hey, thanks very much. First, let's stick with that wireless. Can you give us any color on what strong means to you? Are you over 20,000 subscribers in wireless in Canada? I mean, I think we're all grappling with what your definition of strong is.
Speaker #7: Much. First, let's stick with that wireless. Can you give us any color of what 'strong' means to you? Does that—like, are you over 20,000 subscribers in wireless in Canada?
Speaker #7: I mean, I think we're all grappling with what your definition of 'strong' is.
Speaker #7: is. Hi,
Aravinda Galappatthige: Hi, Vince. We don't disclose our wireless numbers. It's relative to our internal targets. It will take a couple of years before our wireless customer base to be material and really benefit our bottom line. But when you look at what some of the US cables are doing, after a few years of being into wireless, it's really a needle mover to their EBITDA positively, but I would not expect much of an impact in the short term. But we're not yet at a place of disclosing the customer base.
Fréd Perron: Hi, Vince. We don't disclose our wireless numbers. It's relative to our internal targets. It will take a couple of years before our wireless customer base to be material and really benefit our bottom line. But when you look at what some of the US cables are doing, after a few years of being into wireless, it's really a needle mover to their EBITDA positively, but I would not expect much of an impact in the short term. But we're not yet at a place of disclosing the customer base.
Speaker #6: Vince, we don't disclose our wireless numbers. It's relative to our internal targets. It will take a couple of years before our wireless customer base is material and really benefits our bottom line.
Speaker #6: But when you look at what some of the US cables are doing, after a few years of being into wireless, it's really a needle mover to their EBITDA.
Speaker #6: Positively. But I would not expect much of an impact in the short term. But we're not yet at a place of disclosing to our customer base.
Speaker #4: Okay. And on the competition in Canada you were just talking about, can you unpack it all? Is it a fixed wireless aggression problem, or you mentioned TPIA?
Vince Valentini: Okay. And on the competition in Canada you were just talking about, can you unpack it all? Is it a fixed wireless aggression problem, or you mentioned TPIA? Is it more the TPIA or just traditional Bell competition? And a sub-question on that, to the extent you're seeing TPIA experimentation, are you seeing that of somebody reselling your network, so you're at least getting the wholesale fee, or are you seeing that on the telco fiber network?
Vince Valentini: Okay. And on the competition in Canada you were just talking about, can you unpack it all? Is it a fixed wireless aggression problem, or you mentioned TPIA? Is it more the TPIA or just traditional Bell competition? And a sub-question on that, to the extent you're seeing TPIA experimentation, are you seeing that of somebody reselling your network, so you're at least getting the wholesale fee, or are you seeing that on the telco fiber network?
Speaker #4: Is it more the TPIA or just traditional Bell competition? And a sub-question on that: if it's to the extent you're seeing TPIA experimentation, are you seeing that of somebody reselling your network?
Speaker #4: So you're at least getting the wholesale fee, or are you seeing that on the telco fiber?
Speaker #4: network? Sure.
Aravinda Galappatthige: Sure. Happy to answer the question. If you unpack FWA resale and just normal promotional activity, FWA is not having an impact on us. We track churn reasons. And I know some of the advertised prices can be eye-popping on FWA, but we're really not feeling it. On resale, yeah, it does seem to be a phase of experimentation. As I said, the past couple of weeks have been a bit better. Hopefully, people will realize that it's not good for anybody. But to your other question, yes, a big chunk of that resale activity shows backup in wholesale revenue for us. So while the subscriber metrics may be more muted, that's why I was saying that in my introductory comments that it's manageable from a revenue perspective.
Fréd Perron: Sure. Happy to answer the question. If you unpack FWA resale and just normal promotional activity, FWA is not having an impact on us. We track churn reasons. And I know some of the advertised prices can be eye-popping on FWA, but we're really not feeling it. On resale, yeah, it does seem to be a phase of experimentation. As I said, the past couple of weeks have been a bit better. Hopefully, people will realize that it's not good for anybody. But to your other question, yes, a big chunk of that resale activity shows backup in wholesale revenue for us. So while the subscriber metrics may be more muted, that's why I was saying that in my introductory comments that it's manageable from a revenue perspective.
Speaker #6: Happy to answer the question. If you unpack SWA resale and just normal promotional activity, FWA is not having an impact on us. We track churn reasons, and I know some of the advertised prices can be eye-popping on FWA, but we're really not feeling it.
Speaker #6: On resale, yeah, it does seem to be a phase of experimentation. As I said, the past couple of weeks have been a bit better.
Speaker #6: Hopefully, people will realize that it's not good for anybody. But to your other question, yes, a big chunk of that resale activity shows back up in wholesale revenue for us.
Speaker #6: So, while the subscriber metrics may be more muted, that's why I was saying in my introductory comments that it's manageable from a revenue perspective.
Speaker #6: And then, in terms of normal promotional activity, yeah, it popped up during Black Friday and the holidays. But let's see how it evolves—it may just be a point-in-time thing.
Aravinda Galappatthige: And then in terms of normal promotional activity, yeah, it popped up during Black Friday and the holidays, but let's see how it evolves. It may just be a point-in-time thing.
And then in terms of normal promotional activity, yeah, it popped up during Black Friday and the holidays, but let's see how it evolves. It may just be a point-in-time thing.
Speaker #7: Thank you. Switching to the improving trend in U.S. internet subs, you say you won't get back to positive sub adds in the second quarter.
Vince Valentini: Thank you. Switching to the improving trend in the US internet subs, you say you won't get back to positive sub adds in Q2, but you're still trending well. Can you frame this at all? Should we be thinking about another quarter with only losing one or two thousand internet subs, or was there something unusually strong in Q1 that can't be replicated and maybe a slip back to four or five thousand sub losses?
Vince Valentini: Thank you. Switching to the improving trend in the US internet subs, you say you won't get back to positive sub adds in Q2, but you're still trending well. Can you frame this at all? Should we be thinking about another quarter with only losing one or two thousand internet subs, or was there something unusually strong in Q1 that can't be replicated and maybe a slip back to four or five thousand sub losses?
Speaker #7: But you're still trending well. Can you frame this at all? Should we be thinking about another quarter with only losing 1,000 or 2,000 internet subs?
Speaker #7: Or was there something unusually strong in the first quarter that can't be replicated, and maybe a slip back to 4,000 or 5,000 sub losses?
Speaker #6: Without going too, too precise—because we're still in the quarter, right? But the second quarter, do expect some losses. Maybe a little bit more than the current quarter, but it's yet to be seen.
Aravinda Galappatthige: Without going too, too precise because we're still in the quarter, right? But the second quarter, do expect some losses, maybe a little bit more than the current quarter, but it's yet to be seen. But no, it was not an unusual phenomenon in the first quarter. The trends are sustainable. And in fact, after the second quarter, we see a clear line of sight to the improvement trends resuming. We have enough quantified measures in place to believe that that will be the case. And turning positive in totality in the US on HSI subs on a repeatable basis is now something we believe is realistic and is our goal in the medium term.
Fréd Perron: Without going too, too precise because we're still in the quarter, right? But the second quarter, do expect some losses, maybe a little bit more than the current quarter, but it's yet to be seen. But no, it was not an unusual phenomenon in the first quarter. The trends are sustainable. And in fact, after the second quarter, we see a clear line of sight to the improvement trends resuming. We have enough quantified measures in place to believe that that will be the case. And turning positive in totality in the US on HSI subs on a repeatable basis is now something we believe is realistic and is our goal in the medium term.
