MONTREAL – While growth in the television and radio divisions powered Cogeco’s Canadian operations, its Portuguese subsidiary Cabovisão pulled down the company’s third quarter financial results.
For the quarter ended May 31, 3009, consolidated revenue increased by 11.4% to $316.3 million, and consolidated operating income from continuing operations before amortization grew by 10.4% to reach $129.4 million.
But after taking in to account various losses at Cabovisão, the company reported a consolidated net loss of $93.8 million for the first nine months of fiscal 2009, compared to net income of $15.5 million in the prior year.
“We have recently realigned our short term strategic plan in order to curtail subscriber losses that continue to adversely affect the financial results of our Portuguese operations in the current difficult competitive environment”, said president and CEO Louis Audet, in the press release announcing the company’s results.
The “continuing difficult competitive environment”, “intense” customer promotions and advertising initiatives from competitors, plus a local currency revenue decline “more severe and persistent than expected”, all contributed to a decrease in the value of Cogeco Cable’s investment in the Portuguese subsidiary, the press release continued.
On this side of the pond, revenue-generating units (basic cable + digital cable + Internet + phone subscribers = 4 RGUs) in Cogeco’s cable sector grew by 14,985 net additions in the quarter, and 93,325 net additions in the first nine months, for a total of 2,810,199 RGU at May 31, 2009.
“The financial results of our cable sector and of our radio activities in Canada drive Cogeco’s growth in the third quarter”, Audet continued. “All of our radio stations have shown improvement in reaching their target audiences. For the nine month period in the cable sector, our Canadian operations are growing at a steady pace with net additions of 140,215 RGU.”
Cogeco generated free cash flow of $32.4 million in the third quarter, compared to $37.1 million for the same period last year. For the nine month period ended May 31, 2009, it generated free cash flow of $86.3 million compared to $79.5 million in the prior year.
The press release said that the reduction in free cash flow for the quarter was due mainly to an increase in capital expenditures in the cable sector, and an increase in current income taxes.
