Did. Okay. Last but not least, session of the day, is Cogeco Communications. We're thrilled to have the CEO, Frédéric Perron, with us today. Fred, thanks very much for coming in from Montreal and the glory of a hockey team that's still playing to come to this, you know, somber city. Well, well- no playoffs, but, yeah, we'll welcome you anyway. Yeah, yeah, no, thanks for having me and I made the big sacrifice of, probably watching the first period from the plane tonight, in order to be with you guys. Good to see you. Excellent. I mean, opening question just to start for you. Any, when you step back and, you know, think about what Cogeco's doing and how you perceive the value of the company, is there something you think investors misunderstand or are not seeing about the long-term value creation model? Yeah, sometimes we'll hear a relatively simplistic argument on the negative side around, "We don't like U.S. cables. Cogeco is exposed to U.S. cables, therefore we're not in Cogeco." I know some people who drill a little deeper, such as yourself and many others, find quite a different story. When you look at our business, more than half of our revenue and EBITDA is in Canada. That business is doing well. We're growing market share and we're growing EBITDA moderately, and we're growing cash flow quite nicely north of the border. If you look at the U.S., you gotta separate it in two. Half of our footprint in the U.S. is the part that sometimes, you know, people don't like as traditional cables. The other half is low penetration, low ARPU, and lots of room to grow. It's important to decompose all this. The less attractive area is less than a quarter of our business. When you roll all of that up, it's growing dividend, growing cash flow, and deleveraging, and a very healthy balance sheet and value creation story. Can I add to that for you? Is it that quarter of the business that may be more challenged U.S. stuff, how do you think about the value of that compared to, say, the value of what your spectrum is? Yeah. Is the spectrum worth two or three times as much as that? Well- top area of the business? Well, the value of the spectrum is probably infinitely greater than the value of that business because many people now argue that essentially our U.S. business is being valued at zero. If you just put a bit of value to our spectrum, the U.S. would be close to zero. There's certainly something to unlock in terms of value here. We'll come back to spectrum maybe a bit more later. Yeah. Canadian operations, as you say, continuing to perform well, solid subscriber growth, you know, EBITDA growth. What do you think is the sort of key advantages and operating tactics that are helping you deliver that? Yeah. In Canada it's a few fundamentals. First, our customer base is more rural and semi-rural, and the Cogeco brand tends to appeal to a lot of these customers more than some of the Big Three brands. Sometimes the Big Three brands are viewed by these customers as brands from Toronto or Montreal, whereas Cogeco connects more with them. Second, for the younger, more urban customer, our oxio fully digital brand is doing really well, with an NPS above +50, which is probably the highest I've ever seen in telecom. One thing we don't talk about quite often, but is we've been quietly upgrading our network in Canada as well as the U.S. It's now 47% of our Canadian network which has speeds up to 2 Gb, and that's helping our performance as well. Last but not least, we're scaling up our wireless business. In Canada, sales are still slightly ahead of plan and over the years, this will be an increasingly material contributor to our P&L. 47% at 2 Gb, but I mean, the remaining balance or the vast majority of that is at least at 1 Gb. Is at least 1 Gb, which is already more than what most customers can use. Yeah. The factor you can't always control is the competition in the market, Cogeco's obviously not the biggest of the telecoms in Canada, and your major competitor is many times your size. What are your latest thoughts about what you're seeing in terms of price discipline and competition in the market? Is it a little better or worse than it was a year ago? We feel quite good about Canada. I've been in this market now almost six years, and I was sharing with some folks, it's the most, the pricing environment in Canada, especially for wireline, because we're not so exposed to wireless, but on wireline is the most constructive I've seen in nearly six years. You see a pullback in promotional activity. It can spike back up in very short periods, but overall we see a pullback and we've also ourselves been removing promotions that we had sometimes for years. That's helping bring our front book, our ARPU up a little bit. Hopefully that continues. I think you had said that, if my memory's correct, like September last year, your tone was basically just what you said right now. Yep. You dipped down a little bit in December and January. Yeah. You were seeing a bit of noise and maybe some TPIA stuff. Now you're back to the more positive tone. That disturbance was short-lived of whatever was going on in December and January? It was short-lived actually on both fronts. On the spike in promotional activity from our largest competitor, that appears to have been