2. Questions that come to mind……… What are the services/assets of Toronto Hydro Telecom (Who are they?)? Who bought Toronto Hydro Telecom? Who is COGECO? How much did this acquisition cost? Why would they buy them? Interesting facts about the sale. How does this affect Cogeco’s competition, namely Rogers? 2
3. What are the services/assets of Toronto Hydro Telecom (Who are they?)? Network: Part of city-owned Toronto Hydro, THT operates and provides full-service data communications and networking services on its city-wide fibre optic cabling Runs 500 kilometres of wholly-owned fibre optic network, which connects over 500 buildings throughout the GTA Owns and operates the largest and fastest WiFi network in North America. Novarum, (a leading U.S. based wireless advisory, analysis and testing service) rated THT’s WiFi network as the “Best Overall Metro Wi-Fi Service” in its 2007 studies of North American city centres. 3
4. What are the services/assets of Toronto Hydro Telecom (Who are they?)?(Continued) Services Connectivity: All services are delivered via Native Ethernet Fibre, NOT COPPER, providing reliable Private Line, Metro LAN, Wavelength and Internet connectivity. 4
5. What are the services/assets of Toronto Hydro Telecom (Who are they?)?(Continued) Value-Added Services: Co-location – facilities provide a secure hosting environment Data Storage – customers can take advantage of disk space on the SAN, which helps to securely grow and manage business information Data Recovery – Fully managed automatic data replication, and complete server recovery within 1 hour of reported outage or loss Voice over IP – includes telephony features such as call routing, email, voicemail, conferencing and instant messaging Security – Firewall services to protect network and data 5
6. What are the services/assets of Toronto Hydro Telecom (Who are they?)?(Continued) Services (Continued) Wireless Internet Access Under the brand name “One Zone” provides complete WiFi coverage in the heart of Toronto’s business and entertainment district, making it the largest and fastest network of its kind. 6
8. Who is COGECO? Montreal-based company that offers residential and commercial customers Analogue & Digital TV, High Speed Internet, Telephony and Data Services. 2nd largest cable operator in Ontario, Quebec & Portugal in terms of number of Basic Cable service customers Currently provides to 2.4 million homes in its Canadian & Portuguese service territories in total (owns Cabovisão in Portugal) COGECO’s Net Revenue for 3rd quarter ending May 31st,2008 was $283.9 million with a profit of $31.1 million. 8
9. How much did this acquisition cost? On June 13th, 2008, Cogeco announced it reached a definitive agreement to acquire all of the shares of Toronto Hydro Telecom for the purchase price of $200 million. Acquisition price is 9.6 times THT’s projected 2008 EBITDA (Earnings Before Interest,Taxes,Depreciation & Amortization) Will assume $4 million in working capital and deficiencies Deal to close on July 31st, 2008 9
10. Why would they buy them? State of the art fibre optic network that allows COGECO to gain an important footprint into the largest local business telecommunications market in Canada Part of COGECO’s growth strategy of buying hydro telecommunications in order to expand their broadband network. (MaXess Networx April 2008 and FibreWired Burlington Hydro Communications in June 2008 purchases) Broadens the company’s product offerings and they instantly become a player in the commercial market with some high profile customers of THT. COGECO’s broadband facilities now extends from Windsor to Cornwall, including the GTA. 10
11. Interesting facts about the sale About $75 million out of the speculated $135 million proceeds from the sale will be used to offset the $300 million maintenance backlog in Toronto public housing, which has sky rocketed since the province offloaded that onto the City of Toronto. Rogers, BCE, MTS Allstream and Telus, along with a number of private equity firms were among those looking to buy THT 11
12. How does this affect Cogeco’s competition, namely Rogers? NOT SURE YET but: COGECO should no longer be perceived as a small player and Rogers should now have some stiff competition in its own backyard (namely Downtown Toronto) THT WiFi network also involves ownership of the street lamps which can be utilized for marketing of COGECO products and/or maximizing advertising revenue. COGECO will have to integrate networks & ideologies 12
