Good day, and welcome to the Cogeco Inc. and Cogeco Communications Fourth Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Senior Vice President and Chief Financial Officer Mr. Patrice Ouimet. Please go ahead, Sir.

Thank you. So, good morning, everybody, and welcome to this quarterly conference call which Philippe Jetté and I will present. 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. I’ll turn the call over now to Philippe Jetté. Philippe Jetté: Merci, Patrice. Good morning. Thank you, everyone for joining us to discuss the financial results of Cogeco Communications and Cogeco Inc. Let me first note that we are satisfied with Cogeco Communications overall performance for the fourth quarter of fiscal 2021, which is in line with expectations at both our Canadian and American broadband segments. On the media side, we are pleased with the financial results of our radio business, where revenue has grown by 17.7% year over year. All in all these results position us very well to start our fiscal 2022 on a strong footing. Let us begin with a reflection on the key fiscal 2021 accomplishment setting down fresh roots to further expand horizons. Cogeco Communications has pursued its acquisition growth strategy while maintaining a strong financial position. In December 2020, Cogeco Communications completed the acquisition of DERYtelecom the third largest cable operator in Quebec, now serving approximately 108,000 customers. The integration of DERYtelecom is very advanced and financial results are above expectations. In late June, 2021, we announced an agreement to acquire networks passing 689,000 homes and businesses in Cleveland and Columbus, Ohio, serving some 200,000 customers. We closed this acquisition on September 1 and have already started integrating these assets on Atlantic Broadband's platform and are preparing to introduce innovative service enhancement to our new customers. This acquisition allow us to add significant scale to our growing and profitable US broadband business on reasonable financial terms to pursue our market expansion strategies. In Canada, as we further develop our plans to enter the wireless market, we have secured 38 spectrum licenses in Quebec and Ontario, which will increase our spectrum coverage to 91% of our national broadband footprint, which represents a population of CAD3.6 million. These spectrum investments together with the recent CRTC regulatory decision on wholesale wireless services and our robust and growing regional broadband network position Cogeco to further develop plans to enter the mobile market in a financially disciplined way in our core markets in Canada. Over the course of the year, Cogeco Connection announced several network expansion projects in underserved and unserved regions in the province of Quebec and Ontario. Most of these network expansion projects are being done in collaboration with governments whereby Cogeco will deploy approximately 75,000 homes over the next three years. Cogeco's deep roots in regions and rural communities should continue to contribute to its success in collaborating with governments to help close the gap in digital access between large centers and rural areas. In the US, there is an opportunity at the moment to accelerate network expansion and in areas with good demographics and growth potential. We expect to earn an attractive return on these investments from these unsubsidized network expansion and offer more choice to consumers. We also plan to leverage upcoming government funding programs for some network expansions in more rural communities in the US to help close the digital divide. When we look at our corporate social responsibility agenda, in 2021, we took great strides to this end and were gratified to be recognized by leading voices and environmental social and corporate governance or known as ESG practices and reporting as such as being named once more amongst the Global 100 most sustainable corporations. Among our recent initiatives, Cogeco was proud to reiterate its commitment to the environment by announcing its goal of achieving net zero emission by 2050. Cogeco was the first telecommunication company in Canada to have its target approved by the science based target initiative, which include a 65% reduction in emissions from operations by 2030, compared to 2019 levels. As a further recognition of the importance Cogeco gives to a sustainable future, I was proud to announce last week that Cogeco received the inaugural Terra Carta Seal, which recognize global companies that are driving innovation and demonstrating their commitment to and momentums towards the creation of genuinely sustainable markets. This Seal is being awarded to companies with ambition aligned to those of the Terra Carta, a recovery plan for nature, people and the planet launched in January 2021. On the social front, in addition to our strong commitment to digital inclusion, through continued investments in broadband networks, in regional and rural areas, we have sustained our efforts around the workforce diversity and inclusion. We are proud to have achieved our goal of having at least 35% of women in management positions. In June, we were pleased to announce further action plans to drive diversity in inclusion with the rollout of training and education initiatives, the establishment of a DNI leadership committee and increased philanthropic investments, aimed at promoting DNI and supporting underrepresented groups. When looking ahead at some of our priorities for fiscal 2022 at Cogeco Connection, we will continue to seek market expansion opportunities and further develop plans to enter the mobile services market under the right condition. Our network expansion plans include actively seeking and participating in government programs to provide broadband access in underserved and unserved areas, including the upcoming Ontario government program. We have already secured nine high speed internet network expansion projects covering close to 10,000 household in several communities in Ontario, in collaboration with the Ontario and Canadian governments, we are progressing well with the 13 I speed internet network expansion projects. We were awarded last March in several regions of Quebec, which should be completed by SEP by September, 2022, including this law, large Quebec project. We are planning to increase the number of homes passed by 3% by fiscal year end through network expansions and organic growth on the CU on the customer experience side, we will continue to leverage and broaden our new IP TV. Entertainment services is typical expanding to new customer segments and increasing availability in our footprint as high speed internet is our cornerstone service. We will continue to expand our one gigabit per second coverage on our Quebec footprint to better understand and serve our customer. We will continue to enhance our data analytics capabilities and we'll introduce new marketing automation in our contact centers, leveraging artificial intelligence. As we will continue to deploy operational excellence while enhancing customer service cost efficiency initiative will include among others. The pursuit of our digital transformation, mainly through engaging customers to use self-care, virtual connect and diagnostic tools priorities for fiscal 2022. At that Atlantic broadband start with the integration of the O IO acquisition when where we were, where we welcome new colleagues into the ABB and Coco family, and a initiated the integration of technical and operational systems. In addition, we are pursuing network expansions into adjacent cities with attractive growth potential, where we plan to increase on paths by approximately 4% pro forma, the Ohio acquisition. By the end of the current fiscal year planning an initial construction is underway in some areas of new an here and West Virginia with commercial launch scheduled to start early in the 2022 calendar year on the customer experience front, we will continue to implement and refine our new internet first offer strategy. While we plan to launch an IPTV service by the end of this calendar year, we, it a gradual rollout during the year as we accomplish all this, we will continue our digital transformation mainly through engaging customers to use self, self-care virtual connect and through advanced customer communication and diagnostic tools. As for cog media, we are optimistic about the radio outlook as the Quebec economy is recovering, and we continue to enjoy the commitment of our listeners. As many of our stations stand at the top of the ranking for our much talk station, 98.5. It is rank once again, the most listened to radio station in Canada. I will now let Patrice discuss our financial results.

