Cogeco Communications Announces Q3 2025 Financial Results and Canadian Wireless Launch

Executive Summary

• Cogeco Communications reported Q3 FY2025 financial results for the period ended May 31, 2025, alongside an update on its Canadian wireless service launch.
• The company revised its full-year fiscal 2025 financial guidelines, lowering revenue projections to a low single-digit decline and net capital expenditures to $600–$650 million, while maintaining stable adjusted EBITDA and increasing free cash flow expectations.
• Consolidated revenue decreased 2.7% to $730.7 million, driven by declines in both American and Canadian telecommunications segments, though adjusted EBITDA margin expanded to 49.6% due to cost efficiencies.

Key Details

• Q3 FY2025 Financial Highlights (Three months ended May 31, 2025):
  • Revenue: $730.7 million (down 2.7% / 4.1% constant currency).
  • Adjusted EBITDA: $362.4 million (down 0.9% / 2.4% constant currency); Margin of 49.6%.
  • Profit for the Period: $73.3 million ($1.64 diluted EPS).
  • Adjusted Profit Attributable to Owners: $77.2 million ($1.82 adjusted diluted EPS).
  • Free Cash Flow: $143.9 million (up 63.2% / 61.5% constant currency).
  • Net Capital Expenditures: $125.5 million (down 25.5% / 26.8% constant currency).
  • Cash Flows from Operating Activities: $400.8 million (up 20.1%).
• Segment Performance:
  • American Telecommunications: Revenue decreased 3.5% (6.6% constant currency) due to subscriber base decline, particularly in entry-level services, and a shift to Internet-only plans. Adjusted EBITDA decreased 0.5% (3.7% constant currency).
  • Canadian Telecommunications: Revenue decreased 1.8% due to lower revenue per customer (decline in video/wireline phone subscribers) and competitive pricing, partially offset by high-speed Internet additions. Adjusted EBITDA decreased 1.5% (1.3% constant currency).
• Operational Updates:
  • Wireless Launch: First cohort of users is already on the service; expansion into 12 Canadian markets (Alma, Magog, Rimouski, Saint-Georges, Saint-Hyacinthe, Saint-Sauveur, Trois-Rivières in Québec; Brockville, Chatham, Cobourg, Cornwall, Welland in Ontario) over coming weeks, with full geographic deployment anticipated in fall.
  • Fiber Expansion: Added close to 9,500 homes passed during Q3, mostly in Canada.
• Fiscal 2025 Revised Guidelines:
  • Revenue: Low single-digit decline (previously stable).
  • Adjusted EBITDA: Stable.
  • Net Capital Expenditures: $600–$650 million (previously $650–$725 million).
  • Net Capital Expenditures (Network Expansion): $110–$150 million (previously $140–$190 million).
  • Capital Intensity: 20.5%–22.5% (previously 22%–24%).
  • Capital Intensity (Excl. Network Expansion): 16.5%–18.5% (previously 17%–19%).
  • Free Cash Flow: Stable (previously decrease of 0%–10%).
  • Free Cash Flow (Excl. Network Expansion): Stable (previously decrease of 0%–10%).
• Dividend Declaration:
  • Board declared a quarterly eligible dividend of $0.922 per share, an 8.0% increase from $0.854 in the comparable quarter of fiscal 2024.
• Balance Sheet (As of May 31, 2025):
  • Cash and Cash Equivalents: $244.8 million.
  • Total Assets: $9.9 billion.
  • Net Indebtedness: $4.6 billion.
  • Equity Attributable to Owners: $3.1 billion.

Notable Quotes

• "Our financial results for the third quarter of fiscal 2025 were notable for our strong Canadian Internet subscriber loading, efficiencies-driven margin expansion and significant free cash flow," stated Frédéric Perron, President and CEO.
• "We are deeply excited to ramp up our wireless customer base in Canada over the coming weeks, adding to our prior launch of a similar service in the U.S. last year. Wireless will become a powerful tool to retain and grow our North American wireline customer base over time."
• "We continued to solidly grow our Canadian Internet customer base for yet another quarter. While we experienced higher-than-usual customer losses in the U.S., this was partially caused by a few temporary factors. We are implementing several go-to-market enhancements as part of our transformation, and are confident that our U.S. customer trends will improve as these initiatives are executed over the coming quarters."