Cogeco Communications Inc.

And welcome to COGICO, Inc. and COGICO Communications, Inc. Q1 2023 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Ouimet, Senior Vice President and Chief Financial Officer of COGICO, Inc. and COGICO Communications, Inc. Please go ahead, Mr. Ouimet.

Thank you. So good morning, everybody, and welcome to this first quarter conference call, which Philippe Jeté and I will present as usual. Before we begin this call, I'd like to remind listeners that the call is subject to forward-looking statements, which can be found in the press releases issued yesterday. So please go ahead, Philippe. Thank you, Patrice.

Good morning, and thank you for joining us for this first quarter results of fiscal 2023. But before we start, on behalf of COGECO's management and myself, we would like to extend our warmest wishes to all of you for the upcoming year. So let's now start the conference call. Cogeco's financial performance was in line with our expectations in the first quarter, despite the more challenging economy and competitive environment in the United States and Canada. Nonetheless, our reliable high-speed network Innovative digital product offering and local customer service have enabled us to connect new homes and customers as part of our network expansion projects. On the radio side, our radio stations remain at the top of the ratings, confirming once again our leadership position in this market, even if we are operating in soft advertising markets. So let's start with our US operations. During Q1, we pursued our fiber to the home network expansion where we added more than 17,000 homes passed during the quarter. This expansion is part of a program expected to grow homes passed by 5% in fiscal 2023, which is in addition to the 4% we added in fiscal 2022. In Ohio, all the issues encountered for the transition to BreezeLine's brand and systems are now behind us and customer service is back to our quality standard. As we said in our last conference call, we expected a loss of customer in Ohio during the quarter following a rebranding and systems migration. And while net customer loss improve in Q1 versus Q4, it remained high. So we still have work to do, work on our plate to grow our customer base in this market. We also pursue the second phase of OIO's integration by launching our IPTV product in the region to new video customers in December. and will make it available to existing customers this month, which is part of our focus on increasing ARPU in this market. As of network expansion projects in New Hampshire and West Virginia, we are making good progress and we have intensified our marketing efforts. Moving on to the Canadian operations. We accelerated our construction efforts to connect more homes in unserved and underserved communities in Quebec and Ontario, where we added about 20,000 homes passed during this quarter. We remain on target to add about 3% home pass in fiscal 2023, which is in addition to the 2% added last year. These fiber to the home expansion projects are primarily done in partnership with governments and deployed in areas which do not currently have high-speed internet providers. For mobile, we remain determined to launch a service in Canada as we now see less risk and greater clarity with strong government support for the new CRTC MVNO framework to be able to create sustainable wireless competition where we already operate broadband networks. As the last regulatory details and the final wholesale terms and conditions are becoming available, we are preparing our own commercial plans, and we will have more to share before the end of this fiscal year. Now let's discuss CogicoMedia. In the ratings competition, our radio stations are again at the top of the ratings for the numerous audience surveys. While the market remains challenging, we continue to expand our multi-platform audio content options with an emphasis on digital ad tech solutions. Now Patrice will discuss our financial results.

