Cogeco's Dual Reality: Canadian Strength Buffers US Market Headwinds

MONTRÉAL, QC – April 09, 2026 – Cogeco Inc. today presented a complex picture of its financial health, revealing resilient growth in its home Canadian market that stands in stark contrast to significant competitive pressures south of the border. In its second-quarter fiscal 2026 results, the telecommunications and media giant reported a dip in consolidated revenue and earnings, prompting a downward revision of its full-year guidance.

However, the company simultaneously signaled strong underlying confidence by increasing its shareholder dividend and maintaining its free cash flow projections, betting that strategic investments in digital brands, wireless expansion, and operational efficiencies will navigate the turbulent American market.

A Tale of Two Telecom Markets

Cogeco's Q2 results paint a clear geographical divide. The Canadian telecommunications segment continued its steady performance, posting a 0.9% increase in revenue and a 2.3% rise in adjusted EBITDA. The company attributed this stability to the "cumulative effect of high-speed Internet service additions over the past year," which successfully offset declines in traditional video and wireline phone services as customers increasingly opt for internet-only packages.

"Our Canadian performance remains strong and resilient," stated Frédéric Perron, President and CEO of Cogeco, in the company's press release.

This Canadian stability provides a crucial buffer against the challenging environment in the United States. The American telecommunications segment saw revenue plummet by 11.6% (8.1% in constant currency) and adjusted EBITDA fall by 11.7%. Cogeco cited a lower subscriber base, the shift to internet-only services, and a "competitive pricing environment" as the primary drivers.

Industry analysis confirms the intensity of the US market, which is undergoing what experts call a "transformative competitive phase." Cable providers like Cogeco are facing a multi-front battle against aggressive fiber network expansions and the rapid scaling of fixed wireless access (FWA) from mobile giants. With an estimated 28% of new fiber being built in areas already served by competitors, the fight for subscribers has led to aggressive pricing, with some carriers offering discounts of 25-40% to lure and retain customers. This environment has driven customer churn rates up across the industry, putting immense pressure on incumbents.

Innovation as an Anchor in Choppy Waters

In response to these US headwinds, Cogeco is not standing still. The company is midway through a three-year transformation program focused on modernization and finding new avenues for growth. "I am encouraged by the turnaround progress in our U.S. operations," Perron noted, highlighting key strategic initiatives.

A central piece of this strategy is the recent launch of welo, a new digital challenger brand in the US. Debuting in Columbus, Ohio, welo is designed to attract a new customer segment with a simple, digital-first proposition: contract-free, fiber-powered internet with "lifetime locked-in pricing." Plans start at a competitive US$25 per month, a direct move to counter the pricing pressures in the market. Cogeco reported that this new brand has already contributed to a third consecutive quarter of positive internet subscriber growth in Ohio, offering an early sign that the strategy may be paying off.

Alongside its digital push, Cogeco is scaling up its wireless operations in both Canada and the US, which Perron described as a "powerful new tool to compete with." This move aligns with a broader industry trend toward converged service bundles, where providers combine mobile and broadband to increase customer loyalty and reduce churn. While specific subscriber numbers were not disclosed, the emphasis on wireless expansion signals a long-term strategic pivot.

Underpinning these initiatives is the company's transformation program, which leverages new artificial intelligence-based tools to drive operational efficiencies. By automating processes and optimizing network management, Cogeco aims to reduce costs and improve margins, a critical effort while navigating the revenue pressures in its US segment.

The Dividend Paradox: Confidence Amidst Caution

The most telling aspect of Cogeco's announcement may be the apparent contradiction between its revised forecast and its capital allocation decisions. The company lowered its fiscal 2026 projections, now expecting a consolidated revenue decrease of 2% to 4% (from 1% to 3%) and an adjusted EBITDA decrease of 1.5% to 3.5% (from 0% to 2%).

Yet, in the same breath, the Board of Directors declared a 7.0% increase in its quarterly dividend to $0.987 per share. Furthermore, Cogeco maintained its guidance for free cash flow, projecting an increase of 0% to 10% for the fiscal year. This financial maneuver was made possible by a significant 35.5% year-over-year increase in free cash flow this quarter, which reached $152.9 million. The boost was driven by lower capital spending and a one-time retroactive tax adjustment in Canada.

This "dividend paradox"—raising shareholder payouts while lowering earnings guidance—sends a clear message from management. It signals a deep-seated confidence in the company's ability to generate cash, manage its capital effectively, and execute its long-term strategy despite near-term volatility. For investors, it suggests that the leadership believes the current challenges are manageable and that the investments in 'welo', wireless, and AI-driven efficiencies will ultimately stabilize the ship and create sustainable value.

While navigating the dual realities of a stable Canadian base and a fiercely competitive US market, Cogeco is charting a course that balances immediate caution with long-term strategic ambition. The company's ability to successfully execute its transformation and grow its new ventures will be critical in proving that its confidence is well-placed as it heads into the second half of the year.