Cogeco just reported a strange split screen of a quarter. In Canada, things look up. The internet base is growing again. The wireless push is gaining traction. Overall cash flow, what the company calls adjusted EBITDA, is climbing year-over-year. Then you look south. The U.S. business, called Breezeline, is in a fight. Customer losses are mounting. The pricing pressure is intense. This isn’t a minor headwind. It is reshaping the company’s entire financial roadmap for the year ahead.
President and CEO Fred Perron framed it clearly. The Canadian performance is strong. He pointed directly to their digital brand, oxio. Perron called it Canada’s “most loved telecom brand.” That is a marketing claim, but the internal numbers back up the momentum. Oxio sales are hitting internal records. It is a bright spot. The national network is also largely upgraded. About 95% of the Canadian footprint can get 1 gigabit service. Roughly half can access 2 gigabit. This foundation supports the current growth.
The story fundamentally changes when you cross the border. The outlook for fiscal 2027 is sobering. Cogeco expects overall revenue to drop. They see a low- to mid-single-digit percentage decline on a constant-currency basis. More concerning, the adjusted EBITDA profit is forecast to fall by a mid- to high-single-digit percentage. This is not a company predicting a simple slowdown. It is bracing for contraction.
CFO Patrice Ouimet explained the math. Any customer growth in Canada is being completely wiped out by the situation in the United States. The problem is twofold. Prices are under siege. Subscribers are leaving. Perron drilled into the cause. He described an environment of aggressive overbuilding. Former DSL providers are ripping out old lines and installing fiber. Private equity firms are funding new fiber operators to enter existing markets. Larger cable rivals are expanding into Cogeco’s territories, often with fiber offers. This is a capital-intensive war of attrition.
The promotional tactics are brutal. Perron cited reports of new entrants offering fiber service for fifty dollars a month with a ten year price lock. That is not a promotion. It is a land grab. In this context, Perron offered a blunt forecast. He does not expect any significant improvement in U.S. subscriber trends this coming fiscal year. That sets a challenging baseline.
Management is trying to adapt. Breezeline launched a new streaming TV product through DIRECTV. Ouimet expects this move to help future cash flow. But it comes with a reporting trade off. These streaming customers will not show up as traditional video subscribers on the books. Revenue will be recorded as a commission, not the full subscription amount. It makes the top line look smaller, even if the profitability per user is acceptable.
They are also expanding their U.S. digital brand, called welo. Perron said it will reach 70% of their footprint. Customer satisfaction is high. Margins are strong. Yet the forecast for subscriber growth from this initiative is only modest for the coming year. It is a controlled rollout, not a panic switch.
Back in Canada, the expectation is for stability. Ouimet said revenue and EBITDA should be relatively flat for fiscal 2027. He listed several factors:
- Pricing
- Customer additions
- Product mix
- Internal transformation efforts
- Promotional expirations
- Growth of oxio brand
He also added a note of caution. The strong fourth quarter EBITDA growth in Canada included some non-recurring items. The benefit from certain promotions expiring last year will not repeat to the same degree. The mix is also shifting as oxio grows. Its internet margins are comparable to the main Cogeco brand, but oxio customers tend to take fewer television services.
| Fiscal Year | Revenue Decline | EBITDA Forecast | Debt Leverage Ratio |
|---|---|---|---|
| 2027 | Low- to Mid-Single Digit | Mid- to High-Single Digit | 3.0 Times |
| 2026 | Flat | Flat | 3.1 Times |
Financially, the company is navigating these cross currents. Free cash flow for the past year was 554 million Canadian dollars. That is near the high end of their guidance and represents solid growth over three years. For the new year, they expect capital spending to fall to between 425 and 475 million dollars. This planned reduction is deliberate. Perron said major network expansion and speed upgrade projects are largely complete. The company believes its networks are fast enough for current demand. Lower spending will not hurt revenue.
This freed up cash has a destination. Debt repayment. Cogeco’s consolidated debt leverage ratio ticked down to 3.1 times at quarter’s end. Ouimet said the plan is to use excess cash to keep paying down debt in both Canada and the U.S. By the end of fiscal 2027, they expect leverage to drift down to around 3 times.
This focus on the balance sheet showed up in another decision. The company raised its dividend for the 23rd consecutive year. The increase was 2%. That is notably smaller than the 7% hike a year ago. Ouimet was transparent about the reason. With greater business volatility, especially from the U.S., the company is choosing to balance shareholder returns with accelerated debt reduction. The commitment to the dividend is there, but the growth rate is being tempered for prudence.
A final thread runs through all of this. Cogeco’s multi-year transformation program. Perron said they now have artificial intelligence agents deployed across most key operating functions. Automation is starting to show results. He openly stated these AI initiatives should help offset cost pressures in the year ahead. But he was careful to manage expectations. He described the impact as still in a “pre-inflection stage.” The benefits are coming, but they are not a sudden cure for the competitive storm in the U.S.
You are left with a company at a crossroads. Its home market is executing well, finding growth through digital brands and network quality. Its neighboring market is an exercise in defensive management, battling irrational competition and protecting cash flow. The path for investors hinges on which narrative gains the upper hand over the next twelve months. For now, Cogeco is preparing for a tough fight and fortifying its financial position. The modest dividend increase tells you where management’s priority lies.
