MetroCast integration costs reduce Cogeco earnings in the first quarter

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A Cogeco sign is suspended at the company's Annual General Meeting in Montreal on January 14, 2014.

Graham Hughes / The Canadian Press

Cogeco Communications Inc. will not be taking part in an auction for cellular airwaves this year, but hopes to see some changes to government policy that could potentially allow it to enter the wireless sector.

Philippe Jetté, general manager of the cable company based in Montreal, said in an interview Friday that Cogeco had decided not to enter a spectrum auction – radio waves that transmit telecommunication signals – in March. because of the geographical areas covered by the licenses. . Cogeco wants to offer wireless service only in the Ontario and Quebec regions where it sells cable and Internet services, providing customers with the opportunity to be grouped in the mobile service.

"For example, we serve Burlington and Oakville, [Ont.] but you can not buy spectrum without buying all of Toronto. It has to be bought for the whole of the Greater Toronto Area and no business case would make sense to buy as much spectrum for Toronto and not use it, "he said.

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Jetté said he believes the federal government understands this complaint and hopes to see smaller geographic areas included in future spectrum auctions. Cogeco also lobbied Ottawa to create new rules that would require major national carriers to rent airtime to smaller regional players.

The Canadian Radio-television and Telecommunications Commission will be holding a public hearing this year on the wireless wholesale market and could possibly impose such a model.

"Currently, the regulatory environment does not allow a regional player like Cogeco to play and provide benefits to Canadian customers," said Mr. Jetté.

Cogeco's CEO also faced a difficult time for the company's Canadian cable company, which implemented a new customer management system in April, replacing 22 existing systems. The integration caused serious delays in service call setup and overloaded call centers, prompting the company to suspend its marketing efforts to win new customers.

Mr. Jetté acknowledged that "the transition and stabilization period was initially longer than expected, but second, much more visible than expected for our clients," he said. The problems have finally been solved.

"All of our contact centers, sales and marketing have been re-engaged. We have returned to normal in terms of operating metrics, "he said. "We had to go through the storm. The storm has passed and we are on the other side. "

Cogeco said it removed 125 jobs (about 5% of the total Canadian workforce) because of the new system, which relies much less on manual processes, said Jetté, noting that this would allow Company save about $ 9 million a year.

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Mr. Jetté took up his duties in Cogeco in September when Louis Audet, son of the company's founder and long-time CEO, Henri Audet, was promoted to the position of Executive Chairman.

Cogeco announced Thursday its first quarter results and held a conference call for analysts, as well as its annual general meeting on Friday morning. The company stated that revenues from its cable business in Canada were down by nearly 35,000 total Internet, cable and telephone subscribers due to problems with its customer management system.

Its cable business in the United States has been more resilient, recording a strong increase in revenue and EBITDA as a result of acquisitions made last year. Excluding these takeovers, analysts noted that the underlying products and EBITDA grew by approximately 6% and 11%, respectively (EBITDA means earnings before interest, taxes, depreciation and amortization).

Cogeco's data center and business services division continues to struggle with revenues and EBITDA down 3% and 16%, respectively. The company faces fierce competition from US giants Amazon and Google, and Jetté said that while Cogeco still hoped to stabilize the division, it did not rule out the possibility of a sale.

The company said its total revenue increased 16% to $ 643 million in the quarter (mainly due to earnings from its US operations), but earnings declined 1.6 % to 75 million dollars. He earned $ 1.42 per share, up from $ 1.55 per share in the same period last year. Cogeco also declared a quarterly dividend of 52.5 cents, up 47.5 cents per share in the same period last year.

Analysts said the results of "mixed" and the company's shares rose more than 7% Friday.