Cogeco 2013 Annual Report Download - page 12

Management's discussion and analysis (“MD&A”) COGECO CABLE INC. 2013 11
BUSINESS DEVELOPMENTS
On January 31, 2013, Cogeco Cable completed the acquisition of 96.57% of the issued and outstanding shares of PEER 1 by way of takeover
bid (the “offer”) valued at approximately $649 million. On April 3, 2013, Cogeco Cable completed the acquisition of the remaining 3.43% of the
issued and outstanding shares of PEER 1 for a cash consideration of $17 million pursuant to the compulsory acquisition provisions in Section
300 of the Business Corporations Act ("British Columbia"). In connection with the completion of the offer, Cogeco Cable has entered into secured
credit facilities in the amount of approximately $650 million maturing in 2017, with a syndicate of lenders. PEER 1 is one of the world’s leading
internet infrastructure providers, specializing in managed hosting, dedicated servers, cloud services and colocation. This acquisition enhances
Cogeco Cable's footprint and builds on its strategic initiatives by increasing scale in an attractive industry segment with significant growth prospects
in the state of the art data centre platforms. The Corporation has the resources to serve additional businesses worldwide through 20 data centres
and 56 points-of-presence across North America and Europe. PEER 1's primary network centre and head office are located in Vancouver. For
the purpose of segmented operating results, operating results from the PEER 1 acquisition are incorporated in the Enterprise services segment.
For further details on PEER 1 operating results, please refer to the "Enterprise services" section.
On November 30, 2012, the Corporation completed the acquisition of Atlantic Broadband, an independent cable system operator formed in 2003,
serving about 485,000 PSU’s and providing Analogue and Digital Television, as well as HSI and Telephony services. The acquisition is an attractive
entry point in the United States market, providing a significant increase in PSU base with further growth potential, a high quality network infrastructure
and the ability for the Corporation’s management to leverage its core knowledge and operational experience. The transaction, valued at US$1.36
billion, was financed through a combination of cash on hand, a draw-down on the existing Term Revolving Facility of approximately US$588
million and US$660 million of borrowings under a new committed non-recourse debt financing at Atlantic Broadband. Atlantic Broadband operates
cable systems in four geographic clusters: Western Pennsylvania, Southern Florida, Maryland/Delaware and South Carolina. For the purpose of
segmented operating results, operating results from the Atlantic Broadband acquisition are presented in the American cable services segment.
For further details on Atlantic Broadband's operating results, please refer to the "American cables services" section.
CORPORATE OBJECTIVES AND STRATEGIES
Cogeco Cable's objectives are to improve profitability and create shareholder value. To achieve these objectives, the Corporation has developed
the following strategies:
I. Expanding service offerings and enhancing existing services or bundles;
II. Improving the networks;
III. Improving customer experience and business processes; and
IV. Keeping a sound capital management and strict control over spending.
EXPANDING SERVICE OFFERINGS AND ENHANCING EXISTING SERVICES OR BUNDLES
We focus on customers' needs by offering services at attractive prices, expanding our offering with respect to geography and by diversifying our
product and services.
Progress in fiscal 2013
Canadian and American cable services segments
As a result of the acquisition of Atlantic Broadband, we have expanded our cable services into four different geographical clusters in the United
States, a market in which competition is generally more fragmented than in Canada. This acquisition provides an attractive entry point in the
American cable services market, allowing diversification of our cable services business outside the Canadian provinces of Ontario and Quebec.
In addition, we believe the American cable services segment is well-positioned to increase its market share.
On April 2, 2013, Cogeco Cable and Rovi Corporation announced the lauch of two new interactive applications, Cogeco Remote Recorder powered
by Rovi TV Listings and TotalGuide xD, which provide Cogeco Cable's customers with access to the TV schedules on their set-top personal video
recorder (“PVR”) devices from web-enabled devices. Cogeco Cable launched TotalGuide xD with remote record capability. These new applications
bring new innovative product capabilities and make it easier for customers to discover and enjoy entertainment from their portable tablets.
On June 12, 2013, Atlantic Broadband and TiVo Inc. ("TiVo") concluded an exclusive partnership in its areas served to power its state of the art
digital entertainment services across TV, Web and Mobile platforms. TiVo’s complete product suite delivers a unified experience that spans whole
home DVR, HD Set tops for non DVR households, access to Internet delivered video and applications, and multi-screen viewing experiences
delivered through a smart online portal and an Atlantic Broadband customized mobile application.
To better meet the needs of a growing ethnic community in our key service areas, we added 54 new multicultural channels in 12 new channel
packages in Ontario with programs in 9 languages. Cogeco Cable customers in Ontario now benefit from a wider access to the best TV in
entertainment, music and variety of programming in their native language.
Furthermore, to enhance the customer’s quality and viewing experience, we expanded our High Definition ("HD") TV programming line to 150
HD channels in the majority of the Ontario market. Overall, 66 new HD channels including Disney, TMN Fest, ABC Spark, Travel & Escape, Food
Network and Discovery were added free for customers of the equivalent standard definition channel.
We also expanded content available on our On Demand Online service for our Digital Television customers which now have a choice of more
than 3,000 of their favourite shows and movies that they can watch online when they want, wherever they are in Canada.