Louis Audet - CEO Patrice Ouimet - CFO René Guimond - SVP Public Affairs and Communications Andrée Pinard - VP Treasurer

Greg MacDonald - Macquarie Phil Huang - Barclays Jeff Fan - Scotiabank Vince Valentini - TD Securities Drew McReynolds - RBC Capital Markets Rob Goff - Echelon Wealth Partners Maher Yaghi - Desjardins Adam Shine - National Bank Financial

Good day and welcome to the Cogeco Inc. and Cogeco Communications Inc. Q3 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Ouimet, Senior Vice President and Chief Financial Officer of Cogeco, Inc. and Cogeco Cable Inc. Please go ahead Mr. Ouimet.

Thank you. Good morning everybody and welcome to our third quarter conference call. Joining me today are Louis Audet, René Guimond, Andrée Pinard, [indiscernible] Before we begin this call I would like to remind listeners that the information we are providing is subject to forward-looking statements which can be found in our press releases. I will now turn the call over to Louis Audet and we will proceed with questions and answers afterward.

Thank you Patrice and good morning ladies and gentlemen and thank you for joining us today to discuss the results of Cogeco Communications Inc. and Cogeco Inc. for their third quarter of financial 2016. We continue to be pleased with the relative performance of our activities in a very competitive environment albeit less so with the weakness at Cogeco Peer 1 which we will be discussing in a moment. Let us begin with Cogeco Communications. Revenue is up 4.6% to reach $540 million, adjusted EBITDA is up 1.4% to reach $243 million. Our consolidated guidance for fiscal 2016 has been revised mainly as a result of lower than expected operating results from our business information communications technology services sector, combined with the appreciation of the Canadian Dollar over the U.S. Dollar and higher capital expenditures in the last quarter of this year related to a large colocation contract which we have won. We introduced preliminary financial guidance for fiscal 2017 with revenues rising between 2% and 2.5% EBITDA rising between 2% and 3% and free cash flow rising between 32% and 36%. These projections are based on organic growth in Cogeco Communications' three segments offset by an appreciation of the Canadian Dollar over the U.S. Dollar. Furthermore, the capital expenditure level is expected to decline meaningfully in fiscal 2017 as Cogeco Peer 1 will have completed its data center investments in fiscal 2016. Our quarterly dividend of $0.39 per share up 11.4% compared to the comparable period last year has also been reconfirmed. Let us now look at the individual components of Cogeco Communications. At Cogeco Connexion, EBITDA growth softened to 1% due in part to competitive pressures. As the new regulatory regime requiring smaller packages continues to evolve. We work towards preserving absolute EBITDA dollars for new and migrating customers and we will continue to evolve our product offering and our pricing overtime as we deem necessary. At Atlantic Broadband, revenue and EBITDA growth in the U.S. continue to be strong. Business sales as the Connecticut acquisition continue to support this growth along of course with continued organic growth. At Cogeco Peer 1 we’ve suffered a second quarter of negative growth compared to the same period last year. We've announced a non-cash $450 million impairment to goodwill and intangible assets. The impairment was recorded as a result of changing industry dynamics and related valuations and lower expectations for future revenue, profitability and cash flow growth. We completed our 2017 budget exercise this quarter and it became apparent that prior growth objectives would not be met resulting in a decrease in the value of the corporation's investments in Cogeco Peer 1. I would like to stress however that Cogeco Peer 1 is otherwise healthy. We believe our plans for growth are solid and our team is now complete. We are committed to the business and continue to focus on serving customers with the highest of service standards. In fiscal 2017, we expect Cogeco Peer 1’s top-line growth to be in the mid-single digit range and we expect capital expenditures to decline significantly as we will have completed investment in Barrie and Kirkland in both of fiscal 2015 and fiscal 2016. Expected adjusted EBITDA growth combined with significantly lower CapEx should results a meaningful unleveraged free cash flow generation. Turning now to Cogeco Inc. We continue to perform well in the Québec radio market registering top audience ratings. Revenue is up 2.9% to reach $574 million, EBITDA is up 2.5% to reach $253 million. As a result of the revise projections [ph] we just spoke about at Cogeco Communications, Cogeco also revised its guidelines for fiscal 2016. And we are introducing preliminary financial guidelines for fiscal 2017, which of course are also largely based on Cogeco Communications guidance. In conclusion despite this impairment, I wish to reconfirm our commitment to delivering good results through an emphasis on quality service, aggressive sales and operating cost controls. We continue as well to seek opportunistic cable acquisitions in the United States. We would now be happy to answer your questions.

