Earnings Call: Q3 2019

Jul 11, 2019

Good day, and welcome to the Cogeco Inc. And Cogeco Communications Inc. Third Quarter twenty nineteen Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Ouimet, Senior Vice President and Chief Financial of Cogeco Inc. And Cogeco Communications Inc. Please go ahead, Mr. Ouimet. Good morning, everybody, and welcome to our third quarter conference call. So joining me today are Philippe Jatay, Marie Alain Madry, Andre Pinard, Pierre Marie and Philippe Bonnet. So as usual, before we begin this call, I'd like to remind listeners that the call is subject to forward looking statements, which can be found in our press releases issued yesterday. And I'll turn the call over to Philippe Jadet. Good morning, ladies, gentlemen and shareholders of Cogeco Communication Inc. And Cogeco Inc. And thank you for joining us to discuss the results of our third quarter ending May 3139. Let us begin with Cogeco Communications. Our previously announced sale of Cogeco Peer one has closed on April 30 for a net cash receive of $720,000,000 resulting in a net gain on disposal of EUR 82,400,000.0. This transaction now allows Cogeco Communications to focus exclusively on the growth of our North American broadband business with greater flexibility to pursue organic investments and acquisition opportunities as our net leverage has declined from 3.3 times at the end of the second fiscal quarter to 02/2008 times as of May 31 when excluding the results of Cogeco Peer one. The transaction has also allowed the launch of a normal course issuer bid where Cogeco Communications could repurchase up to 1,800,000.0 shares or 10% of its public float over a one year period. Between our share buyback program and our dividend, we could return up to 60% of our expected fiscal year twenty twenty free cash flow to shareholders. That is dividend and NCIB if fully exercised. The management team is focused on delivering shareholder value by creating exceptional customer experience, augmenting our geographic reaches in The US and Canada, mobilizing highly engaged teams, and in time, expanding into new telecommunication market segments such as wireless. The implementation of a new customer management system, the rollout of many digital initiatives as well as one gigabit Internet speeds and the upcoming launch of an IPTV platform in Canada demonstrate our commitment to offer enhanced services in a cost effective way. Cogeco Connections recognition in 2019 as one of the top employers in the Greater Montreal area by the editors of Canada's Top 100 Employers is a testament to our engaged workforce. On the wireless side in Canada, we were very pleased to see the recent actions by innovation, science and economic development as well as the CRTC to explore regulatory changes that would allow capable regional entrants into the wireless market. In our submission to the CRTC, we propose a hybrid MNO model in which companies with significant network access infrastructure would have regulated wholesale access to spectrum in regions where they operate. This approach balance the objectives to sustain Canadian investment and implement pro consumer measures. We remain committed to exploring opportunities to enter the wireless space in a in a disciplined fashion. And given the consultation time frame and the various discussion in this process this process will result in, it is still too early to provide further comments on the specifics of a wireless rollout. Let's now move to an overview of our consolidated financial results. Note that results from continuing operations exclude Cogeco Peer one's results. So for the quarter, revenue is up 1.7% and EBITDA up 4.3% in constant currency when compared to the same period last year. Reported revenue has reached and $87,300,000 and EBITDA has reached 283,900,000.0 generating a margin of 48.3%. Cogeco Connection achieved an EBITDA growth of 3.6%, which is close to last quarter's strong performance And customer trends have improved compared to last year. Atlantic Broadband's 4.4% EBITDA growth was in line with expectations, reflecting higher marketing expenses at now at the now normalized level with q three also capturing the full impact of the annual January 1 programming rate increases. The increased marketing spending, the Florida expansion plan and greater focus on reconnecting seasonal customers in New Hampshire and Maine have paid off as primary service units, net adds of 15,800 have more than doubled in the quarter compared to last year. The quarterly dividend was reconfirmed at $0.05 $25 per share, a 10.5% increase over last year. Let us now look at the individual components. At Cogeco Connection, our PSU trends in the quarter are slightly ahead of the comparable quarter last year, now reflecting normalized trends as our CMS migration issues have been fixed, and we have ramped up our sales and marketing efforts since last November. The new CMS is the foundation piece of Cogeco Connection, evolution to digitize customer experience, enabling quicker response time and better digital interaction to enhance and personalize the customer experience. Cogeco Connections revenue has declined by 1% in the quarter, which is the trailing impact of declines in residential video and telephony customers in Q4 twenty eighteen and Q1 twenty nineteen as a result of the transition experienced last year with the new CMS. Commercial services revenue growth was strong at 6% and now represents over 10% of Cogeco Connections revenue. As customer trends have stabilized, we expect overall low single digit revenue growth at Cogeco Connection in Q4 and