Thank you Philippe. So revenue at Cogeco Communications is up 8.1% and adjusted EBITDA up 1.7% in constant currency when compared to the same quarter last year. This was driven by EBITDA growth of 1.7% at Cogeco Communications and 4.6% at Atlantic Broadband. Free cash flow declined by CAD42 million or CAD37.7 in constant currency, mainly as a result of capital expenditures increasing by CAD56 million, partly offset by reduced financial expense and higher EBITDA. The significant increase in capital expenditures in the fourth quarter is mostly due to Atlantic Broadband's accelerated purchases of customer premise equipment and networking equipment in order to avoid supply chain disruptions, which are impacting many industries these days, as well as the strong customer editions that we had in past years sorry, past quarters that had an impact on our inventories. These capital expenditures are expected to be used to support growth driven by the recent Ohio acquisition, as well as network expansion projects. We announce an increase in the quarterly dividend from CAD0.64 to CAD0.705 per share, representing a 10.2% increase over the last year. Our track record of generating free cash flow and strong free cash flows has enabled us to grow our dividend at an annual rate of at least 10% over the last eight fiscal years. Cogeco Communications has also made meaningful share repurchases since May 2019 and purchased close to 400,000 shares during the quarter. Now, let us look at the individual components. Cogeco Communications our Canadian broadband business revenue has increased by 10.1% in constant currency relative to the same quarter last year. Excluding the impact of the daily telecom acquisition, revenue in concurrency grew at 1.2%. Organic revenue growth was related to a higher internet service customer base and a higher value product mix. Cogeco Communications' EBITDA increased by 1.7% in constant currency relative to the same quarter last year, which is better than expected considering that we had planned for no growth in EBITDA during the quarter as highlighted during the third quarter conference call. Excluding the impact of the DERYtelecom acquisition, EBITDA in the quarter declined by 5.5%. This decline is mainly related to an unusual CAD4 million reduction in expenses last year, lower marketing and sales activities last year in the context of the pandemic and the impact of delaying certain annual rate increases from June to November this year. Overall Cogeco Communications delivered the expected mid to high single digit growth in revenue and EBITDA for the full year. The broadband customer additions in the fourth quarter were lower compared to last year which benefited from the positive impact of the pandemic, but were strong from a historic perspective. The video product losses were lower than last year, mainly resulting from the IPTV introduction and from a more targeted sales and marketing approach by region and by market. Finally, the losses were in line with historical trends. Turning to Atlantic Broadband, revenue in constant currency increased by 5.8% in the fourth quarter, compared to last year, while EBITDA increased by 4.6%. Organic revenue growth comes mainly from a higher internet customer base and a higher value product mix. The EBITDA growth was slightly lower than revenue growth due to higher marketing and advertising expenses to support overall customer based growth. The shift in expenses during the pandemic was planned and explained during our last earnings call. Broadband customer additions were more muted during the quarter and lower than last year's unusual additions in the context of the pandemic. The video and phone customer declines are mainly related to the broadband first approach and the fact that we generally do not offer video-only services anymore. Now let's take a look at Cogeco Inc. The fourth quarter consolidated revenue increased by 8.4% and EBITDA increased by 0.9% in constant currency. Revenue related to the radio operations increased by 18% in the fourth quarter compared to the prior year, which had been impacted by the pandemic. And we announced an increase of 14.7% in the quarterly dividend. So going from $0.545 to $0.625 per share. I'll now discuss our revised financial guidelines, Cogeco Communications revised its 2022 financial guidelines issued last quarter to include the impact of the Ohio acquisition, which was completed on September 1. On a constant currency and consolidated basis, Cogeco Communications expects to grow revenue in the range of 15% to 17% and EBITDA in the range of 14% to 16%. The Ohio acquisition should contribute 11.5% of their revenue growth and 11% of the EBITDA growth. Expectations excluding the Ohio acquisition are generally in line with the previous financial guidelines when factoring a slightly better than expected fiscal 2021 comparative year and slightly higher capital expenditures due to increasing equipment costs. At Cogeco Communications, we forecast in fiscal '22, close to mid-single digit growth in revenue and EBITDA resulting from organic growth and also the impact of the daily acquisition, which still has an impact