Cogeco outlined a plan to expand its Atlantic Broadband footprint in the U.S. to approximately 70,000 new locations in its fiscal 2022, aiming to push fiber to homes in areas currently served only by DSL or cable.
During an earnings call, Cogeco CEO Phillippe Jette said it will pursue network expansions in cities adjacent to Atlantic Broadband’s existing footprint which have “attractive growth potential.” He noted “planning and initial construction is underway in some areas of New Hampshire and West Virginia, with commercial launches scheduled to start early in the 2022 calendar year.” Ultimately, it is targeting a 4% increase in its number of homes passed.
Atlantic Broadband is the eighth largest cable operator in the U.S., serving 12 states primarily along the East Coast. It recently closed a deal to acquire two market areas in Ohio from WideOpenWest (WOW!) for $1.13 billion.
As of the end of its fiscal Q4 2021 (the three months to August 31, 2021), Atlantic Broadband passed 936,519 and served 520,517 internet customers. The WOW! deal, which wrapped on September 1, boosted its footprint to nearly 1.63 million homes and customer base to 717,000. It offers 1-gig service to 97% of its coverage area.
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Cogeco executives said on the call the majority of its U.S. expansion will be in overbuild areas where it will face off with one cable player and one phone company. Rather than attempting to compete in areas where fiber-to-the-home (FTTH) is already available, the company will focus on bringing fresh FTTH service to communities currently served by DSL.
They added the company expects to spend CAD115 million (approximately $91.6 million) to CAD120 million on its projects in the U.S. and achieve a 36% penetration rate over the course of three years.
“In the U.S. there is an opportunity at the moment to accelerate network expansion in areas with good demographics and growth potential,” Jette stated. “We expect to earn an attractive return on these investments in unsubsidized network expansions and offer more choice to consumers. We also plan to leverage upcoming government funding programs for some network expansions in more rural communities in the us to help close the digital divide.”
Metrics
Consolidated Cogeco revenue of CAD632.7 million was up 4.5% year on year. Profit of CAD103.4 million increased 7.5%.
Full year fiscal 2021 revenue totaled CAD2.6 billion, with Atlantic Broadband contributing CAD1.12 billion. The remainder of full year revenue came from the company’s Cogeco Connexion operation in Canada (CAD1.39 billion) and Cogeco Media (CAD93 million). Profit rose 8.8% to CAD431.6 million.