in fiscal twenty twenty. Cogeco Connections EBITDA has grown by 3.6% in constant currency, mainly as a result of lower workforce expenses resulting from an operational optimization program in the 2019 and lower programming costs as a result of lower PSUs. One gigabit Internet speed is now available to about 55% of our footprint, and we are on track to achieve our 60% goal by the August. Cogeco is pleased to see the continued momentum at the federal and provincial government levels to support private investment in high speed Internet connectivity in regional areas. In addition to the budget announcement made in Ottawa, Quebec, and Toronto last last March and April, which included a combined 4,000,000,000 in government funding over a decade, the federal government recently unveiled Canada's connectivity strategy called high speed access for all. This strategy confirms the critical importance of connectivity for economic development and the strong commitment of the federal government to work with provinces and the private sector to achieve its ultimate goal of connecting 100% of Canadian by 02/1930. Cogeco is very well positioned to support the respective government in achieving their goals. The new programs will be a great opportunity for Cogeco to grow and extend our regional high speed Internet coverages across Ontario and Quebec as well as further bolster our leadership position in our target markets. Atlantic Broadband's revenue and EBITDA have increased by 5.44.4% respectively in constant currency, mostly due to organic growth. The organic growth is mainly related to three factors, the continued growth and upsizing in residential Internet and commercial services rate increases implemented in August in former ABB Systems and in October in the MetroCast Systems and the ramp up of the Florida expansion plan, which is now positively contributing to EBITDA. The PSU trends in Q3 were very strong, as explained earlier, especially for Internet, which is our higher margin service. We are pleased to note that the Internet penetration over the last year has increased by about 1%. Atlantic Broadband currently offer a one gigabit Internet service in over 75% of its footprint and is well aligned to reach its 90% target by the August. Let us now take a look at Cogeco Inc. Consolidated revenue has increased 1.3% and EBITDA 2.9% in constant currency. As you know, we operate 23 radio stations, which for the most part, occupy leading position in their respective markets. Our team strives every day to provide relevant and unique content to 5,400,000 listener per week who tunes to our stations. That being said, the advertising markets in the traditional radio business continue to be challenging, and competition has increased relative to last year. As a result, we are managing our costs tightly in order to ensure that we continue generating attractive free cash flows from the business. The quarterly dividend has been reconfirmed at $0.43 per share, a 10.3 increase over last year. For fiscal twenty nineteen, our April 9 guidance was which was revised to exclude Cogeco Peer one remains unchanged. We are now introducing our preliminary guidance for fiscal twenty twenty, which on a constant currency basis relative to fiscal year twenty nineteen calls for revenue growth in the 2% to 4% range and EBITDA growth in the 2.5% to 4.5% range. The expected low single digit growth at Cogeco Connection will stem largely from Internet customer additions and growth in the business sector. The expected mid single digit growth at Atlantic Broadband will result from both the residential and business sectors and continued Florida expansion. In fiscal twenty twenty, the capital intensity ratio is expected to be below 20% as a result of revenue growth. The expected slight increase in capital expenditures should be mainly related to The US operations as we continue to expand our network in Florida. Our CapEx budget includes investment to further expand our one gigabit Internet speed footprint in both countries, the rollout of our IPTV platform in Canada, continued digital transformation initiatives, and further expanding our footprint in Canada where we can secure government funding for high speed Internet. We are currently testing our IPTV platform, and we are very enthusiastic about the enhanced features we will provide to our customers. We are expecting the launch to our entire Canadian footprint by the end of the current calendar year. Free cash flow on a constant basis should grow by 5% to 11%, mainly as a result of increasing EBITDA, modest CapEx growth and declining financial expenses due to the $720,000,000 received from the sale of Cotico Pier one. As you can see, fiscal year twenty twenty looks very promising as we continue to pursue profitable organic growth through providing NN services to our customers, growing our Internet and commercial services market shares and expanding in select areas such as Florida. Profitable growth will also be accomplished through continued investment in employee engagement, astute marketing, digital transformation initiatives, and consistent investment in infrastructure upgrades to provide service enhancement to our customers. We continue to look for attractive acquisition opportunities and are proactively engaged in the Canadian wireless consultations. And now we will be happy to answer your questions. Thank you. At this time, if you would like to ask a question, please press Your first question comes from the line of Vince Valentini from TD Securities. Please go ahead. Thanks very much. A couple of questions. First, on the Internet