Thank you, Philippe. So during the first quarter, revenue at Cogico Communications was up 2.3% and adjusted EBITDA up 1.8% in constant currency when compared to the last year, which reflects organic growth at Cogico Connections and stable revenue at BreezeLine, partly offset by higher operating expenses in both segments. Capital intensity was at 25.8% compared to 19.6% last year due to increased activity related to network extensions in both countries. Excluding those network expansion projects, capital intensity was 17.2%, which is approximately the same level as last year. Free cash flow decreased by 20% to $105.7 million in constant currency due to higher capital expenditures related to the network expansion investments and interest expense, partly offset by lower acquisition and integration costs, higher EBITDA, and current income taxes. Excluding network expansion projects, free cash flow and constant currency would have increased by 10.6%. In the first quarter, communications continued to be active in the share buyback program at a faster pace than the previous quarters based on the low stock price, with the purchase of 512,000 shares for $37 million. And in November, we amended our buyback program to increase it to 10% of the public flow. A dividend of 77.6 cents per share was declared for the quarter, which is an increase of 10.1% versus the prior year, reflecting confidence in our growth strategy. Let us now look at the performance within the segments. In the U.S., BreezeLine's revenue and constant currency remained stable in the first quarter, mainly as the benefit of a high-value product mix. and rate increases were offset by the impact of a lower customer base in Ohio. EBITDA decreased by an expected 3.4% in constant currency, reflecting stable revenue and unusually low spending in marketing and advertising, and less staff last year in Ohio while the assets were still operated under the previous owner's brand. As expected, we had an elevated number of internet customer disconnections. This was driven primarily by the remaining impact of a rebranding and customer management and billing systems migration in Ohio in fiscal 22, and to a lesser extent due to the impact of the high inflation on customer spend and the resulting increase in competition, notably for entry-level products. The product mix improved with a greater proportion of new connections taking faster internet speeds and therefore driving a higher average revenue per unit. Overall, the number of internet customers decreased by 14,000 during the quarter, with 10,000 related to Ohio. The video and phone customer losses reflect cord cutting for some customers, which was slightly more impacted by the high inflation environment. Turning to our Canadian operations, Cogical Connections revenue increased by 4.8% in constant currency relative to the same quarter last year. mainly due to the cumulative effect of an increased Internet service customer base and higher average revenue per unit driven by good product mix and rate increases. EBITDA increased by 6.4% in constant currency, mainly from revenue growth and efficiencies resulting from a restructuring made in the fourth quarter of fiscal 22, partly offset by higher marketing expenses to drive future growth. The 2,500 Internet customer additions in the first quarter were lower than last year, reflecting a slower activity in the industry and a strong quarter last year in the context of the pandemic. The Canadian business is also improving its ARPU for the Internet product by having an improved customer product mix. The video and phone customer losses reflect cord cutting for some customers, especially in the context of a high-inflation environment. As it relates to Cogeco Inc., in the first quarter, revenue increased by 2.4% and EBITDA increased by 2.3% in cryptocurrency. Radio operations revenue increased by 2.5% while the advertising market remained soft. As for buybacks, Cogeco Inc. acquired 28,000 shares during the quarter and subject to the approval of the TSX, the Board of Director has approved a renewal of the NCIB program for up to 325,000 shares for the coming year. A dividend of 73.1 cents per share was declared for the quarter, which is an increase of 17% versus last year. Now, let's discuss the financial guidelines. The lowered and expected customer base in Ohio, and to a lower extent, the increasing macroeconomic pressure on customer spending and a resulting competitive environment have left led both corporations to revise the financial guidelines for revenue, EBITDA, and CapEx, which were originally issued in July. Free cash flow projections remain the same as previously disclosed. On a constant currency and consolidated basis, Cogico Communications expects to grow its revenue and EBITDA in the range of 0.5 to 2%. We're now expecting to spend from $700 to $775 million in CapEx, still including $180 to $230 million in growth-oriented network expansions, resulting in a capital intensity of 24% to 26%, or excluding those extensions, 17% to 19%. At BreezeLine, we now expect low single-digit growth in both revenue and EBITDA on a constant currency basis, reflecting a higher value product mix and growth in the internet service customers outside of Ohio for the full year. partly offset by lower customer base in Ohio. If it were not for the Ohio impact, we would have expected a mid-single-digit growth in the US, as we were expecting originally. Revenue and EBITDA at BreezeLine, under the new guidance, are anticipated to be higher in the second half of the year than the first half. In terms of quarterly cadence, we anticipate a mid-single-digit decline in revenues and EBITDA in the second quarter of the year, due to elevated EBITDA we recorded last year, as we had less costs in Ohio prior to the migration to our brand and our systems. This is expected to be followed by sequential growth in revenue and EBITDA in Q3 and Q4. At Cogico Connection in Canada, We continue to expect low single-digit growth in revenue and EBITDA, reflecting stability in our traditional operations and growth in our newly built expansion areas in Quebec and Ontario, partly offset by video and phone cord cutting due to the current high inflation environment. On the quarterly results, Cogeco Connections EBITDA growth in the second half of the year should be more neutral, as we've had price increases at different moments last year, as well as some year-end adjustments in Q4. As for the Q2 results, we do expect modest year-over-year growth in revenue and EBITDA in Canada. So I'll turn the call over now to Silip for concluding remarks.

