THE CANADIAN PRESS

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MONTREAL - Telecom giant Cogeco Inc. (TSX:CGO) said Wednesday that strong performance from its radio and cable TV divisions helped the company reverse year-earlier losses despite a slowing economy and intense competition affecting the company's cable business in Portugal.

"We consider ourselves very fortunate to be in a position to have delivered and to be in a position to continue delivering very good results in what is de facto an extremely difficult economy," Cogeco chief executive Louis Audet said in a conference call with analysts.

"In so doing, we are backed by the very solid balance sheet which we have catered to."

Earolier Wednesday, the Montreal-based company reported earnings for the first quarter of fiscal 2009 of $11.1 million or 66 cents a share. The profits came a year after Cogeco posted a loss of $10 million or 60 cents a share.

Revenue rose 18.5 per cent to $308.4 million for the quarter ended Nov. 30, 2008, from a year-earlier $260.3 million, Cogeco said. The top-line increase came as acquisitions in the cable division helped push operating costs up 14.7 per cent to $183.7 million.

The company said both the radio and the cable sectors reported solid financial performance for the first quarter. All of Cogeco's key performance indicators increased compared to the prior year except for a decrease in cash flow caused by the increases in capital expenditures required in the cable sector to support demand for HD television service in Canada and digital television in Portugal.

Audet said Cogeco's Canadian operations have seen solid customer growth which helped to offset "the worst quarter to date" for its Portuguese operations, which account for approximately 19 per cent of the company's overall earnings.

The company lost approximately 21,000 customers in Portugal over the last three quarters, but given the magnitude of the competition in Portugal's telecom industry, these losses are minor, Audet said.

"I think we have to put these things in proper perspective," he said.

"There are losses, we acknowledge that, but when we compare the market movements here I'm quite proud that we have managed to minimize these losses."

He added that he expects Cogeco's results will compare "very favourably" to its competitors in Portugal.

Audet said subscriptions in Canada increased in all of its services - including basic cable, pay TV, high-speed Internet, digital TV and telephone - but admitted the quarter didn't see a "big influx" of new subscribers.

"What you are seeing from our company is constant regular gain with no home runs, but just chugging along and getting these customers through the door to come in and join us. This is despite what has been a not good economy," Audet said.

"I think our territory is very prone to manufacturing and industry, but as you can see, we've been doing quite well despite that," he added.

Cogeco says its Canadian cable operations are benefiting from continued growth despite the early signs of maturation in some services.

In the cable sector's commercial activities, Cogeco Data Services successfully bid on a long-term contract to provide solutions for the telecommunications needs of the Toronto District School Board. The contract is expected to provide $39 million in revenue.

Cogeco Cable is Canada's fourth-largest cable company, with a territory stretching from Quebec's Gaspe region to the tip of southwestern Ontario.

It is second-largest cable provider in Quebec, after Quebecor Inc.'s Videotron (TSX:QBR.B) and the second-largest in Ontario after Rogers Cable, a division of Rogers Communications (TSX:RCI.B).

Cogeco shares were up 46 cents to $24.94 in Wednesday trading on the Toronto Stock Exchange.