MONTREAL – While bankrupt convention television broadcaster TQS has been a drag on the company, Cogeco Inc. continues to grow thanks largely to its cable division.
"Cogeco’s first quarter financial result is very positive,” said company CEO Louis Audet in a release late Wednesday afternoon touting the company’s first quarter results.
“In the cable sector, Cogeco Cable has continued on its growth trajectory and is in an excellent position to achieve superior growth in 2008… With regards to the court order involving TQS, after careful thought, the time has come to end our participation in the general interest television sector. Cogeco’s portion of the impairment of assets amounts to approximately $18.5 million. In radio, we are well positioned to keep our leading position in key markets and gain market share in our other markets. We are looking forward to achieving a strong fiscal 2008," added Audet.
(Cogeco owns 60% of TQS with CTVglobemedia holding the other 40%.)
Revenue in the first quarter of fiscal 2008, ended November 30, 2007, increased by 11.2% to $292.8 million, operating income before amortization grew by 17.7% to $104 million and free cash flow reached $25.3 million.
On the cable side, which includes operations in Canada and Portugal, revenue-generating units (the combined number of Internet, basic cable, digital cable and telephony subscribers) reached 2.568 million with 83,024 net additions in the quarter.
However, customer growth on the digital and Internet side is slowing. Cogeco added 29,100 Internet customers in the quarter, as compared to 37,000 in Q1 2007. On the digital TV side, the company found 16,200 new customers, as compared to 21,200 in the same quarter of fiscal 2007. Even the rapidly growing VOIP telephony service added 24,600 customers in the quarter, down from last year’s 21,200.
“In Canada, first quarter 2008 RGUs’ net additions were lower than for the same period last year and reflect early sign of maturation in most services,” explains the release. “In Portugal, Cabovisao faced fierce competition and as a result all services generated lower customer growth. RGUs grew at a slower pace since competition offered deep discounts to attract customers during the first half of the quarter. Cabovisao did not match the competition high discounting offering. However, since then, pricing has become more rational. The performance of Cabovisao since its acquisition by Cogeco Cable has been well above management’s original expectations and growth prospects for the future remain excellent.
“The number of net additions in Basic Cable in the Canadian market stood at 8,064 customers compared to a growth of 16,240 customers for the same period last year due to the expiration of certain promotional offers. In Portugal, Basic Cable service grew by 4,933 customers compared to 7,253 customers.
“In Canada, the number of net additions to HSI service stood at 25,294 customers compared to 28,935 customers for the same period last year. During the first quarter 2008, HSI customer net additions is mostly due to the enhancement of the product offering, the impact of the bundled offer of Television, HSI and Telephony services (Cogeco Complete Connection), and promotional activities. HSI service customers in Portugal increased by 3,806 customers compared to 8,077 customers in 2007,” continues the release.
“Canadian net additions of Digital Television service stood at 16,253 customers compared to 21,224 customers for the same period last year. The decrease in net additions this quarter compared to the same quarter last year reflects greater maturity of the digital TV segment following a period of robust growth, especially in fiscal 2006. Since then, the Company also adjusted the service offering and price gap differential between Analogue Television services and Digital Television, which has also contributed to a moderation of the strong growth experienced in the past years. Nevertheless, customers continue to demonstrate strong interest in HD technology.”
In radio, fall’s BBM ratings report that the Rythme FM network continues to lead in the Montreal and Trois-Rivieres markets while the 93.3 station in Quebec City and Rythme FM in Sherbrooke continue to expand their audience, says the press release.