next year, as we don't have a full year in the comparative year. The organic growth should stem primarily from demand for the residential internet product, the upselling of customers to hire tiers of service and the recent launch of the IPTV product at Atlantic broadband, we do expect a mid-single digit organic revenue and EPI growth from the expected continued demand for the residential internet product and growth in a business sector. As for quarterly results, we expect that organic the year EBIDA growth will gradually improve during the year as we will be comparing a more normal post pandemic operation this year to an unusually strong first half in fiscal 2021. Let's remember that during the first half of last year, both Cogeco Communications and the time and broadband generated very strong year over year organic growth at crucial connection. We expect a small year over year increase in EBITDA in the first quarter when including the impact of the daily telecom acquisition and exclude excluding the daily telecom impact. We expect the first quarter to generate a decline in EBITDA since we delayed some rate increases until November of this year. And the level of operating expenditures was unusually low last year. Overall, the first quarter in our Canadian operation should be a similar story. As the fourth quarter, we are reporting on today. We then however, expect organic growth in the next three quarters of the year at Atlantic broadband. We expect the first half of the year, especially the second quarter to generate lower year of the year. Organic EBITDA growth followed by strong in the second half of the year, resulting as mentioned in mid-single digit revenue and EBITDA growth for the full year in council dollars. This is due to the timing of expenses during the pandemic last year, higher political advertising revenue during the presidential campaign last year, and also higher marketing and a expenses this year. We're planning for capital expenditures in the CAD815 million to CAD845 million range resulting in an expected capital intensity of approximately 28% or including the network expansions. It would be 20%. The capital expenditure budget includes CAD230 million to CAD240 million in network expansion projects, which is the same as mentioned last quarter and approximately CAD95 million related to the Ohio acquisition of which close to half is linked to the integration and densification of the network as mentioned last quarter, the network expansions will result in higher capital intensity in both countries, but are necessary to seize a unique window of opportunity for growth. These expansions should add approximately 3% to our homes passed in Canada and 4% in the US. The four is pro forma. The number of home staffs we have added with the Ohio acquisition. Since these projects will take most of the fiscal year to build both business segments, expect the growth in home spas towards the end of the year at least for the bulk of what we are building and the impact in the revenues and EBITDA will be in future years, not, not this year, free cash flows on a constant currency and consolidated basis should decrease between 33% and 43% due to the higher capital intensity, higher financial expenses and about CAD35 million in transaction and integration us related to the Ohio acquisition. Excluding the network expansion projects mentioned earlier, free cash flow and concurrency would otherwise increase between five and 15%. The recently closed Ohio acquisition and the announced spectrum purchases result in the pro perform leverage of 3.4 times. EBITDA at Cogeco Communications is at a level that allows us to pursue our dividend payment strategy, as well as our share buyback program at cog, Inc. Our guide have been revised to take into account the Ohio acquisition, and we also expect revenue growth of 15% to 17% EBITDA growth of 14% to 16% and cash flow decline of 33% to 43%. I'll turn the -- I'll turn it over and now to Philippe to provide concluding remarks. Philippe Jetté: Thank you, Patrice. As we can see, fiscal 2022 looks very promising. We will actively pursue organic growth opportunities and continue to be on the lookout for acquisition within our leverage target in areas where we are positioned as a consolidated of regional cable operators, we are actively investing in our operations and networks to continue to offer ever faster internet speeds and high performance products while expanding our network into areas to help address the digital divide between large urban centers and regional and rural areas. We also continuously innovate through automation in both the us and Canada to deliver exceptional digital experience for our customers. Through our digital transformation, we are putting our customers first and also aim to gain agility while further increasing our efficiency as an inclusive leader, we place social commitment and corporate social responsibility at the heart of our priorities. We strive to drive inclusive growth, support our communities and continue fostering a highly collaborative, engaging and inclusive work environment. And now we will be very happy to answer your questions.

