Cogeco Communications Inc.

Good day and welcome to Cogeco Inc. and Cogeco Communications Inc. Q3 2024 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. Please go ahead, Mr. Ouimet.

Thank you. So good morning, everyone, and welcome to our third quarter conference call. As usual, before we begin the call, I'd like to remind listeners that today's discussion will include estimates and forward-looking information. We ask that you review the cautionary language in the press releases issued yesterday and in our 2023 annual reports regarding our various risks, assumptions, and uncertainties that could cause our actual results to differ. With that, I'll now pass the line to our CEO, Frédéric Perron, for opening remarks. Thank you, Patrice.

Good morning, everyone, and thank you for joining us for our Q3 2024 results. On our last call, I provided a glimpse into our plans for the coming years, and I explained how shareholder value creation will be at the forefront of both our strategy and our culture. Our focus is on setting the stage for sustainable growth. and we see clear upside potential. As you know, our top five priorities are to, first, drive synergies. We will deploy best practices in both markets, such as harmonizing systems and modes of operations to the largest extent possible. To that aim, we announced a major change to our organizational structure in May, where we will combine our US and Canadian telecommunications operations into one team, effective September 1st. This nimbler structure will help accelerate our performance and will generate cost savings, which will be reinvested in growth drivers, where we have historically under-indexed, such as marketing, digitization, and analytics to drive revenue. Second, increase the digitization of our processes, which will result in a higher percentage of our sales and service interactions done through digital channels. To that aim, we just deployed Charlie, our first AI chatbot in the U.S., and the results are above our expectations so far. In less than one month, Charlie has successfully handled tens of thousands of customer interactions, many of which did not require a transfer to a human. Charlie will continue to evolve and will be deployed in Canada over the coming weeks, using the same platform and vendor as in the U.S. in order to maximize synergies between our two countries. Third, accelerate advanced analytics. we will leverage advanced analytics to improve our customer-based management, retention, and sales efforts, as well as our network management activities. Fourth, pursue disciplined network expansion. Our rural footprint expansion continues in Ontario in conjunction with government programs, while the Quebec expansions are essentially done and have already achieved strong penetration results ahead of our expectations. Our focus will then turn to the U.S. as we intend to participate in the BEAT program to the extent that it meets our disciplined return on investment objectives. The bidding process for different states could start this summer and may continue over the course of a year. Winners will have four years to deploy in areas where they've been awarded subsidies. Fifth, cross-sell wireless. Our US MVNO wireless service has now launched within the majority of our US footprint, and we're making progress towards a commercial launch in Canada. As you know, negotiations with MNOs must be kept confidential, so we will not be able to comment further on them today. other than saying that they are progressing. These wireless services will be bundled with wireline products, allowing for incremental sales as well as higher customer retention. As you can see, there is no shortage of opportunities ahead for Cogeco, and to capture these opportunities, we have welcomed several new members to our team to help execute our strategy going forward. With that said, let's get right into our Q3 results. Our third quarter consolidated results were in line with our expectations as we continue to focus on balancing subscriber growth with financial performance. Our fiber to the home network expansion programs in Canada and the US added close to 12,000 new homes passed in the quarter. bringing our total to 239,000 homes passed since the beginning of fiscal 2022, representing more than 8% organic growth in our network. At Cogeco Connection, our Canadian telecommunications business, we continued, again this quarter, to grow our internet subscriber base by close to 6,000 customers under the Cogeco initiative. and Oxio brands. This, combined with strong cost discipline, has allowed us to grow EBITDA by 2.9% year-on-year. As we progress with our organizational changes, we intend to incorporate more of Oxio's digital-first processes across our company-wide operations over time. Our network expansion program is steadily ramping up in Ontario, and we will continue through fiscal 2025 and end in fiscal 2026, while our Quebec expansion is now essentially complete. We are very satisfied with customer additions in the completed regions as customer penetration levels are trending higher than planned. Across the two provinces, we expanded our network by an additional 5,400 homes passed this quarter, increasing the number of Canadian homes passed to nearly 124,000 since the beginning of fiscal 2022, the majority of which are part of government subsidy programs. We're also continuing our preparation for mobility in Canada, including MVNO access negotiations. As I said earlier, we cannot provide further detail on these negotiations at this time, but we can say that we look forward to providing our Canadian customers with wireless options. At BreezeLine, we grew EBITDA by 3.9% in constant currency compared to last year, as planned. in part thanks to actions taken in recent months to increase our efficiency and move customers to higher margin products. With a larger proportion of our BreezeLine customers taking increasingly fast internet speeds, our mix of higher margin services improves and our average customer tenure lengthens. Additionally, our ongoing focus on cost efficiencies combined with product enhancements, help deliver a higher adjusted EBITDA margin. Our U.S. fiber network expansion program added 6,400 new homes passed in the quarter, bringing our total to more than 115,000 homes passed since the beginning of fiscal 2022. In terms of mobile developments, BreezeLine Mobile launched in the majority of our US footprint this quarter, rounding out the BreezeLine product bundle with reliable, competitively priced, and flexible mobile solutions for our customers. This capital lean MVNO solution increases our addressable market, strengthens our product mix and will improve customer attraction, retention, and satisfaction over time. It is still too early to start disclosing detailed results on the product, but we will do so when it reaches critical mass. As anticipated, the US Affordable Connectivity Program, or ACP, was discontinued in mid-May. This program provided a $30 monthly credit to eligible U.S. residents to gain discounted Internet access. While we're not immune to the impacts of this program's removal, BreezeLine has considerably less exposure to ACP than the industry average, with program participants representing less than 4% of our Internet subscriber base and a much lower percentage of revenue, as the ARPU of these customers is considerably lower than the average. Although the discontinuation of ACP has created temporary vibrations in our reported internet subscriber figures, as anticipated, we do not expect a material impact of this change on BreezeLine's revenue and EBITDA performance and we expect the impact of ACP on our subscriber numbers to be relatively short-lived. Overall, BreezeLine added 7,900 internet subscriber losses in the quarter, which included 3,300 ACP subscriber losses, 2,100 of which were in Ohio. In Ohio, Specifically, the loss of ACP along with competition for entry-level services contributed to lower speed internet subscriber losses. However, we continue to experience improving subscriber metrics for higher speed, higher margin customers. Improved network performance coupled with upgraded products are contributing to rising customer satisfaction levels. Additionally, the launch of our IPTV product in the market continues to result in improving video subscriber metrics versus last year. Turning to our radio business, Cogeco Media reported an other quarter of year-over-year growth in revenue, with radio advertising sales modestly rebounding and our digital advertising solutions, social media formats, and revamped studio facilities now providing meaningful contributions to revenue growth. Furthermore, we're pleased to report that Cogeco Media Stations remained at the top of the ratings again this quarter, which contributed to our positive momentum. Now, let me turn the call over to Patrice, who will provide more details on our financial performance for the quarter.