Cogeco Communications Inc
TSX:CCA
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Cogeco Communications Inc
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Good day, and welcome to the Cogeco Inc. and Cogeco Communications Inc. Q4 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to 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 fourth quarter conference call, which Philippe Jetté and I will cover. Before we begin this call, as usual, we'd like to remind listeners that the call is subject to forward-looking statements, which can be found in the press releases issued yesterday. So I'll turn the call over to Philippe Jetté.
Good morning, ladies, gentlemen and shareholders of Cogeco Communications Inc. and Cogeco Inc., And thank you for joining us to discuss the results of our fourth quarter and fiscal year ending August 31, 2020. I would like to first address the hostile proposals from Rogers and Altice to acquire both Cogeco Inc. and Cogeco Communications, which were rejected by the company's Board of Directors, taking into consideration the members of the Audet family's unanimous rejection of the proposals. I would like to highlight the stewardship the Audet family has provided to the corporations over the last 63 years, which has allowed the corporations to grow and prosper. Today, Cogeco enjoy a unique and enviable position as the only broadband services company with a significant presence in both Canada and the United States. As all the facts are out there, including the November 18 end date, there is nothing to add on this matter. I would like to begin the call by highlighting the key strategic initiatives Cogeco Communications made in recent years, which are contributing to the company's growth and the fourth quarter's results. Cogeco has clearly positioned itself as a consolidator of regional cable operators in the U.S. alone. We made 5 acquisitions, totaling approx. CAD 4 billion in the last 8 years. The integration of these acquisitions were all well-executed as it demonstrated by consistency -- a consistently superior organic growth, partly due to Internet penetration, increasing from 33% to 53%; and second, one of the U.S. industry [ highest ] EBITDA margins at 45%. Second, the COVID-19 pandemic has not stopped us from pursuing our activities with the closing of the Thames Valley acquisition in the U.S. in March, the closing of the iTéract acquisition in Canada in May, and the announcement last week of an agreement to acquire DERYtelecom for $405 million. The regional cable company is the third largest cable operator in Québec and serves approximately 100,000 customers. Third, we intend to continue playing an active role as an effective and disciplined regional cable consolidator. To do so, we are also counting on our reputation of being a responsible and respectful acquirer for all stakeholders involved, including the employees, the communities we operate in and the owners of the businesses we acquire. Fourth, our data hosting business, Cogeco Peer 1 was sold last year, enabling Cogeco Communications to focus on its broadband platform and to initiate a large share buyback program, resulting in $175 million bought back in the first year of the program in addition to a dividend which has grown 10% annually. Fifth, in Canada, we expanded our 1-gig service to over 70% of our footprint. I've just started rolling out our new IPTV service, and I've won a good share of available government funding dedicated to increasing connectivity in unserved and underserved regions. Finally, Cogeco Communications is now in a unique North American broadband platform with close to half of its revenue generated from its U.S. operation, and we continue to forge ahead with our plan to enter the mobile services market to provide more choice to Canadian consumers. Let me continue with a reflection on the key fiscal 2020 accomplishments. Our focus at the start of the fiscal year was on building on the many transformative projects that we've put in place in 2019 and refining our strategy for continued long-term growth. We made changes to our leadership team at Cogeco Communications, welcoming a new President at Atlantic Broadband, Frank van der Post, at the start of the fiscal year, who brings a solid go-to-market expertise, and announcing later in the year, an equally capable new President at Cogeco Connexion, Frederic Perron. As we said about ensuring our plans move forward, we were suddenly phased in the spring with the swift arrival of COVID-19. Cogeco's subsidiary 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. We have capitalized on a number of initiatives, which were implemented in the spring to accelerate our digital transformation program as we expect that many customers will continue to use our online tools after the pandemic. We were able to provide our customers highly reliable connections, thanks to the capacity, reliability and robustness of our network, which experienced significant and unprecedented peaks of usage up to 70% increase during the day. Despite the many challenges of the crisis, which is still gripping our world, we have maintained financial discipline, resulting in little overall impact on Cogeco Communications fourth quarter and annual financial results. This key accomplishment is a tribute to all of our employees, which have worked tirelessly throughout the crisis and