MONTREAL – Continued growth in Cogeco’s Canadian division helped to hold third quarter profits steady at the Montreal-based company.
For the quarter ended May 31, 2010, revenue at Cogeco Inc. increased by 4.6% ($14.6 million) year-over-year to reach $330.9 million. Net income of $10.7 million was virtually unchanged compared to the same period of the previous fiscal year, however, net income in the third quarter of 2009 included an unfavourable income tax adjustment of $2 million related to the certain items at the company’s Portuguese subsidiary Cabovisao.
Operating income before amortization grew slightly by $1.3 million, or 1%, to reach $127.9 million this quarter when compared to the same period the previous year, and operating costs amounted to $203 million for the quarter, up 7% ($13.3 million) from the same period last year. Free cash flow reached $49.6 million, compared to $32.4 million in the third quarter of fiscal 2009.
President and CEO Louis Audet said that stabilization at Cabovisao, which added 27,680 revenue-generating units (RGU) this quarter, was a key factor in the quarter’s results.
“Cogeco continues to grow its cable customer base both in Canada and in Portugal with net additions in all services”, Audet said in a statement. “While Europe’s economic difficulties persist, the competitive situation in Portugal appears to be settling down. In part, we ascribe this to the retention strategy adopted by Cogeco Cable in fiscal 2009.”
Here at home, the Canadian operations’ third-quarter revenue rose by 11.1% ($27.6 million) to $275.7 million. This was driven by net additions of 36,561 RGU, the introduction of high speed Internet usage billing, rate increases implemented at the end of fiscal 2009, and the revenue related to the new levy amounting to 1.5% of gross cable television service revenue imposed by the CRTC in order to finance the new Local Programming Improvement Fund, the company said.
Cogeco ended the quarter with 2,306,870 RGU in Canada, consisting of 874,072 basic cable customers, 541,946 digital cable customers, 550,153 high speed Internet customers, and 340,699 telephony service customers.
"As for our fiscal 2011 preliminary financial guidelines, which exclude the financial projections of the Corus radio stations until the transaction is completed, we anticipate an upward progression with revenue at approximately $1,380 million and operating income before amortization at approximately $538 million,” Audet added.