Speaker #6: But no, it was not an unusual phenomenon in the first quarter. The trends are sustainable. And in fact, after the second quarter, we see a clear line of sight to the improvement trends resuming.
Speaker #6: We have enough quantified measures in place to believe that that will be the case. And turning positive in totality in the US on HSI subs on a repeatable basis is now something we believe is realistic and is our goal.
Speaker #6: In the medium term.
Speaker #4: Excellent. And last one, if I could—very nice to see the rating warnings, or whatever you call them, removed from Moody's and S&P. Does that now free you up to consider using your free cash flow and balance sheet strength for share buybacks?
Vince Valentini: Excellent. Last one, if I could: very nice to see the rating warnings, or whatever you call them, removed from Moody's and S&P. Does that now free you up to consider using your free cash flow and balance sheet strength for share buybacks? I mean, as I'm sure you appreciate, if you're still on track for 600 million or more in free cash flow in fiscal 2027, that's an incredible free cash flow yield and a lot of excess cash after paying your dividend. Do you think about starting to use that as an opportunistically to buy back shares?
Vince Valentini: Excellent. Last one, if I could: very nice to see the rating warnings, or whatever you call them, removed from Moody's and S&P. Does that now free you up to consider using your free cash flow and balance sheet strength for share buybacks? I mean, as I'm sure you appreciate, if you're still on track for 600 million or more in free cash flow in fiscal 2027, that's an incredible free cash flow yield and a lot of excess cash after paying your dividend. Do you think about starting to use that as an opportunistically to buy back shares?
Speaker #4: I mean, as I’m sure you appreciate, if you’re still on track for $600 million or more in free cash flow in fiscal 2027, that’s an incredible free cash flow yield.
Speaker #4: And a lot of excess cash after paying your dividend. Do you think about starting to use that opportunistically to buy back shares?
Speaker #6: Yeah. So as we go through fiscal '26, we're still going to concentrate on reducing debt. We're still slightly higher than the three-times target.
Patrice Ouimet: Yeah. So as we go through fiscal 2026, we're still going to concentrate on reducing debt. We're still slightly higher than the 3x target. When you look also at the ratings on the debt, there is an expectation as well of continued decrease in leverage. That being said, as we get to next fiscal year, to your point, which starts in September, then we do expect to have hit that target and also have visibility on strong free cash flow next year. And that's a discussion we'll have definitely at that point internally on what do we do with the excess cash? Do we resume a buyback program? That we've run for many years in the past, so that's a possibility for sure. Do we repay more debt? We do a mix of both.
Patrice Ouimet: Yeah. So as we go through fiscal 2026, we're still going to concentrate on reducing debt. We're still slightly higher than the 3x target. When you look also at the ratings on the debt, there is an expectation as well of continued decrease in leverage. That being said, as we get to next fiscal year, to your point, which starts in September, then we do expect to have hit that target and also have visibility on strong free cash flow next year. And that's a discussion we'll have definitely at that point internally on what do we do with the excess cash? Do we resume a buyback program? That we've run for many years in the past, so that's a possibility for sure. Do we repay more debt? We do a mix of both.
Speaker #6: When you look also at the ratings on the debt, there is an expectation as well of continued decrease in leverage. That being said, as we get to next fiscal year, to your point, which starts in September, then we do expect to have hit that target and also have visibility on strong free cash flow next year.
Speaker #6: And that's a discussion we'll have definitely at that point internally, on what do we do with the excess cash? Do we resume the buyback program that we've run for many years in the past?
Speaker #6: So, that's a possibility for sure. Do we repay more debt? We do a mix of both. But I would say it's not something in the short term, but that discussion will come soon.
Speaker #6: So that's a possibility for sure. Do we repay more debt? We do a mix of both. But I would say it's not something in the short term, but that discussion will come soon enough.
Patrice Ouimet: But I would say it's not something in the short term, but it's going to come, that discussion will come soon enough.
But I would say it's not something in the short term, but it's going to come, that discussion will come soon enough.
Speaker #4: Okay, I appreciate that, Patrice. Just to state the obvious—hopefully it's obvious—I mean, your dividend yield is higher than your cost of debt.
Vince Valentini: Okay. I appreciate that, Patrice. Just to state the obvious, hopefully it's obvious. I mean, your dividend yield is higher than your cost of debt. So buying back shares still has a cash-on-cash benefit, which hopefully the rating agencies would appreciate. And certainly, I know the equity market would appreciate, but leave it to you guys, and I'll pass the line.
Vince Valentini: Okay. I appreciate that, Patrice. Just to state the obvious, hopefully it's obvious. I mean, your dividend yield is higher than your cost of debt. So buying back shares still has a cash-on-cash benefit, which hopefully the rating agencies would appreciate. And certainly, I know the equity market would appreciate, but leave it to you guys, and I'll pass the line.
Speaker #4: So, buying back shares still has a cash-on-cash benefit, which hopefully the rating agencies would appreciate, and certainly I know the equity market would appreciate.
Speaker #4: But I'll leave it to you guys, and I'll—
Speaker #4: pass the line. Thank you.
Aravinda Galappatthige: Thank you.
Patrice Ouimet: Thank you.
Speaker #6: Thank you, Vince.
Patrice Ouimet: Thank you, Vince.
Fréd Perron: Thank you, Vince.
Speaker #1: Thank you. And your next question comes from the line of Maher Yagi from Scotiabank. Please go ahead.
Operator: Thank you. And your next question comes from the line of Maher Yagi from Scotiabank. Please go ahead.
Operator: Thank you. And your next question comes from the line of Maher Yagi from Scotiabank. Please go ahead.
Speaker #8: Merci d'avoir pris mon appel. I wanted to say good morning. I just wanted to ask you first about your Axio strategy. I know there's probably a lot more to say when you actually launch it in the US.
Maher Yaghi: Merci d'avoir pris mon appel. Good morning. I just wanted to ask you first on your oxio strategy. I know there's probably a lot more to say when you actually launch it in the US, but it's been quite successful for you as a brand in Canada. And the idea to replicate that in the US obviously makes sense. I just wanted to ask you, is the goal for the oxio-like brand in the US is to sell a service in territory only or also out of territory like you are doing in Canada?
Maher Yaghi: Merci d'avoir pris mon appel. Good morning. I just wanted to ask you first on your oxio strategy. I know there's probably a lot more to say when you actually launch it in the US, but it's been quite successful for you as a brand in Canada. And the idea to replicate that in the US obviously makes sense. I just wanted to ask you, is the goal for the oxio-like brand in the US is to sell a service in territory only or also out of territory like you are doing in Canada?
Speaker #8: But it's been quite successful for you as a brand in Canada. And the idea to replicate that in the US, obviously, makes sense. I just wanted to ask you, is the goal for the Axio-like brand in the US to sell a service in-territory only, or also out-of-territory like you are doing in Canada?
Speaker #8: But it's been quite successful for you as a brand in Canada, and the idea to replicate that in the U.S., obviously, makes sense. I just wanted to ask you: Is the goal for the Axio-like brand in the U.S. to sell a service in-territory only, or also out-of-territory like you are doing in Canada?
Speaker #6: Bonjour, Maher. It's Fred. Thank you for the question. We are indeed super excited about the launch of an Axio-like brand in the US. The short answer to your question is it's in territory only.