Thank you. Our first question is going to come from the line of Jerome Dubreuil with Desjardins.

Thanks for taking my question. Actually two questions on CapEx. Your CapEx guidance seems a bit higher than what the street anticipated. I understand it's probably a good time to do it. I'm looking to see a bit where this higher number might come from. Are there more projects than what was expected in July? Is it our understanding that wasn't good or maybe if there's some cost inflation that might be included in there. And then the second question on CapEx just want to clarify what you mean by growth oriented network expansion projects just to be clear, the 20% kind of normalized CapEx, what percentage growth would that imply? Thank you. Philippe Jetté: Okay, great. Hi Jerome. So yeah, there's a couple of reasons why we have increased the CapEx guidance. First of all, obviously we have the Ohio acquisition. So as I mentioned, there's about CAD95 million, and that is a mix of just business as usual and also the integration CapEx and densification of the network. So you'll recall when we announced the transaction, we said there would be in addition to running the business, there'd be CAD82 million in additional CapEx we would put through over a period of two years. So there's a portion of that. About half, I would say the increase related to Ohio is related to this and the rest of the business as usual. We also have some densification costs that we were planning to do last year in 2021 related to the daily acquisition that we're going to do next year. Just delayed a little bit by a quarter or two. So that explains a bit of the shift of CapEx in Canada. And there is also a bit of inflation as you know, there's some inflation coming in the equipment from transportation, some also the electronics. So we do expect to see some, it's not extremely material, but that explains a portion of the reason. I would say Ohio is probably the biggest difference there.

