Good day, and welcome to the Cogeco Inc. and Cogeco Communications Inc. Q3 2020 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Patrice Ouimet, Senior Vice President and Chief Financial Officer of Cogeco Inc. and Cogeco Communications Inc. Please go ahead, Mr. Ouimet.
Good morning, everybody, and welcome to our third quarter conference call, which I'll cover with Philippe Jetté. Before we begin this call, I would like to remind listeners that the call is subject to forward-looking statements, which can be found in the press releases we issued yesterday night. I'll turn the call over to Philippe Jetté.
Merci, Patrice. Good morning, everyone. Thank you for joining us to discuss the results of our third quarter, ending May 31st, 2020. I'd like to start by highlighting the outstanding work performed by our teams across Quebec, Ontario, and the U.S. East Coast, which enabled Cogeco to provide high-quality connectivity services and increase access to information and entertainment for our customers since the beginning of the COVID-19 crisis. Cogeco's subsidiaries have quickly adapted their services through the implementation of personalized measures to offer customers more flexibility while encouraging them to make use of our online services, including self-serve, self-installations, and self-repairs. In the medium term, we intend to capitalize on a number of initiatives which were implemented during the confinement period to accelerate our digital transformation journey, as we expect that many customers will continue to use our online tools after the pandemic.
Cogeco was particularly proud to have responded to the increased needs of its customers, thanks to the capacity, reliability, and quality of its network, which experienced significant data traffic peaks during the confinement period with increased teleworking, online educational, and digital entertainment consumption. Despite having offered numerous relief initiatives to our customers, such as temporary discontinuance of late fees and data overage fees, the third quarter financial results of Cogeco Communications were only modestly impact by the COVID-19 pandemic, as we experienced strong demand for our internet product and a lower level of customer activations and disconnections, which contributed to lower operating costs. However, the third-quarter financial results of Cogeco Inc. were more impacted due to its exposure to the media business, as radio advertising revenue was significantly impacted by the pandemic.
On a positive note, we are seeing modestly improving trends in the radio sector with the gradual easing of confinement measures, helping the retail sector and the economy. In line with its corporate social responsibility engagement, Cogeco was very proud to receive two prestigious recognitions over the last month. Cogeco Communications has been named to Corporate Knights 2020 Best 50 Corporate Citizens in Canada for a third consecutive year, placing it among the Canadian companies which are setting the standard for sustainable growth leadership. In addition, we were honored to receive the Caring Company Certification from Imagine Canada, which recognized our philanthropic work and social commitment. We have always strived to support our communities and are proud to join a network of leaders who are setting the standard for corporate philanthropy in Canada. Let us continue with Cogeco Communications' latest strategic development.
Cogeco Connexion was proud to announce on May 21st that it was selected for 11 infrastructure projects as part of the Quebec government new Connected Regions program to accelerate access to high-speed internet in underserved regions. These projects, which are part of the first phase of the program, will make it possible to connect more than 15,500 homes located in 15 regional municipalities across Quebec. These planned network expansions are in addition to the January announcement that Cogeco Connexion, in conjunction with SWIFT, a non-profit, municipally-led broadband initiative, will deploy its networks to 3,650 more homes and businesses in the Wellington and Lambton Counties in Ontario. Cogeco Connexion has submitted several additional infrastructure projects located in Quebec and Ontario as part of the CRTC's Broadband Fund program.
It also expects to submit other projects under the new Improving Connectivity for Ontario program, the federal government Universal Broadband Fund program, as well as for the next call for projects with the SWIFT program. As part of our strategy to extend our regional and rural internet coverage and further reinforce our position to enter the wireless market in a disciplined manner, Cogeco Connexion acquired, on May 1st, iTéract, a company that operates as a full telecommunication service provider in southern Quebec, using a combination of fixed wireless and fiber-to-the-home technologies. As part of the transaction, Cogeco acquired 15 exclusive 3.5 gigahertz spectrum licenses. The 3.5 gigahertz band is globally recognized for the deployment of 5G technologies. iTéract's network, spectrum licenses, and workforce expertise will be complementary assets as they cover a large region in rural southern Quebec and serve approximately 2,000 customers.