Aravinda Galappatthige: Bonjour, Maher. It's Fred. Thank you for the question. We are indeed super excited about the launch of an oxio-like brand in the US. The short answer to your question is it's in territory only in the US. But when you look at the upside potential, oxio in territory is already doing so well for us in Canada. We've reported our best subscriber performance in Canada in the past 13 years. Last quarter and this quarter was solid as well. And oxio is a big part of that. Now, if you contrast Canada and the US, the opportunity is even bigger in the US because in Canada, our penetration on Cogeco is already in the low 40%. But in the US, in totality, we're in the low 30s, and in half of our footprint, we're below 20% penetration.
Fréd Perron: Bonjour, Maher. It's Fred. Thank you for the question. We are indeed super excited about the launch of an oxio-like brand in the US. The short answer to your question is it's in territory only in the US. But when you look at the upside potential, oxio in territory is already doing so well for us in Canada. We've reported our best subscriber performance in Canada in the past 13 years. Last quarter and this quarter was solid as well. And oxio is a big part of that. Now, if you contrast Canada and the US, the opportunity is even bigger in the US because in Canada, our penetration on Cogeco is already in the low 40%. But in the US, in totality, we're in the low 30s, and in half of our footprint, we're below 20% penetration.
Speaker #6: In the U.S. But when you look at the upside potential, Axio in territory is already doing so well for us in Canada. We've reported our best subscriber performance in Canada in the past 13 years.
Speaker #6: Last quarter and this quarter was solid as well. And Axio is a big part of that. Now, if you contrast Canada and the US, the opportunity is even bigger in the US because, in Canada, our penetration on Cogeco is already in the low 40s.
Speaker #6: But in the US in totality, we're in the low 30s. And in half of our footprint, we're below 20% penetration. So you just start thinking about the possible upside from such a second brand, and it gets pretty exciting.
Aravinda Galappatthige: So you just start thinking about the possible upside from such a second brand, and it gets pretty exciting.
So you just start thinking about the possible upside from such a second brand, and it gets pretty exciting.
Speaker #8: Yeah, okay. Thanks for that precision. My second question is on the improving trends in the U.S. on the subscriber side. Obviously, it was quite noticeable in Q1.
Maher Yaghi: Yeah. Okay. Thanks for that precision. My second question is on the improving trends in the US on the subscriber side. Obviously, it was quite noticeable in Q1 compared to a year ago. But I just wanted to understand what you are giving up to improve those subs because you're kind of doing pretty much the same strategy that Charter and Comcast are doing in the US, which is repricing your base or repricing the offers in the marketplace for your internet service. For example, I can see you're selling one gig for $45 a month in Ohio right now, and the first month is free. That service used to be $75 a couple of months ago. So when I think about the objective here, how should we think about ARPU progression or ARPU negative impact in the US as you reprice your product to improve subs?
Maher Yaghi: Yeah. Okay. Thanks for that precision. My second question is on the improving trends in the US on the subscriber side. Obviously, it was quite noticeable in Q1 compared to a year ago. But I just wanted to understand what you are giving up to improve those subs because you're kind of doing pretty much the same strategy that Charter and Comcast are doing in the US, which is repricing your base or repricing the offers in the marketplace for your internet service. For example, I can see you're selling one gig for $45 a month in Ohio right now, and the first month is free. That service used to be $75 a couple of months ago. So when I think about the objective here, how should we think about ARPU progression or ARPU negative impact in the US as you reprice your product to improve subs?
Speaker #8: Compared to a year ago, but I just wanted to understand what you are giving up to improve those subs, because you're kind of doing pretty much the same strategy that Charter and Comcast are doing in the U.S., which is repricing your base or repricing the offers in the marketplace for your Internet service.
Speaker #8: For example, I can see you’re selling one gig for $45 a month in Ohio right now. And the first month is free. That service used to be $75 a couple of months ago.
Speaker #8: So when I think about the objective here, how should we think about our pool progression or our pool negative impact in the US as you reprice your product to improve subs?
Speaker #8: And when we come out of this transition, where do you expect revenue growth to land at?
Maher Yaghi: When we come out of this transition, where do you expect revenue growth to land at?
When we come out of this transition, where do you expect revenue growth to land at?
Speaker #6: Okay. Hi, Maher. It's Fred again. I'll start answering, and maybe Patrice will want to add a little bit on this one. First of all, when you look at our year-on-year decline in our pool, it's not because of a massive drop in acquisition prices for new customers.
Aravinda Galappatthige: Okay. Hi, Maher. It's Fred again. I'll start answering, and maybe Patrice will want to add a little bit on this one. First of all, when you look at our year-on-year decline in our PSU, it's not because of a massive drop in acquisition prices for new customers. It's because mainly of cord cutting. So some customers are cutting the cord on TV, and TV itself has a higher RPU than our internet product, but it comes with very little margins. So I would say that's the main driver. There is a bit of promotional activity for sure, and it is a fact, to your point, that new customers come in at a lower RPU than existing customers that are in Canada as well. But our improvement in our PSU trends that we're reporting this quarter is not because of any massive change on that front.
Fréd Perron: Okay. Hi, Maher. It's Fred again. I'll start answering, and maybe Patrice will want to add a little bit on this one. First of all, when you look at our year-on-year decline in our PSU, it's not because of a massive drop in acquisition prices for new customers. It's because mainly of cord cutting. So some customers are cutting the cord on TV, and TV itself has a higher RPU than our internet product, but it comes with very little margins. So I would say that's the main driver. There is a bit of promotional activity for sure, and it is a fact, to your point, that new customers come in at a lower RPU than existing customers that are in Canada as well. But our improvement in our PSU trends that we're reporting this quarter is not because of any massive change on that front.
Speaker #6: It's because, mainly, of course, cutting. So we're cutting—some customers are cutting the cord on TV. And TV itself has a higher ARPU than our internet product.
Speaker #6: But it comes with very little margins, so I would say that's the main driver. There is a bit of promotional activity for sure. And it is a fact, to your point, that new customers come in at a lower ARPU than existing customers.
Speaker #6: That's true in Canada as well. But our improvement in our PSU trends that we're reporting this quarter is not because of any massive change on that front.
Speaker #6: We just stay along with the market, and there has not been a massive change in pricing. Our improvement comes from execution. It comes from beefing up some sales channels that were previously underexploited, especially in those areas where our penetration is below 20%.
Aravinda Galappatthige: We just stay along with the market, and there has not been a massive change in pricing. Our improvement comes from execution. It comes from beefing up some sales channels that were previously underexploited, especially in those areas where our penetration is below 20%. And it comes from simplifying our pricing as opposed to reducing it. So that's how I'd characterize it. Patrice?
We just stay along with the market, and there has not been a massive change in pricing. Our improvement comes from execution. It comes from beefing up some sales channels that were previously underexploited, especially in those areas where our penetration is below 20%. And it comes from simplifying our pricing as opposed to reducing it. So that's how I'd characterize it. Patrice?
Speaker #6: And it comes from simplifying our pricing, as opposed to reducing it. So that's how it characterizes it.
Speaker #6: Patrice: No, I think you summed it up.
Patrice Ouimet: No, I think you summed it well. Happy to take other questions, but I think these were the main points.
Patrice Ouimet: No, I think you summed it well. Happy to take other questions, but I think these were the main points.
Speaker #2: Well, happy to take other questions, but I think these were the main points.