subscriber adds in Canada. So if the IT issues are behind you, I'm just trying to struggle with how the Internet sub add number is basically the same in Q3 this year as it was in Q3 last year. And obviously, it was a slight negative. Is that some sort of timing or seasonal issue? Do you expect a strong recovery in Q4 on that front? Yes. Hi, Vince. So we have a quarter that was generally in line with what we were looking for, but a little softer. But when you compare it to last year, I would say the main difference will be when you get to Q4 and Q1 of next year. That's where we had the bulk of the impacts on the PSUs when we made the change in the system. The Q3 of last year, we were already one month into it, but it was just the beginning of the implementation. So you should not normally see a big difference year over year in the third quarter, which obviously will change in Q4 and Q1. And for the future, so this quarter was a little softer in Canada and stronger in The U. S. In terms of PSUs. We would expect in Canada to improve going forward. Okay. Keep in mind, Vince, as well that Q3 is typically a slowest quarter in terms of Internet net adds as it's there's a lot of summer returning home for the summer. Maybe I'll just expand on that then, if you don't mind, just to make sure we're not on a different page here. If I look back two years ago to the third quarter of twenty seventeen, was there something unusual then that I may have forgotten about because you added over 5,000 Internet subs in that quarter? If you look at actually, it does vary from one quarter to another. That quarter was a little stronger. If you look at the total PSU picture for Q3 of twenty seventeen, we were at minus 7,600 PSUs. And this quarter is a bit softer at minus 12. So that's why I said if you look in the past, basically, we would expect to go back to normal. There's no particular relationship with the system change that's behind us. It's just that some quarters are a bit softer. The video was a bit softer. The phone was stronger than usual in this quarter. And the Internet, again, 17 was a little stronger than usual in Q3. Okay. No, that's fair. Thank you. The last question I have is just a bit more structural one, CGO versus CCA. I'd look back over the last two and three quarter years, so the last eleven quarters, in every single period, the free cash flow per share at CGO is higher than the free cash flow per share at CCA. And that's when I back out the economic interest in CCA that CGO doesn't own. So just take proportionate free cash flow from CCA and then the slight extra amount that CGO generates from radio and the management fees. So it's consistently doing more free cash flow, but yet your dividend is $1.72 at CGO and it's $2.1 at CCA. There's a 22% gap. I also did the math to just say how much dividend does CGO get from CCA every year and then add back the amount of extra free cash flow CGO generates from its other businesses. There's also a pretty huge gap there. Is there some structural reason why you think a lower dividend at CGO makes sense than at CCA? There's historical reasons why we have a difference today and had to do with the bank facilities we had, which have been changed in the past few years. So there's not a structural reason today. So that's why also we started doing the buyback program. Now we have it in both companies, but we started a lot earlier at CGO because we had additional cash flow. So in terms of returns of capital, we if you take the total of buybacks and dividends, we have addressed it this way. You have a good question though. Going forward, is this something that will change? We typically make the decision on dividends in the fourth quarter, but it's really due to historical reasons. The other thing I could add is that we've been increasing the dividend at CTO in a percentage basis high at a higher rate than CCA for the past few years to close that gap. So it's just a question of judgment on how quick or not we want to do it. Thanks Patrice. Your next question comes from the line of Drew McReynolds from RBC. Please go ahead. Yes, thanks very much. A couple from my end. First on the Canadian side of the business, clearly getting some very good margin expansion. Wondering, guess, Patrice, the extent to which the current expansion that we're seeing in the first quarter you expect to continue and how ultimately IPTV could impact that as we look into fiscal twenty twenty? Sure. So indeed the margin is very strong in the quarter. They vary a little bit from one quarter to another depending on many elements that happened during the quarter. So if you think going forward, we are thinking in the upcoming year to see an increase in margin in 2020 versus 2019. So in but not to the extent we have in the third quarter. So a range of a little higher, 53%, 54% would probably be a good proxy for the coming year. In terms of IT TV, the major impact will be on the CapEx side once we start the program. So that will be at the end of the calendar year. There is improvement that we're expecting eventually also in OpEx as there's more self installs. And as we get closer to the launch or when we launch, then we'll be able to provide more clarity on this, which I want to make sure that we launch first before addressing this. But more CapEx impact than OpEx with IPTV. Okay. And sorry, just on the CapEx impact, you're saying ultimately positive, but near term negative? Or did I reach incorrectly? No, not negative near term. It's just that when we launch IPTV, we should be able to benefit from a decrease in CapEx on the CPEs. That's just one