This transaction represents the third acquisition of spectrum licenses by Cogeco over the last two years. Speaking of the Canadian operations' various strategic objectives, we also announce the appointment of Frédéric Perron to the position of President of Cogeco Connexion, effective September 1st. Frédéric is a seasoned and dynamic senior executive with over two decades of leadership at leading telecommunications and financial services companies such as T-Mobile, Vodafone, Rogers, and Capital One. His proven track record in developing high-performance teams, as well as his extensive experience in marketing, branding, sales, and customer service will be strong assets as Cogeco Connexion pursues its growth and innovates to deliver distinctive customer experiences. Frédéric was most recently Chief Commercial Officer at T-Mobile Polska, where he led a team of 3,000 people serving seven million customers.
He successfully built the company's commercial portfolio from the ground up, refreshed the brand, substantially improved the client service approach, and fostered strong employee engagement. Frédéric will be based in our Burlington, Ontario office. Moving on to M&As. The Thames Valley Communications acquisition was closed on March 10 for an amount of $50 million. The upcoming launch of enhanced bundles and the TiVo video platform on this footprint is expected to contribute to increased penetration services. Given that Thames Valley is contiguous to our existing Connecticut operations, we also expect to generate operating efficiencies. We continue to look for further value-accretive acquisitions in the U.S. to accelerate our growth as we enjoy a solid financial position at both Atlantic Broadband and Cogeco Communications.
Given a net leverage ratio at 2.7 times net debt to EBITDA, excess cash at CAD 294 million pro forma, the CAD 200 million debenture that we will redeem on July 20th, unused revolving credit facilities of close to CAD 1 billion, and significant positive free cash flow generated each quarter, we have decided to renew our normal course issuer bid to repurchase up to 1.9 million shares over the next year or 10% of the public float. Note that we repurchased 90% of the maximum permitted shares for an amount of CAD 175 million during the last program, and we continue to be active under the current program. Let me move to an overview of our consolidated financial results at Cogeco Communications. For the quarter, reported revenue has reached CAD 605.8 million, increasing by 1.1% in constant currency.
EBITDA has reached CAD 294.7 million, increasing by 1.9% in constant currency and resulted in an EBITDA margin of 48.6%. Atlantic Broadband's revenue and EBITDA growth were partly offset by modest decline at Cogeco Connexion. CapEx intensity at 20.4% was higher than the same quarter last year due to higher capital expenditures at both Cogeco Connexion and Atlantic Broadband, although we expect full-year expenditures to be in line with our initial expectations. The quarterly dividend has been reconfirmed at CAD 0.58 per share. Let us look now at the financial results of the individual components.
Cogeco Connexion's reported revenue has declined by 1.6% relative to the same quarter last year, mainly as a result of video customer losses and lower net pricing from consumer sales, mostly as a result of the carryover effect of product bundles being more actively promoted from the fourth quarter of fiscal 2019 to the second quarter of fiscal 2020. The revenue decline was partly offset by the continued growth in internet services customers and rate increases. When compared to the second quarter of the current fiscal year, revenue declined by a modest 0.5% due to the impact of the pandemic, as we did not charge data overage fees, and credits were given to customers subscribing to sports packages.
Cogeco Connexion EBITDA declined 1.1% relative to the third quarter of last year, mainly as a result of lower revenues and higher bad debts due to the economic downturn related to COVID-19, partly offset by lower marketing initiatives and installation costs as customers were largely performing self-installation and remote repairs during the pandemic. Note that EBITDA has actually grown by 3.7% relative to last quarter as a result of lower operating expenses. The organic loss in primary service units has remained stable relative to the same quarter last year, but the client mix has improved due to the increase in internet subscription and service upgrades, as our high-quality connectivity services are more than ever sought after during a period where teleworking and online education are essential. Atlantic Broadband's revenue in constant currency increased by 4.5% in the third quarter compared to last year, while EBITDA increased by 7.1%.
Excluding the impact of the Thames Valley acquisition and a non-recurring gain on disposal of property of $1.7 million, recorded as an offset to operating expenses, revenue and EBITDA would have grown 3.1% and 4.1%, respectively, in constant currency. Organic revenue growth comes mainly from both residential and business internet service customers, and rate increases mostly implemented during the fourth quarter of fiscal 2019, partly offset by a decrease in video service customers and the suspension of late fees charged to customers, combined with lower political advertising sales in the context of COVID-19. Organic EBITDA growth was mainly related to an increase in revenue and lower marketing expenses, partly offset by an increase in bad debts as a result of the economic downturn related to the pandemic.