Speaker #8: Yeah, thank you. So I did look into that—the mix of PSUs that you have in the US—and when I look at Q1 '25, about 25% of your PSUs were on video.
Maher Yaghi: Yeah. Thank you. So I did look into the mix of PSUs that you have in the US. And when I look at Q1, Q2, Q2, about 25% of your PSUs were on video. And in Q1 this year, it's 24%. And then on home phone, it was 12% last year and 12% this year. So obviously, there's slightly less video as a percent of the overall PSU base in this quarter versus last year's Q1, but it hasn't moved that much. So I'm trying to figure out what's driving the 4% price decline per PSU in the US. And when should we expect that to improve?
Maher Yaghi: Yeah. Thank you. So I did look into the mix of PSUs that you have in the US. And when I look at Q1, Q2, Q2, about 25% of your PSUs were on video. And in Q1 this year, it's 24%. And then on home phone, it was 12% last year and 12% this year. So obviously, there's slightly less video as a percent of the overall PSU base in this quarter versus last year's Q1, but it hasn't moved that much. So I'm trying to figure out what's driving the 4% price decline per PSU in the US. And when should we expect that to improve?
Speaker #8: And in Q1 this year, it's 24. So, and then on home phone, it was 12% last year and 12% this year. So obviously, there's slightly less video as a percent of the overall PSU base in this quarter versus last year's Q1.
Speaker #8: But it hasn't moved that much, so I'm trying to figure out what's driving the 4% price decline per PSU in the US. And when should we expect that to—
Speaker #8: improve? Yeah.
Aravinda Galappatthige: Yeah. So what this analysis doesn't show, Maher, is which segments of TV customers are losing versus those that we're adding. So in many cases, we're losing the higher RPU TV customers, and we're adding lower RPU ones. So it would get into a pretty detailed analysis, and I'm sure you can talk about it with Patrice on the follow-up calls, but we've analyzed this in and out, and cord cutting is the main driver of the RPU decline. Of course, to your point, new customers also do come in on promotional rates at a lower rate, and that's also a factor. But our point is simply that the improvement in Q1 is not due to any material change in that trend.
Fréd Perron: Yeah. So what this analysis doesn't show, Maher, is which segments of TV customers are losing versus those that we're adding. So in many cases, we're losing the higher RPU TV customers, and we're adding lower RPU ones. So it would get into a pretty detailed analysis, and I'm sure you can talk about it with Patrice on the follow-up calls, but we've analyzed this in and out, and cord cutting is the main driver of the RPU decline. Of course, to your point, new customers also do come in on promotional rates at a lower rate, and that's also a factor. But our point is simply that the improvement in Q1 is not due to any material change in that trend.
Speaker #6: So what this analysis doesn't show, Maher, is which segments of TV customers we're losing versus those that we're adding. So, in many cases, we're losing the higher ARPU TV customers.
Speaker #6: And we're adding lower ARPU ones, so it would get into a pretty detailed analysis. And I'm sure you can talk about it with Patrice on the follow-up calls.
Speaker #6: But we've analyzed this in and out, and cord cutting is the main driver of the ARPU decline. Of course, to your point, new customers also do come in on promotional rates at a lower rate.
Speaker #6: And that's also a factor. But our point is simply that the improvement in Q1 is not due to any material change in that trend.
Speaker #8: Okay, one last question. In terms of the growth that we're seeing in Canada—obviously, it's quite noticeable as well. How should we think about these net adds on broadband in Canada as sustainable, from a sustainability point of view?
Maher Yaghi: Okay. One last question. In terms of the growth that we're seeing in Canada, obviously quite noticeable as well, how should we think about these net adds on broadband in Canada from a sustainability point of view? And can you maybe tell us what's giving you the advantage to load as many customers as you are? Is it oxio, or the Cogeco brand is also successful in the marketplace these days?
Maher Yaghi: Okay. One last question. In terms of the growth that we're seeing in Canada, obviously quite noticeable as well, how should we think about these net adds on broadband in Canada from a sustainability point of view? And can you maybe tell us what's giving you the advantage to load as many customers as you are? Is it oxio, or the Cogeco brand is also successful in the marketplace these days?
Speaker #8: And can you maybe tell us what's giving you the advantage to load as many customers as you are? Is it Axio, or is the Cogeco brand also successful in the marketplace these days?
Speaker #8: days? And prior
Aravinda Galappatthige: In prior quarters, including this one, it was a combination of both. It depends quarter by quarter. Sometimes network expansion helped. Less so in more recent quarters, the Cogeco brand has held its own over time, and then it's really oxio that's helped generate, I would say, differentiated growth in Canada versus some of our peers. And that's why we're so excited about an oxio brand in the US. As it relates to moving forward, as we've said, Q2, PSU growth in Canada will be more muted, but we're recovering a lot of that in wholesale revenue. Is that the new normal? Not necessarily. It's still a stage where people are experimenting. And as I said, the past couple of weeks have been a bit better.
Fréd Perron: In prior quarters, including this one, it was a combination of both. It depends quarter by quarter. Sometimes network expansion helped. Less so in more recent quarters, the Cogeco brand has held its own over time, and then it's really oxio that's helped generate, I would say, differentiated growth in Canada versus some of our peers. And that's why we're so excited about an oxio brand in the US. As it relates to moving forward, as we've said, Q2, PSU growth in Canada will be more muted, but we're recovering a lot of that in wholesale revenue. Is that the new normal? Not necessarily. It's still a stage where people are experimenting. And as I said, the past couple of weeks have been a bit better.
Speaker #6: Quarters, including this one, it was a combination of both. It depends quarter by quarter. Sometimes network expansion helped, less so in more recent quarters.
Speaker #6: The Cogeco brand has held its own over time. And then it's really Axio that's helped generate, I would say, differentiated growth in Canada versus some of our peers.
Speaker #6: And that's why we're so excited about an Axio brand in the U.S. As it relates to moving forward, as we've said, Q2 PSU growth in Canada will be more muted.
Speaker #6: But we're recovering a lot of that in wholesale revenue. Is that the new normal? Not necessarily. It's still a stage where people are experimenting and, as I said, the past couple of weeks have been a bit better.
Speaker #8: Okay. Great. Merci beaucoup.
Maher Yaghi: Okay. Great. Merci beaucoup.
Maher Yaghi: Okay. Great. Merci beaucoup.
Speaker #6: Merci. Thank you.
Aravinda Galappatthige: Merci.
Fréd Perron: Merci.
Operator: Thank you. Your next question comes from the line of Matthew Griffiths from Bank of America. Please go ahead.
Operator: Thank you. Your next question comes from the line of Matthew Griffiths from Bank of America. Please go ahead.
Speaker #9: And your next question comes from the line of Matthew Griffiths from Bank of America. Please go ahead.
Speaker #9: ahead.
Speaker #3: Oh, hi.
Frederic Perron: Hi. Good morning. Thanks for taking the question. So just going back to the US broadband sub picture that you're providing, is there a way to kind of share with us whether the improvements that you're expecting are going to be coming from reduced churn? Or you've mentioned sales channels as something that you've been working on improving. So is it a gross add difference going forward that we should be expecting as the driver? And then secondly, I think you've mentioned medium term as the time period for US broadband subs turning positive. Should I read medium term as 2027, or is it slightly further out than that? Is the next year too soon? Is that still near term? And maybe just finally on the transformation efforts.