And on the your second question if I understood correctly, hopefully I feel free to tell me if I'm not answering your question. What we're referring to with and without is the CAD230 million and CAD240 million in CapEx related to new bills we're doing in the year. And that's a mix of Canada and the US. So this is what adds to home spa in the 20% we don't have basically home spas growth, because it's included in the CAD230 million to CAD240 million.

Yeah. That that answers my question. Thank you.

Thank you. Our next question will come from the line of Vince Valentini with TD Securities.

Thanks very much Patrice on that CAD230 million to CAD240 million rural CapEx. Should we expect that to pace in evenly through each of 2022? Or is it, is it somewhat skewed to the back half?

It's a bit difficult to say because it dependent on a number of things how the construction goes. And even before that there's permitting, that is not finished as well. So I would say my base assumption, that's going to be more second half than first half. But it's difficult. It's very difficult to plan for this on a quarterly basis.

Fair to say in the first you're almost two months into the first quarter. You haven't spent too much of it yet.

Exactly. So, we're building right now and it's Phillip said the, in the U S we're planning to see some additions early calendar year and next year it's a small portion. So there is construction activity, but I would say there's still a lot of permitting activity right now, which is not very consuming from a Catholics standpoint. So probably less so into one and renting up over the next three quarters in Quebec. We have to be done by September, 2022, which is one month after our, you ran. So there's going to be a blitz there for sure. And then Ontario in the US it's more paced and S and some straddle into the next year as well.

Okay. I have two other questions. I'll throw them both out at your one, the, the line for corporate costs and inner segment eliminations was CAD13 million loss in Q4 last year. This year jumped to CAD17 million. Just wondering what, what caused that, and it is CAD 17 million. I knew run-rate, or there's something unusual. And the final question is there anything you can give us for leap on the, the timeframe for negotiations on MV&O terms and, and rates? I assume the process has started in talking to some of the carriers, but no idea how long it might take before we, we, we find out what to, what you might be able to do. Thanks. Philippe Jetté: Yeah. Well, let me start with your second questions. And as we've explained before there it's a multi-step process to enter the mobile market. We are now with the CRTC framework. There was there's a very public open process where the incumbent MNOs have proposed a terms and conditions. We have likewise on the public record file, the next sense of with many others, extensive answers now the CRTC as really to finalize these terms and conditions they've said many times. So I said then, and governments that all this framework is supposed to encourage competition and create a framework that is fair and reasonable to bring more choice to the marketplace. So we are still in this process. This is a not a very obvious step that we need to clear the next one after that. And, sorry to help you on the timing. We're not expecting this CRTC process to be finished before this winter and it might be prolonged if these CRTC needs even more information from current players after that there will once we have a framework and it is good terms for new players like us in the marketplace, we will enter a, a rate negotiation, a commercial rate negotiation period with DMNS. And this will take time and it could be super-fast if we find the rates that we need to for a good to support the good business case, and the likelihood that we don't there is a backstop arbitration process, would this CRTC, this obviously will add even more time. Now we are definitely into spring summertime next year. So hope this is helping in terms of timing. It could be longer depending on the, the intensity of the negotiation, as well as the pushback that we're seeing from the incumbent Seminoles right now.

That's very helpful. Let me just make sure to clarify that, I assume that none of your CapEx guidance for 2022 includes any wireless or M you know, build out then given the timeframes you just said. Philippe Jetté: Yeah, I've said that in the past. I'll make it clear again, today we are going to deploy capital in line with market success. So at first means that we will enter the market. We will ramp up and base on success. We will invest CapEx. Okay. So on your other questions on the on the corporate costs so perhaps refer to the could you call communication I'm trying to see where you which number you were using the 17, but if you're referring to the physical communications corporate class into four, there were CAD11.2 million, and you're right. It's an increase versus a 6.3 last year. And there, this comes primarily from our innovation group which does include wireless activities. And that's for that said, we're not building a network, but there's some activities obviously in a sector and, and some a group of employees there as well. So going forward for the next year, we don't expect to be at the same level as the Q4 number. We expect to be at the lower run rate than this, but it's still going to be higher than what we incurred for the full year of fiscal 21. And I'm happy to talk offline if you want to, if you want to go more into it, perhaps you referred to CGO, but cause you Coleen that we happy to do it offline.

