Cabovisao drags on Cogeco in Q3
Subscriber losses at its Portuguese subsidiary depressed Cogeco’s third-quarter results, but the company still managed to report income essentially flat from its Q3 in 2008.
Cogeco’s revenue was up 11.4 percent to $316.3 million. Third-quarter consolidated net income amounted to $10.5 million, compared with $9.5 million for the same period of the prior year.
In Canada, the company reported growing cable revenue-generating units (RGUs) by 14,985 net additions in the quarter, for a total of 2.8 million. The company added fewer phone customers due, it said, to increased penetration in existing service areas and fewer new markets launched.
Capex spending was up more than 11 percent to $57.7 million, due largely to headend upgrades for high-speed Internet – apparently upgrades to DOCSIS 3.0.
For the quarter, Cogeco took a $399.6 million charge for goodwill impairment on its investment in Cabovisao in Portugal, which Cogeco reported was subject to “recurring competitive pressure resulting in subscriber losses that were more severe than originally anticipated.”
Cogeco reported that competitors in Portugal had added services to complete their triple-play offers and were heavily promoting introductory prices, which were successfully enticing subscribers away from Cabovisao.
Louis Audet, Cogeco’s president and CEO, said, “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.”
That “realignment” was apparently a reference to changes in bundle packages and pricing being offered to Cabovisao subscribers.