Calamos Global Total Return Fund

Cogeco Cable reported 13.4% sales growth year over year, 17.5% EBITDA growth, a consolidated EBITDA margin of 39%, free cash flow of $21.6 million, and RGU growth of 83,000. In Portugal, revenue rose 4.5% in euros, while EBITDA in euros increased about 4% to 5% after excluding close to €1 million of additional marketing and certification costs. Management said Canada was outperforming original expectations, while Portugal was softer but showing signs of improving pricing. Guidance was maintained for Cogeco Cable, except for an income tax adjustment to be reflected in Q2; management said this would result in net profit of $118 million. For Cogeco, Inc., guidance was revised to reflect TQS being treated as a discontinued operation and to include the income tax benefit; excluding the TQS write-off, management said net income would be up 25% versus last year.

Louis Audet struck an upbeat but measured tone, saying the quarter was “very good” and that Cogeco Cable’s results were among the best in company history. He emphasized that Canada was doing better than expected and that Portugal remains a long-term growth reservoir despite short-term competition and pricing pressure. He also framed the company’s job as maximizing shareholder profitability rather than simply chasing subscriber growth, especially as the Canadian market matures.

Pierre Gagne focused on the mechanics behind the quarter and the guidance changes. He cited the Portugal cost increase of roughly close to €1 million tied to marketing and certification, noted the euro revenue comparison of 4.5% growth, and said the company was still comfortable with EBITDA guidance of 425. On financing, he said the $100 million private placement debenture related to pre-financing debt maturities of US$150 million in October 2008 and another US$150 million in June 2009, and he said Q2 guidance would be refreshed in April based on Canada, Portugal, and interest rates.

Analysts pressed management on Portugal’s higher operating costs, weak pricing, and whether the 37% EBITDA margin target was still achievable; management said pricing is improving but needs another quarter to judge progress. Several questions focused on whether Cogeco would get more aggressive in bundling or subscriber growth in Canada, but management said its mandate is to optimize profitability and it has no immediate plan to change its approach. There were also questions about the $100 million debenture, which management said was for pre-financing upcoming debt maturities, and about TQS and the dual public-company structure, which management said would not be changed at this time.