short-lived. You're also alluding to TPIA activity. These were some of our larger competitors reselling our network, whether it's in Quebec or in Ontario. That was also quite short-lived, and it's not something that's material for us at this point. Okay. When thinking about the next, you know, 6 - 12 months, in terms of internet subs, is it, you know, you've had some really good results. Is it gonna be good enough to just try to replicate what you've done in the last 12 months? Or with wireless now in the bundle and oxio still doing well, and you still have more Ontario homes in rural areas coming online, is there any chance it gets even a bit better, or are you hoping to just get back to where you were? We don't give guidance on subs. Also, as I said, we're balancing volume and value. As we bring prices back up and remove some of the promotional activity, sub volume is not the only thing we're shooting for here. I'll just remember, remind everyone that in three of the past four quarters, we had the best customer base growth for internet as a percentage, for all of Canadian telecom. We got a solid marketing machine, which we expect will continue to give us good results. The wireless within that, you're still trending to whatever your internal targets were. It's going as well as you'd hope? It is. For wireless, I would say, you know, players such as Comcast and Charter in the U.S. are probably good benchmarks for us in terms of wireless penetration over time, both in Canada and the U.S. for us. You see that they now actually, both of them have wireless lines in the 10 million-12 million for an internet customer base around 30 million. It took them a few years to reach that, but what I would say so far, early days, but we're kind of on track to maintain a similar trajectory than what they had. Obviously for them now, it's a material positive needle mover to their P&L. To be clear, that's lines, not households. Correct. I don't think they have 30% of their internet households taking their wireless product. No, no. If you convert lines into households or accounts, their bundling rate, their accounts, wireless accounts as a percentage of their internet customer base is in the 20%-ish range. 20%, yeah. Yeah. As opposed to 30. Okay. Habs playoff success, maybe it's made you a little more open to, you know, and happy. I'll ask you again, you wanna give us a wireless number in Canada of what, how many subs you're at now? We don't disclose it. Nice try. Maybe if the Habs win the Stanley Cup, I'll reconsider. Okay. No, I think, again, looking at the trajectory of Comcast and Charter over the years is probably the best benchmark to look at for now. Switching to the U.S., as you mentioned, there are challenges in some of the areas. Maybe remind us what you've done recently in Ohio and with the new digital brand and what, just sort of better data analytics and marketing strategies, why you have confidence that those trends will improve. Yeah. Again, as I said at the beginning, it's important to separate our U.S. business in two. There's the more traditional side, which has the same challenges as the rest of the sector. In the other half, our penetration is less than 20% of, and our ARPUs are lower, so we have more room to grow. That's primarily oxio, but there's Florida as well and bits and pieces elsewhere. In terms of progress, in oxio it's now been three quarters in a row that we're growing our customer base. We've, we're growing sales channels. Some of our sales channels were heavily underutilized in the past in the U.S., especially in those lower market share areas. For example, we had zero retail point of presence. It doesn't mean that we need to make big investments in retail, but having a bit of a point of presence will help. Other channels, such as door to door, which is a fact of our industry, were severely underused as well. We're building that up. We just launched our second brand, welo, which is a fully digital brand similar to oxio in Canada. Early days. Far so good. It's not gonna be super material to the Q3 subs, but it's in, roughly in line with our expectations as we start scaling it up. Those welo expectations, I mean, you have a template from Canada. I know when you bought oxio, it was mostly outside of the Cogeco footprint, but then there was a time, I forget exactly which quarter it was, where you refocused it more on a second brand within your- Yeah your Cogeco footprint. From that starting point, do you have a template as to how much you think welo should penetrate, and you're trending towards that? When you say it's your internal plan? Yes and yes. It will be an S curve. oxio was an S curve as well, you now see the good part of the S curve now in our Canadian results. We're still on the bottom of the S curve for welo, it's tracking to plan so far. Okay. With, like, a new brand, and, you know, I assume there's some costs for that, more marketing channels and being deployed, this costs money. Are you able to offset all of that with new AI initiatives? Can you update us on what you're doing around sort of core operating costs to try to bring those down? Yeah. On AI, of course, not only for the U.S., but for both countries, we're deploying quite a few agents at the moment, and I'll give you a few examples. We're