PSU additions in Q3 were slightly lower than during the same quarter last year due to the provision related to non-paying customers, which Atlantic Broadband has not disconnected as part of its Keep Americans Connected pledge with the Federal Communications Commission. Let us now take a look at Cogeco Inc. In the third quarter, consolidated revenue has declined by 0.6%, and EBITDA has increased by 1.1% in constant currency. The communication segment contributed positively to the growth, while the media business, although on a much, much smaller scale, was significantly more impacted by the COVID-19 pandemic, as the bulk of its radio revenue is generated from the retail industry, which is significantly affected by the current crisis. As most retail stores in Quebec were forced to close temporarily during the months of March, April, and May, they significantly reduced or completely stopped their media spending.
This had a direct impact on our radio business, which recorded a year-over-year decline of 33% in revenue. To mitigate the negative impact of such a decline, the business took immediate actions to reduce its cost base, which partly lowered the negative impact of results. The severity and length of the crisis and its economic impact on radio advertising revenue, especially on the retail industry, remains unknown at the moment. We do, however, expect our media business to be in a strong position from a market share perspective when the situation eventually stabilizes. The Numeris spring rankings has four of our stations at the top of market ranking. The quarterly dividend has been reconfirmed at CAD 0.475 per share. I will now discuss financial guidelines.
Based on the experience gained while operating during the pandemic and the fact that there is one quarter left to the current fiscal year, Cogeco Inc. and Cogeco Communications are introducing financial guidelines for the current fiscal ending on August 31, 2020, on a constant currency basis. We expect that both companies will achieve low single-digit % revenue and EBITDA growth and mid-single-digit % free cash flow growth. For the fourth quarter of fiscal 2020, we expect positive revenue and EBITDA growth at Cogeco Connexion.
At Atlantic Broadband, we expect that organic revenue and EBITDA year-over-year growth will be in line with the Q3 performance when excluding a non-recurring gain of $ 1.7 million, as discussed. At Cogeco Media, we expect a further decline in advertising revenue as the easing of confinement measures in Montreal occurred only gradually in June. However, we are currently seeing modestly improving trends in our advance bookings.
Our multi-year revenue and EBITDA organic growth plans call for low single-digit growth in Canada and mid-single-digit growth in the US and mid-single-digit consolidated free cash flow growth. The performance in fiscal year 2021 will depend on a number of factors, including the impact of COVID-19 and the related state of the economy and competitive dynamics in Canada and the US. We will provide guidelines for FY 2021 when we have sufficient visibility on how the COVID-19 crisis will evolve and its impact on the economy. Let me conclude by saying that we are very pleased with how our teams have responded to the COVID-19 crisis, showing great adaptability, agility, and strong dedication. We were able to navigate through significant changes in the way we operate during the confinement period and expect to improve operations going forward by capitalizing on lessons learned and new opportunities arising from increased connectivity needs.
On this, we will be happy to answer your questions.
At this time, I'd like to remind everyone, in order to ask a question, please press star and the number one on your telephone keypad. Your first question comes from the line of Aravinda Galappatthige. Your line is open.
Good morning. Thanks for taking my questions. A couple from me. First of all, on the Canadian internet subscriber numbers, obviously a very good result in the current conditions. I was wondering if you can provide a little bit more color on that front. I know that reduction in churn was a big part of that, but competitively, you guys have a significant advantage in terms of speed. I was wondering whether you can talk to the extent to which that became a bigger factor this quarter, and how we should think about that in the future when you think about the competitive landscape there. In the U.S., is there any change in the M&A landscape? I know that you keep an eye on a group of potential targets there.
Is it fair to say that the current conditions potentially hasten a transaction or maybe bring some of those players to the table a bit sooner in light of some of the pressures they might be feeling in the near term? I'll leave it there. Thanks.
All right. Hi Aravinda. It's Patrice. I'll take your questions. On the strength of the Canadian internet numbers, I would say it's always difficult to know exactly where the new customers are coming from. Generally, you can see them in two buckets. One is customers moving from DSL to our network or FTTN, mainly DSL to our network, which is a lot faster. As you know, we offer 120 megabits everywhere and a gigabit in 70% of the territory in Canada. That's a portion. People wanting faster internet. The other one is with obviously a lot of people working from home now, there are some people that did not have internet lines at home and have installed internet lines, they were sorry, only running TV at home, or not, and access to the internet was through wireless.
