Montreal-based Cogeco says it's faced competitive pressure in its U.S. internet markets.Christopher Katsarov/The Canadian Press
Cogeco Communications Inc. CCA-T posted a fourth-quarter revenue drop and decreased revenue expectations for its 2026 fiscal year, while raising its dividend in the quarter in a report that met some analyst expectations but missed others.
The Montreal-based media and internet company reported Thursday a 4.9-per-cent revenue drop in the quarter, which it attributed to mounting competitive pressure in some of its U.S. internet markets and a decrease in wireline phone and video services.
Cogeco’s U.S. operations are under pressure from cable companies and fixed wireless internet. The company lost 6,000 U.S. internet subscribers during the quarter, however, subscribers in Ohio grew for the first time in four years, and Cogeco president and chief executive officer Frédéric Perron said he expects growth in that state “will eventually offset customer losses in the other markets.”
The company lost nearly 11,000 Canadian video service and wireline phone subscribers in the quarter, but added 17,000 net internet subscribers in Canada during the quarter, a figure which exceeded analyst consensus and which helped to offset reductions in the company’s legacy businesses.
Mr. Perron said that average revenue per user – a figure used in the telecom industry to measure the earnings per customer – is starting to improve, as internet pricing starts to become more “constructive.”
The growth in net subscribers follows the company’s expansion of its own network into rural areas, as well as internet provided over competitors’ networks within the company’s footprint. So far, the company has completed about three quarters of its fibre buildout, with about 25,000 locations remaining, mostly in rural Ontario, Mr. Perron said.
Meanwhile, the company provided guidance for the 2026 fiscal year, projecting revenue drops of between 1 and 3 per cent, and a decrease of between 0 and 2 per cent for its adjusted earnings before interest, taxes, depreciation and amortization, on a constant currency basis, as it invests in new sales and marketing capabilities.
Yet the company raised its dividend by 7 per cent to $3.95 per share annually, reflecting a yield of 6 per cent.
And in a call with analysts Thursday morning, Cogeco chief financial officer Patrice Ouimet said the company plans to continue to “meaningfully” raise the dividend in the future.
The company pays about 30 per cent of its cash flow in dividends, Mr. Perron added in an interview, a ratio which he said is low for the telecom sector. The company is targeting about $600-million in free cash flow by fiscal 2027, which he said gives the company ample flexibility.
“We have room to grow the dividend and lower the debt at the same time and possibly start share buybacks at one point in the future, if we choose to do so,” he said.
The company is in the second year of its three-year strategy to turn around growth, and is investing in expanding its network and finding efficiencies within the business.
Speaking at a CIBC investor conference on Sept. 25, Mr. Ouimet said the company had merged management teams of Canada and U.S. businesses, which led to cost savings and faster decision making.
The company has also implemented chatbots to speed up customer service support, and recent months, the company launched a mobile service for customers who buy its internet in an attempt to sweeten the deal with service bundles.