Cogeco 2008 Annual Report Download - page 32

Management’s Discussion and Analysis COGECO CABLE INC. 2008 31
OPERATING RESULTS
YEARS ENDED AUGUST 31, 2008 2007 CHANGE
(in thousands of dollars, except percentages) $ $%
REVENUE 833,097 714,070 16.7
OPERATING COSTS 467,454 412,602 13.3
MANAGEMENT FEES — COGECO INC. 8,714 8,568 1.7
OPERATING INCOME BEFORE AMORTIZATION 356,929 292,900 21.9
OPERATING MARGIN 42.8% 41.0%
REVENUE
For fiscal 2008, revenue for the Canadian operations rose by $119 million, or 16.7%, compared to fiscal 2007, mainly as a result of
the various factors discussed below:
• HSI service net customer additions during fiscal 2008, of about 58,000, and the full-year impact of the 2007 net additions of
about 73,000 customers, generated incremental revenue of approximately $26.6 million over fiscal 2007;
• Telephony service net customer additions during fiscal 2008, of about 76,000, and the full-year impact of the 2007 net
additions of about 91,000 customers, generated incremental revenue of about $43.4 million over fiscal 2007 due to continued
service rollout in the Corporation’s markets and the increased penetration in areas where the service is already offered;
• Basic Cable service net customer growth during fiscal 2008, of about 8,000, and the full-year impact of the 2007 net additions
of about 16,000 customers, contributed to improve revenue by $11.4 million;
• The recent acquisitions generated incremental revenue of $7.1 million;
• Various rate increases during fiscal 2007 and 2008 generated incremental revenue of about $10.3 million as a result of the
following net rate increases implemented by the Corporation:
o In the second half of fiscal 2007:
• In March 2007, a monthly rate increase of $3 per Digital Television service customer in Ontario;
• In April 2007, a monthly rate increase of $3 per Digital Television service customer in Québec and a rate increase of
$1.50 per Analogue Value Pak service customer in Ontario.
These rate increases represent an average increase of approximately $1.25 per Basic Cable service customer.
o In the first quarter of fiscal 2008:
• In October 2007 in Québec, a rate increase of between $1 and $2 per Analogue Basic Cable service customer
without a bundle, a rate increase of $0.50 per Basic Cable and tier service customer without a bundle, and rate
increases from $2 to $5 per HSI Lite service customer and $5 per HSI Standard stand-alone service customer;
• In November 2007 in Ontario, a rate increase of between $1 and $2 per Analogue Basic Cable service customer
without a bundle, and rate increases from $2 to $5 per HSI Lite service customer and $5 per HSI Standard stand-
alone service customer;
• Finally, a rebate of $5 per Telephony service customer with two bundled service offers was also introduced in fiscal
2008 in Ontario and in Québec.
o In the fourth quarter of fiscal 2008:
• In July 2008 in Ontario, a rate increase of $2 for all Digital TV packages, slightly offset by targeted reductions in HD
access fees in certain markets and monthly equipment rental fees of selected digital receivers; a $2 rate increase to
HSI Standard service in a bundle and a $5 rate increase to HSI Pro service in a bundle;
• In July 2008 in Québec, a reduction of $4 for the monthly equipment rental fee of the standard definition-DVR
receiver.
These rate adjustments implemented in fiscal 2008 represent an average increase of approximately $1.60 per Basic
Cable service customer.
In addition, new Digital services and VOD services contributed to the revenue growth by an amount of $7.6 million and equipment
rentals were more favoured over equipment sales and generated net additional revenue of $7 million.
In fiscal 2008, ARPU increased by $10.67, or 15.3%, to reach $80.42 as a result of improved penetration of all services combined
with rate increases.