Strong Fourth Quarter and Year-End Financial and Operational Results for Cogeco Cable

Friday, October 26th, 2007
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  • Consolidated revenue grew 39.7% to $244.3 million and 51.4% to $938.9 million, respectively (essentially in line with July 2007 guidelines);
  • Consolidated operating income before amortization increased 40.6% to $102.4 million and 46.6% to $370.8, million respectively (above July 2007 guidelines);
  • Consolidated net income for the year amounted to $84.7 million up 29.2% and free cash flow reached $30.6 million (above July 2007 guidelines);
  • Strong subscriber growth continued with 49,576 net additions of revenue-generating units reaching 300,688 in fiscal 2007 (above July 2007 guidelines);
  • Second public offering in fiscal 2007 of 3,000,000 subordinate voting shares resulted in a gross proceed of $153,450,000;
  • New Canadian operational structure was put in place to enable a stronger synergy throughout our Canadian operations.

MONTREAL, QUEBEC — Today, Cogeco Cable Inc. (TSX:CCA) announced its financial results for the fourth quarter and fiscal year 2007 ended August 31, 2007. Strong operating results in both Canada and Portugal have contributed to solid financial results.

Canadian Operations

Digital Television services:

  • On June 5, addition of six high definition (HD) channels in its HD line-up in Quebec;
  • On July 17, addition of WGN HD to its HD line-up in Ontario;
  • On September 4, addition of Setanta International Sports Pak to its digital line-up;
  • On September 25, addition of MTV to its digital line-up in Quebec;
  • On October 3, addition of RDS HD to its HD line-up in Quebec;
  • On October 11, addition of Leafs TV HD to its HD line-up in Ontario.

In the fourth quarter of 2007, net additions were lower than for the same period last year mainly due to a reduction in Basic Cable service customers and to a slower growth of Digital Television service customers. During the fourth quarter, Telephony customers grew by 21,173 to reach 143,636 compared to a growth of 20,394 for the same period last year. This growth is mostly attributable to the launch of the service in new markets and increased penetration in areas where the service is already offered. Coverage of homes passed has now reached 78% compared to 66% last year. The net losses of Basic Cable service in the fourth quarter reached 2,627 customers, compared to a gain of 685 customers for the same period last year, mainly due to less generous promotional offers to Basic Cable customers in the fourth quarter 2007 compared to the same period the year before.

The number of net additions to HSI service stood at 12,363 customers compared to 12,601 customers for the same period last year. During the fourth quarter 2007, the 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.

The net additions of Digital Television service stood at 8,747 customers compared to 10,563 customers for the same period last year. The decrease in net additions this quarter compared to the same quarter last year reflects a maturation of the digital TV segment following a period of robust growth, especially in the second half of fiscal 2006. Nevertheless, customers continue to demonstrate strong interest in HD technology. Furthermore, the Corporation adjusted the service offering and price gap differential between Analogue Television services and Digital Television services in the second half of fiscal 2006, which has also contributed to a moderation of the strong growth experienced in fiscal 2006.

Portuguese Operations

  • Cabovisao – Televisao por Cabo, S.A. (Cabovisão) launched its Digital Television service in July 2007.
  • Growth of Basic Cable service by 4,756 customers.

For the fourth quarter, all services generated customer growth as anticipated from the Corporation’s guidelines, except for the Telephony service net additions, which were lower than expected, but the service penetration compared to Basic Cable customers remained the same.. Basic Cable service grew by 4,756 customers, HSI service by 2,936 customers and Telephony service by 2,228 customers.