Thank you. [Operator Instructions]. Our first question comes from Greg MacDonald of Macquarie. Please go ahead.

So I want to ask some further questions on the Peer 1 asset. In particular a $450 million write-down suggests pretty mature impairment to that business. And it’s a very different message than what we had in the previous quarter. So I wonder A, if you could give a little bit more detail along the lines of what specifically is affecting the impact on that business. And if you can talk in terms of -- if I read through the press release, it seems like the issue is more one of services mix then it is volumes given the fact that the U.S. economy seems to be doing fine. If you can give some detail around that? And then secondly, probably much more importantly, the outlook of the business, because, if I’m thinking of -- the press release itself says that the outcome will persist through fiscal 2016 and if I’m thinking about $450 million write-down, to get that type of number, the assumptions that I’d have to make on an annual free cash impact is much greater than kind of the most recent quarter and it suggests that there is the potential for much more decrease, much more of a decrease in future quarters. Can you give some context as to what the outlook would look like in that enterprise division, I think that would be helpful beyond the next quarter?

Sure. I’ll do my best, I’ll start off and I’m sure then that Patrice will want to add some number of thoughts. We are not envisaging this enterprise to decline. It will continue growing, I’m not saying the fourth quarter of this year will be easy. But this is not a business that will decline. But as you know and are familiar with the accounting subtitles, what we are required to compare is the original projection of growth compared to what we’ve experienced to date and what we think we’ll have in the future. And that is what basically drives the write-down. So this does not mean that the value will decline, we have put in place all the measures, which we think are required. We now have a solid rederived, redesigned product offering, we have completely reorganized our sales. We have a complete new line-up of Senior Executives, some of which joined us in the last four months and some of them only two months ago. So they’ve hardly had an opportunity to make their mark on the business. We have made the requisite investments in our data centers, which are about 50% used now, which means that the other 50% on aggregate is available. We have dense fiber infrastructure serving Montreal and Toronto. So we have in hand all of the elements to rebuild this company. Having gone through, what was admittedly a rocky bringing together of Cogeco service and Peer 1 hosting, so I think you should not view this as a sign that things will get worse, but they are a reflection of the requirements of accounting rules, but our faith and our belief in this business remains intact, perhaps it will not do the 15% a year and that we would have liked it to do, but it's certainly not in decline, that I will confirm.

If I can add to that to your questions, so we've had a difficult quarter last quarter which we discussed on the last call. This quarter was more difficult than the previous one. Now a portion of the reduction in revenues is due to our own decision to exit certain unprofitable products, unprofitable basically meaning after deprecation or CapEx, so we’ve been sealed from a free cash flow standpoint, made sense for us to continue. That's about half the decrease in the quarter that's due to our decision and the balance is due to the market dynamics of the markets we operate in and we are hopeful to become more effective at selling our products with the new management team that we just explained. In terms of what we were aiming for in the past few quarters was basically to turning the business around and generate double digit growth so lower double digit and what we have assumed now in the next year's guidance is mid-single digit and the environment has changed especially for the managed hosting portion of the business, that being said we feel we're well aligned with the right products to growth this business going forward. But that changed in expectation and growth rate at recent and near term makes obviously an impact on valuation.

So quick follow-on obviously there are cost cuts happening at the same time, so should we be thinking of the $20 million quarterly EBITDA in this division as something that you're not likely to see a decline below as where you stability point is or is there further downside here on that number?

No, we basically are planning to not talking about Q4 but talking about next year and future years to grow the top line and in terms EBITDA margin, we are planning to have EBITDA margin similar to what we've seen so far this year on a year-to-date basis, so high level assumptions on how we see the business going forward. So the answer is, with the numbers you've quoted that we -- no we would not see numbers below that, it would growth from where we are generally.