portion of our CapEx obviously. But on that piece, there's going to be an impact. Okay. Understood. And in terms of the TV picture, can you comment on what you're seeing in terms of cord cutting perhaps Ontario versus Quebec if there's a difference, but also how Canada would compare to the footprint your U. S. Footprint? Are you seeing any acceleration? Is it relatively stable? Any commentary there would be helpful. Sure. No, nothing new really. So historically, what we've seen is the cord cutting has been a bit slower in Canada than what you've seen in The U. S. And in The U. S, I would not call it dramatic either, but it's a little faster than what we see in Canada. So nothing really new there. I know the PSUs were or the video PSUs in Canada were softer this quarter, had more to do with just the timing of marketing promotions and competitive situation than pure cord cutting. And between Ontario and Quebec, it's I would say generally the what's available from streaming services is more catered towards the anglophone market. So and our market in Canada is a bit more francophone, so less impact on Quebec perhaps than what you'd see in Ontario. Okay. No, that's great. On the American broadband side, I think last quarter you did talk about an uptick in Internet net additions. I believe in Q4 as some of the MDU business and the larger contracts come on board. Did we see any of that in Q3? Or was Q3 just more of an organic kind of uptick from reconnects and more marketing dollars per torque? Yes. So the one we were referring to that will come online in Q4, because it's a bigger one, is still planned for Q4 right now. It did not happen in Q3. And obviously, we have a lot of customers in Florida. So obviously, we typically comment only if it's bigger. So in Q3, we did see a nice uptick year over year. Would say it's really two reasons. So we're investing in Florida and selling as well. So there's an uptick there. That's a portion of the reason. And it will be a bit spotty from quarter to quarter. And the other reason is the reconnects and we've been successful at capturing our fair share of the reconnect. So actually, it was stronger this year than what we had achieved last year, which was the first time we were running this new operation that MetroCast has. Okay. That's great. Last one for me. A little bit more modeling in terms of a blended cash tax rate for fiscal twenty twenty. If you have that handy, that'd be great. And if you can give us any context around depreciation and amortization, again, just strictly for modeling. Sure. So the cash tax percentage is 12%. And we typically put it also in the MD and A, just so people can work the math. I know it just came out yesterday. And in terms of depreciation, so I'm looking at Andre here. Can maybe we can take it offline, but I would not necessarily expect at a high level significant change from what you're seeing in current quarters because the continuing operations are out sorry, the discontinued operations of CP1 are out of the numbers. So you should not necessarily see a major difference. Okay. Thank you very much. Your next question comes from the line of Jeff Fan from Scotiabank. Please go ahead. Thanks. Good morning and thanks for taking the questions. First, just on your guidance for F twenty twenty. I'm assuming the growth rates that you've given are based on the midpoint of your F 2019 guidance. Is that correct? So it's a good question because we're in a period where we have two guidance out, so 2019 and 2020. Typically, what we do is we try to we do look at where we think we'll end up, and we do have ranges that can absorb differences with the mean. So we don't necessarily use the mean per se, but we our goal is not to have to change the guidance when we get to the end of Q4 and report the actual numbers for the year of 2019. And so that's our goal. It doesn't mean it would work every year, but normally what you have would be the guidance we would normally keep for next quarter for 2020. I see. Okay. So just so I understand that, what you're saying is you like to maintain the growth rates that you've given up and that will be based on once F 2019 is done, will be based on the actual F 2019 and that your growth rates shouldn't expect to change? That's right. That's our plan right now, obviously. Obviously, the business evolves, we look at it every quarter, but that's the current thinking. Okay, great. Just on Canadian cable, a few questions earlier I think about the system migration, how that impacted last year. One of the things I do recall was that you had issues on bill credits because of some of the issues that you faced. Can you just remind us when the impact of those bill credits happened? And if there was any ways to kind of remind us how much the impact was? Yes. So the credits were primarily given in 2018 and 2019 and it corresponds also when you saw a larger decrease in PSUs. And we need to go back to what we actually said publicly. It's been a while. But they were in a few million dollars in each quarter from my recollection. Okay. And just my final question is on the share buyback and I guess related to that leverage. It's nice to see that you guys are buying back shares with the Pier one proceeds. It looks like you bought back roughly onetwelve of your NCIB in one month. So I guess the read through there is that you are on pace to buy the to execute the full buyback. And it sounds like from the earlier comments that you're going to be allocating 60% of your cash flow towards dividend and buybacks that you would execute the full buyback. Am I interpreting that