starting to automate our entire internet troubleshooting journey. What that means is if you're a customer and you have problems with your internet at home, first, if you go and you chat with our, a bot, if you choose to chat to a bot, we've enhanced the diagnostic capabilities using AI behind that bot. We have another agent that scans the network in your area if you contact us and diagnoses immediately. Does it seem to be a problem in their house with their modem or in the line in the back got some water in it? We run an immediate diagnostic that informs the bot. If you're transferred to an agent, the agent already gets an AI summary of what has happened and your conversation with the bot, so you don't have to repeat everything to the agent, which can be frustrating for you as a customer. The diagnostic has taken place. If we decide to immediately dispatch a technician because our agent has seen, our AI agent saw that it's probably a problem with your line in the back, and we need to send a technician and stop wasting your time, then at the end of the call, there's an AI summary of the call so that our agent doesn't need to spend five minutes taking notes about what happened. The technician automatically has all the information of what the problem might be, so that he brings the right tools and that we dispatch the right technician. This is already becoming live. Some of it is already live. Some of it is coming over the next few weeks, and it's a material reduction to our cost structure over time. The other thing I would say is we often talk about AI in the context of cost reduction. We, like all other telecoms, spend a fair amount of money in retention, so that's when you call us and you negotiate a better deal. We're starting to use AI to make that investment more efficient, which will benefit revenue over time. Great. Is there any way to frame what type of cost reduction you can continue to do on a sustainable basis? Maybe focus on the U.S. first if, you know, maybe ask it this way. How much revenue decline can be incurred while still having flat EBITDA in the U.S.? I know you're not at flat right now, but if you were to get to flat, could you offset 3% revenue growth with these AI and other cost reduction initiatives? I'm not gonna make a commitment on that one, especially for the U.S. What I would say in the U.S. is we're slowly starting to reduce our EBITDA decline in the U.S., the top line pressures are such that I wanna stay realistic here. The top line pressures and the competitive pressures in the U.S. are such that we don't yet have line of sight to positive EBITDA, neutral EBITDA yet. I think investors have come to peace with that in the short and medium term. I think what investors wanna see from us is a couple of quarters of reducing EBITDA decline, and then we'll see how the market evolves. In terms of reducing the EBITDA decline, you've been pretty outspoken that Q2 was going to be the worst and it would get better in Q3 and Q4. Is it still your prognosis? You know, We're near the end of the quarter, I'll be careful in what I say. There's also the market remains quite tough. You've seen some of the recent results of, you know, the Charters and Comcasts and Cable Ones of this world. I'll be cautious other than to say that a slow and steady improvement is still what we're targeting for the U.S. business. Okay. I'm gonna come to the audience in a minute just in case anybody has a question out there. Fair enough. Let's talk about LEO competition for a second. I've been asking everybody this, but particularly interested in your answer because you do have a U.S. operation, and just seems anecdotally like there's a little more activity by Starlink in urban markets in the U.S. than there may be in Canada to this point. And obviously some people are worried about Amazon LEO, what they may do to pound their chest out of the gates as well. Are you increasingly worried about LEO competition to your broadband business in either Canada or the U.S.? Yeah. I'll start by saying that never underestimate Elon Musk. We're certainly not cavalier in terms of our posture related to LEO. There are real limitations to the product. Even with his new Gen 3 that he's deploying right now, you can't have more than one beam at the same place, whether it's his beams or the competitor beam. That really limits what you can do. It's not like wireless, where you can keep adding capacity and antennas. The other thing is within one beam, even with this new generation, there's a relatively small percentage of homes that they have the capacity to serve. It's really a product for very rural areas, and the product has limitations. You know, there's no linear TV. A lot of very rural customers still wanna watch linear TV. There's an antenna on the roof. It has instability questions sometimes. It's one thing to say you'll get 100 Mbps, but do you get it all the time? What we've done is we've looked at our U.S. footprint, village by village, town by town, and we've modeled out what is the maximum capacity that Starlink can reach in that village for, with Gen 3. What I can say without disclosing a number is that it's quite manageable for us. North of the border, it's even more manageable because the Quebec and Ontario government had the foresight