Cogeco-owned U.S. operator Breezeline scooped up WideOpenWest’s (WOW!) Cleveland and Columbus markets for $1.13 billion earlier this year. But speaking on its latest earnings call, Cogeco CEO Philippe Jette revealed the integration of those assets has been harder than expected, causing thousands of customers to drop their service with the company.
In its fiscal Q4 2022 (ended August 31), consolidated Cogeco revenue rose 14% to CAD 746.9 million ($546.9 million). Breezeline contributed CAD 364.6 to this tally, while the company’s Canadian broadband business Cogeco Connexion accounted for CAD 360.8 million. The remainder came from Cogeco Media.
Breezeline ended the quarter with 1.68 million homes passed and approximately 708,000 internet service customers across 12 states. However, the U.S. business lost about 10,000 subscribers overall thanks to substantial losses in its new Ohio markets. CFO Patrice Ouimet said while it gained 4,700 broadband subscribers across all its other markets, it shed 14,700 customers in Ohio. Breezeline competes with AT&T and Charter Communications in Ohio.
Jette attributed the poor performance in Ohio to a tougher-than-expected transition of WOW!’s customer base onto Breezeline’s customer management and billing platform as well as poorly-timed service outages. While the situation has improved, he noted customer losses in the state are expected to continue into the company’s fiscal Q1.
“For the transition, we had a higher than usual call volumes, which have been significantly reduced since then and short-term service-related issues are now restored,” the CEO stated. “We are now focusing our marketing efforts to an end service and product offering in that market, which has a strong growth potential.”
Ouimet added that it expects some weakness in broadband net additions outside of its Ohio footprint in Q1 thanks to expected seasonal disconnections.
“We do expect that past Q1, though, that we'll have strength,” he said. “A portion will come also from the network expansions we've done in the U.S.”
Cogeco increased its number of homes passed by about 4% in its fiscal 2022, adding about 70,000 new passings. In the coming year, it plans to expand by another 5%, Jette said. Ouimet added the company will spend between CAD 180 million and 230 million on expansion projects.