Thank you, Baptiste. As we pursue our journey for sustainable growth, COGECO was pleased to become a signatory to the Corporate Nights Action Declaration on Climate Policy Engagement during COP27. The declaration aims to promote effective climate policies consistent with the Paris Agreement through ongoing engagement with governments and key industry associations. In addition, we were once again delighted that our corporate governance practices have been recognized by the Globe and Mail, board games, as among the best within Canadian family control dual-class public corporation. And now, Patrice and I will be happy to answer your questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you're using a speakerphone, please lift the handset before pressing any keys. First question comes from Maher Yagi at Scotiabank. Please go ahead.

Oui, bonjour. Thank you for taking my questions. I want to just maybe start with your U.S. operations and try to really understand maybe if you can break down what is causing the elevation in churn. You mentioned the Ohio business as the main culprit here in terms of the results for subscriber losses in the quarter. Can you explain or let us know what is the main culprit of this decline other than your current continued integration of the brand, I suppose there are also other reasons like, you know, increasing competition, you know, who is acting in your marketplace to take share from you. And outside of Ohio, are you seeing also increased pressure? If so, on which service, who is the competing companies that are, you know, coming in and trying to take share. You know, especially I'm trying to understand the impact of fixed wireless as well as potentially other cable operators trying to take share from the U.S. I have a follow-up question after that.

Good morning, Mayor. Yeah, so in Ohio, as you know, it's a three-player market for wireline services, so there's two formerly cable companies and one phone company that's mainly in DSL. And basically when we, because we had to rebrand, obviously it was a carve-out business. When you do this, you change the name and you change the systems, the bills also. It provides customers an ability or a moment to think about their services and And basically in this market, again, it's a three-player market. There's also fixed wireless, which is new. I would say fixed wireless in general is not something we're seeing across the board. It's a bit more prevalent in Ohio or in our networks. And that's one additional source of competition in the region. We did expect to have less customer losses in Q1 in Ohio than in Q4, and that's what happened. This will be true in the future as well. We do expect those losses to significantly reduce over time as we go throughout the year, but there will be some in Q2 and we'll see about Q3 and Q4. In the rest of the business, I would say overall there is a bit more competition in the industry, not necessarily where we operate in particular. but this is driven partially by what's happening with FWA, and it has had some impact on the pricing and the acquisition activity of some players in the U.S. So there's a bit of that. So we did have a small loss of customers in Q1 outside Ohio, as you saw, but we are expecting that this will turn for the balance of the year.

May I complement this by saying Just adding that in Ohio, remember that it's not just a carve-out and a change of system. We change brands, so we had lower marketing activities last year. We didn't want to market the previous brand in the market, so we awaited our brand to be launched, and therefore now we're more active on marketing than we were, and we're still ramping up. So just expect that we will be even more present in the market. in Ohio.

Okay. And how should we look forward to Q2 in terms of trends in the U.S. for internet loading? You mentioned that things are expected to improve, but are we looking to grow internet subs in the U.S. in Q2 or continue to see losses? My second question was on the wireless. I see that you continue to, you have been adding staff and executive and employees in your wireless project. Can you maybe give us an update on any changes or any advancement on on that project that could be noteworthy at this point?