correctly? Yes. So I'm sorry, did you want to take it? Okay. So the we did actually do about 112,000,000 in May. We actually did not buy back during the blackout period in June, and we have an ability to do so or not. And depending on the choices we make at that point, we can be in the market or out because you have the regulation basically and the way we operate have to those instructions have to be given before. So we haven't done it in June and we're planning to restart in July. So that's a call we make every time. In terms of total amount for the year, we're planning to do a very large portion of the buyback, and that's still the plan. And but again, June was not there, so you might end up a little lower. Okay. Understood. And lastly, just on leverage, can you just remind us what you're targeting to settle with respect to your leverage ratio? At the I'm sorry, at the end of Q4, is that your question? No, I didn't like what your target leverage ratio is. It's still about three times. We're below that now following the sale of CP1. But obviously, we've done many times in the past, the leverage goes down and then when there's an acquisition, it goes up. So it's we're still targeting at the high level three times. Okay, great. Thanks guys. Your next question comes from the line of Matthew Griffiths from Bank of America Merrill Lynch. Please go ahead. Hi, thanks for taking the question. I just wanted to ask on the Canadian segment. For the past three quarters, you've called out resellers in the having an impact on the Internet. I was just wondering if this is kind of a growing kind of competitive threat that you're seeing and maybe how large it's become in that segment? And then also in Canada, just curious if you could give some comment on whether Bell has kind of made some more inroads in laying fiber across your footprint and kind of how effectively you feel as though you're kind of retaining those customers as they push further in? Thanks for your question. So on the reseller side, on the Internet services, they're very niche and they're very localized. If my memory serves me well, the CRTC numbers indicate about 10 to 15%. So they are developing very niche solution and they are gaining some shares but in some very specific areas in some cities. So not a major concern there. Now on the Bell side, are not seeing major changes in the market there and we feel very well equipped with our Internet being deployed at at one twenty everywhere. And as you heard me say, we are rolling out our one gigabit Internet speed where the demand is as well as the competition is also using some fixed wireless solutions that are maxed out at 50 megabit. So our platform is far superior than the wireless offers. So all in all, we feel good. We have good products and although we embrace competition, we're not doing too bad. Do you feel you have the ability to kind of maybe anticipate where the demand is likely to be and therefore where Bell is likely to perhaps lay fiber and to preemptively move in? Or is it are they just is it just too hard to kind of see what competitors are doing and you're just sometimes ahead to them and sometimes responding? Well, as for Bell, I will redirect you to them to find out about their plans. But we continue to improve our services, stay ahead of the demand curve, be very, very close to our customers, our understanding our markets and keep delivering on a better customer service. So we will remain focused on providing our markets a better service and I think we'll do very fine with that. All right. Thank you. Your next question comes from the line of Maher Yaghi from Desjardins. Please go ahead. Thanks for taking my question. I wanted to ask you on the your customer base in Canada and The U. S. And when I look at The U. S. Customer base, you indicate that 48% of your customers have one service with you and 33% have two services with you. In Canada, the numbers are 31 with one service and 32 with two services. I was wondering what your views are on are Canada's customer base likely to reflect what we're seeing in The U. S. In a couple of years because both countries are showing trends towards reducing the number of services in one bill. So the question is, will the Canadian customer base look like The U. S. Customer base in a few years? Or there's differences that you think will limit the amount of services that they'll let go as time goes by? Sure. So the answer is probably in the middle. Basically, happens is in The U. S, we have the Florida market where we have some bulk units where we're going to provide just HSI. So there's some of that. There's also the fact that when we bought MetroCast, MetroCast had a higher concentration of single products. And our approach is to push more bundles, so two and three products in The U. S. So you should normally and that's our plan to be able to have more double and triple plays in The U. S. Than currently. And in Canada, we do the same obviously. But as you pointed out, there is some cord cutting. So the single HSI especially, single play typically increases a little bit. So the answer is probably a middle ground over time. So Patrice, when I look at these numbers in Canada, you're are you looking maybe like what's your long term distribution that you expect things to settle at? Is it 40% maybe for with one service? Is that what is likely to happen? Well, these numbers change all the time given market dynamics. I have the our competitors are also have plans. The demand is changing over time as content is moving from certain distribution media to others. So there's not really a plan other than