Cogeco 2013 Annual Report Download - page 38

Management's discussion and analysis (“MD&A”) COGECO CABLE INC. 2013 37
Under the terms of the Senior Secured Notes, Cogeco Cable has agreed to indemnify the other parties against changes in regulation relative to
withholding taxes and costs incurred by the lenders due to changes in laws. These indemnifications extend for the term of the related financings
and do not provide any limit on the maximum potential liability. The nature of the indemnification agreement prevents the Corporation from
estimating the maximum potential liability it could be required to pay. As at August 31, 2013 and 2012, no liability with respect to these
indemnifications has been recorded.
SEGMENTED OPERATING RESULTS
The Corporation reports its operating results in three operating segments: Canadian cable services, American cable services and Enterprise
services. The reporting structure reflects how the Corporation manages the business activities to make decisions about resources to be allocated
to the segment and to assess its performance. For the purpose of segmented operating results, operating results from the Atlantic Broadband
acquisition are presented in the American cable services and operating results from the PEER 1 acquisition are included in the Enterprise services
segment.
CANADIAN CABLE SERVICES
CUSTOMER STATISTICS
Net additions (losses) % of penetration(1)
Years ended
August 31,
2013 August 31, 2013 August 31, 2012 August 31, 2013 August 31, 2012
PSU 1,980,122 5,068 73,645 (2)
Television service customers 834,771 (28,344) (14,870) 49.9 52.4
HSI service customers 661,337 20,882 35,301 (2) 39.5 38.8 (2)
Telephony service customers 484,014 12,530 53,214 28.9 28.6
(1) As a percentage of homes passed.
(2) In the fourth quarter of fiscal 2013, HSI customers have been adjusted upwards retroactively to comply with the industry practices and consequently, PSU and
penetration rate have been also adjusted.
Fiscal 2013 PSU net additions were lower than in the comparable period of the prior year mainly as a result of service category maturity, competitive
offers and tightening of our customer qualifications. For fiscal 2013 net customer losses for Television service stood at 28,344 compared to
14,870 for the prior year. Television service customer net losses are mainly due to the promotional offers of competitors for the video service
combined with the tightening of our customer credit controls. For fiscal 2013, net additions for HSI service customers stood at 20,882 and
Telephony net additions at 12,530 compared to 35,301 and 53,214, respectively, for the prior year. HSI and Telephony net additions continue to
stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and
Telephony services, and promotional activities.
Furthermore, as at August 31, 2013, 68% (65% in 2012) of the Canadian cable services customers subscribed to two or more services. The
distribution of customers by number of services for the Canadian cable services were: 32% who subscribe to the single play (36% in 2012), 31%
to the double play (29% in 2012) and 37% to the triple play (36% in 2012).