Competition Should Limit Growth, but Cogeco Communications Should Continue to Drive Free Cash Flow

Cogeco has done a good job of building fixed-line networks in underserved markets with relatively low competition. However, we expect competitors to continue to impede its locations as its most significant competitors look to expand their fiber networks in the US and Canada. Additionally, as consumers continue to cut TV and landline phone services, we think Cogeco faces a challenging path of minimal revenue growth. Yet, losses in low-margin TV subscriptions should help drive firmwide profitability as internet services become a larger mix of its business.