MONTREAL – While reporting a quadrupling of third quarter net income to $8.2 million Cogeco Cable, the country’s fourth-largest MSO, said the number of telephone customers it has predicted adding is likely conservative.
The company has only been in market with a voice over Internet protocol service since June 8th (and only in some of its markets – Oakville-Burlington launched June 8th, Trois Rivieres three weeks later) and company CEO Louis Audet declined to give any early signup data. However, it has told analysts this year it expected to connect 7,000 to 8,000 telephony customers by the end of fiscal 2005, August 31st.
During this morning’s conference call with those analysts, Audet tried his best to keep from being drawn into a numbers conversation. The analysts pointed out that both Shaw Communications and Videotron ltee dramatically underestimated the number of voice customers they figured they would sign up and wanted to know if Cogeco was trending the same way.
While not tying his comments directly to his own company’s penetration, he added, “this is going a lot better than most of us had even hoped for. Our mood is one of guarded optimism.”
Questioner after questioner pushed Audet on the company’s 7,000-8,000 prediction, calling the estimate “too conservative” or “very conservative”.
“You could have worked for the inquisition,” Audet told one of the analysts. “Let’s just say we’re satisfied with how (the telephony rollout) is going.”
Cogeco Cable plans to offer telephony to 85% of its markets by the end of calendar year 2006.
Overall, "Cogeco Cable continues to report progress in the size of its revenue-generating units. Digital television and high-speed Internet services are continuing to expand, and we are confident of reaching our projections by the end of the fiscal year 2005," adds today’s press release.
"The improvement in our results exceeds our forecasts and sheds a very favourable light on the 2005 and 2006 fiscal years. We are therefore revising our forecasts of operating income before amortization for the 2005 fiscal year upwards to $226 million. For the 2006 fiscal year, Cogeco Cable anticipates a meaningful increase in free cash flow to about $52 million, up from 2005, despite the launch of its digital telephony service in most of its markets," added Audet.
The company’s operating margin now stands at 41.6% compared to 38.8% for the same quarter last year. Revenue in the quarter increased 5.8% to $140 million.
Cogeco had 827,324 basic cable customers at May 31, 2005, a drop of 3,523 since the beginning of the quarter. It added 5,731 Internet customers for a total of 274,873 and 8,739 digital set top boxes, for a total of 287,962.