of giving subsidies to build fiber in really rural areas. That came out of COVID when people were working there. Most of Quebec and Ontario is covered or will soon be covered by fiber, even in the most remote places. The regulatory environment is less favorable to Starlink north of the border than south of the border. We're pretty confident that this is even more manageable north of the border. Reminds on the, those rural fiber builds, the TPIA rates obviously got finalized recently, over fiber. Are you concerned at all about people piggybacking on your network? I think you have a fair window of time where. Yeah no one's allowed to use it, 'cause it's new and you're not one of the two incumbents. There's a window of time for new builds where those networks cannot be resold. I don't remember exactly the number of years. Also our own, the fiber resale does not apply to smaller regional players, so we're insulated from that. Right. 'Cause I think some people say, "Why did Cogeco spend all this money building fiber when the mandated access rules aren't favorable and everybody else is cutting CapEx?" Yours is a little different, that yours doesn't qualify. Our new fiber does not qualify for resale. Okay. TPIA on your cable networks, any change in dynamics there of either the price you're getting or the amount of volume that people are using on it? People reselling our network on wireline is not really material. As we talked about before, there was a bit of a spike before the holidays, but it's calmed back down. Even when it does happen, at least we make it may impact our optical sub numbers, but we make wholesale revenue out of it. Okay. Anybody in the audience have a question? Put your hand up, we'll get you a microphone if you do. Yeah, looks like not. Let's move on to unpack spectrum a little bit more. Yeah, you think you mentioned earlier that I may look at your company a little differently than some. I certainly think the spectrum has to be considered. It is way too big to just ignore in the enterprise value, especially, not especially, sorry, even if it can't be monetized for several years. People are talking about the long-term growth potential in data centers for Bell that, you know, maybe is several years off till it's at full fruition, but for some reason they won't pay attention to the asset you have that is, you know, has a bit of a tail to it. With that backdrop, remind us, you know, what your intentions are here. Do you think you ever would need to use that spectrum, or can it be monetized? And what are the sort of paths that are potentially optimal to monetize it? Yeah. Just a reminder to level set everyone, we've invested CAD 588 million in spectrum throughout the years. We got the discounted price for spectrum as a new entrant. The markers for the value of that spectrum today, there are a few markers that suggest anyone between CAD 1 billion and CAD 2 billion. The latest spectrum residual auction would suggest about CAD 1.5 billion worth of spectrum that we have. Half of that spectrum is in places where we don't even operate a wireless network, so we don't need it as much. There are a lot of opportunities for monetization over time. There are some restrictions for transfer right now, but some of them will come off over time. One late cable founder in Canada once said, "I never met a gigahertz I didn't like." Spectrum, holding onto spectrum, it typically appreciates in value. We're patient with it, but we see that the incumbents want more spectrum. There is no new auction coming other than millimeter wave. Over time we might become the only game in town in terms of where to get spectrum, and we'll play our cards wisely to monetize this as appropriate over time. In your regions where you are the cable company and you're using an MVNO to offer wireless, can you remind us how that deal works? Is there a risk that the CRTC ends that in 2030, when the mandated access ends, and you'd have to use that spectrum to build your own network, or do you have confidence you'd be able to work around that? We have a mostly commercial deal with TELUS, which is a five-year deal. It also is not an exclusive deal, so it doesn't prevent us from having another partner as well, although we're pleased with the relationship with TELUS so far. You know, nothing prevents players in Canada for continuing to make these one-on-one type of agreements. As it relates to whether the CRTC will let that type of framework expire within seven years, it's hard to comment on. Again, we can still have our own agreements, similar to what we've done with TELUS. We feel we have quite a few degrees of freedom on this. We have a fair amount of flexibility that we'll see how much, you know, network we need to build. We may not need to build that much, but we'll see over time. Yeah, that's what I'd say for now. To be clear, the commercial deal you have, you didn't have to include the spectrum in that? It wasn't part of the negotiating leverage to say, "Use our spectrum. In return, let us have MVNO access." You were able to keep the spectrum out of that equation? Correct. Our spectrum, we haven't offered any of our spectrum to anyone yet. It is a precious asset that we're holding onto. As I said, it appreciates in value. That was not offered as part of