Cogeco Inc.

Good day and welcome to the Cogeco, Inc. and Cogeco Communications, Inc. Q4 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 Cogeco, Inc. and Cogeco Communications, Inc. Please go ahead, Mr. Ouimet.

Thank you. So good morning, everybody, and welcome to this fourth quarter conference call, which Philippe and I will be presenting. Before we begin the call, as usual, 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 I'll turn the call over now to Philippe. Thank you, Patrice, and good morning.

Thank you all for joining this call. While fiscal 23 was a year in which we made significant progress in strengthening our core foundation and delivering on our primary growth factors, we did fall short of the financial guidelines provided. Headwinds facing the U.S. operations over the course of fiscal year offset the solid growth we experienced within our Canadian business on both revenue and EBITDA. That said, a number of measures were implemented in fiscal 23 to help mitigate the challenges we currently face at BreezeLine. These initiatives along with investments made to prepare for the launch of wireless services within our US footprint, aim not only to improve our efficiency, but also to increase our addressable market, strengthen our product mix, and improve our customer retention and satisfaction. As for our fourth quarter, our consolidated results were resilient, driven by an increase in overall internet subscribers, and average revenue per users, which offset challenges brought on by inflation, increased competition, and global economic uncertainty. During the quarter, we demonstrated once again our intense focus on balancing subscriber growth with financial performance. In Canada, Cogeco Connection performed very well in Q4, with strong internet subscriber addition, as well as an increase in revenue per customer. In the U.S., while BreezeLine continued to face headwinds from the macroeconomic and nationwide competitive environment, its revenue per customer, adjusted EBITDA, and EBITDA margin increase in the quarter, reflecting a better product mix, stemming from its internet-led strategy, cost efficiency initiatives, and the acquisition of higher price point customers, which help offset customer losses at lower price points due to increased competition. As a group, we continue to execute on our strategic growth priorities. In both Canada and the U.S., we continue to see the financial benefits from our Fibre to the Home network expansion programs, which contributed to new internet subscribers in both markets. Overall, through these network expansion programs, we've added close to 124,000 homes passed over the last fiscal. If we include those added in fiscal 22, this brings us to 196,000 additional homes passed, representing a 7% growth of our network over the last two years. Many of these expansions were facilitated through government subsidy programs aimed at reducing the urban-rural digital divide. It allowed us to expand our fiber network in demographically and competitively attractive areas where we continue to target very healthy penetration rates. We announced in October the completion of the rural network expansion in Quebec, where we expanded services to 180 municipalities through the Quebec and federal government subsidized high-speed internet network expansion program. Meanwhile, in Ontario, we are pursuing our extension activities and preparing for the construction phase of additional projects with funding support from the Ontario and federal governments. In the US, we expanded to adjacent communities in New Hampshire and Virginia. The latter included some unserved homes and businesses under the Rural Digital Opportunity Fund program administered by the FCC. We continue to look forward to the launch of the broadband equity access and deployment funding program in the U.S., called DEED, which we intend to participate in. Under this program, each state will run its own process of allocating funds for rural fiber expansions. Within our traditional markets, we continue to position ourselves for future organic growth through our high-quality digital product offerings, distinctive and local customer service, reliable and evolving high-speed network, and technology advantage. During the year, we also double the network capacity servicing Ohio. in line with our acquisition integration strategy to drive higher revenue per customer over time in that market. In Canada, we are taking a multi-brand approach to serve new demographics and customer segments. During the last year, we expanded our service offering to include a digital-only experience for a younger generation of residential customers through the acquisition of the Oxio brand. We have continued to invest to support the high growth of Oxio and have been pleased with its performance to date. As it relates to other M&As, we continue to pursue growth by evaluating complementary businesses that will expand our footprint geographically and broaden our capabilities and service offerings as we have done for Oxio. However, we do not expect to undertake any large acquisitions in the near future as we focus on executing our other growth initiatives. In terms of mobile developments, in Canada, we remain in MVNO access negotiations. But, as you will understand, for competitive reasons, we cannot provide any further details on these negotiations. We will reiterate, however, that securing satisfactory wholesale rate for access to incumbent wireless networks will be critical to the viability and long-term success of our mobile entry. We are registered as a qualified bidder in the 3800 MHz spectrum option. While we are not allowed to discuss the option, we will remind investors that our total spectrum coverage to approximately 4 million people in the Quebec City to Windsor corridor encompasses 95% of our Canadian high-speed network footprint. In total, we have now acquired approximately 400 million worth of spectrum across several frequency bands that are considered optimal for 5G wireless services. In terms of mobile in the US, We are preparing the groundwork to enter the U.S. wireless market through commercial MVNO arrangements in the states we serve. We expect to be able to provide an update on our mobile progress in both countries in future quarters. Though I'll note that if we are successful in MVNO negotiation, we don't anticipate a material rollout of our Canadian MVNO operations in the short term. as we have some preparation work remaining to complete. Finally, we pursue our sustainability agenda through the implementation of various initiatives that are aligned to the best environmental, social and governance or ESG practices. Additionally, we continue to be recognized by leading voices in ESG commitments and disclosures. Over the past year, we've ranked for a fourth consecutive year among the world's 100 most sustainable corporations, according to Corporate Knights, for setting a standard in sustainable growth leadership. For the second consecutive year, we were included in the prestigious sustainability yearbook presented by SNP Global, for its excellence in implementing BESS ESG business practices. And our governance practices were recognized by the Globe and Mail board games as among the best within family-controlled dual-class public corporation. I will now review our operational results and begin with our Canadian operations. We continued to connect more homes in unserved and underserved communities in Quebec and Ontario, often with the help of government partnerships where we added another 7,300 homes passed this quarter, bringing the total to more than 96,000 new homes passed over the last two fiscal years. Our Canadian team achieved a 15-year record this quarter with the addition of 14,000 internet customers thanks to their effective sales and marketing strategies, entry in newly served areas, the contribution from Oxio, and their unrelenting focus on customer experience while continuing to grow ARPU year over year. As for our U.S. operations, in Q4, our fiber network expansion covered nearly 16,000 new homes past, bringing the total to more than 99,000 new homes past over the past two fiscal years, further expanding our total addressable footprint. The markets remain challenging in Q4, notably for customers at lower speeds and price points due to the macroeconomic environment and competitive intensity. However, the product mix and customer tenure continue to improve with a greater proportion of new connections taking faster internet feeds and therefore driving a higher average revenue per unit and gross margins. We reported approximately 9,000 internet net losses, of which 6,000 were in Ohio. which is a bit higher than the two prior quarters and below our expectations. During the quarter, we continue to densify the network and work to bring our internet customer base in Ohio to growth as we focus on gaining greater brand awareness. On that front, we have made solid progress, and this is being reflected in improving net promoter scores. Outside Ohio, internet customer net losses were essentially in line with last quarter, which were driven by aggressive offers by competitors in response to FWA competition they are facing in other areas. Now for CogicoMedia, while we continue to face Edwin from a difficult radio advertising market industry-wide, we are happy to report modest year-on-year growth in revenue this quarter. With our stations remaining at the top of the ratings and 98.5 Montreal being the most listened to station in all of Canada, we believe we are well-positioned to face the industry's challenges going forward. In the meantime, we continue to expand our multi-platform audio content options with more digital ad tech solutions social media-oriented formats, and state-of-the-art studio facilities. Now, let me turn the call over to Patrice, who will provide more details on our financial performance for the quarter.