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Cogeco cable company considering steps towards wireless business: CEO

Cogeco Communications is considering a move into the wireless business within its own cable and internet territories in parts of Ontario and Quebec, chief executive Louis Audet said Thursday in a conference call with analysts.
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Cogeco Communications is considering a move into the wireless business within its own cable and internet territories in parts of Ontario and Quebec, chief executive Louis Audet said Thursday in a conference call with analysts.

The company's Canadian landline network serves southern parts of Ontario and Quebec, in competition with Bell Canada in both provinces and with Telus in parts of Quebec. It doesn't compete with Rogers or Videotron.

Audet said the Montreal-based company — Canada's only major internet and cable provider without a wireless arm — has avoided investments in the sector because of the high costs and risk of failure faced by new entrants.

But Cogeco has recently acquired licences for spectrum — the radio frequencies required for wireless communication — because conditions appear to have become more favourable, he said. 

Cogeco will also evaluate the possibility of participating in a federal auction of 600-megahertz spectrum that's scheduled for next year but would only do so in consultation with a partner, Audet said.

"That is why we've started devoting relatively small amounts of capital towards accumulating spectrum," Audet said. "If you want to enter into a partnership, you have to have something to offer."

Cogeco is most likely to adopt a hybrid business model, where it operates some of the infrastructure and other portions of the network are operated by a partner or by a mobile virtual network operator (MVNO). 

Advocates of MVNOs say they are a way to increase competition and push down prices, while critics say the widespread use of MVNOs would discourage investments in actual network infrastructure.

Last year, the Canadian Radio-television and Telecom Commission issued a pair of decisions that restricted how much access Sugar Mobile, an MVNO, could give its customers to the Rogers wireless network.

But the federal cabinet later ordered a review of that decision and, in March, the CRTC said it would conduct a "more fulsome" review of wholesale rates charged by the main carriers for access to their wireless networks.

Audet said he thinks it's more likely now that the regulatory environment for MVNOs will become more favourable.

"There's a growing frustration in the public with regards to the price of wireless services in Canada. This is being echoed at the government and regulatory level," Audet said.

He added that Cogeco also has a new technology bargaining chip because its extensive fibre network could be used to bring faster fifth-generation wireless services to its territory.

Audet made his remarks during a conference call to discuss third-quarter results from Cogeco Communications and its parent Cogeco Inc., which are both publicly traded companies controlled by the Audet family. 

Cogeco Inc., which gets most of its revenue from Cogeco Communications but also owns a Quebec-focused media business, had nearly $25 million or $1.53 per share of net income attributable to shareholders in its most recent quarter.

That was down 16.9 per cent from $30 million or $1.81 per share in the year-earlier fiscal third quarter.

Cogeco Communications Inc., which also operates a cable and internet business in the United States through Atlantic Broadband and the Peer 1 data centre business in several countries, had $61.3 million or $1.24 per share of net income.

That was down about 20 per cent from the year-earlier quarter.

Cogeco Inc.'s overall revenue was up 11.6 per cent from last year at $668.9 million, including $637.1 million from its main subsidiary.

Shares of both companies rose nine per cent Thursday but remained near the low end of their 52-week range.

Cogeco Inc. subordinate voting shares closed at $63.18, up $5.20, while Cogeco Communications shares closed at $70.93, up $5.89.

 

Companies in this story: (TSX:CCA, TSX:CGO, TSX:BCE, TSX:RCI.B, TSX:T)

David Paddon, The Canadian Press




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