July 12, 2012 / 1:03 PM / 5 years ago

UPDATE 1-Cogeco Cable profit rises, but sees tough times ahead

* Revenue up 7.2 pct, lowers full-year forecast

* Cogeco Inc unit expects to sign up fewer customers

* Profit from continuing ops C$1.09 vs C$1.08 year ago

July 12 (Reuters) - Cogeco Cable Inc, the main unit of media and telecom company Cogeco Inc, p osted p rofit and revenue growth in the third quarter but warned that business would slow as tough competition ma kes it more difficult to sign up customers.

The Montreal-based company, which offer s cable TV, high-speed Internet and telephone services in mostly rural areas of Ontario and Quebec, sa id pro fit from continuing operations edg ed higher as revenue rose 7.2 percent.

Larger rivals BCE Inc and Quebecor Inc also operate in the same markets and are expanding into Cogeco’s rural heartland.

The company, which had sold its struggling Portuguese unit earlier this year, e arned C$53.2 million, or C$1.09 per share, from continuing operations, up from C$52.4 million, or C$1.08 per share, in the year-ago period. Rev enue cam e in at C$3 19.8 million.

“Similar to Shaw results, Cogeco Cable is balancing growth and profitability in saturation of increasing competition and service saturation,” RBC Capital Markets analyst Drew McReynolds wrote in a note to investors, referring to Shaw Communications , the dominant cable company in Western Canada.

Analysts had expected Cogeco Cable to earn C$1.07 per share on revenue of C$323.6 million.

The company cut its customer growth forecasts for the full year to 72,000 from 80,000 as it lost some television customers and recorded slower growth in Internet and telephone services.

It expects to add only 50,000 new customers in fiscal 2013.

It said full - year revenue would slip slightly from its earlier projections but operating income should c ome in s lightly higher than ex pected thanks t o cost-cutting measures.

For fiscal 2013, which starts in September, Cogeco Cable expects 5.5 percent revenue growth but operating costs a re expected to grow slightly faster. Profit is expected to grow 12 percent.

The company’s shares , which have fallen 10 percent since the start of the year, c losed on Wednesday at C$45.83 on the Toronto Stock Exchange.

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