Cogeco Communications' (CCA.TO) non-cash write-down of its Breezeline U.S. broadband division increases the likelihood that the Canadian telecom company will pursue strategic alternatives, including a potential exit from the U.S. business, TD Securities said Friday.
"The non-cash write-down of Breezeline has stimulated questions from investors about the future intentions for this US cable business," analyst Vince Valentini said in a note to clients.
"In two notable instances in the past (Portugal cable and Peer1 data centres), Cogeco fully divested the struggling operations within a reasonably short period of time after writing down the book value," the analyst said.
Valentini said Cogeco explored the sale of some of its US cable systems in the first half of 2025, with bids presumably below the level management wanted.
"We have no knowledge of an active sale process today, but we believe the write-down has increased the probability that CCA will consider strategic options and perhaps a full exit of the US business in the next 12-24 months," the analyst said.
"Cable assets are out of favour in the US, but existing cablecos could still have an interest in the scale and cost synergies of acquiring a smaller player," Valentini said.
"Breezeline also continues to generate meaningful FCF, which could attract interest from financial players."
The analyst maintained a Buy rating and $83 price target on Cogeco.