Matthew Griffiths: Hi. Good morning. Thanks for taking the question. So just going back to the US broadband sub picture that you're providing, is there a way to kind of share with us whether the improvements that you're expecting are going to be coming from reduced churn? Or you've mentioned sales channels as something that you've been working on improving. So is it a gross add difference going forward that we should be expecting as the driver? And then secondly, I think you've mentioned medium term as the time period for US broadband subs turning positive. Should I read medium term as 2027, or is it slightly further out than that? Is the next year too soon? Is that still near term? And maybe just finally on the transformation efforts.
Speaker #3: So just going back to the US—good morning, thanks for taking the question. The broadband sub-picture that you're providing, is there a way to kind of share with us whether the improvements that you're expecting are going to be coming from reduced churn, or—you've mentioned sales channels as something that you've been working on improving.
Speaker #3: So, is it a gross add difference going forward that we should be expecting as the driver? And then secondly, I think you've mentioned 'medium-term' as the time period for U.S. broadband subs turning positive.
Speaker #3: Should I read 'medium-term' as, like, 2027? Or is it slightly further out than that? Is next year too soon? Is that still near-term?
Speaker #3: And maybe just finally, on the transformation efforts. So as you're progressing through this, working through the second year kind of checklist, for lack of a better word, what have you—what kind of details can you give us on what you've completed and what you're moving on to in that program?
Frederic Perron: So as you're progressing through this, working through the second-year kind of checklist, for lack of a better word, what kind of details can you give us on what you've completed and what you're moving on to in that program? Thanks.
So as you're progressing through this, working through the second-year kind of checklist, for lack of a better word, what kind of details can you give us on what you've completed and what you're moving on to in that program? Thanks.
Speaker #3: Thanks.
Aravinda Galappatthige: Sure. Hi, Matt. It's Fred. On your first question, the improvement in the US coming from churn versus gross new sales, we have initiatives in flight to keep improving our churn management and our retention, blocking, and tackling, but most of the improvement will come from gross new sales. It's the simple math of what I was saying before, which is in half of our footprint, our penetration is below 20%. So there is a real opportunity to deploy new sales channels in that footprint, plus our soon-to-be-launched second brand to materially grow our penetration in that footprint. On the definition of medium term, a handful of quarters is what we're shooting for right now, so it's not past calendar 2027 or even fiscal 2027. It's not beyond that. Our goal is shorter term than that.
Fréd Perron: Sure. Hi, Matt. It's Fred. On your first question, the improvement in the US coming from churn versus gross new sales, we have initiatives in flight to keep improving our churn management and our retention, blocking, and tackling, but most of the improvement will come from gross new sales. It's the simple math of what I was saying before, which is in half of our footprint, our penetration is below 20%. So there is a real opportunity to deploy new sales channels in that footprint, plus our soon-to-be-launched second brand to materially grow our penetration in that footprint. On the definition of medium term, a handful of quarters is what we're shooting for right now, so it's not past calendar 2027 or even fiscal 2027. It's not beyond that. Our goal is shorter term than that.
Speaker #6: Hi, Matt. It's Fred. On your first question, the improvement in the U.S. coming from churn versus gross new sales, we have initiatives in flight to keep improving our churn management and our retention blocking and tackling.
Speaker #6: But most of the improvement will come from gross new sales. And it's the simple math of what I was saying before, which is, in half of our footprint, our penetration is below 20%.
Speaker #6: So there is a real opportunity to deploy new sales channels in that footprint, plus our soon-to-be-launched second brand, to materially grow our penetration in that footprint.
Speaker #6: On the definition of medium-term, a handful of quarters is what we're shooting for right now. So it's not past calendar 2027, or even fiscal 2027—it's not beyond that.
Speaker #6: Our goal is shorter-term than that. But please just give us a bit of grace on that one, and we'll get there. But we have to see how the competitive environment evolves.
Aravinda Galappatthige: But please just give us a bit of grace on that one, and we'll get there. But it has to be, we have to see how the competitive environment evolves and give or take a couple of quarters, but we'll get there. That's our goal.
But please just give us a bit of grace on that one, and we'll get there. But it has to be, we have to see how the competitive environment evolves and give or take a couple of quarters, but we'll get there. That's our goal.
Speaker #6: And give or take a couple of quarters, but we'll get there. That's our goal.
Speaker #3: And
Speaker #3: on the transformation. Yeah. Yeah.
Patrice Ouimet: And on the transformation, yeah? Oh, sorry. Go ahead.
Patrice Ouimet: And on the transformation, yeah? Oh, sorry. Go ahead.
Speaker #3: Oh, sorry. Go ahead. No, no.
Maher Yaghi: No, no. I was just the transformation. Thank you.
Matthew Griffiths: No, no. I was just the transformation. Thank you.
Speaker #8: I was just the transformation. Thank you.
Speaker #3: Yes. Yeah. So, on the transformation, I would say that to your point of year one or two of the three-year program, the first year was more focused on cost optimization, which included the reorganization of our Canadian and U.S. businesses initially.
Patrice Ouimet: Yes. Yeah. So on the transformation, I would say to your point, we're in year two of the three-year program. The first year was more focused on cost optimization, which included the reorganization of our Canadian and US businesses initially and a number of other elements after. We had more to do on the cost front as well, optimizing the way we operate our chatbots, IVR systems, and there's a lot going on as well in the number of basically proactive maintenance and making sure we tackle issues in the systems before they become a customer-facing issue, which reduces truck roll. So there's a lot of these things still on the map for year two and year three. But I would say what's a bit newer in year two and three is more focused on revenue generation.
Patrice Ouimet: Yes. Yeah. So on the transformation, I would say to your point, we're in year two of the three-year program. The first year was more focused on cost optimization, which included the reorganization of our Canadian and US businesses initially and a number of other elements after. We had more to do on the cost front as well, optimizing the way we operate our chatbots, IVR systems, and there's a lot going on as well in the number of basically proactive maintenance and making sure we tackle issues in the systems before they become a customer-facing issue, which reduces truck roll. So there's a lot of these things still on the map for year two and year three. But I would say what's a bit newer in year two and three is more focused on revenue generation.
Speaker #3: And then a number of other elements after. We had more to do on the cost front as well: optimizing the way we operate our chatbots, IVR systems, and there's a lot going on as well in the number of basically proactive maintenance and making sure we tackle issues in the systems before they become a customer-facing issue, which reduces truck rolls.
Speaker #3: So there's a lot of these things still on the map for year two and year three. But I would say what's a bit newer in year two and three is more focused on revenue generation. We've talked about this before, but this was not the focus of year one.
Patrice Ouimet: We've talked about this before, but this was not the focus of year one. That has to do with the way we sell our product, the way we segment the market, and the way we have contacts with the market as well. Churn reduction is an element as well. As part of that as well, launching the second brand is the idea is to be able to tackle basically different segments of the market. It's more difficult to do with only one brand. I would say there's a lot going on. The last piece I would say is, as we started this a while ago, the opportunity to use AI to do some of this work was not there at that point, but it is today.
We've talked about this before, but this was not the focus of year one. That has to do with the way we sell our product, the way we segment the market, and the way we have contacts with the market as well. Churn reduction is an element as well. As part of that as well, launching the second brand is the idea is to be able to tackle basically different segments of the market. It's more difficult to do with only one brand. I would say there's a lot going on. The last piece I would say is, as we started this a while ago, the opportunity to use AI to do some of this work was not there at that point, but it is today.
