By Greg O’Brien
MONTREAL – With its traditional business of residential television, Internet and phone in Canada maturing, Cogeco Cable CEO Louis Audet says the United States will be one of the company’s main growth avenues over the next number of years.
Speaking at a CIBC institutional investors conference in Montreal on Thursday, Audet identified Cogeco’s burgeoning business services unit (telecom, data hosting, other IT services and so forth under its Cogeco Data Services division) and further network purchases Stateside as prime growth levers he intends to pull on.
The first plunge into the American cable market came earlier this year with the company’s $1.36 billion purchase of Atlantic Broadband and its 253,000 subscribers in Pennsylvania, Florida, Delaware, Maryland and South Carolina. Noting that the American company had been owned by private equity until now, Audet believes that with some new capital spending, adding certain things like more high definition TV channels, and improving the company’s marketing and sales, there is growth to be had within AB’s existing footprint.
Once that growth is under way, something Audet says will start to happen within a year of the deal closure (expected this fall), “then we can start acquiring others – and there are many independent cable operators that can be bolted on to this very strong infrastructure,” he explained.
(It may be a bit discourteous to point this out – and some readers have done that with us privately already – but Audet said similar things about growth and acquisitions in Europe after the company’s 2006 move into Portugal, which worked for a while, but from which the company eventually had to retreat.)
While the financial community took a dim view of the Cogeco’s dive into the U.S. market, Audet is undeterred, calling the buy “a beachhead in the United States from which we can grow and eventually, God-willing, have something that will look like Cogeco Cable in Canada, except it will be in the United States.”
Audet noted that there are several hundred independent cable operations in the U.S. which may be looking for buyers over the next number of years. He also noted that Atlantic Broadband is a member of the National Cable Television Co-operative which, like the CCSA in Canada, represents independent, largely rural, network operators. The NCTC’s independent membership represents a total of 11 million American cable customers, so there are small cable companies Stateside which could be consolidated.
Finally, when asked at the conference what Cogeco might look like three to four years from now, Audet said the company’s business services data unit will be bigger and added the company “hopefully will have acquired other cable systems… our basis in the United States will no longer be 250,000 subs.”