I would say it would come from those two. We do expect that this strong growth in the quarter and people working from home will be less prevalent in the future, obviously, as people have installed themselves to be able to work from home. That being said, we do still expect strength in the coming quarter because, again, our speed advantage will remain for a long time. On the U.S. M&A landscape, it's actually a bit the reverse. Like us, most players have businesses that have had some impact from COVID-19, so more costs, some lost revenues, but more strength in internet numbers. I would say generally, we're seeing this across the board, and most players I'm sorry, are generating cash flows. There are some processes that we were expecting to happen earlier in the year that have been postponed.
We do expect that they will come back to market, so we should normally get back to a normal market in the coming months. That would be our view. Obviously, with what's going on right now in the States in terms of confinement in different states, first wave, second wave, we'll have to see how it evolves. Obviously, when we make an acquisition, we have to be able to visit the operations. This will be the key thing to look at.
Great. Thank you, Patrice.
Your next question comes from the line of Vince Valentini from TD Securities. Your line is open.
Thanks very much. First question's on free cash flow in your guidance. I want to make sure I understand this. You say mid-single-digit growth for the year. Through nine months, you're down 7%. If you were going to do, say, 5% growth for the full year, you'd need to do about CAD 132 million in free cash flow in the fourth quarter, which would be a 57% increase from last year. Is that what you're trying to telegraph because of some major timing issues on cash taxes or CapEx or any other items? Is mid-single digit to be taken as a wider interpretation of what the growth could be for the full year?
We do expect to be, again, it's in constant currency, but we do expect to be at mid-single-digit growth year-over-year for free cash flow. It's true that the CapEx level was elevated in Q3. Sometimes there's a timing on certain projects, but we also bought a bit more CPE than usual as we were initially just trying to protect from shortages on CPE as we were getting into the COVID-19 crisis. We have strengthened the network as well, so we've advanced some projects. We do expect these expenses to not reoccur in Q4. Yes, so I would say mid-single digit. Obviously, it's not a perfect number, but we should be around there. As we said on the last call, we took out our guidance on our last call, but we also said that we were aiming to protect the cash flow.
With a slightly lower level of EBITDA, we're able to control CapEx and have a slightly lower level of CapEx and end up in a similar situation in free cash flow.
Patrice, is there anything in terms of cash taxes? I think I read in the release that some government levels allowed you to defer some payments that would've been paid in Q3. Is there some catch-up in Q4 or not till September or beyond?
I don't expect anything large in taxes in Q4. Mind you, our tax expense was higher in Q3. It's mainly the total tax expense. As our business evolves and our mix of business between U.S. and Canada changes, the interest rate change as well. They changed a lot recently. We were guiding initially on cash taxes of about 12% for the year, so far in the year, that's where we are. When you look past this year, this will probably increase a little bit to about 14%. This is what we foresee in the future. The total tax this quarter, including the deferred, was about 23%. Going forward, it will probably be around there, like 23%, 24%. There's been a shift related to taxes due to these elements.
Okay, great. One last one. Bad debts. You talked about those expenses being up in both Canada and the U.S. Can you quantify that at all? Have you taken any sort of allowances to try to predict what bad debts will be in future quarters? Have you just booked what was realized in Q3?
Yeah. We booked about CAD 3 million more on a consolidated basis than usual. Normally, we're running the bad debt expense. You can look at it as a bad debt expense. We're including write-offs as well. If you look just at the expense line on the P&L as a percentage of revenue, overall in the year, it runs at about 0.4%. This quarter was higher, it was about double that. We do it quarter by quarter because we cannot really pre-book it. We look at the receivables, we have to estimate what will be collectible and not. As you know, our receivables are higher than usual as we have agreed, like the whole industry, to not disconnect customers during the confinement period. We do expect a large number of customers to pay some of the longer-dated bills. Obviously, it does increase bad debts.
Maybe one thing to mention also is, given this particular timing where we cannot collect as normal, especially in Q3, we did also estimate the number of PSUs which we would normally have disconnected and taken out. We actually took a provision in our PSU numbers to give a better picture for what are the revenue-generating PSUs in the quarter.
Thank you very much.
Thank you.
Again, if you'd like to ask a question, please press star and the number one on your telephone keypad. Your next question comes from the line of Jeff Fan from Scotiabank. Your line is open.
Thank you. Good morning. Hope everyone is well. Got a few questions. First, just to clarify on the guidance that you gave for Q4 for Canada. I think you talked about growth in the fourth quarter, both in revenue and EBITDA. I just want to make sure I heard that correctly. If so, what are some of the drivers to get you from Q3, which seemed to still be negative, to the positive in Q4?
