Co­geco con­sid­er­ing wire­less: CEO

The Beacon Herald - - BUSINESS - DAVID PAD­DON THE CANA­DIAN PRESS

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.

Yet 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.

Later, the fed­eral cab­i­net 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 fifth­gen­er­a­tion 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.

THE CANA­DIAN PRESS FILES

Co­geco Com­mu­ni­ca­tions is con­sid­er­ing a move into the wire­less busi­ness within its own ca­ble and in­ter­net ter­ri­to­ries.

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