MONTREAL – Beating its guidance and re-setting projections going forward, fiscal 2005 finished pretty well for Cogeco Cable.
While its media side didn’t perform as strongly, all of the company’s cable financial and subscriber goals were met or exceeded for the year ended August 31st. Operating income before amortization rose 11.9% while net income finished 30% higher than forecast at $28.7 million. Free cash flow was $45.3 million, within the projected range, even with a pretty big ramp-up in telephony spending. CFO Pierre Gagne said in a conference call with financial analysts that without the voice over Internet protocol telephony investments, FCF would have been closer to $55 million.
The number of high-speed Internet (HSI) and digital customers rose by 16% and 22% respectively to 277,648 and 255,289. Launched last June, the number of customers for the digital telephony service at the end of the fiscal year reached about 2,500, including pending orders. The better than expected growth in HSI, digital and telephony customers offsets a small decline in basic service customers of 2,422.
Cogeco president and CEO Louis Audet told the Monday morning call that the company is revising its guidance for its telephony product, predicting 32,000 to 37,000 VOIP customers by August 31, 2006, instead of its initial prediction of 7,000 to 8,000.
In fact, Cogeco is nearly at its initial ’06 guidance now. Audet told the conference call that the company is adding 500 new telephony customers per week. Adding that total to the EOY 2005 total comes to nearly 6,000 voice customers already and the product is available to only 24% of its customers (in Kingston, Windsor, Burlington and Oakville, Ont., and in Trois Rivieres, Ste-Hyacinthe and Drummondville, Que.).
Audet added that the company will soon be ramping up the weekly adds to 600-700 (likely when it turns Hamilton on in November).
And, now that the company’s VOIP product is in the market, Cogeco is turning its attention to wireless telephony, too.
“Now that we’re off to a very good start (in VOIP),” said Audet, Cogeco is ready to turn its attention to analyzing whether or not it should or shouldn’t add wireless.
“We’re just at the beginning of the process,” added Audet.
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