MONTREAL – Driven primarily by a growing cable division, Cogeco Inc. saw revenue increase by 21.4% to $199.3 million in the fourth quarter of 2006, ended August 31st.
Net income in the quarter came in at $10.3 million in the quarter, as compared to $630,000 in the same quarter of 2005. For the full fiscal year, net income was $23.1 million, while 2005 saw a net loss of $19.8 million
With the acquisition of Portugal’s Cabovisao as a contributing factor, the number of Cogeco revenue-generating units jumped from about 1,348,000 at the beginning of the fiscal year to approximately 2,185,000 at the end of August 2006.
"We are in a very good position to sustain growth, in Canada with more than 208,000 RGUs added to our base as a result of the positive impact of our digital telephony service and, with the well-trained and enthusiastic people in Portugal, who are working to grow our position in that market," said company president and CEO Louis Audet in the press release.
During the fourth quarter, the Canadian operations reported strong RGU increases, adding more than 44,000 compared to about 10,000 for the same period last year and growing revenue by 12.7%, while operating income before amortization improved by 11.8%. This was driven by the addition of so many telephony customers.
On a consolidated basis, revenue increased by 24.8%, operating income before amortization by 20% while net income more than tripled to reach $34 million.
On the media side, TQS still drags on results. The third-ranked Quebec TV broadcaster developed a new logo and imagery and prepared the fall season, which coincided with the 20th anniversary of the station. "The 20th anniversary of TQS is testimony to the vitality of a generalist television network, that is different in terms of style and content. We continue to take all the necessary measures to improve our programming with new shows that will please our advertisers and our audience," said Audet.
In radio, Rythme FM kept its ratings leads. "The competition is fierce but we continuously strive to maintain that position. This is why in August, we launched a new morning show and revisited our lunchtime and afternoon shows with new hosts," he added.
For fiscal 2007, Cogeco expects to improve operating income before amortization by 33% to 35%, and consequently generate a net income of approximately $15 million. The expected free cash flow should stand between $15 million and $20 million as announced in the third quarter.
For the Canadian cable operations, management is maintaining its 2007 preliminary projections of last July. In Portugal, we expect to add more than 75,000 RGUs essentially equally divided between basic cable, high speed Internet (HSI), and telephony services, said the company.
Revenue generated from the Portuguese operations should exceed $215 million and operating income before amortization should reach approximately $70 million, an operating margin of 33%. Consequently, on a consolidated basis, an operating margin of approximately 38% should be achieved.
