Cable Tech

Cogeco set to let Altice USA's deal deadline die

Having already rejected Altice USA's latest unsolicited overture, Cogeco's top exec made it clear today not to expect any changes as a November 18 deadline affixed to Altice USA's sweetened offer approaches.

"As all the facts are out there, including the November 18 end-date, there is nothing to add on this matter," Philippe Jetté, president and CEO of Cogeco and Cogeco Communications said today on the company's fiscal Q4 earnings call. "Today, Cogeco enjoys a unique and enviable position as the only broadband services company with a significant presence in both Canada and the United States."

Both Altice USA and Toronto-based Rogers Communications have cast an envious eye upon Cogeco in recent weeks, but Cogeco wants them to look elsewhere and take a hike.

In its latest, greatest bid made on October 18, Altice USA put forth a revised, increased offer to acquire all of Cogeco, then retain Cogeco's US business (Atlantic Broadband) and sell Cogeco's Canadian assets to Rogers. The Cogeco boards and Gestion Audem, a family-owned company with 69% of voting rights of Cogeco, quickly shot down the revised offer of C$11.1 billion ($8.4 billion). Altice USA, which reports Q3 results Thursday afternoon, said last month it would withdraw the offer by November 18 if it's unable to come to a "mutually satisfactory" agreement or "does not see a clear path forward to completion of a transaction."

Cogeco sizing up its own M&A opportunities

Meanwhile, Cogeco remains on the hunt as a buyer, announcing last week a deal to acquire DERYtelecom, the third-largest cable provider in Quebec, for C$405 million ($304.15 million).

DERYtelecom, which serves about 100,000 customers in more than 200 municipalities, will help Cogeco expand its footprint in the province and further pursue Cogeco's edge-out expansions, Jetté said. Cogeco, he added, also intends to boost DERYtelecom's broadband penetration (today it's at 46.5%) by investing in speed upgrades and adding more Wi-Fi capabilities, and complement that with the rollout of Cogeco's new IPTV product and its commercial services product suite.

Cogeco execs also reiterated that they have 30 to 40 companies on their target list should they come up for sale. While M&A intensity slowed during the earlier stages of the pandemic and some deals were pulled back as a result, some M&A opportunities have started to resurface, including some in the US, Cogeco execs said.

Mobile matters

Cogeco also offered an update on its plan to enter the mobile services market under a proposed hybrid mobile network operator (HMNO) framework that would involve accessing portions of incumbent wireless networks alongside the buildout of its own infrastructure. The aim of the initiative, which is awaiting government approval and would use some spectrum Cogeco has been gathering on its own, is to bring more competition to the mobile market while also extending access in rural and regional underserved or unserved parts of Canada.

"Dense urban centers are well served," Jetté said. "Now we have to turn to regional wireless and mobile ... and Cogeco and other regional operators will be part of that."

Cogeco, he added, is also looking at expanding its footprint with fixed wireless access, again focused on regional and rural areas.

Cogeco has argued that a motivator behind Rogers's interest in joining Altice USA in a hostile bid to divvy up Cogeco is to prevent Cogeco from entering the Canadian mobile market. Rogers, Cogeco's largest long-term shareholder and a mobile operator in its own right, holds a 33% economic stake in Cogeco.

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— Jeff Baumgartner, Senior Editor, Light Reading

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