MONTREAL – Cogeco Inc. is actively looking at more acquisitions in cable companies in the United States, but has ruled out acquisitions in the data services sector over the next year after a 2016 in which “our results have been disappointing” at subsidiary Peer 1, president Louis Audet said on Thursday at the company’s annual shareholders’ meeting in Montreal.
The company’s year-end financial results were mostly positive, with earnings increasing and a higher dividend to shareholders, both from Cogeco Inc. and subsidiary Cogeco Communications Inc. But a $450-million writedown at Peer 1 technically put the company in the red for the year that ended August 31.
Audet said while there won’t be more acquisitions in the data services sector in the next year, when it came to the question of a sale of Peer 1, “we’re not there now,” he added. Instead, the company will refocus on higher-value propositions. Beyond that, Audet used somewhat vague language to describe Peer 1’s strategy, describing its goals to “rationalize and expand our product suite” and “optimize the use of current assets.”
Also vague was the disclosure of a new “very large customer” at its Kirkland data centre, west of Montreal. Cogeco cited secrecy clauses in its agreement with the company, that won’t permit it to name the customer in question, say the nature or size of the deal, or even when it was signed. However, Philippe Jetté, president of Cogeco Peer 1, told Cartt.ca that much of the capital expenditure spent on the data centre in the past year was in order to service this one client, whose contract is very long-term (much more than seven years). “We were the only one to get close to their design,” he said of the mystery client.
Asked about the effect of cord-cutting, new CRTC regulations and potential encroachment onto its cable territory by Bell, Audet remained cool and confident. The TiVo-based TV distribution system it uses now meets its needs and competes well with Bell, Audet said, and the integration of Netflix helps counteract cord-cutting. While he didn’t rule out switching systems at some future date, (Both Shaw and Rogers have cast their lot with Comcast’s X1 platform), “TiVo has a roadmap that we are comfortable with,” he said.
Audet also said he thinks cord-cutting is “a phase in the life of a young person”, and that he thinks young people who cord-cut when they live alone will tend to sign up for cable TV service once they build a family, “and our territory is mostly young families.”
Cogeco Connexion, the division which manages the cable system, will spend the next year improving its customer management system to improve customer self-service so that people can make more changes to their subscriptions and accounts without having to pass through customer service.
On the media side, (Cogeco owns 13 radio stations in Quebec, including Montreal’s 98.5 FM, which leads Quebec in Numeris ratings), little has changed in the past year and nothing indicates major changes in the near future.
Instead, the company will focus on “continuous improvement of programming and rigorous cost control.”
Photo by Steve Faguy.
