Cogeco 2006 Annual Report Download - page 7

Message to Shareholders COGECO CABLE INC. 2006 5
This fi scal year will be known as the year when Cogeco Cable resumed its external growth strategy. The August 2006 acquisition
of Cabovisão – Televisão por Cabo, S.A. (Cabovisão), the second largest cable telecommunications company in Portugal,
has opened the door to interesting growth possibilities for the Corporation. This desire to resume external growth,
announced by Cogeco Cable at the start of the year, was followed up by meticulous studies with respect to the size and
the market and ended with the acquisition of a company that met our stringent criteria, one of which was a reasonable
acquisition price. Following the acquisition, the total debt ratio on Cogeco Cable’s consolidated pro-forma EBITDA was
4.8, which is below the forecasts announced prior to the signing of the purchase agreement. The integration of this asset
has progressed in line with our expectations and should continue to do so according to plan.
In our Canadian territories, the enthusiastic response of our customers for our Digital Telephony service exceeded our
expectations and had a ripple effect on the number of subscribers to our other services. Since the initial implementation
of this service in June 2005, more than 52,000 customers have subscribed, and 56.4% of them subscribe to all of our other
services. As of October 16, 2006, 70% of our homes passed in our territories have access to our competitive phone service.
Furthermore, the convenience and superiority of cable has gradually eroded the demand for dial-up Internet access in
favour of cable broadband connections in all our markets. This trend is particularly evident in the Québec market, which
tends to echo the demand in Canada as a whole. Everyday, the need to access information and multimedia fi les grows,
generating a demand for increased speed and download capacity. Cogeco Cable retains its lead in its markets by offering
customers its Standard service with a download speed of up to 10 Mbps and its Pro service with a maximum download
speed of 16 Mbps, while the combined download and upload bit cap for each service was recently substantially increased.
Subscriptions to our HSI services have risen and now total 343,080 customers, a 23.6% increase over last year.
Our video services also enjoyed impressive growth. This is attributable to greater demand for the triple-play bundled offer,
to the intense popularity of Digital and HD Television, and to our continuously improving offerings in Digital Television, HD, and
VOD services. At year-end, Digital Television customers had access to more than 250 channels in Ontario and 180 channels
in Québec, while VOD offered 1,400 hours of programming, including most of the major productions and successful
releases of the top American studios. As for HD customers, they now have access to up to 24 channels in Ontario and
3 in Québec.
Customer satisfaction is the driving force behind all our decisions and actions. In line with our strategy, our growth will
stem from an ongoing, continuous improvement of our offering in all of our regions and in all of our services.
Similarly, our new Portuguese subsidiary will also share this overriding objective of “customer satisfaction”. Particular attention
will therefore be paid to sales and service. As for the offering, the fi rst items to be evaluated will be Digital Television and
greater penetration of HSI services in order to satisfy the growing demand for these types of services in Portugal. Its highly
advanced network offers a lot of fl exibility in this respect. In Canada, growth will be fuelled by expanded television and
video choices, access to our Digital Telephony service in virtually all of our territories, and still the fastest and most secure
HSI services in its category in our territories.