still today, to make sure that we maintain high-quality connectivity services and increase access to information and entertainment in this time of crisis. However, the financial results of Cogeco Inc. were more impacted during the second half of the year due to its exposure to the media business as radio advertising revenue was significantly impacted by the pandemic. On a positive note, the revenue decline in the fourth quarter with slightly less than experienced during the third quarter and advanced bookings for the new fiscal year are improving. Let us focus on the key initiatives at Cogeco Connexion, first by addressing acquisition. Even though the Canadian market is more consolidated than the U.S. market, we were successful in securing 2 acquisitions. In May, we closed the iTéract acquisition, a full telecommunication service provider in Sergent, Québec, serving approximately 2,000 customers. But as part of this transaction, we acquired 15 exclusive 3.5 gigahertz spectrum licenses, covering a large region of rural south in Québec, which will help in expanding our network in underserved and unserved regions and launch a wireless service if the regulatory environment is favorable. We continued our expansion with the announcement last week of an agreement to purchase DERYtelecom, the third largest cable operator in Québec. This transaction will enhance the scale of our Canadian operations and is one of the few remaining sizable opportunities in Canada. This strategic acquisition will increase our foot all in Québec in complementarity with geographic areas, enabling us to further pursue our regional edge-out expansion. In the last year, DERY generated mid-single-digit revenue growth, which we expect to be able to realize over the next few years as we add our product line out to those of DERY and invest further in sales and marketing. We intend to increase the penetration of internet services, currently sitting at 46.5% by continuing to invest in speed upgrades and WiFi functionality. We also expect to introduce our new IPTV product and roll out our commercial services product suite. DERY has an attractive demographic profile aligned with Cogeco's target market. Its competition is also more fragmented with approximately 60% of the footprint covered by DSL competition, demonstrating the superior growth opportunity. DERY secured government subsidies to expand its network by approximately an additional 5,500 households over a 3- year period and is awaiting answers to a number of other projects submitted as part of broadband funding programs. In addition, we expect to be able to achieve significant cost synergies over the next 3 years as we interconnect our systems, integrate our IT systems and benefit from further economies of scale. For the first full year of operations under Cogeco's management, we expect that the acquisition will add 7% to our Canadian EBITDA. And from a consolidated basis, will add close to 4% to our free cash flow. Let me continue on the network upgrade and expansion, and I would first note that we have committed to invest approximately $250 million annually in capital expenditures in Canada to upgrade and expand our networks if we exclude larger acquisitions such as DERY and the wireless initiatives. And as I mentioned earlier, in fiscal 2020, we expanded our 1-gig service to over 70% of our footprint and have just launched our IPTV service. In addition, we are very active in various government programs in Canada to provide high-speed internet to underserved areas. Cogeco was recently awarded 16 projects in Québec and in Ontario and has applied to more than 100 additional projects, which are currently being reviewed. Cogeco has submitted targeted regulatory change design to increase competition in Canada's wireless market as part of the CRTC consultation. Cogeco's proposed hybrid mobile network operator, HMNO model, would enable the sustainable entry of new wireless carriers across Canada with particular benefit to underserved regions. This proposal will allow facility-based wireline and wireless service providers to access portions of the national incumbent wireless networks, while also requiring those regional providers to invest in their own telecommunication infrastructure. Cogeco believes that there has been a number of positive development in the quarter regarding the CRTC's wholesale internet service 2019 costing decision. Following an industry cabinet appeal in its August decision, the government expressed its concern that the rate established by the CRTC in August 2019 may undermine investment in high-quality networks, particularly in rural and remote areas. In September, the CRTC approved a request submitted by the cable carriers to stay the implementation of the 2019 announced rate for aggregated wholesale high-speed access service until it completes its review of that order. Let's now focus on the key initiative at Atlantic Broadband, where under the leadership of Frank van der Post, we put several initiatives in motion, aim at providing a greater customer experience. We implemented a new interactive voice response system, put more emphasis on our self-install program and launched a virtual connect tool, which will reduce the number of customer calls. We grew our product offering, launching our TV online app and HBO Max as well as adding Showtime Anytime, YouTube Kids and