Communications sector gets crunched in quarterly results

In another sign of the global recession, a pair of Canadian communications companies posted flagging earnings Thursday while a third indicated that fewer people subscribed for its wireless phone service.

Cogeco Inc. took a big writedown on its Portuguese cable subsidiary in the quarter ended Feb. 28, a move that turned the cable and internet provider's operating profit into a huge bottom-line loss.

Meanwhile, Montreal-based Astral Media Inc. managed to post a net profit of $28.95 million for the second quarter, also ending on Feb. 28. But, the specialty television and radio company saw those earnings tumble more than 50 per cent compared to a year earlier.

Finally, Telus Communications Inc. said it gained fewer wireless subscribers, on a net basis, for the January to March period of 2009 than the previous year.

Cogeco's Iberian iceberg

On a net basis, Cogeco, which provides basic and digital cable service, lost $115.3 million, or a hefty $6.38 a share, for the second quarter. That compared unfavourably to the same period one year earlier when the Montreal-based firm earned $15.9 million, or 95 cents a share.

3-month stock chart of Cogeco Inc.

A large portion of Cogeco's financial woes were centred in Portugal, where its Cabovisäo cable and telephony subsidiary has performed much worse in recent months.

"Cabovisäo's competition position continued to deteriorate in the second quarter due to the unfavourable earnings climate and recurring intense customer promotions and advertising initiatives from competitors in the Portuguese markets," Cogeco said in its earnings statement.

In fact, the subsidiary missed subscriber targets in four of five categories set out in Cogeco's 2008 annual report.

As a result of its subsidiary's deteriorating performance, Cogeco was forced to write off almost 70 per cent of the value of Cabovisäo, or $399 million, in the second quarter.

Once non-cash charges, including the Portuguese writedown, were eliminated from Cogeco's figures, the company actually earned $8.7 million in the quarter versus an operating profit of $8.4 million for the same period one year earlier.

Astral boosts cash

Astral, which operates 20 television services in this country including Teletoon, saw its quarterly figures drop to 52 cents a share, down from a per-share gain of $1 for the second quarter last year.

The company said a weak economy hurt its outdoor advertising business as well as ads on its television properties.

Overall, advertising sales hit $108.3 million in the period, down one per cent.

3-month chart of Astral Media Inc.

For the first six months of the fiscal year, however, Astral ad cash jumped 21 per cent, good news for the balance statement but bad news for the rest of the year.

That is because the second three months of the year showed obvious deterioration compared to the first quarter.

In the current cash-as-king environment, however, Astral managed to bolster its financial liquidity in the first half of the year.

The company had cash and cash equivalents of $41.7 million by the end of February. That compared favourably versus the first of the previous fiscal year when Astral had liquidity resources of $6.3 million.

Telus wireless woes

Telus did not report earnings but instead its second-quarter wireless subscriber numbers. The telecommunications heavyweight said it was adding fewer people than expected to its network.

Telus added 346,000 users overall for the January-March period, up only one per cent versus the same time last year.

On a net basis, where the number of people who deactivate their service were subtracted from gross additions, however, Telus only gained 48,000 new subscribers, down 46 per cent versus the 88,000 the Vancouver-based firm added for the first three month of 2008.

As a result, Telus warned investors that its earnings probably will be weaker than is currently the common wisdom.

"First-quarter 2009 wireless segment financial results are expected to be adversely impacted by lower-than-expected wireless net additions and average revenue per unit," Telus said.