Yeah. You heard it correctly. We do expect to grow in Q4 year-over-year. Actually, when you look at Q3, it was a decline year-over-year, but we had more impacts from COVID-19 in there. When you compare Q3 to Q2, actually, the EBITDA has grown and the revenue has declined less than when you compare year-over-year. My point is, it's an improvement in Q3 versus Q2, and we do expect Q4 to be an improvement as well. What will drive this on the revenue front, while we're getting more back to normal in Canada with the easing of confinement, sports is going to come back as well. I talked about collection as well. We're going to be not yet in normal state, but not in a state we were in Q3 where most people were confined at home.
Also we have to look at Q4 last year, which was a softer quarter. That also plays into it when you compare the two years.
Okay. Maybe unpacking that a little bit, the ARPU trends, you talked about some price increases that typically would have happened in May did not happen, and some of the fees were waived, both overage in Canada and late fees in the U.S. Can you talk about the rough impact of some of these fees being waived in the quarter you just reported? Also, a little bit of color on what you planned for regarding rates that was delayed back in May.
Yes. You're talking about Canada still?
Yeah, Canada, but if it is material maybe for U.S. Both Canada and U.S.
In Canada, the impact on revenue of COVID was about CAD 2.3 million. You're right, a section of the overage for the proportion of customers that don't have unlimited packages. It's a small component, so it's baked into it. For customers that have the sports packages, they were ahead of credit during that period, which we also get back on our side with video providers. It was then also a small decline in point-of-sales earnings, and it's mainly related to the decline in hotels, restaurants during that period. In Quebec, the impact on revenue was a bit more than CAD 1 million, so it's a bit smaller.
Overage Sorry.
No, go ahead.
No, I was gonna ask whether the overage fees are now reinstated for Canada?
Yeah. It's gradual, and it depends on the regions and I would say for Q4, it's a mix, and you can assume that when we get to next year, We're gonna be back to normal.
Okay. The price increase?
Yes. We had introduced a small price increase in Ontario, which we delayed initially during the confinement period, but this will be applicable in Q4. It's not major. I would say if you take the overall revenue base, it's about 1%, because it does not touch all the products and all the regions.
Great. I guess one final question is on the network capacity. You talked about usage increasing the capacity spend. Wondering if you can help us think through the capacity margin that you have in the network with that capacity spend?
We still have more than enough capacity, as you know, and it's a continuous process. Our engineers are monitoring very closely the level of usage for every services in every area of the network. As we add CapEx and capacity, there's an ongoing monitoring process that resets itself and reforecast the next addition. We should not be in any trouble capacity-wise. It's ongoing.
Great. Thanks so much.
Your next question comes from the line of Matthew Griffiths from Bank of America. Your line is open.
All right. Thanks for taking the question. I wanted to ask about, there's been significant kind of government support for business and individuals, and I hear your comments that you're expecting growth in the quarter, but do you not expect maybe a lagged effect of some kind of headwinds to revenue once this support gets pulled back a little bit? I'm thinking maybe more on the small business side, on the commercial side, if you can make any comments there. Just to follow up on the comments made about the network and capacity. I know comments have been made in the past about the download capacity and where that kind of peaks and how that's gone.
I was wondering with the increase in work from home and video conferencing, how the upload side of that looks, and if there's any plans to augment that or any requirement or foreseen need to augment that going forward.
Okay. Well, let me start with the capacity, just to stay on that. The same process applies, uploads or downloads. We monitor and augment both streams in our network constantly. Fixed broadband networks are a lot easier and less impacted by fluctuation. Our loads are more stable compared to wireless networks. When actually you run into trouble, it's more on the wireless side. Wired network are very predictable. We have line of sight on the mid to long term because we have very high loads, and they don't swing that much.
Uploads or downloads, we can easily predict and make the augmentation we need. Now for the first part of your question, and I'll ask Patrice to complement that, but we are giving guidance for only this quarter. Of course, there's all kinds of things that could happen with the economic recovery. We plan with what we know so far. The small business are more impacted, but they all count of our networks, our internet connectivity on our telephony, on our hosted PBX service to stay in business and get the most out of it. We don't really foresee that they will all go bankrupt and disconnect all essential services like connectivity.
If I can add also, that said, we're talking about Q4, and Q4 ends in a month and a half. It's very close by, and the government programs in Canada are running either to that or past that as well. You're right that long term, if we look into next year, once the programs ease, and that's a question mark because they were just extended on the commercial side. We will have to see how this works. We've already seen a decrease in video feed in the hospitality area. Obviously, the core business is internet and phones. As long as the businesses are in operations, normally these are services that are essential for them to operate.