That's good. Thank you

Your next question will come from Matthew Griffith with Bank of America Merrill Lynch.

Hi, thanks for taking the question. I'm just going to follow up on the wireless comments quickly, if I could. I just wanted to clarify, you mentioned that you would deploy capital on a success based basis, but if my understanding of like the CRTC model is correct you can, you can enter these envy and Ole arrangements for a seven-year period while you build your network. So I'm not sure you know, how much leeway there is to deploy success-based capital when you have to finish the network. So maybe you could clarify that comment if you could, please. And then secondly, I wanted to ask about the Ohio subscriber counts. It seems at the time of acquisition the kind of broadband subscriber numbers that you provided you know, basically didn't change over the six months to the numbers you provided as at the beginning of September. And so this just curious what you're seeing in the market you know, HIO in particular, where there didn't seem to be any growth, which seems like an anomaly. And just generally in the U S we've had some of the other providers comment about you know, kind of moderating their expectations for net odds, referring to, you know, slower move activity. So just generally what you're seeing in the U S market. Thanks. Philippe Jetté: Okay. Thank you, Matthew, let me start with your first question on the CapEx need for a mobile operation. So that's one component then the second hidden component in your question is the seven year period. So to, to, to start an operation, you obviously need some equipment to activate customers to be able to set them up. So there's a, there's a small portion of capital that is required for the activation support billing these, these kinds of elements that we would like obviously apt to put upfront, but they are relatively small. Now the, the network builds. I, my previous comment is we're going to build a network as we find success. Remember that the framework is allowing players like us to enter the market leasing capacity on the MNOs network. So this is what we will do our market penetration will raise, and we will deploy capital for network equipment based on success. So two to two different buckets, if you want for a four cap expenditure now the seven year of course we are not going to aggressively build a network to start before we find success, I said it would be the reverse and we would build gradually as we find success during the seven year, but the seven year is not a cliff thing. We have to demonstrate to the CRTC that we are investing that we're, we're not just leasing capacity as in the wire line framework for TPI as they can rent networks, but they have no obligation to build. We've always at Cogeco supported a model where if you do find success in the marketplace, you ask to invest, and this is what we're going to do. And at the end of the seven year there will be a public process with the CRTC monitoring those investments and making sure that the commitments that were made by players are, are in line. Remember that the MNO is I've taken more than 30 years to build with day after day. So no one would expect from me new players to do build networks in less than seven years, but the principle here is to invest gradually over time. And the, the CRTC to monitor that On a high of question specifically we were not I would say we're pretty much in line with what we saw when we made the transaction in terms of internet customers. We were not planning initially on your recall, we did discuss this when we made the acquisition to have a substantial, substantial increase in number of customers. Initially, what we said is that for a period of 12 to 18 months, we're going to be in integration mode which means that we need to basically certain services to our platform. Order taking billing, for example and also at the same time, we are identifying the network to be able to get new customers and also sell higher speeds to customers and introduce them that PTV product. So stability for us is what we were expecting. And following that theory of, then we're planning to be able again, to grow penetration a bit and also grow our mix of higher end business by selling bigger packages. The other thing you'll notice as well is the, on the video side, the not that you can necessarily see it separately, but the video on the video side there is a decline and that was also planned. The strategy that while has, is a little different than what we do on the video front. So we're all losing some PSEs on video but in terms of a strategy long-term, we are planning again, to introduce an ITV platform across our networks in the us, including in the wild territory. So that again was plan.

Okay, great. Thanks. Maybe if I can sneak one more in just quickly, there was also mentioned in the MTNA about kind of expansions into, you know I think it was Virginia, if I'm not mistaken and New Hampshire that I'm sure is included in the two 30 to two 40, even though I think the majority of that is in Canada. Is there any, how much of those expansions in the us, which are going to continue past this current year are included in that two 30 to two 40, just so we can carry it forward? Philippe Jetté: Sure. Yeah, it isn't, it basically it's close to half enough to U S Canada in terms of the network expansions and your rights are going to extend the past this fiscal year. We're going to evaluate other areas as well. So we have a team looking at this right now, and as long as we find the attractive areas and again, these are, we think attractive financially where we can make a mid-teens in terms of unlevered returns. We're planning to do this for some time while we can but it's about yeah, approximately half of the two 30 to two 40 as it relates to the U S expansion.

