Summary

  • Cogeco Communications cut Q4 net capex for network expansion by 53.6% year over year, but capex excluding those projects rose 39.8%; total net capex increased 4.8%.
  • Its FY2027 guide lowers net capex to C$425 million–C$475 million, while revenue and adjusted EBITDA are expected to decline.
  • Canadian revenue and EBITDA grew in Q4; U.S. revenue and EBITDA fell as the subscriber base shrank and more customers chose internet-only service.

The capex headline has a footnote-shaped hole

The easy version of Cogeco Communications’ October results is that the buildout is winding down. The company expects fiscal 2027 net capital expenditures of C$425 million to C$475 million, against C$561 million in fiscal 2026. It says operational efficiencies and the near completion of many network expansion and upgrade projects will lower the bill.

The quarter just reported was less tidy. Net capex for network expansion projects fell 53.6% to C$26.8 million. Excluding those projects, net capex rose 39.8% to C$134.9 million. Total net capex increased 4.8% to C$161.7 million.

Cogeco points to higher spending on customer-premises equipment, mainly in Canada, and the timing of other initiatives. U.S. segment capex remained stable. The release does not assign every dollar of the increase to equipment, so the 39.8% figure is the better boundary: it measures spending outside network-expansion projects, not a single category of hardware.

That distinction matters. “Expansion is nearly complete” explains why one line is shrinking. It does not describe the whole investment program. In Q4, the company spent more on capex outside expansion even as the expansion line fell. The annual guide is therefore a change in the expected mix and timing of investment, not evidence that the business has stopped spending to support service.

Two markets, two operating directions

The customer picture is split along the same geography. In Canada, Q4 telecommunications revenue was C$375.0 million, up 0.6%; adjusted EBITDA rose 3.4% in constant currency. Cogeco says accumulated high-speed internet additions helped, while video and wireline-phone subscribers declined and internet-only plans became a larger share.

In the United States, telecommunications revenue fell 6.6% in constant currency and adjusted EBITDA fell 9.6%. The company attributes the revenue decline mainly to a smaller subscriber base, a higher share of internet-only customers and a competitive environment. Its investor update puts the August 31 internet base at 1.562 million: 968,000 in Canada and 594,000 in the U.S. That is a snapshot, not a churn rate.

Consolidated Q4 revenue declined 2.8% in constant currency to C$695.5 million; adjusted EBITDA declined 4.7% to C$344.8 million. The Canadian operation is growing, but it did not outweigh the American decline. The composition of customers matters alongside the count: Cogeco’s own explanation links internet-only mix to revenue pressure in both markets.

A smaller build budget does not yet buy a cash rebound

Cogeco’s Q4 free cash flow was C$104.2 million, down 3.7% in constant currency. Its separately reported free cash flow excluding network-expansion projects fell 21.2% in constant currency to C$130.4 million. Those are company-defined measures; the second line exposes a weaker cash result outside the expansion-project adjustment while the company was still spending more on non-expansion capex.

For fiscal 2027, management expects free cash flow of C$500 million to C$550 million. It names lower adjusted EBITDA, higher financial expense and current income tax as pressures, partly offset by lower net capex. Revenue is expected to decline by a low-to-mid single-digit percentage and adjusted EBITDA by a mid-to-high single-digit percentage, on a constant-currency basis.

The board also raised the quarterly dividend 2% to C$1.007 per share, extending a 23-year run of annual increases. That payout decision sits beside a forecast for lower revenue, lower EBITDA and a free-cash-flow range below fiscal 2026’s C$554 million actual. The figures show how management is balancing investment, cash generation and shareholder returns; they do not disclose the board’s full capital-allocation calculus.

Cogeco did not publish fiscal 2027 segment guidance or quarterly net subscriber changes by country; either would show how much of the consolidated decline rests on U.S. customer losses rather than service mix.

Sources