Okay. Thanks. Maybe if I can just follow up too with one other question about the U.S. Florida has been a pretty key market for you guys. I'm just wondering, with them being in the news kind of in a negative way recently, is that impacting your operations at all, or has it been fairly stable, given that they're not kind of imposing the same type of shutdowns that you would've seen in Quebec and Ontario?
Well, it's pretty sad what's happening in Florida. This will most likely bring more confinement measures in place. People are still using essential services, as we just mentioned, for business or for consumers. They will be most likely re-confined, they won't stop needing information, entertainment, and connectivity services. We don't really foresee a big swing, it could delay some projects, like new adds on our network. If re-confinement measures are put in place, it could slow down some builds and some projects, and slow down some PSUs. Existing customers will continue to use our services the way they use it. They certainly won't downgrade, more could upgrade.
Okay. Thanks a lot.
Again, if you'd like to ask a question, please press star and the number one on your telephone keypad. Your next question comes from the line of Drew McReynolds from RBC. Your line is open.
Yeah. Thanks very much. Good morning. One follow-up for me on the television side. Lots going on in the numbers we just saw for the period. You alluded to given on the residential side credits to customers. Obviously on the commercial television side, you've seen with the closures an impact. I'm just trying to get a sense for underlying if there's any accelerated TV cord cutting or cord shaving at this point as you look forward. Just secondly to that, I may have missed this in the opening commentary, could you give us an update on where you are with the IPTV deployment? That'd be great. Thank you.
Right. On the cord cutting, no, we're not actually seeing cord cutting on TV. As people have been confined home, actually TV watching has been good and use of phone as well. I would say the credits were more on the specific sports packages in Canada, where we're also getting credits on the video we're buying from the providers. It doesn't apply to across the board, but it's for the larger sports-related packages. Once sports comes back and it's slowly starting again, then we do expect those credits to be removed. Obviously customers will have access to what they're used to watching, and we're going to be back to normal. No activity so far we're seeing in terms of accelerated cord cutting. Philippe, did you want to cover IPTV?
IPTV, yes. Good question. We have not stopped, internally, our work. Of course, our priority right now remains on the stability of our operations, best service to our customers, and assistance while they perform self-care, self-repair, self-install. We have a full workforce to serve the customers. It's not an ideal time to launch a new product. We are looking for the best timing. The latest months were not ideal to launch a new product. It's there, and we will launch it as soon as a better timing can be found. In the meantime, we continue to optimize it and create the best products for our customers.
Great. Thanks very much.
Your next question comes from the line of Jeff Fan from Scotiabank. Your line is open. Jeff Fan, your line is open.
Yes, I think we've had Jeff before. Oh, go ahead.
Hi, sorry about that. Sorry, I was on mute. I wanted to just quickly follow up on the sports comment, on the credits that you're giving to your customers and the credits that you're actually getting from your broadcast partners. How is this working? Are you proactively giving credits and then getting the same dollar credits from your broadcasters? Can you just walk us through how that's working?
Yeah. We have proactively done it on certain packages. Basically, it's a matching. We actually give bigger credits than we save on the video, so we lose the margin. That's the right thing to do. The way we pay our video is directly linked to what we charge our customers in terms of the packages and the feed they're getting. We know exactly who gets what, and so it's linked. Basically, the credits we're getting for certain packages is taken out in revenues and also in our cost in video.
Okay. That's had a slight negative impact, actually, because you're giving more credits away than you're getting back.
That's right.
And so when-
Is it very large? but yes, we're losing the margin there. Yeah.
Okay. As sports comes back, hopefully, I guess, in the next few weeks, I guess those will all start to reverse.
That's the expectation, yes.
Okay, great. Thank you.
This can be complemented with some channels that were also provided to us for free as unscrambled channels, and we made them available for free to our subscriber, thus augmenting the choice and the entertainment experience. This came at no cost, and we have provided the same unscrambled channels at no cost.
Great. Thanks for the color.
There are no further questions at this time. I'll turn the call back over to the presenters.
All right. Well, thanks everybody for being there today. We're going to be presenting our Q4 numbers in the fall. In the interim, as usual, please feel free to call us if you have any questions. Thank you.
Bye now.
This concludes today's conference call. You may now disconnect.