Thank you.

Thank you. Our next question is going to come from the line of Jeff Fan with Scotiabank.

Thank you. Good morning. Just to follow up on the previous question so it sounds like the CapEx expansion or dollars and half up between us and Canada. Can you is it the breakdown of the number of homes? I think it was 75,000, is that split evenly between us and Canada as well. And then of the ones in the us. Are you going still into overbuilt markets i.e. are you competing against Farber and another MSO in some of these edge out expansions? Philippe Jetté: Okay. So it's about actually the 75,000 refers to something else it's a Canada. It's multi-year and it relates to government subsidized areas. So when you look at what we're planning to do this year with the two 30 to two 40 we're planning to add between 50 and 60,000 homes fast in Canada. So that's about 3% increase in the network and in the U S that's about 70,000 homes fast. So that's about 4% of the network. Again, the network does include now Ohio. So it's a bigger number of base that than we used to report on. So 50 to 60 plus 70 in the US approximately again, the timing of these can straddle another year, depending on how fast we can get permits and get construction ongoing. The nature of the builds in Canada are almost all government subsidized. It means we're going into areas where there is no high-speed internet provider it's primarily DSL or, or nothing, or fixed wireless in the US it's primarily, we, we do have a bit of this in the US as well, but I would say the majority is an overbuild areas where there is a cable player and there is a phone company. We are not going into areas that have fiber to their home. We are going in areas typically where you will have a DSL phone company.

And even in diesel overbuild areas, you expect to get a return in the mid-teens, is that I hear that correctly. Philippe Jetté: That's all right. And where we're going with fiber, the home and these areas. So yes, so you'd have a, basically us as a fiber to the home provider, you have a cable player and the phone company, and there's a bit also of what we've been doing in Florida for many years now, as far as a different story. Obviously there's more players, but it's more longer-term contracts signed with associations of residents,

Right? So your penetration assumption in these markets, I would presume would be pretty high with fiber to the home. Philippe Jetté: Yeah. So we're assuming 36% over three years. I know different players will have different assumptions on this, but we try to be conservative. And yes, with 36%, over three years, we can generate mid-teen returns in Canada. We're assuming a higher penetration of a 50%, because again, it's a two-player market with the other player being not providing high-speed internet at this point.

That makes sense. Just one follow-up on the us operation operations, the margins specifically I know you had some marketing costs this quarter, so your broadband first strategy and deliver the margin expansion, but when should we start to look at margin expansion as a result of this strategy with being broadband first? Philippe Jetté: Yeah, well, it's going well, actually, we we've been able to increase the revenue per customer for the, especially for the intranet product. So actually the margins per customer are increasing and that should help the margins. Now, when we compare it to last year, for the reasons I explained before there were lower operating expenses and the worst sales is marketing because of the pandemic. So I wouldn't say it's the necessarily the best reference point. If we look at the full year at ABB, we did 45.8% margins. We should be in a similar place next year. And as we add these new expansions that we just talked about we do expect this will play favorably. And in addition to the broadband first approach. So we should see an uptake. What goes against the margin is the video cost increases, which are higher than inflation. But the mix shift with some reduction in PSEs and video, and those PSA's going towards internet does help the margin. So right now it's sort of even, even thing out I expect with the network expansions that we'll see an improvement over time. It is not going to be a '22 story. If it's going to start in '23 and mostly in '24, we're going to see a bigger impact of these network. Expansions.

Thank you. At this time, I see no further questions. I would like to turn the call back to Mr. Ouimet and Mr. Jetté for closing comments. Philippe Jetté: Okay, great. Well, thanks for being there this morning, and we're going to be back in January with the Q1 results. So feel free to call us in the meantime, have a good day.

Thank you. This will conclude today's conference call. We appreciate your participation. You may now disconnect.