Speaker #3: And that has to do with the way we sell our product, the way we segment the market, and the way we have contacts with the market as well.
Speaker #3: Churn reduction is an element as well. As part of that as well, launching the second brand—the idea is to be able to tackle basically different segments of the market.
Speaker #3: It's more difficult to do with only one brand. So I would say there's a lot going on. And the last piece, I would say, is as we started this a while ago, the opportunity to use AI to do some of this work was not there at that point.
Speaker #3: But it is today. So, we have a heavy emphasis on actually using AI and the latest and greatest to make this happen, rather than do it the traditional way.
Patrice Ouimet: So we have a heavy emphasis on actually using AI and the latest and greatest to make this happen rather than do it the traditional way. So hopefully that gives you some hints on what we're doing today.
So we have a heavy emphasis on actually using AI and the latest and greatest to make this happen rather than do it the traditional way. So hopefully that gives you some hints on what we're doing today.
Speaker #3: So, hopefully that gives you some hints on what we're doing today.
Speaker #8: Yeah, no, that's super helpful. And maybe—sorry, if I could ask one other thing. On the 20% share in some markets, has there been any—I'm sure you've looked into why that is.
Maher Yaghi: No, that's super helpful. And maybe, sorry, if I could ask one other thing. On the 20% share in some markets, has there been any? I'm sure you've looked into why that is. And maybe, can you share with us why is it so low in some markets? And what in your plan addresses that why and fixes it?
Matthew Griffiths: No, that's super helpful. And maybe, sorry, if I could ask one other thing. On the 20% share in some markets, has there been any? I'm sure you've looked into why that is. And maybe, can you share with us why is it so low in some markets? And what in your plan addresses that why and fixes it?
Speaker #8: And maybe can you share with us why it is so low in some markets? And what, in your plan, addresses that 'why' and fixes it?
Speaker #8: it? Okay.
Aravinda Galappatthige: Okay. It comes from three places. First, Ohio is the main part of that. You may remember that we bought the Ohio business four years ago or so, and it was already an overbuilder. So by definition, the share there was already lower, and there was a loss of share, unfortunately, through the integration at the time. The second is in newly built footprint. I think it's in newly built footprint over the past few years where we see an opportunity to execute better from a sales perspective there. We're not building those new network extensions anymore. We've stopped them shortly after I was named CEO a couple of years ago, but they do underindex in terms of sales, and we're now ramping that up.
Fréd Perron: Okay. It comes from three places. First, Ohio is the main part of that. You may remember that we bought the Ohio business four years ago or so, and it was already an overbuilder. So by definition, the share there was already lower, and there was a loss of share, unfortunately, through the integration at the time. The second is in newly built footprint. I think it's in newly built footprint over the past few years where we see an opportunity to execute better from a sales perspective there. We're not building those new network extensions anymore. We've stopped them shortly after I was named CEO a couple of years ago, but they do underindex in terms of sales, and we're now ramping that up.
Speaker #6: It comes from three places. First, Ohio is the main part of that. You may remember that we bought the Ohio business four years ago or so.
Speaker #6: And it was already an overbuilder, so by definition the share there was already lower. And there was a loss of share, unfortunately, through the integration at the time.
Speaker #6: The second is in newly built footprint. I think it's in newly built footprint over the past few years, where we see an opportunity to execute better from a sales perspective there.
Speaker #6: We're not building those new network extensions anymore. We stopped them shortly after I was an MCU a couple of years ago. But they do, on their index in terms of sales, and we're now ramping that up.
Speaker #6: And the last area is Florida, where Florida was typically focused on bulk sales, but we have a residential footprint there, where we think we can deploy more sales force.
Aravinda Galappatthige: The last area is Florida, where Florida was typically focused on bulk sales, but we have a residential footprint there where we think we can deploy more sales force. You add all those three things together, and that's how we get there. Ohio is the main one.
The last area is Florida, where Florida was typically focused on bulk sales, but we have a residential footprint there where we think we can deploy more sales force. You add all those three things together, and that's how we get there. Ohio is the main one.
Speaker #6: So you add all those strings, those three things together, and that's how we get there. But Ohio is the main one.
Speaker #8: Okay, that's great. Thank you so much.
Maher Yaghi: Okay. That's great. Thank you so much.
Matthew Griffiths: Okay. That's great. Thank you so much.
Speaker #8: much. Thank you.
Operator: Thank you. Your next question comes from the line of Drew McReynolds from RBC. Please go ahead.
Operator: Thank you. Your next question comes from the line of Drew McReynolds from RBC. Please go ahead.
Speaker #1: And your next question comes from the line of Drew McReynolds from RBC. Please go ahead.
Speaker #1: ahead. Yeah.
Patrice Ouimet: Yeah. Thanks very much. Good morning. And Fred, thanks for clarifying that last question. That's super helpful. Two others for me. Number one, on the Canadian broadband margins and, I guess, more importantly, the trajectory. I know revenue mix will drive cable margins for the industry going forward, but just would love to get your sense. Really good margin performance. We see Rogers at kind of stable revenues to almost 58%. And obviously, that's a little bit of a bigger scale. But what do you see as upside kind of medium term here on Canadian margin? And then just secondly, with respect to commercial revenues, so I guess business revenues, both in Canada and the US, it generally looks kind of flattish. And just wondering if there's anything to flag in that segment from the perspective of cable cos in general being under-penetrated in the business market, particularly S&B.
Drew McReynolds: Yeah. Thanks very much. Good morning. And Fred, thanks for clarifying that last question. That's super helpful. Two others for me. Number one, on the Canadian broadband margins and, I guess, more importantly, the trajectory. I know revenue mix will drive cable margins for the industry going forward, but just would love to get your sense. Really good margin performance. We see Rogers at kind of stable revenues to almost 58%. And obviously, that's a little bit of a bigger scale. But what do you see as upside kind of medium term here on Canadian margin? And then just secondly, with respect to commercial revenues, so I guess business revenues, both in Canada and the US, it generally looks kind of flattish. And just wondering if there's anything to flag in that segment from the perspective of cable cos in general being under-penetrated in the business market, particularly S&B.
Speaker #3: Thanks very much, good morning, and Fred, thanks for clarifying that last question—that's super helpful. Two others for me. Number one, on the Canadian broadband margins and, I guess more importantly, the trajectory.
Speaker #3: I know revenue mix certainly will drive cable margins for the industry going forward. But just love to get your sense—really good margin performance we see at Rogers, that kind of stable revenues, doing almost 58%.
Speaker #3: And obviously, that's a little bit of a bigger scale. But what do you see as the upside, kind of medium-term, here on Canadian margin? And then just secondly, with respect to commercial revenue—so I guess business revenues—both in Canada and the US, it generally looks kind of flattish, and I was just wondering if there's anything to flag in that segment from the perspective of cablecos in general being underpenetrated in the business market, particularly SMB.
Speaker #3: Just would like to get an update—just what your growth expectations are for that segment. Thank you.
Patrice Ouimet: Just would like to get an update just on what your growth expectations are for that segment? Thank you.
Just would like to get an update just on what your growth expectations are for that segment? Thank you.
Speaker #3: you. Yeah.
Speaker #6: It's great. So, good morning. So, in terms of margins, well, we've been increasing margins over the years in Canada, as you know. It comes from different elements.