Amazon Prime on the TiVo platform. We acquired what was formerly Thames Valley Communications, adding approximately 10,000 customers within our existing geographic footprint, continued our expansion in the Florida markets and executed targeted edge outs in all regions. In addition, important organizational changes were made to streamline functions, reinforce center of expertise and achieve efficiency that will allow Atlantic Broadband to remain agile in the marketplace. Cogeco Communications consolidated financial results. For the quarter, revenue is up 3% and EBITDA up 6.2% in constant currency when compared to the same period last year. Reported revenue reached $605.2 million and EBITDA reached $294.5 million, generating a margin of 48.7%. Cogeco Connexion achieved an EBITDA growth of 5.7% or 3.4% if we exclude nonrecurring items, which is a very strong performance considering the negative impact that pandemic is having on our economy. For a second quarter in a row, internet connections were very strong. Atlantic Broadband 7.2% EBITDA growth in constant currency and organic growth of 5.9% was even stronger than the third quarter performance. Primary service unit net adds of 20,653 almost triple in the quarter compared to last year, mainly as a result of significant increase in internet connections, as more customers are looking for a highly reliable service when working from home in the context of the COVID-19 pandemic as well as new bulk activations in Florida. We announced an increase in the quarterly dividend from $0.58 to $0.64 per share, representing a 10.3% increase over last year. Let us now look at the individual components. Cogeco Connexion reported revenue increased by 1.3% relative to the same quarter last year, mainly due to the customers transition to higher value offerings, a significant increase in Internet connections for a second quarter in a row, growth in commercial services and a rate increase. Cogeco Connexion's EBITDA increased by 5.7% relative to the same quarter of last year as a result of increased revenue and lower operating expenses. If we exclude nonrecurring items, totaling approximately $4 million, EBITDA would have still grown by 3.4%. We are happy with the PSU performance, with internet subscribers increasing by approximately 9,000 during the quarter. Atlantic Broadband revenue in constant currency increased by 4.9% in the fourth quarter compared to last year, while EBITDA increased by 7.2%. Excluding the impact of the Thames Valley acquisition, revenue and EBITDA would have grown by 3.5% and 5.9%, respectively. 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. The superior organic EBITDA growth was mainly due to revenue increasing at a greater pace than operating expense as these are managed diligently. Atlantic Broadband added over 13,000 new Internet customers, a sharp increase compared to the prior year. Let us now take a look at Cogeco, Inc. In the fourth quarter, consolidated revenue increased by 1.6% and EBITDA increased by 6.1% in constant currency. While the broadband business had strong results, the smaller media business continued to be impacted by the COVID-19 pandemic as the lower level of economic activity, notably in the retail industry, had an impact on advertising revenues. Revenue related to the radio operations decreased by 29% in the fourth quarter compared to the prior year, a slightly lower decline than in the third quarter. However, EBITDA improved over last quarter as Cogeco maintained cost control measures while preserving the quality of the content offered to our listeners. We also avoided significant bad debt expenses through an active management of our accounts. We will continue to monitor the situation closely in the coming quarters as significant uncertainty remains for the economy in general, and more specifically, for certain category of advertisers. We do however expect our media business to be in a strong position from a market share perspective when the situation eventually stabilizes. We announced an increase of 14.7% in the quarterly dividend from $0.475 to $0.545 per share. I will now discuss the financial guidelines. On a constant currency and consolidated basis, Cogeco Communications expect low-single-digit percentage growth in revenue and EBITDA for fiscal 2021. Both metrics should increase mainly as a result of organic growth at Atlantic Broadband for both the residential and business sectors, the continued expansion in Florida, annual rate increases and the full year effect of the Thames Valley Communications acquisition completed on March 10, 2020. At Cogeco Connexion, revenue growth should stem from growth in the business sector and internet customer additions. The capital intensity should remain essentially stable at approximately 20%. At Atlantic Broadband, capital expenditures will be driven by our continued Florida network expansion and additional investments in our network infrastructure in the areas we serve. At Cogeco Connexion, we expect lower customer premise equipment costs as a result of the progressive launch of our IPTV solution, offset by a gradual acceleration of investment to expand our network footprint across Ontario and Québec, where we participated in various government-sponsored programs. Free cash flow on a constant currency and consolidated basis is expected to grow at low-single-digit percentage. We expect