Canadian cableco Cogeco has announced that it has written off its Cabovisao assets in Portugal for the third quarter of FY2010/11, chiefly as a result of the enduring impact of the European economic crisis. The company said that, during the three months ended 31 May 2011, it wrote off its net investment in Cabovisao through a non-cash impairment loss worth CAD225.9 million (USD234.7 million). Cogeco indicated that revenue from Cabovisao – in the local currency – for the three- and nine-month periods ended 31 May 2011 amounted to EUR31.6 million and EUR94.3 million respectively, decreases of 2.3% and 4.6% when compared to the corresponding periods one year earlier. Operating income before amortisation amounted to EUR4.4 million (USD6.3 million) for the quarter (down 7.1% year-on-year) and EUR10.5 million for the nine months ending 31 May (down 36.2% year-on-year). In operational terms, during the nine month period, Cabovisao saw its ‘high speed internet’ (HSI) customers drop 2,140 to 258,127, whilst its voice telephony subscriber base shed 4,178 users, slumping to 249,644.
Louis Audet, president and CEO of Cogeco Cable, commented: ‘… the Portuguese economy is still in a recession and the budgetary deficit remains high. To curtail its deficit, the Portuguese government has increased the income and sales tax rates, reduced its spending on social programmes, which were necessary to reform the economy. As a result, there is a downward pressure on customer spending since there is less disposable income. For Cabovisao, this situation has translated into net customer losses and service downgrades by customers across all the services in the third quarter of fiscal 2011. Management considers that this situation, as evidenced by the customer losses, is more significant and persistent than expected, resulting in the write-off of Cogeco Cable’s investment in the Portuguese subsidiary’.