Vince Valentini: Yeah. It's great. So good morning. So in terms of margins, well, we've been increasing margins over the years in Canada, as you know. It comes from different elements. There's a portion that's mixed, but a portion that comes through the cost reductions that we've been able to do. So it depends on the years, but typically, half a point to a point has been something we've been able to do. When you throw in acquisitions, obviously, it can change the mix, but we haven't done meaningful ones recently. So when you look at this full year, I would say versus where we are in Q1, we're probably going to be in a similar place. So we've had a good increase versus last year. But I would say, yeah, that's probably it.
Patrice Ouimet: Yeah. It's great. So good morning. So in terms of margins, well, we've been increasing margins over the years in Canada, as you know. It comes from different elements. There's a portion that's mixed, but a portion that comes through the cost reductions that we've been able to do. So it depends on the years, but typically, half a point to a point has been something we've been able to do. When you throw in acquisitions, obviously, it can change the mix, but we haven't done meaningful ones recently. So when you look at this full year, I would say versus where we are in Q1, we're probably going to be in a similar place. So we've had a good increase versus last year. But I would say, yeah, that's probably it.
Speaker #6: There's a portion that's mixed, but a portion that comes through the cost reductions that we've been able to do. So, it depends on the years.
Speaker #6: But typically, like half a point to a point has been something we've been able to do. When you throw in acquisitions, obviously it can change the mix.
Speaker #6: But we haven't done meaningful ones recently. So, when you look at this full year, I would say, versus where we are in Q1, we're probably going to be in a similar place.
Speaker #6: So we've had a good increase versus last year. But I would say, yeah, that's probably it. And then if your question is longer term, we do think as we continue to invest in automation and improvement in our operations—I gave a few examples on the call earlier.
Vince Valentini: If your question is longer term, we do think as we continue to invest in automation and improvement in our operations, I gave a few examples on the call earlier. These typically produce increasing margins as we're a lot more efficient in the way we operate. We'll keep on working on this in the future.
If your question is longer term, we do think as we continue to invest in automation and improvement in our operations, I gave a few examples on the call earlier. These typically produce increasing margins as we're a lot more efficient in the way we operate. We'll keep on working on this in the future.
Speaker #6: These typically produce increasing margins as we're a lot more efficient in the way we operate. So we'll keep on working on this in the future.
Speaker #7: In business segments.
Aravinda Galappatthige: In business segment.
Drew McReynolds: In business segment.
Speaker #6: Yeah, and for the business segment, yeah, it's been more flattish. This is actually an area, I would say, business for us is about 10% ish of our business.
Vince Valentini: Yeah. And for the business segment, yeah, it's been more flattish. This is actually an area I would say business for us is about 10%-ish of our business, and residential is the balance. So obviously, our focus has been more on residential. We do have some focus, I would say a bit newer focus on commercial. So we're going to be putting some efforts there. That being said, we also don't want to go into too many products on the commercial side. Given the size of the business, it's often not worth our while doing. So for now, I would say, yes, it's more neutralish, but we do feel that there is some upside in that business in both countries going forward. It will be less material than what we do in residential, though.
Patrice Ouimet: Yeah. And for the business segment, yeah, it's been more flattish. This is actually an area I would say business for us is about 10%-ish of our business, and residential is the balance. So obviously, our focus has been more on residential. We do have some focus, I would say a bit newer focus on commercial. So we're going to be putting some efforts there. That being said, we also don't want to go into too many products on the commercial side. Given the size of the business, it's often not worth our while doing. So for now, I would say, yes, it's more neutralish, but we do feel that there is some upside in that business in both countries going forward. It will be less material than what we do in residential, though.
Speaker #6: And residential is the balance. So obviously, our focus has been more on residential. We do have some focus, I would say a bit newer focus, on commercial.
Speaker #6: So we're going to be putting some efforts there. That being said, we also don't want to go into too many products on the commercial side, given the size of the business.
Speaker #6: It's often not worth our while doing. So, for now, I would say yes, it's more neutral-ish. But we do feel that there is some upside in that business in both countries going forward.
Speaker #6: It will be less material than what we do in residential, though.
Speaker #3: Yeah. Gotcha. Thanks very
Patrice Ouimet: Yep. Gotcha. Thanks very much.
Drew McReynolds: Yep. Gotcha. Thanks very much.
Speaker #3: much. Thank you.
Operator: Thank you. And your next question comes from the line of Stephanie Price from CIBC. Please go ahead.
Operator: Thank you. And your next question comes from the line of Stephanie Price from CIBC. Please go ahead.
Speaker #1: And your next question comes from the line of Stephanie Price from CIBC. Please go ahead.
Speaker #1: go ahead.
Speaker #5: Hi. Good
Stephanie Price: Hi. Good morning. I just wanted to circle back on Ohio. Net adds in the Ohio region improved sequentially again this quarter. Just curious about what you've done in that region to move it back to growth and your ability to use the same playbook to move to growth in the rest of the US.
Stephanie Price: Hi. Good morning. I just wanted to circle back on Ohio. Net adds in the Ohio region improved sequentially again this quarter. Just curious about what you've done in that region to move it back to growth and your ability to use the same playbook to move to growth in the rest of the US.
Speaker #5: Morning. I just wanted to circle back on Ohio. So, NetAdd and the Ohio region improved sequentially again this quarter. Just curious about what you've done in that region to move it back to growth, and your ability to use the same playbook to move to growth in the rest of the—
Speaker #5: US. Sure.
Aravinda Galappatthige: Sure. Hi, Stephanie. Without giving the entire playbook to our competitors, what I would say is we've deployed new sales channels in that footprint, and we're not done doing that. That's number one. Number two, we've simplified our pricing. Customers were telling us that our pricing was too complicated before, so we've made it more transparent, more simple. And then there's other blocking and tackling around analytics, customer-based management, more refined targeting, both of new customers and existing customers for upsell and retention. And then, of course, last but not least, that's the obvious place to start with our second brand. That's not in the results yet, but that's going to be in the future results.
Fréd Perron: Sure. Hi, Stephanie. Without giving the entire playbook to our competitors, what I would say is we've deployed new sales channels in that footprint, and we're not done doing that. That's number one. Number two, we've simplified our pricing. Customers were telling us that our pricing was too complicated before, so we've made it more transparent, more simple. And then there's other blocking and tackling around analytics, customer-based management, more refined targeting, both of new customers and existing customers for upsell and retention. And then, of course, last but not least, that's the obvious place to start with our second brand. That's not in the results yet, but that's going to be in the future results.
Speaker #6: Hi, Stephanie. Without giving the entire playbook to our competitors, what I would say is we've deployed new sales channels in that footprint, and we're not done doing that.
Speaker #6: That's number one. Number two, we've simplified our pricing. Customers were telling us that our pricing was too complicated before. So we've made it more transparent, more simple.
Speaker #6: And then there's other blocking and tackling around analytics, customer-based management, more refined targeting—both of new customers and existing customers for upsell and retention.
Speaker #6: And then, of course, last but not least, that's the obvious place to start with our second brand. That's not in the results yet, but that's going to be in the future results.
Speaker #6: And then, of course, last but not least, that's the obvious place to start with our second brand. That's not in the results yet, but that's going to be in the future results.
Speaker #1: And then you mentioned in the U.S., penetration is below 20%. One of the reasons was newly built-out footprints. It looks like you added about 3,000 homes passed in the quarter in the U.S.