year-over-year growth to be stronger in the first half of the year since the second half will be compared to a stronger second half of fiscal 2020. At Cogeco Inc., we expect low-single-digit revenue growth, essentially flat EBITDA and low-single-digit free cash flow growth. Cogeco expect flat EBITDA as Radio results should be weaker as the COVID-19 pandemic continues to impact adversely advertising revenues. Note that the financial guidelines do not reflect the recently announced acquisition of DERYtelecom. Guidelines will be updated once the company completes the acquisition, most likely before the end of the calendar year. As you can see, fiscal '21 looks very promising despite the unfavorable economic impacts related to the pandemic as we will continue to manage our costs closely and pursue profitable growth through various organic initiatives and acquisitions. Pro forma, the DERYtelecom acquisition, our net leverage is estimated at 2.7x, leaving ample room for other acquisitions and share buybacks. Due to our commitment to bring new services and competitive choice to our communities, especially in underserved regions, we remain engaged in launching a wireless service in Canada, if the regulatory conditions are conducive to meeting our financial return objectives. Finally, I would like to conclude by saying how proud I am that we received last July the Caring Company Certification from Imagine Canada. It recognized our leadership and community investment and social responsibility, which is a fundamental part of our history and DNA and is increasingly important in times of crisis. And now, we will be happy to answer your questions.
[Operator Instructions] Your first question comes from Drew McReynolds from RBC.
Two big picture one’s for you, Philippe, and a housekeeping one. On a big picture, you covered off and reiterated -- obviously, your desire here in Canada to get into wireless. It's been the position, I think, of Cogeco that you see sustainable growth in wireline with or without wireless. Wondering if that position is evolving, obviously, given a lot of 5G initiatives across North America that are underway in convergence and down the road the importance of the B2B market in driving incremental revenues overall in the sector. So would appreciate just an updated thought there. Also, you alluded to the uniqueness of the North American platform. Could you highlight for us some of the benefits that you see by having a presence both sides of the border there? And just third on the housekeeping item, CapEx intensity at 20%, little bit higher than what we were penciling into our model, wondering just to unpack that here in fiscal 2021 and the extent to which it remains, I don't know if it's elevated, but at that 20% level through the medium term,
Thank you, Drew. Well, on the first topic, we have said many times and demonstrated through our results that we can continue to grow. And for the long term, our wireline business, broadband continued to grow. There is a steady demand, and we see it in times of pandemic that there is a very solid and growing demand for home connectivity. Now part of the internet at home additions is also a move from the mobile-only usage. So you've referred to the 5G investment. Yes, that's the future of mobile telecommunication, but home -- inside the home, there is a massive amount of data that more and more devices are consuming, and this home needs to be fed by wired networks. The mobility network is convenient when you move between homes, but inside the home, with all the video, with all the internet, the video conferencing, the business services that we consume more and more, there is a very solid demand for wireline and broadband network. So we will continue growing on the wireline side, and the opportunity for us is really to add mobile as a product in our portfolio as you know we are a very focused company with 3 products, and the addition of the fourth one has to meet our financial objectives. Right now, we're working with, as you know, for some time with the regulatory bodies to make sure that we can find -- actually in larger regulatory policies to support the expansion in regional territories. Dense urban centers are well served. Now we have to turn to regional wireless and mobile quality -- high-quality operations, and Cogeco and other regional operators will be part of that. The next part of your question was about the synergies, really about ABB and CCX. The way we've shaped our operations, we have developed a very significant number of synergies with shared services, with expertise centers, between the corporate group as well as the ABB and CCX team. So the -- all these initiatives and the increase in synergies actually translate in margins we have, and we continue to work very well altogether. So this will continue for the long term. And in terms of capital intensity, we have some projects like the introduction of IPTV that is actually going to lower our costs on the video side in Canadian operations, but we have a significant market expansion and agile programs to better serve the underserved and unserved areas. Governments are very, very eager that all Canadians and Americans be connected at their home, in cottages to internet, and we're working really hard to meet the appetite of that market.
Your next question comes from Vince Valentini from TD Securities.
