Cogeco Q3 2025 presentation slides: Wireless expansion amid revenue pressures

Introduction & Market Context

Cogeco Inc. (TSX:CGO) released its investor presentation on July 15, 2025, highlighting the company’s strategic initiatives and financial performance amid challenging market conditions. The telecommunications provider’s stock closed at $67.18, down 1.21% on the day of the presentation, reflecting ongoing investor concerns following the company’s recent Q2 earnings miss when revenue declined by 2.7% year-over-year.

The presentation comes as Cogeco navigates competitive pressures in both its Canadian and American telecommunications segments while emphasizing its expansion into wireless services and network upgrades as key growth drivers.

Executive Summary

Cogeco Communications (TSX:CCA), the company’s primary telecommunications subsidiary, maintains a strong market position with 1.6 million residential and business subscribers across North America. With a market capitalization of $3.0 billion and a dividend yield of 5.2%, the company continues to focus on returning capital to shareholders while investing in growth initiatives.

The presentation emphasized Cogeco’s differentiation through speed, reliability, innovation, and customer experience, highlighting its above-industry-average adjusted EBITDA margin of 49.3%. Management also showcased the company’s capital-efficient growth strategy, including subsidized fiber-to-the-home expansions and the upcoming launch of wireless services in Canada.

As shown in the following overview of investment highlights:

Detailed Financial Analysis

Cogeco Communications has demonstrated a consistent commitment to shareholder returns, with dividends per share growing from $0.56 in fiscal 2010 to $3.69 in fiscal 2025. The company maintained a dividend payout ratio of 30% in F2024 (24% excluding network expansions), indicating a sustainable balance between growth investments and capital returns.

The following chart illustrates this consistent dividend growth trajectory:

The company’s financial performance shows strong profitability metrics, with adjusted EBITDA increasing from $1,206 million in F2021 to $1,455 million in the last twelve months (LTM), representing a margin of 49.3%. This margin strength stands out as particularly impressive given the 2.7% revenue decline reported in Q2 2025.

The following chart details the company’s adjusted EBITDA and profit trends:

Cash flow generation has remained robust, enabling both growth investments and capital returns. Free cash flow increased from $489 million in F2021 to $665 million in LTM, while cash flows from operating activities grew from $1,019 million to $1,192 million over the same period.

As illustrated in the cash flow performance chart:

Cogeco maintains a stable debt profile with a net debt to adjusted EBITDA ratio of 3.1x and available liquidity of $1,330 million as of May 31, 2025. The weighted average cost of debt stands at 5.4%, with interest rates mostly fixed and an average term to maturity for long-term debt of 4.5 years.

Strategic Initiatives

A central focus of Cogeco’s presentation was its expansion strategy, particularly the upcoming launch of wireless services and continued fiber-to-the-home network expansions. The company has added nearly 279,000 homes passed since the beginning of F2022 through fiber expansions in both Canada and the U.S.

The company’s wireless strategy includes Breezeline Mobile, which launched in 2024 across the majority of its U.S. broadband footprint, and the imminent launch of Cogeco Mobile in select Canadian markets. Both initiatives utilize a capital-light MVNO (Mobile Virtual Network Operator) model.

The following chart illustrates the company’s expanding addressable market:

In Canada, Cogeco has secured significant wireless spectrum coverage, with 92% share of spectrum powered by 5G-optimized 3500 & 3800 MHz, representing an investment of $588 million. This positions the company well for its upcoming wireless service launch.

As shown in the wireless spectrum coverage map:

Segment Performance

Cogeco Connexion, the Canadian telecommunications segment, continues to deliver strong adjusted EBITDA margins of approximately 53%, consistently outperforming Canadian peers. Revenue increased from $1,393 million in F2021 to $1,501 million in LTM, despite recent quarterly pressures.

The following chart details Cogeco Connexion’s financial performance:

Breezeline, the American telecommunications segment, has shown improved adjusted EBITDA margins through an internet-led strategy and operating efficiency. Revenue increased from $880 million in F2021 to $1,038 million in LTM, with margins ranging from 46-49%.

The following chart illustrates Breezeline’s financial results:

Forward-Looking Statements

For fiscal 2025, Cogeco Communications has provided financial guidelines projecting revenue of $2,977 million and adjusted EBITDA of $1,442 million. The company expects net capital expenditures of $638 million, with $137 million specifically allocated to network expansion projects.

The capital intensity is projected at 21.4% (16.8% excluding network expansion projects), with free cash flow of $476 million ($613 million excluding network expansion projects).

The following table details the F2025 financial guidelines:

These projections come with some caution, as management indicated during the Q2 earnings call that they anticipate a low single-digit decrease in consolidated revenue and EBITDA for Q3, alongside an increase in capital intensity by 350 basis points.

Investment Structure

The presentation also clarified Cogeco’s corporate structure, with Cogeco Inc. (TSX:CGO) holding 12.0 million shares of Cogeco Communications (TSX:CCA), representing 28% equity but 80% voting rights. Cogeco Inc. also operates Cogeco Media, a radio broadcasting business with $96 million in LTM revenue.

As illustrated in the investment structure chart:

Despite the challenging competitive landscape acknowledged in the recent earnings call, Cogeco’s presentation emphasized its strategic positioning for long-term growth through network expansion, wireless service launches, and operational efficiency initiatives, while maintaining its commitment to shareholder returns through dividends and share repurchases.

Full presentation:

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