Sure. I'll take the first one. For Q2, obviously, we don't guide specifically on the PSUs because this is more volatile and also it's always a trade-off between ARPUs and volumes, and we try to strike a balance there. But we do expect from what we're seeing so far that Q2 will provide a positive number outside Ohio. because it was a bit unusual to have it as a negative number in Q1. And in Ohio, we do expect loss of customer, but it will be normally quite lower than what we've seen in Q1. And in Ohio, I just want to mention also, as we had planned all along, we have introduced an IPTV product on schedule, so this will help for a portion of customers. It will also help with the infrastructure investments we're making, as it will provide an ability to optimize the network. So this was planned all along, and it's part of the future activities.

For mobile, I know it was frustrating to be waiting so long for the terms and conditions, the time to be released by the CRTC. We have now... an understanding. It's a good thing we were waiting to see the full details. The CRTC have inserted in there another requirement to meet, which is to be commercially operational somewhere in Canada. It's not very stringent, but we will adapt our plans in the coming weeks and months to revise our strategy. We have to wait for the T&Cs to be final, final, final. We think we're very close to that, but we need to give the CRTC a closure to this process, start negotiations under the MVNO framework with the MNOs, as well as some parallel commercial conversations and agreements that will take place as we firm our plans. We have a good team in place today. They've been working hard in the past two years as we prepare our capabilities and experience. We are going to continue to add to this team. And as I said, before the end of the fiscal, when everything will be known, we will have more to say on commercial launch plans.

Merci, Philippe.

Maybe I could just simply add this. Maybe you noticed too, but we have spectrum to cover 91% of our operating broadband footprint today. So that condition we were expecting, we largely meet today, but we need spectrum as well. So we continue to work getting the appropriate amount of spectrum in our portfolio.

Thank you. Next question comes from Vince Valentini at TD Securities. Please go ahead.

Thanks very much. Good timing for my question to segue off what you were just talking about there, Philippe. Can you just clarify on those terms and conditions that you only have to own some amount of spectrum anywhere that you want to be in MVNO? There's no requirement to have a certain amount of it. So, I mean, you already have enough to qualify. All you need is an operating wireless network in some region to fully qualify for the current rules. Is that correct?

That's correct. We have the same understanding. We need to own spectrum, obviously, to gradually shift from leasing capacity on the incumbents network to moving to our own network. If you don't have enough capacity, there will be difficult eventually to transition. But for the first year, expect that we are going to lease capacity and operate mostly focus on the market to take shares in the market to welcome customers on the Cogeco network and down the road in a very in the most capital efficient manner we'll build our network to build enough coverage and capacity and transition gradually the subscribers to our network so we still have time to ramp up our spectrum position there's no minimum but well You need to have some spectrum to be eligible, but there is no minimum requirement just to enter the MVNO framework.

Cool. The second question is on the rural expansions and the sub-ads. Can you give us a little bit more? You mentioned the homes passed, but I'm curious in terms of actually connecting subscribers and how much of a lag effect there is. Did you add some rural customers in these new regions in the first quarter, and would you expect that to ramp up in any meaningful way in Q2?

Yes, we did have some. So we're getting started in Canada, and the U.S. is even newer. So we had almost a very small amount in the U.S., but it's starting. In Canada, we had some in Q1 as part of the numbers. And we do expect that, yes, it will ramp up as we add more homes throughout the year. The financial impact of this will be more next year as we're able to then generate revenue and benefit from it.

And ramping up in Q2, Patrice, are we talking like a couple of thousand potential ads in these new territories?

Yeah, I think that would be reasonable to overall have a couple of thousand, yeah.

And my last question, Bell has recently notified customers in Ontario and Quebec of a $5 price increase for internet in January. I just wanted you to remind us what your potential schedule is for rate increases.

So we actually had our rate increases in September. So this is already done. We have a different schedule.

Thank you. Thank you. Next question comes from Stephanie Price at CIBC. Please go ahead. Good morning. Thanks for taking my questions.

You mentioned that it's unusual to see Q1 net-add losses in the U.S. outside Ontario. Just hoping you could dig a little bit deeper into the regions where you saw the most competitive pressures in Q1 and the levers you're pulling as you return to growth in or expect to return to growth in Q2 in those regions.