Let me start on CapEx as well. Philippe. Is it possible to articulate what you think CapEx intensity would be in 2021 if you didn't have those edge-outs, if you just maintain your operations for current footprint as opposed to adding new households would be -- would we be seeing a trend down to the 18% to 19% range instead of 20%?
Yes. So Vince, yes, absolutely. We're doing a bit more than we had planned initially and that's good news. Actually, we're doing a lot of effort to minimize the maintenance CapEx. So that goes through minimizing the CPE costs, increasing self-installation, which are good for the customer and good financially as well. But when we see opportunities for growth in terms of growing our footprint in an attractive way financially, which is in part through these government-sponsored programs, then we do it. So we definitely would be lower. I don't have an exact figure, but probably around 18% or so without this. And then for also addressing Drew's question for future years, we'll see how this plays out. We have put in a number of bids for these projects, and those projects are multiyear. They're all small projects, but they add up together. And as we have more clarity on what we'll be able to do, we'll come back to the market later on in the year to talk about future years. But for now, we do have some expansion CapEx in addition to what we normally do as expansion in 2021.
Okay. And then another question on broadband, especially in the U.S., I find your presentation a little understated. I mean your sub ads are remarkably good, the 5.5x higher than what you did in the fourth quarter last year. And given your -- the size of your base, 13,500 is a big number. Is there anything you can talk to there? Was there something unusual? Was it bulk contract or something that came through in the quarter? Or is this just a new trend? And if so, do you have any sort of thoughts on how September and the first quarter are trending? Are things remaining just as strong as that on the broadband growth side?
We're obviously very pleased with what we've been able to achieve. A portion of it comes from the COVID situation. Obviously, there is more need for home lines and fast lines. And as you know, especially in the U.S., our competition outside Florida is primarily DSL. So that plays to our advantage. We still see some good trends going forward, but obviously, if you think about a home that has decided to upgrade their speeds and change providers, often this will have been done already. So we don't expect it's going to be as strong in the coming year, but we'll have to see. We were, again, pleasantly surprised in Q4 to have those subs. So if you look at ABB for the coming year, we don't provide exact guidance, but I would probably point towards the previous year of 2019, which was a more normal year, where you don't have the extra dunk coming from the pandemic situation. But it's still -- we still have sizable increases in internet subs in that year.
And one last one. From a big picture perspective, you're putting up pretty decent organic results. You're tacking on acquisitions to grow your footprint accretively, yet your share price is down close to 20% year-to-date, depending on whether you look at CCA or CGO, which is actually worse than any other cable or cable stock we track. Can you give us any color as to when you sit around the Board room table, what the Board members are saying? Are they just saying, "Oh, just be patient, it's -- these results will eventually get rewarded." Or is there any sense of urgency that may be some other actions are needed to surface shareholder value?
Well, we continue to focus on what matter most, which is to continue our growth plans to deliver value for all stakeholders to really stay close to our markets, understanding the need and hence our customer experience. So these are the fundamentals, and we will stay focused on what matters and what's matter is growing our business and improving our service.
Can I just follow up, Philippe? If that's the case, and you still have a fairly clean balance sheet even after the DERY acquisition and cash on your books, can you really consider making acquisitions when your share price multiple is this low? Is it possible you could just accelerate share buybacks using that balance sheet capability instead of putting more money into premium-priced acquisitions?
Yes, it's Patrice. So we've been doing both actually. We have a lot of capacity to add in terms of acquisitions. We could finance a USD 1 billion transaction, if we had one that was ready to announce. And we could do bigger numbers than this as well, but that would be the simple part just raising money. As you know, we generate a lot of free cash flows in both countries. This is something we always focus on, and we're able to delever. So we've been able to be very active in the NCIB. In the first year, at CCA, we did 90% of the maximum. So that was, if I recall, $175 million. When COVID hit, we slowed down a little bit, just to be careful, but we still maintained it and since September with the hostile bid, then we had to stop. So far, we have not reactivated this. We are planning to, but there is a legal implication. So that's something we'll be looking at. So definitely, very interested in continuing to be active in the share buyback in addition to looking at acquisitions.
Your next question comes from Jeff Fan from Scotiabank.