And then final question, Louis, you've commented on CapEx for 2017 in this division being significantly lower, is there any way to put some numbers around from a capital intensity perspective?

Yes, I'll take this one as well. So we've been investing significantly in data center build outs mainly in Barrie and in Montreal and Kirkland over the past two years. So in 2016, we've invested in Kirkland to build pod 1 and given that we have secured a large co-location contract has built or finalizing the built of pod 2 as well as some specialized equipment. So this is where the main difference is going forward, in 2017 we will not incur these expenses and we're not planning at least at this stage to build more data centers.

So how do we think of CapEx in this division than going forward without major focused [ph] expansion?

Yes so for the coming year you can think about low 20s in terms of capital intensity and then going forward we're very focused on making sure that we have a good level of capital intensity, so hopefully we can shrink this. But definitely a big decrease in the coming year in the low 20s as opposed to being above 30% this year as we were investing in data centers.

Thank you. The next question comes from Phil Hong from Barclays. Please go ahead.

Just want to have a quick follow-up on Greg's question earlier, regarding the mid-single digit growth at Peer 1 next year, I was just wondering what visibility you might have, that gives you a little bit more comfort to assume that beyond the product that you have, can you maybe comment a little bit around your demand for that product, what visibility do you have to the comforts around the mid-single digit growth assumption?

The visibility we have is further to the reorganization of our sales grew, we can see our sales performance growing from months-to-months. So that's early evidence we have. Of course that has to translate into financial statements, but that's an early sign, we have just brought on a new major client who has requested that their identity remain confidential, which will be our anchor tenant in Kirkland. So we now have evidence that things are getting better further to the reorganization of the bringing together and what is required now is just a little time for it to become obvious to you.

Right okay, and in terms of the timing for that sales to translate into actual revenues that you guys report. What typical timeframe are we still talking about around six months or what's the timeframe typically for --?

I would expect us to collectively see this in a visible manner early in the new fiscal year.

With respect to the unprofitable services that you guys are speeding up on the transition out of, how much of that do we still have left?

We're still going through it, but there is a portion that we're transferring into products that we want to keep. So, basically going from minimal services to more services being offered to these customers. So, we're still going through this in the fourth quarter but we expect in the New Year for this to be largely than -- there's going to be some remaining, but largely done in 2016.

And would it be fair to say that I guess the key forward impact from this -- from this bucket of revenues is going to be just as been in Q4 or do you think we've seen a worse of it?

I think we've seen the worst of it. We -- you see we have had to fine tune our methods, this was business that we wanted to convert into other services. And in some cases perhaps we went about it, a bit too brutally and it's declined faster than we thought. So, we’ve refined our methods and I would expect it to be less traumatic going forward.

And then one question on the Canadian cable business if I could, just given the more benign competitive environment in Quebec based on our understanding at least, and pretty much most of Ontario outside of Toronto as well, could we see some better subscriber trends ahead for cable in Canada?

It's a good question. Our third quarter in terms of sub-numbers was not as good as we would have hoped or as we had seen in the second and first quarter. We continue to work extremely hard on our retention offers and our sales and our save techniques. Will it be meaningfully better than say the year-to-date? I doubt it. But that's still pretty good if you compare it to peers. It's still an enviable performance.

So, I guess you would probably, I guess maybe a different way to ask it is, you don't feel that the competitive environment is necessarily that benign versus the way maybe I had assumed because I saw -- I guess from my -- what I’m able to see it feels like it was pretty isolated to Toronto in terms of hyper-competition between Bell and its cable competitors. But is that sort of not a fair characterization based on what you guys are seeing on the ground?

It is a fair characterization and it does have a spill effect in the rest of Ontario, but we're managing, we're doing okay generally speaking. And of course it's -- but it is very sort of ironic, isn't it, that in Western Canada they've sorted their issues out and everyone's started growing in a profitable manner, while this is occurring in the East, it's a little ironic. But anyway that's life. So, we’ll deal with it successfully as you can see.