Sure. So we operate in 12 states. So we do have different variables in different states. So in some areas, we have competition that's only DSL. Some areas where you'll have a bit of fiber. Actually, the fiber count is not that big, and it hasn't changed, actually, recently in the U.S., which is often a question I have. It's at 15% approximately based on the number of customers we have in the U.S. outside Florida. And there's some areas where we have three-player markets, even outside Ohio. So I would say it's a bit spread out, yes.

Okay, thanks. And the press release also mentions several cost optimization initiatives. Just curious if you can walk us through what those look like and the materiality of them.

Well, in general, we always work in optimizing our operations, customer-facing operation in the field. There's also the back office optimization. These are ongoing quarter over quarter, so there's a component to create innovative product and services it is optimizing by releasing some legacy system there's also as we have a very very strong focus on broadband the talent and the teams and the company are focused in building more broadband and than the older legacy product and services. And then the back office with a lot more efficient systems that were rolled out in the past four or five years, we now are at the point where we can extract significant benefit from DSS, OSS, and ERP platforms. And we will continue to add on a quarter-to-quarter, year-over-year improvement in operations.

Great, thank you. And just final one for me is on capital allocation. I know you recently increased the NCIB. Just curious how you're thinking about the uses of capital between dividends, buybacks, and M&A here.

Sure. So, on the dividends, we try to have stability. So, we've been growing, so at Cogeco Communication, we've been growing the dividend at about 10% per year in the last five to seven years. So, we just did that last quarter. So, So I would say this one is fairly simple, and we try to keep the same rate for the full year. In terms of the buybacks, this is something we can ramp up or down. We did see an opportunity as the stock was quite low to ramp it up. The M&A is something obviously that's more long-term. So when we bought Ohio, we added more debt coming from this. So right now we're slightly above our target of three times of debt to EBITDA on a consolidated basis. So we have capacity to do more, but obviously we have to find the right targets. At the same time, given where we are, the size of the transactions we would be looking at right now would be more on the smaller than the larger side.

Great. Thank you very much.

Thank you. Next question comes from Jerome Dubril at Desjardins.

Please go ahead. Thanks for taking my questions. First one is on the reduction in the CapEx plans. We have seen the guidance update from last night. The release indicates there's no change on the network extension projects. Can you comment on the nature of the CapEx reduction then, please?

Well, we have a significant expansion program in Canada and the U.S. There's a number of external dependencies from governments to utilities. So we are rolling out, incurring here and there some delays. They could be permitting. They could be construction-related. So we're adjusting the capital outlay. But in the end, we're also – we have – intention to keep the cash flow guided previously in line. So we are going to continue to build and activate as close as possible after the sales of these new home paths to generate revenue and EBITDA. But there is always an opportunity even if construction costs are on one side increasing opportunity to optimize our construction work and be more efficient. So, all in all, altogether, we felt we could reduce the capital outlay, not impacting too much of the DA and not cash flows.

Okay, great. And the second question for me, you know, we've seen a few updates on the potential cost of the DOCSIS 4.0 migration during the quarter. I don't expect you to jump the gun on the migration there, but I wonder if you have an update on these costs or maybe on the numbers that we have heard from some of the peers, if you think these estimates could make sense in your context as well.

Well, DOCSIS is a standard that is developed by Cable Labs. Cable Labs is actually owned by the industry of cable codes in North America and abroad as well. There are lots of members, parts of Cable Labs. So what's true in terms of cost for most players is also true for the others. What's more important here is really what the market needs. So DOCSIS 4 is a tool in the toolbox. We knew it was coming long ago and we are first and foremost focused on where is our offering at, what does the market demand, and from that point of view we know and we want to stay ahead of the market curve. So we have a very powerful platform with DOCSIS 3.1 today. A significant portion of the activations went from more than 200 megabits now to closer to 400 and 500 megabits. DOCSIS III supports that very well, and we are more regional and rural in our footprint, so the number of homes passed per node is to our advantage in highly dense areas and footprint. more density, but they need to adopt newer technology faster than we will in our regional footprint.