to quickly adapt to the marketplace and deliver what customer stay ahead of the demand curve and deliver what customer wants. So if they if they want more of of a product, we we will adjust our bundles accordingly. Okay. And my second question is on the price increases and elasticity to those price increases in Canada specifically. Can you talk a little bit about your views on what could be remaining as potential headroom in terms of price increases going forward? Are you seeing pushback more than you've had in the past or the price increases are passing normally as they have done in the past? Yes. I would say there's not really a change with the past. We're typically what we do in both countries. We try to well, we have video cost increases that we need to pass through. And we do provide better value every year and better speeds on Internet. So I think customers see the value we're bringing as well. And we're trying to be reasonable, obviously, with what we do in terms of price increasing overall. And for a portion of the customers that decide to, for example, cut the cord, and again, it's a small portion, but as we were talking just before, there's more dollars available there to increase speed on Internet so that money can be used in different products basically. So we see capacity for price increases in the future, again, being reasonable and making sure that our customers see the value we're bringing to the table. Okay. And on the restructuring you did in Canada, how much of that restructuring is fully reflected in your cost basis right now? It's fully there. So the restructuring we did about two quarters ago, we were expecting to get $14,000,000 per year. And this third quarter reflects basically 25% of that approximately. Okay. Is there an opportunity to do something similar in The U. S. Or more in The U. S. You see it more as an investment cycle right now? You're ramping up your base so that you can service more customers in the future? So in The U. S, we operate right now with a very efficient team. There are no reduction. We are in high growth. There's a lot of work to continue the Florida expansion, but also in the North and in the central areas of our networks. We operate in 11 states. It's a very, very wide coverage. I feel that we have the adequate resources to provide that customer experience that we want above the competition. And so that's how we will continue going forward. Perfect. And my last question on your constant currency growth rate in The U. S. What would it be without acquisitions? Well, this quarter you mean for the third quarter? For the third quarter. Yes. It's there's a little bit of an acquisition we did, the FiberLite in The U. S, but it's a very small amount. So we did not quantify it, but it's less than 1%. Your growth is 3.6% as you state, 1.7% in constant currency. What would it be if I exclude Fiber Light? You're talking the combined number, the consolidated number? Or The U. S, yes, sure. That's my what I was explaining is we did not quantify the Fiber light impact because it's really small. So it would have a very minor impact on the 1.7% revenue growth year over year. Okay. So it's more like a decimal point on the 1.7 Yes, it's really small. Okay. Thank you. Thank you. Your next question comes from the line of Jeff Fan from Scotiabank. Please go ahead. Thank you. This is actually just a follow-up more of an industry view. We've seen unlimited pricing on mobile being introduced in Canada. And in the last few years, you've seen unlimited mobile in The U. S. I'm curious in your U. S. Experience, have you seen any of that impact your cable broadband Internet service? Not necessarily cord cutting, but any impact on your growth in usage where customers are using more of their unlimited mobile plans as opposed to their tethering to their WiFi or their home broadband? That's kind of The U. S. Question. And then the second part is really in Canada with the introduction of unlimited, how do you position your broadband business to ensure that if there is any kind of substitution that doesn't occur in your core base? Thanks. I'll first answer by reminding ourselves that wireline to wireless, the this is it's not only just a speed, but it's a volume answer as well. So an average home consumes north of a 160 gigabit in Canada and a little bit more in The US where wireless plans usually provide two gig, three gig, four gigs of usage a month. So there's a huge huge difference in using a wired network versus a wireless network And homes are largely consuming from their wire wired connection, their broadband connection. And this is here to stay. With DOCSIS 3.1, we can offer one gig as you know, and technology is evolving fast. Cable apps has already a 10 gigabit product waiting to be released. So the significant gap between the two will always call for complementary use of technology. Wireline and wireless will continue to be used together. And wireless is more of a nomadic thing. Now as it relates to caps and throttling and which I believe was the early part of your question, well we have a wireless code in Canada. And as you know right now these plans are challenging the wireless code that the CRTC has put in place. We'll see what happens with that. Great. Thank you. And there are no further questions at this time. I turn the call back over to management for closing remarks. Okay. Well, thanks everyone for participating. We're going to be back with our fourth quarter in October. So in the meantime, free to call us. Thank you. Thank you. Thank you. This concludes today's conference call. You may now disconnect.