Stephanie Price: Then you mentioned in the US, penetration below 20%. One of the reasons was newly built-out footprints. It looks like you added about 3,000 homes passed in the quarter in the US. Maybe you can talk a little bit about the opportunity there?
Stephanie Price: Then you mentioned in the US, penetration below 20%. One of the reasons was newly built-out footprints. It looks like you added about 3,000 homes passed in the quarter in the US. Maybe you can talk a little bit about the opportunity there?
Speaker #1: Maybe you can talk a little bit about the opportunity there.
Speaker #6: Yeah. I wouldn't say we're building much new footprint anymore, Stephanie, in the US. That's something that we've stopped, just because of the nature of the market.
Aravinda Galappatthige: Yeah. I wouldn't say we're not building much any more new footprint. Stephanie, in the US, that's something that we've stopped just because of the nature of the market. Any numbers that you see, such as that 3,000, is more the residual impact of either prior long-standing projects being completed or residual commitments to some local government. But we're not starting many new projects on that front. The opportunity is on filling the pipe, so to speak, and deploying some of the same tactics that I was talking about in your Ohio question in that footprint as well.
Fréd Perron: Yeah. I wouldn't say we're not building much any more new footprint. Stephanie, in the US, that's something that we've stopped just because of the nature of the market. Any numbers that you see, such as that 3,000, is more the residual impact of either prior long-standing projects being completed or residual commitments to some local government. But we're not starting many new projects on that front. The opportunity is on filling the pipe, so to speak, and deploying some of the same tactics that I was talking about in your Ohio question in that footprint as well.
Speaker #6: Any numbers that you see, such as that 3,000, are more the residual impact of either prior long-standing projects being completed or residual commitments to some local government.
Speaker #6: But we're not starting many new projects on that front. The opportunity is on filling the pipe, so to speak, and deploying some of the same tactics that I was talking about in your Ohio question, in that footprint as well.
Speaker #6: well. All right.
Stephanie Price: All right. Thank you very much.
Stephanie Price: All right. Thank you very much.
Speaker #5: Thank you very
Speaker #5: much. Thank you once again.
Operator: Thank you once again. Should you have a question, please press star, followed by the one on your telephone keypad. Your next question comes from the line of Jérôme Dubreuil from Desjardins. Please go ahead.
Operator: Thank you once again. Should you have a question, please press star, followed by the one on your telephone keypad. Your next question comes from the line of Jérôme Dubreuil from Desjardins. Please go ahead.
Speaker #1: Should you have a question, please press star, followed by the one on your telephone keypad. And your next question comes from the line of Jerome Dubreuil from Desjardins.
Speaker #1: Please go ahead.
Speaker #3: Hey, bonjour tout le monde. Thanks for taking my questions. First one, another one on the subscriber trends in the US going forward. You seem quite confident on that front.
Patrice Ouimet: Hey, Bonjour, tout le monde. Thanks for taking my questions. First one, another one on the subscriber trends in the US going forward. You seem quite confident on that front. I'm wondering if on top of the operational efficiencies that you're planning to roll out, is there any change on the pace of fiber building in your footprint that you have noticed maybe that leads you to this forecast?
Jérôme Dubreuil: Hey, Bonjour, tout le monde. Thanks for taking my questions. First one, another one on the subscriber trends in the US going forward. You seem quite confident on that front. I'm wondering if on top of the operational efficiencies that you're planning to roll out, is there any change on the pace of fiber building in your footprint that you have noticed maybe that leads you to this forecast?
Speaker #3: I'm wondering if, on top of the operational efficiencies that you're planning to roll out, is there any change on the pace of fiber building in your footprint that you have noticed, maybe, that leads you to this?
Speaker #3: forecast? The
Speaker #6: The forecast comes mostly from the execution things, Jerome, that we've been talking about on this call. I would describe the competitive environment as steady, with some puts and takes.
Aravinda Galappatthige: The forecast comes mostly from the execution things, Jérôme, that we've been talking about on this call. I would describe the competitive environment as steady with some puts and takes. But it's true that fiber penetration used to be nowhere in the US, and we're getting closer over time to what would be a stability point, the same way we've experienced that in Canada in the past and navigated it quite well. But I would say, by and large, it's the different measures that we've been explaining on this call.
Fréd Perron: The forecast comes mostly from the execution things, Jérôme, that we've been talking about on this call. I would describe the competitive environment as steady with some puts and takes. But it's true that fiber penetration used to be nowhere in the US, and we're getting closer over time to what would be a stability point, the same way we've experienced that in Canada in the past and navigated it quite well. But I would say, by and large, it's the different measures that we've been explaining on this call.
Speaker #6: But it's true that fiber penetration used to be nowhere in the U.S., and we're getting closer over time to what would be a stability point, the same way we've experienced that in Canada in the past and navigated it quite well.
Speaker #6: But I would say, by and large, it's a different measure that we've been explaining on this call.
Speaker #3: Okay, great, thank you. Second one from me: consolidated CapEx in the quarter was pretty much where we expected it to be, but there was quite the shift out of the US and into Canada.
Patrice Ouimet: Okay. Great. Thank you. Second one for me, consolidated CapEx in the quarter was pretty much where we expected it to be. But there was quite the shift out of the US and into Canada. I'm wondering if there's something to unpack there or if it's more of a timing thing.
Jérôme Dubreuil: Okay. Great. Thank you. Second one for me, consolidated CapEx in the quarter was pretty much where we expected it to be. But there was quite the shift out of the US and into Canada. I'm wondering if there's something to unpack there or if it's more of a timing thing.
Speaker #3: I'm wondering if there's something to unpack there, or if it's more of a timing thing.
Speaker #6: Yeah, it's more of a timing thing. The CapEx by quarter can be more volatile. But there was more CPE spend in Canada this quarter, which we won't have in the next few quarters.
Aravinda Galappatthige: Yeah. It's more of a timing thing. The CapEx by quarter can be more volatile, but there was more CPE spend in Canada this quarter, which we won't have in the next few quarters. So I would say overall, we're on track for the full year, but I would not take the trend of the Q1 and apply it to the full year. It's going to revert back to more normal numbers over the full year.
Patrice Ouimet: Yeah. It's more of a timing thing. The CapEx by quarter can be more volatile, but there was more CPE spend in Canada this quarter, which we won't have in the next few quarters. So I would say overall, we're on track for the full year, but I would not take the trend of the Q1 and apply it to the full year. It's going to revert back to more normal numbers over the full year.
Speaker #6: So, I would say overall we're on track for the full year, but I would not take the trend of Q1 and apply it to the full year.
Speaker #6: It's going to revert back to more normal numbers over.
Speaker #6: the full year. Okay.
Patrice Ouimet: Okay. Great. Merci beaucoup.
Jérôme Dubreuil: Okay. Great. Merci beaucoup.
Speaker #3: Great. Merci beaucoup.
Speaker #1: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Ouimet for any closing remarks.
Operator: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Romet for any closing remarks.
Operator: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Romet for any closing remarks.
Speaker #1: remarks. Okay.
Aravinda Galappatthige: Okay. Great. Thanks for being on the call today, and happy to take any other questions you have in the future. Have a good day.
Patrice Ouimet: Okay. Great. Thanks for being on the call today, and happy to take any other questions you have in the future. Have a good day.
Speaker #6: Great. So thanks for being on the call today, and happy to take any other questions you have in the future. So, have a good day.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.