Yes, good points. Thank you.

Thank you. Next question comes from Tim Casey at BMO. Please go ahead.

Yeah, thanks. A couple for me. One question on the Canadian operations. It certainly appears that Bell has ramped up the promotional activity and really trying to play to the marketing of fiber strengths. I'm wondering if you can comment on that and if you're seeing that in the month-to-month kind of market activity. And second, back to the DOCSIS migration topic, Are you fully committed to DOCSIS or would you consider a variable approach with respect to fiber based on a particular market density or economic standing? Do you think would fiber be part of a solution or are you completely committed to a hybrid fiber coax plant. Thank you.

These are two good questions, Tim. Thank you. So the first one is for what Bell is doing in the market. Again, we have to look at this from the demand and the offer. So they are introducing, obviously, very fast speed, but to be able to attract customer attention, they need to discount them very, very low. We've seen price points of $60 to $80 in the market. So that already suggests to you that there is not a large number of segments in the market that are awaiting these speeds to be sold at a reasonable price. So they have to discount them fairly heavy. So that's for the bell part of your question. The DOCSIS part of your question, it has been it will be always a mix of fiber and other technology. We have a large tool kit. There is a number of different scenarios in the marketplace from the residential market to the bulk market to small business, medium business, industrial and large enterprise. They all require a different solution. We have always for For example, in the Balkan commercial and enterprise market, delivered fiber to the premise or fiber to the customer for more than 10 years. So there is a lot of fiber in our network, and year over year and even week over week, we calibrate the network using the right mix of COAX and DOCSIS where it's HFC. and everything new is fiber all the way to the customer. And there are some place where the man actually moves a bit faster and we adjust the network with more fiber, if not fiber to the end, to the end point. So DOCSIS 4 is not a blanket solution. It will be part of the toolkit and we will calibrate all the solutions to meet the demand and stay ahead of the demand curve.

Thank you very much.

Thank you. Next question comes from Matthew Griffiths at Bank of America. Please go ahead.

Hi, good morning. Thanks for taking the question. First off, I just wanted to return to the wireless question if I could. Do I understand like your position correctly if I kind of paraphrase it as you're going to have to build a network a wireless network somewhere within your footprint first, and then you'll have to go to the incumbent to start negotiating rates that would apply for the kind of MVNO usage while elsewhere, while you build out that footprint. I mean, is that the path that you're currently on?

So the new eligibility requirement is to have something commercially available somewhere in Canada. We'll define down the road what that really means to us, but we will certainly meet that requirement from the CRTC. Now, the negotiations among different partners, there were conversations in previous years. They will continue. What the CRTC really means is that we can not benefit from the regime until we've launched something somewhere, and we're going to meet that. But discussions or conversations don't need to wait until we have the lights on somewhere to start.

Okay, so you can negotiate rates, have clarity on what your economics potentially would be, and then take the next step to proceed if it makes sense. And if by some chance it doesn't make sense, then your bill decision could be altered. Is that correct?

That's correct. It's more just a tiny bit more complex than that because there are many players in the market. There are three dominant MNOs and there are combinations of things. So it's not just a binary consideration.

Right.

Okay.

No, that makes sense. Thanks for that clarity. And then just on the U.S., market uh the broadband market in particular um you know i see projections of what the uh what you know the sell side is expecting for broadband net ads in the us which is you know really a de minimis number for the next couple of years you know is that in line with how you see the markets and particularly you're like a sliver of the u.s market so do you feel as though that applies to you equally, or do you see a different outlook for the regions you operate in? And does that factor into your comments about broadband net-add growth as we go through the year? Thanks.

Well, the existing markets are calmer than they used to. We see very, very low churn rates in our legacy footprints, so there is less movement in the market. And new ads come from edging out or addition, population, demographic changing. But the core of the market is more calmer than it used to be. So as long as this will remain true, I think we should expect low churn and light growth.

