Cogeco 2010 Annual Report Download - page 6

Message to shareholders COGECO CABLE INC. 2010 5
Message to shareholders
Dear Shareholders,
Cogeco Cable continues to navigate successfully through the turbulence of the last few years in financial markets and the global economy,
staying the course on growth and value creation for our shareholders. Accordingly, revenue grew 5.2% on a consolidated basis in fiscal 2010,
including the results of turnaround initiatives in Portugal. Also, operating income before amortization(1) is up 0.4% while adjusted net income(1)
rose 25% to $128 million.
RGU growth in fiscal 2010 was strong in all sectors driven by a net increase of more than 190,000 in Canada and more than 96,000 in
Portugal, for a total of more than 287,000 net additions. Customer growth is tangible evidence that our services remain popular with customers
and that the strategies deployed during the fiscal year in our different markets have been effective, despite persistently robust competition.
Cogeco Cable continued to reinvent itself with characteristic flexibility, intrapreneurship, and an intense focus on customer satisfaction. To meet
the need for a more personalized and higher quality experience, we enhanced our video content offering in residential markets in Canada by
expanding Digital content, VOD and HD services. We augmented our Internet offering with new packages, including services powered by
DOCSIS 3.0, which enables customers to benefit from speeds up to 50 Mbps, with higher speeds to be implemented in the near future. We
also introduced new Telephony packages tailored more closely to different customer needs.
Our drive to constantly improve our customer experience and satisfaction is supported by evolving technology, well tailored service offerings,
sustained investment in resources, improved processes and controls, and the innovativeness and agility of employees, senior managers and
Board members. Continuous network upgrades and improvements enable us to revamp our offering with expanded networks and the gradual
deployment of technologies such as DOCSIS 3.0 that promote more effective bandwidth utilization. Innovation also included implementing new
management methods to improve process quality and effectiveness, periodic reviews of risks and the actions taken to manage risk, and
developing the skills of our teams. All these activities are centered on the goal of winning new customers and increasing the loyalty and
satisfaction of current customers.
Cogeco Data Services (“CDS”), our subsidiary serving large corporations, also continues to gather strength, expanding its co-location facilities
to meet the increasingly pressing needs of business customers. CDS has also started building networks to serve all of the buildings of the two
Toronto school boards and the City of Toronto under contracts signed in 2009.
In Portugal, strategies to retain and win customers have proved effective despite sustained competition. We enriched our video offering with HD
and Digital content and improved Internet packages for triple-play customers while our Telephony packages have achieved a 94% penetration
of Basic Cable service customers, one of the highest penetration rates in Europe. Cabovisão is intensifying efforts to develop its customer base
in the business sector. Management expects financial results to start showing growth again following the significant changes of the last two
years. Cabovisão’s efforts to outdistance the competition with quality offerings and attentive customer service have already started to generate
the expected results.
Fiscal 2010 was also marked by a number of developments at the regulatory level. The decision of the Canadian Radio-television and
Telecommunications Commission (“CRTC”) on the Local Programming Improvement Fund (“LPIF”) had a direct impact on consumers but did
not provide for controls to ensure the improvement of local programming. The CRTC also ruled in favour of negotiations for fee-for-carriage
payable by cable companies such as Cogeco Cable to conventional TV broadcasters. However, this matter is still before the courts and no
decision has been made. On another note, the CRTC commended Cogeco Cable’s exceptional performance in exceeding the objectives of the
regulatory framework in the operation of its community TV channels.
Meanwhile, capital markets have acknowledged the Corporation’s prudent and disciplined efforts to grow, focusing on what it does best –
serving its customers. A Revolving Term Facility was concluded in July 2010 for $750 million maturing in 2014, granting the Corporation the
necessary flexibility to support future growth.
Our Corporation also remains among the best in Canada for governance, ranking in the top third according to the Annual Corporate
Governance Survey published by the Globe and Mail’s Report On Business in November 2009. With strong competition in the
telecommunications market continuing to demand enhanced performance from all players, the members of our Board of Directors are a
valuable source of support and guidance
(1) The indicated terms do not have standardized definitions prescribed by Canadian Generally Accepted Accounting Principles (“GAAP”) and therefore, may not
be comparable to similar measures presented by other companies. For further details, please consult the “Non-GAAP financial measures” section on page 40
of the Management’s Discussion and Analysis.