Just a follow-up on Vince's question regarding share buyback. Would you be interested or would you think you have the capacity to go beyond the NCIB program to buy back more than a substantial portion of your own shares, especially given the hostile situation that's underway, and if that doesn't come to any kind of conclusion? That's the first question. And then the second question is just regarding wireless. I know a lot of it is being placed on the CRTC coming to terms with your HMNO proposal. If the CRTC doesn't side with you on that proposal and they go another path, what is your plan B regarding wireless and spectrum?
On the first one, on the buyback, in terms of going past the NCIB and doing something more substantial, in general, we want to keep some capacity to do both because obviously we want to continue to be an active player in the consolidation of the industry, and we've had -- we've been successful doing it so far. If you're referring to a special situation where there would be a block of shares available, we could certainly be part of the solution if this became available, but we'll have to see if it does become available at one point. Yes. On the second one for wireless, let's -- we are focused on our HMNO plan. There is market power that was demonstrated by the CRTC twice now through public hearings process. So the government as well is very interested to see more options and lower price for consumers. So the HMNO and our proposal, it's not just something for Cogeco, it's actually something for a lot of regional operators throughout Canada. And it's about bringing more choices and competition outside of the dense urban centers. They've been well served. That's where the majority of Canadians were. But now we need, as a country, to expand this in regional underserved and unserved areas. And Cogeco was so well supported. We have deposited in our request to the CRTC, at the same time, over 300 letters from cities and towns and municipalities that actually want a better service, more options, lower price in their regions. So all -- throughout Canada, many others -- other regional operators will actually benefit from that. And it's a matter of time for the CRTC to come to conclusion. But honestly, we are first convinced; and second, it's a matter of time. So we're staying with plan A.
Your next question comes from Matthew Griffiths from Bank of America.
I had 2 kind of related. On guidance for Canada, you point out growth coming from business and sub growth with broadband. And I couldn't help but notice the disclosure around the impact that the aggregated wholesale rates would have if it was finalized and put into place that kind of grew from $10 million in 2019 to an estimated $18 million in 2020. So notwithstanding the actual rates, but just the activity of the wholesalers seem to be gaining some traction and momentum. Is this playing into the growth overall, the ability to pass on price increases in the Canadian market? Maybe you can just speak to those 2 things, that would be helpful.
Hopefully, I will address your 2 questions, but just on the increase in the value, the 2019 rates would have, 2019 being the proposed rates that are being reviewed right now by CRTC and that the cabinet basically has commented on a couple of weeks ago, saying that basically CRTC had to review those rates in face of the operators need to continue to invest in networks and bring capacity to consumers. You have -- there is actually a couple of elements in the growth in that differential, and the main one has to do with speed upgrades that were done by the customers of those TPIAs. And under the proposed rules, there is not really a variation in the price per speed. Whereas, right now, the rates that we're using are the 2016 rates, and there is a different -- there is a pricing grid per speed. So you should not assume that there's been clear acceleration in the number of subscribers. It mostly has to do with the speeds that people are consuming, and there is also a bit related to sort of not the speed, but the actual consumption per month. That's another element in the revenues we generate. Did I address your 2 questions? I'm not sure I got the second one.
Yes. No, it's -- you did. So it's not an increased activity, just to increase on elements that make up the price. So that's clear.
That's our main reason, yes.
Your next question comes from [ Jerome Dibari ] from [indiscernible] Bank .
So we've seen free cash flow in the quarter was maybe a bit lighter than your recent expectations from this summer. We've talked about faster network deployment for fiscal '21, but was that also the case in the quarter?
Yes, definitely. The quarter, we ended up spending more than we thought in the quarter, but it was for a good reason. So the 2 main reasons were more TSUs than we had initially forecasted. So again, that's good news because we like having more TSUs and that requires some CapEx, so success based CapEx. Also, we had planned for some disruption in construction in Florida, given the situation with the pandemic, and it turns out that we can -- we built a bit faster than we thought. So I would say, these are the 2 main reasons, and there's been a bit of equipment purchasing. The third reason would be equipment purchasing that we did. Again, during the pandemic, you can -- we did not experience real shortages in equipment, but certain categories of equipment, we bought a little more than usual to make sure that we would not be cut short on inventories.