Okay. Thanks for taking my question.

Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star 1. Next question comes from Drew McReynolds. Please go ahead.

Yeah, thanks very much. Good morning, too, for me, maybe for you, Patrice. On margins down in the U.S., you've obviously always had a pretty healthy margin here. It seems like we're kind of into a little bit of a new era here, whether it's pricing, marketing, mix. all the moving parts at the U.S. telecom market. Wondering just if you can provide some kind of outlook for margins from BreezeLine. And then second, on the M&A playbook, I think in the past you've alluded to obviously your due diligence on any asset you acquire in the U.S., adjusting a purchase price for all the different kind of moving parts on a very local basis with respect to competition and market structure, etc. But at a high level, you know, relative to maybe two or three years ago, do you see your M&A appetite or playbook evolving at all? Or are you just intending to adjust, you know, what you're kind of willing to pay for some of these assets? Any color there would be great. Thank you.

Sure. So good morning. So in terms of margins at BreezeLine last year, we generated 46.3%. And one of the reasons, by the way, why it's lower than Canada is the video content cost. So the structure of the video is a little different in the U.S. This year, we are expecting a slight increase versus what we did last year. So obviously they will change from quarter to quarter, but that's our current expectation. In terms of M&A, obviously when we look back, especially when we announced the Ohio deal, this was prior to the war in Ukraine and the high inflation and the ramp up in FWA. So there's a lot of things that have changed in the market since then. So we had to integrate during this new environment. In general, we're looking forward to continue to grow organically, to grow through footprint expansions, which we're doing right now, and there might be more in the U.S. with the new BEAP program, which is similar to what we're doing in Canada with rural expansions. And as for M&A, we will continue to be actively looking. That being said, this will take into account the new environment, which means that we might well pass on certain things that we would have done in the past, or, as you said, adjust the pricing. But definitely we have to reflect the current and expected future competitive environment in the specific area we're looking at. And one thing to take into account also, obviously there's the demographics, number of players and everything, But even what we're buying in terms of network and fiber count, and so there's a lot of things we have to look at. I think these things are becoming even more important than before in our acquisitions.

It relates as well to our capacity to execute. It's great. Right now we have a lot of governments interested to help the industry find the way to connect all the unserved or underserved areas, that is taking not only capital expenditure, but a lot of human capacity out of organizations. So, that time also to be accounted and balanced against M&A. M&A takes time. Integration sometimes can be long and So you come up with a plan, and things don't always go exactly as planned, and you need human capacity to interact and fix that, which we're doing right now in Ohio. Plus all the new projects, we always maximize our capacity. So really, to me, there's a fixed capacity with the organization, and we use all of it.

Got it. Thank you.

Thank you. Next question is a follow-up from Jerome Jabril at Desjardins. Please go ahead.

Yeah, thanks for taking the follow-up. I just want to clarify that I understood that well. But, Philippe, I think I heard you say that COGICO will certainly meet the requirement from the CRTC. Does that mean that you will have a home wireless network in the foreseeable future, maybe before the negotiations, and if we can clarify that this is included in the updated CapEx expectations. I appreciate we don't have the final conditions, but just want to clarify that I heard that well and that this is within the guidance.

Okay. Well, first for the guidance they include in the OPEX and CAPEX are wireless ambitions. It has been through for the past two years. Now, in terms of meeting the CRTC requirements, the first part is really to have the CRTC really clarify all the details they are expecting industry to meet. That's in process. I think it will take until April before that first phase is doing is ongoing but that doesn't preclude or prevent any commercial negotiation to go on and continue and new ones to be developed either under the MVNO framework or outside of the MVNO framework. So we could have parallel things going on while we understand exactly what the CRTC wants us to do, and we will meet those conditions to benefit from the MVNO regime.

Okay, thank you.

Thank you. There are no further questions at this time. You may proceed.

Okay, well, thanks, everyone, for being on today's call. So we'll be disclosing our second quarter results in mid-April, and feel free to call us in the meantime. Thank you.

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