Photo: Graham Hughes The canadian Press
The president and chief executive officer, Philippe Jetté
Cogeco Communications expects that a growing number of its customers are unable to pay their monthly bills, while several of them are on leave forced home because of the pandemic of COVID-19.
Nevertheless, the quebec-based company of telecommunications, like other actors in the sector, said on Wednesday, during a conference call to discuss results for the second quarter, not having the intention to crack down on the laggards. “Normally, if after a certain time people are not able to pay, there is a disconnect, – has explained the chief financial officer, Patrice Ouimet. We’re not going to do that. We expect, therefore, that this [the number of overdue accounts] increases. “
Questioned by analysts, the management has not provided specific data regarding its clients in this situation.
The bad debts had not significantly affected Cogeco Communications — the main subsidiary of Cogeco, during the financial crisis of 2008, was recalled by Mr. Ouimet. “Obviously, we are experiencing a type of crisis is different, but we have not seen a significant increase in bad debts. We’ll wait to see what happens. “
The spread of the new coronavirus has already had effects at Cogeco Media, which operates a network of 23 radio stations in Quebec and Ontario, where it was temporarily laid off 130 people — approximately 25 % of the total workforce — because of the erosion in advertising revenues. The pandemic has also prompted Cogeco Communications to put aside its forecast for the fiscal year that ends in August because of the uncertainty.
“We intend to publish our annual forecast when the situation will stabilize,” explained analysts with the president and chief executive officer, Philippe Jetté, without, however, providing schedule. In the short term, the company anticipates a negative impact on its revenue, especially because more and more people lose their livelihood.
In a note sent to its clients, Maher Yaghi, of Desjardins capital Markets, was felt, however, that Cogeco Communications was among the companies best positioned of the canadian telecommunications sector to absorb the impacts of the pandemic. “The company is less exposed to business services for small and medium-sized companies compared to its peers and we believe that wireline services should offer a better performance than the wireless services during the crisis, as more people spend more time at home. “
According to the analyst Drew McReynolds, RBC capital Markets, the pandemic could encourage Cogeco Communications to wait before raising its price, and the re-introduction of fees when the use limit data is exceeded.
In the second quarter ended February 29, Cogeco Communications has earned a net profit of 109.4 million, or $ 2.24 per share, compared to 81.7 million, or $ 1.65 per share, in the same period a year ago. Revenues were $ 586 million, an increase of 0.4 %, or 0.9 % on a constant currency basis, compared to the second quarter of the previous fiscal year.
Normally, if after a certain time people are not able to pay, there is a disconnect. We’re not going to do that.
— Patrice Ouimet