That's interesting. And we heard yesterday stronger wording on rural deployments on fixed wireless from T-Mobile. Are you seeing an acceleration in that technology over your footprint in the U.S. and maybe a few words on -- if you have any from what T-Mobile said yesterday?
Well, fixed and mobile wireless need spectrum. So you've seen us. We have started to acquire spectrum licenses, and we gather a starting set of spectrum assets. So we are looking at expanding our footprint with fixed wireless access. So that will be mainly for regional and rural areas where it's faster to reach some groups of housing by wireless, and we will naturally grow our fiber optic networks. So eventually, we will replace those wireless connection with much faster fiber optic links to every home, and we will just push our wireless equipment further out there to reach even more remote housing areas. So that's how we plan to use fixed wireless access in Canada and the U.S., but it needs to start with spectrum that we have started to acquire and accumulate. On the -- specific to the U.S. with T-Mobile, I'm not too sure. I can't really comment about their strategy there, but I just described what we're thinking about fixed wireless access.
[Operator Instructions] Your last question comes from Matthew Lee from Canaccord.
So just on the business front, can you maybe give us an update on the U.S. B2B performance? Have you started to see a recovery in that market?
Yes. So our total business sector in Q4 was up 0.5 points. So 0.5 percentage point year-over-year. That's for the 2 countries. And actually, the 2 countries have grown a little bit during the quarter. So overall, if you look at the services we offer, internet and phone lines have done fine. Normally, we're growing fast. This time, obviously, with the pandemic, we're not growing really, but it's a stable business. And this is offset -- it was mainly for the last quarter, but offset on the video side for certain hotels and restaurants. So when -- in certain regions, they are closed, then we don't provide the service during that period of time. So it's been spotty during the last 6 months. But overall, we are fine. We -- that's something we're watching closely. And when you think also about the future, the last thing a business will want to reduce is the internet connection, unless the business is not there anymore. So, so far, we've been doing okay, but not growing the pace we're used to.
That's fair. And then in terms of subscribers in Canada, your second half numbers are really solid. Is there anything driving that beyond the usual demand for speed and upgrades? Or are there any onetime items that have sort of driven that subscriber growth up?
Yes. So there is no onetime item. Like, sometimes we will have big bulk agreements in Florida that will be there in the quarter. It's not the case this quarter. So it was more spread towards the various territories. And again, we typically grow Internet, but it's been faster than usual, as you pointed out, and we think it's, in large part, due to the pandemic. So our competition in the U.S., outside Florida, which is a special case. But outside Florida, it’s by far DSL competition. So that means that the video is carried through satellite. It means that the internet is limited at typically 15 megabits. Whereas, we offer 1 gig to 90% of the territory in the U.S. So that's mainly it. And it's -- a lot of people moving from slower competitors and also, as Philippe mentioned earlier, some people that are mobile-only and now are working partially or fully from home and want a dedicated line because that's the best way of getting equipped by the home environments.
So it has totally to do with the products. We offer a much faster product. In most cases, it's unlimited. It starts at 120, it goes to 1 gig in speed. So the DSL competition and the mobile-only competition can cope with that.
Right. Fair enough. And then just lastly, on the acquisition front in the U.S. I mean it looks like the competitive intensity for U.S. cable close is sort of heating up from an M&A perspective. Is your pipeline so strong there? Or maybe has that lightened up?
Yes. So there is -- that's something we've said before. There is about 30 to 40 companies that could be of interest, if they were for sale, and we were happy to proceed post due diligence. There's been a reduction in intensity in the beginning of the pandemic, so -- starting in March. So some deals were pulled, and we've seen some deals come back to market. You probably saw some announced. So we're probably back to normal, and we're always interested in looking for acquisitions. And the latest one has been in Canada. It was top on our list, the DERY acquisition and -- but we are definitely continuing to be in the market for more acquisitions in U.S.
We have no further questions in queue. I'd like to turn the call back over to the presenters for any closing remarks.
Okay. Well, thank you, everyone, and we'll be back for our first quarter earnings results in January, and feel free to call us if you have any questions in the meantime. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.