MONTREAL – Coegco Inc. has written off its Portuguese cable unit Cabovisao amid a third quarter net loss of more than $56 million.
The company said Thursday that the majority of its weaker than expected results were due to a non-cash impairment loss of $225.9-million for Cabovisao, as Portugal weathers a severe economic decline which has seen it require financial assistance from the International Monetary Fund and the European Central Bank.
Net losses for the quarter ended May 31, 2011 were $56.7 million, compared to net income of $10.7 million for the same period last year. Excluding the Cabovisao write off, adjusted net income would have amounted to $16 million, a 49% increase over last year. Revenue increased by 13.3% this quarter to reach $375 million.
“Cogeco’s solid results in the third quarter of fiscal 2011 are mainly attributable to the performance of Cogeco Cable’s Canadian operations, which generated continued RGU and revenue growth," said president and CEO Louis Audet, in a statement. "However, in the European operations, customer losses and service reductions have become more significant and persistent than Cogeco Cable’s management expected. This situation is due to economic measures taken by the Portuguese government to reform the economy and reduce the deficit, which led to a decrease in customer spending capacity. Under these prevailing circumstances Cogeco Cable wrote-off its investment in its Portuguese subsidiary, Cabovisao."
Here at home, Cogeco Cable gained 41,819 new revenue-generating units (RGU) to end the quarter with 3,369,116 RGU. It credited the increase to targeted marketing initiatives in Canada as well as the continuing interest for high definition television services.
Basic cable subscribers dropped by 3,374 to 1.14 million, while digital cable customers increased by just over 28,000 to end the quarter with 818,624. Internet customers increased by 4,760 to 758,460, and telephony service customers grew by 12,394 to 654,551.
Audet said that despite the “Cabovisao situation”, Cogeco’s expects to meet most of its fiscal 2011 financial targets.