that deal. You know, to be clear, we always had the option of going, when we were negotiating with different partners, we had the option of going to CRTC arbitration, which we didn't do, because ultimately we were satisfied with the arrangement we could get to. Okay. Lastly on the spectrum is foreign ownership rules. Can you remind me, I don't believe there's anything that would block that spectrum being sold to a foreigner, but are there any I know there's strings on selling it to Rogers, Bell, and TELUS, but is a foreigner allowed to own that spectrum? I don't. I know in terms of company ownership, there are no limitations. I don't think there are limitations on spectrum either. Even I wonder if some foreigners have bid before for spectrum. I'd have to triple check, but not to my knowledge, there are no restrictions. I don't believe there are either. Yeah. Yeah. Based on your answer, I'm gonna interpret that you haven't had any conversations with Starlink about selling them the spectrum. I mean, if, I mean, they've obviously bought spectrum in the U.S. If they did wanna come to Canada and try to have some sort of hybrid offering and have some spectrum capacity to help their direct satellite offering, even if it's just for rural areas, I mean, that could be another option as well, I assume. Could be. We're not gonna get into speculation about that quite yet. Sometimes it's a different type of spectrum they need as well. We have lots of options in terms of monetizing our spectrum if we choose to do so. Free cash flow. Yes. First, do you wanna reiterate CAD 600 million? You seem to reiterate it every time you speak that you can do CAD 600 million next year. Next year is getting pretty close. We're getting exactly. We're getting closer and closer to guidance, so, and my CFO's not here today, so I'll let him give the guidance when we issue it. Our cash flow has been growing and we're confident about that growth. What does CAD 600 million mean to you in terms of percentage of market cap and what kind of options that gives you know, after you pay your dividend? In a hypothetical scenario where we were able to generate CAD 600 million in cash flow, that would be about 20% of our market cap. After we paid a dividend and a couple of other things, you know, that still leaves CAD 400 million, which is as well a very high percentage of our market cap, which can then be used for further deleveraging and/or buybacks. On the leverage side, we said that our target was three turns of leverage, which we're on track to achieve by the end of this fiscal year, so by the end of this summer. We'll see if we wanna deleverage further than that, again, and/or do buybacks. Good news is we have the optionality to do all these things, plus keeping a healthy dividend as well. When do you think you sit down and make that decision with the management team and the board on allocating that money for fiscal 2027? Is that in October when we get the fourth quarter results? Yeah, the conversation starts in July and then gets finalized in October. If there is going to be a buyback program, or some other uses of that cash flow, we should hope to find out about it then? Well, we may not necessarily announce it immediately. It could also be announced throughout the year. Those conversations take place in October internally. Okay. We got a couple minutes left. Nobody in the audience has anything I assume still, just to make sure. Let me, is there anything we didn't touch on that I missed that you wanna highlight about the, about the story? No, I'll just summarize it. I've talked about the different chunks of our business. I've talked about the U.S., the traditional U.S. cable that certain people like less, is less than a quarter of our business. When you roll all of that up, we got still at a consolidated level, growing dividend, growing cash flow, reducing leverage. That's the key. We've touched on the competitive environment, which is still tough in the U.S. That's why we're being measured about, you know, steady improvement being what we're targeting. The competitive environment being relatively favorable on the Canadian side, and that's why we feel good about the continued performance of our Canadian business. All the math you're giving gives great context, Fred. Is it, just to be clear, when you're saying it's 25%, I don't think you're adjusting for the fact that you only own 79% of the U.S. business. If you further adjust for that, it's even smaller. Correct. 25% of your enterprise value. No, it's probably, as we said before, it's probably close to zero. Yeah. This will be quick, we only have a minute left, and I think the answer will be quick non-answer or no, but I assume there's no change in view and update that you're aware of from the Audet family in terms of collapsing the holding company structure or doing anything outside of the box. For now it's just run the business and make it better. Yeah, that's nothing new to report on that front. Yeah. See, I knew it would be a quick answer. Yeah. Okay. Well, thank you very much for your- Thank you. Time and thanks everybody for spending the morning with us, and we'll wrap it up in time for everybody to get back to their desks for the Quebecor call at 1:00 P.M. Thanks very much, Fred. Thanks everyone.