Cogeco Launches New Mobile Service in Canada for Low Data Users

Cogeco Inc. has officially launched its long-anticipated wireless service in Canada, positioning itself to compete by focusing on “low-to-mid data users.” The Montreal-based telecommunications company said it has already begun signing up an initial group of customers after a pre-registration period open to its existing Canadian wireline subscribers.

President and CEO Frédéric Perron told analysts the company will roll out service in parts of Ontario and Quebec across 12 Canadian markets in the coming weeks, with a full commercial launch planned for this fall. Cogeco has said its mobile coverage will be available where it already provides broadband service. “We’re ready to go,” Perron said during a conference call to discuss the company’s third-quarter earnings.

Pricing still to be announced as Cogeco focuses on bundled offers for existing customers

Perron declined to publish pricing details ahead of a customer announcement, explaining that the company intends to inform its subscribers of plan options first. The wireless service will be offered exclusively to customers who also subscribe to Cogeco’s wireline services, aligning with the company’s strategy of using bundled cellphone and internet plans to improve retention.

To encourage early adoption, Cogeco plans a limited-time launch bonus for the first wave of mobile customers. When pressed by analysts about potential aggressive pricing, Perron emphasized that any introductory discounts would be temporary and that Cogeco aims to remain a “rational player” in the market. He reiterated that this launch is not intended as a move to become a national price disruptor but to complement existing services and strengthen relationships with current subscribers.

Cogeco leverages MVNO framework to deliver mobile service in Canada

In the U.S., Cogeco began offering wireless service under the Breezeline Mobile brand last year to customers in 13 states where it already provides broadband. In Canada, the company is using the mobile virtual network operator (MVNO) framework to deliver service. Under MVNO arrangements, a provider offers mobile services by accessing another carrier’s network rather than building its own full wireless infrastructure immediately.

The Canadian Radio-television and Telecommunications Commission (CRTC) established the MVNO rules to enhance competition by enabling regional carriers to enter markets where they previously lacked wireless networks. Those rules also include requirements for regional providers to construct their own network infrastructure in certain areas within a specified period.

Perron noted that it will take time before the MVNO-based wireless service makes a meaningful contribution to Cogeco’s overall results, describing mobile as a longer-term play to complement its wireline business.

Wireless launch coincides with revenue guidance downgrade and U.S. challenges

The wireless rollout announcement came as Cogeco reported a profit attributable to owners of the corporation of $20.5 million for the quarter ended May 31, up from $19 million a year earlier. That equated to $2.13 per diluted share, compared with $1.97 per diluted share in the same quarter last year.

Despite the profit increase, Cogeco revised its 2025 guidance, reducing its revenue outlook for the fiscal year to a “low single-digit decline,” down from prior guidance that anticipated “stable” revenue. Management attributed the revision to expected additional pressure on revenue, particularly in the U.S., where competition has intensified.

To manage headwinds, Cogeco said it is pursuing several cost-reduction initiatives and operational efficiencies across the organization to mitigate the impact of lower-than-expected revenue.

U.S. competition and subscriber declines create near-term pressure

For the quarter, Cogeco reported revenue of $758.5 million, down from $777.2 million in the same period a year earlier. On an adjusted basis, the company reported earnings of $2.40 per diluted share, compared with an adjusted $3.02 per diluted share a year ago.

Analysts flagged concerns about the company’s performance in the U.S. Scotiabank analyst Maher Yaghi noted that Cogeco has experienced subscriber erosion in its American markets, losing nearly 5% of its U.S. internet subscriber base and close to 11% of its video service accounts over the past 12 months. Yaghi suggested Cogeco may need to consider more assertive measures to stem subscriber losses, pointing out that some large U.S. cable operators have used price guarantees and bundled wireless promotions to stabilize their customer bases.

Cogeco has not adopted those same tactics on a broad scale, and management appears to be balancing the desire to defend market share with a measured approach to pricing and promotions as it expands mobile offerings in Canada.

Read more news:

• Canadian home sales forecast downgraded—but the market may be turning a corner
• AI chatbots can help with personal finance—if you ask the right questions
• Inflation climbs to 1.9% in June, led by surging vehicle costs
• Do you need that bank mutual fund? Maybe not