Cogeco Communications (TSE:CCA) said its Canadian operations ended fiscal 2026 with renewed internet customer growth, strong wireless sales and another quarter of year-over-year adjusted EBITDA growth, while its U.S. business faced worsening competitive conditions that drove higher internet subscriber losses.
President and CEO Fréd Perron said the company’s Canadian network upgrades now support residential download speeds of 1 gigabit per second across about 95% of its footprint and 2 gigabit speeds across approximately 50%.
U.S. Competition Pressures Outlook
Cogeco’s U.S. operation, Breezeline, experienced a more difficult fourth quarter than management had anticipated. CFO Patrice Ouimet said elevated competitive pressure contributed to increased internet customer losses and affected both revenue and adjusted EBITDA.
Perron said competitive challenges in the U.S. include fiber upgrades by DSL providers, private-equity-backed fiber overbuilders and expansion by larger cable operators. Those deployments have been accompanied by aggressive customer-acquisition campaigns and promotional pricing, he said.
“The competitive environment got worse,” Perron said, adding that the company would not expect a significant improvement in U.S. subscriber trends during fiscal 2027.
While satellite competition is affecting only the company’s most rural areas and fixed wireless access remains a factor, Perron identified network overbuilding and aggressive promotional offers as the larger sources of pressure. He said the company had also rationalized its own promotions, improving the net present value of acquired customers even as subscriber trends remained under strain.
Breezeline has introduced several initiatives intended to improve its position, including wireless service, new sales channels, a digital second brand called welo, and a streaming television offering through a partnership with DIRECTV. Perron said welo had been expanded to additional states and would be available across 70% of the company’s U.S. footprint following planned launches.
Management said it expects the DIRECTV arrangement to benefit future adjusted EBITDA and free cash flow. However, reported video subscriber metrics are expected to decline because DIRECTV subscribers will not be counted as company-owned subscribers. Revenue will also be lower over time because Cogeco will recognize earned commissions rather than the full video subscription amount.
Fiscal 2027 Guidance
Cogeco Communications introduced fiscal 2027 guidance that reflects the expected continuation of U.S. market pressure. On a constant-currency basis, the company expects revenue to decline by a low- to mid-single-digit percentage and adjusted EBITDA to decrease by a mid- to high-single-digit percentage.
The company attributed the outlook to Canadian customer-base growth being offset by pricing pressure and subscriber losses in the U.S. Cost efficiencies from its transformation program are expected to partly offset the impact of lower U.S. revenue.
- Capital expenditures are projected at C$425 million to C$475 million.
- Free cash flow is expected to range from C$500 million to C$550 million.
- Financial expenses are expected to be C$250 million to C$300 million.
- Current income taxes are expected to be C$30 million to C$60 million.
Ouimet said Canadian revenue and EBITDA are expected to be relatively stable in fiscal 2027. The fourth quarter included positive non-recurring items in Canada, he said, meaning the quarter’s EBITDA growth rate should not necessarily be extrapolated. Management also cited product-mix effects, including greater sales of internet services and oxio’s limited television attachment, as factors affecting results.
In the U.S., Ouimet said pricing pressure, lower subscriber levels and fixed operating costs are expected to weigh on EBITDA margins. He said transformation-related spending was not a primary cause of the margin pressure.
Cash Flow, Capital Spending and Debt
Cogeco Communications generated C$554 million in free cash flow during fiscal 2026, near the upper end of its original guidance, Perron said. The figure represented 33% growth over three years. On a constant-currency basis, annual free cash flow rose 7.3%, according to Ouimet.
Management said lower planned capital spending will not compromise revenue opportunities. Perron said the company is entering the third year of its transformation program, which is expected to generate disproportionately greater capital-expenditure benefits through vendor consolidation, team consolidation and operational synergies across Canada and the U.S.
The company has also completed many network-expansion and speed-upgrade projects, allowing it to moderate investment while maintaining available capacity, management said.
Cogeco Communications ended the fourth quarter with a consolidated debt leverage ratio of 3.1 times, down from 3.2 times in the prior quarter. During the quarter, the company refinanced maturing debt with a new C$200 million Canadian tranche and repurchased $46 million of Term Loan B debt securities.
Ouimet said the company plans to use excess cash for debt repayment in both its Canadian and U.S. borrowing structures. Based on the midpoint of fiscal 2027 guidance, he said leverage could decline to about 3 times by year-end.
Dividend Raised for 23rd Straight Year
Cogeco Communications and Cogeco Inc. increased their dividends by 2%, extending their dividend-growth record to 23 consecutive years. Ouimet said the smaller increase compared with recent higher increases reflected a balance between shareholder distributions and debt reduction amid greater business volatility.
The company also said its Cogeco Media business reached weekly radio listenership of 4.6 million. Looking ahead, management identified wireless growth, further expansion of oxio and welo, and additional operating and capital efficiencies—including from artificial intelligence—as core priorities. Perron said AI agents are now deployed across most key operational functions, with the company expecting their impact to build during fiscal 2027.
About Cogeco Communications (TSE:CCA)
Cogeco Communications Inc is a leading telecommunications provider committed to bringing people together through powerful communications and entertainment experiences. We provide world-class Internet, wireless, video and wireline phone services to 1.6 million residential and business subscribers in Canada and thirteen states in the United States. Our services are marketed under the Cogeco and oxio brands in Canada, and under the Breezeline brand in the U.S. We take pride in our strong presence in the communities we serve and in our commitment to a sustainable future.