Thank you. The next question comes from Jeff Fan from Scotiabank. Please go ahead.

Just to continue on the Cogeco Peer 1 line of questions. Can you give us a bit of breakdown on the percentage of revenue that are coming from Canadian customers versus non-Canadian customers in the Cogeco Peer 1 segment? Just want to get an understanding as how integrated this business is versus with your geographic breakdown and also with your cable businesses respectively and in either countries?

Well I think Patrice will answer the question.

Yes, Phil, so we do provide segmented information by country, but it includes all our divisions, although it can be worked out backwards when you take out ABB. So, basically about the majority of our revenues in Cogeco Peer 1 are in the U.S. and then in Canada and then the UK. The UK is about 10% of the pie, so I would say the U.S. is the majority of the revenues.

And can you talk about the -- like the way the customers are buying for Cogeco Peer 1 services in Canada whether they are somewhat integrated with your cable business at all? I'm just trying to get an understanding as to either the rational for having this business at all?

Yes, well. I think well this is a discussion that we've had on prior conference calls. So the straight answer is no. This is not related to the cable business. This is related to this corporation's desire to enter the half of the width [ph] of the telecom market that it did not have access to prior to 2008, and that is servicing large and medium sized businesses. So, that's the reason why we bought Toronto Hydro Telecom and the reason that we added on after that a number of applications to build this capability in that market. It also being a substantial part based on managed hosting, it also breaks your dependence on geographies because it allows users from other geographies to come in and take advantage of your infrastructure. So, the story is one of growth and breaking barrier. You should not be confused by the fact that there are growing [indiscernible] along the way.

Okay and then one last question on just capital allocation, on CapEx specifically, the Canadian cable business and if we talk to others in the cable industry there is lots of investments going on, whether it's related to IP DOCSIS 3.1 notes splitting. When you make a decision on allocating CapEx between your different divisions, I guess the concern is potential concern and maybe you can help us alleviate that, is that the investments that you are making in datacenters now is preventing you from making the right investment in your core Canadian cable business to withstand some of the competition that's coming from a much bigger competitor. So can you just help us think through that a little bit to give us some comfort to the Canadian business, cable business is not affected by this allocation?

Well, I would like to categorically state that that hypostasis doesn’t apply to us, that is absolutely not they are situated. We are making all the investments that we think are required in our Canadian cable business, in our U.S. cable business and in our information technologies sector that we feel are required and what we do in one area is not preventing us from doing the right thing in other areas. So I really want to correct that misperception.

Okay, thanks.

And all of the things you referred to that other operators are doing, well guess what we're doing them too. It’s clear that cable companies have a substantial advantage over phone companies, using DOCSIS 3.1 they can move to gigabit up to all the way up to 4 gigabit and 10 gigabit for services using full duplex DOCSIS 3.1, while investing about $50 per home passed [ph]. So of course you'll see lower CapEx levels in cable companies then you will see in phone companies, but that's because of a natural advantage that our infrastructure offers.

Fair enough. Thank you.

Thank you.

And if I can add, answering to the previous question, I was looking at to pull out the numbers on Cogeco Peer 1, but actually the Canadian revenues are slightly higher than the U.S. So they are not too far from each other, but Canadian first, U.S.A. second and the UK is third, I just wanted to correct that.

Thank you. The next question comes from Vince Valentini, TD Securities. Please go ahead.

Patrice may I just double clarify what you just said there. That is just for the datacenter operations or does that include the connectivity business within enterprise as well, when you gave those percentages?

No it's the whole business, if its where only for managed hosting then it would be more focused on [indiscernible].

Right that’s what I thought. Sticking [ph] with that I guess, can you confirm the 450 million impairment charge, the number you gave seem to suggest it's mostly in the U.S. So it would suggest it mostly relates to the Peer 1 acquisition, but does any of that impairment charge relate to Toronto Hydro Telecom or any other acquisitions or is it pretty much all of Peer 1?

It is primarily Peer 1 or managerial thing, which was what Peer 1 was doing. There is the portion of it that relates to the other segments connectivity mainly, as basically our previous growth rate expectations are not what we're forecasting right now, so it's primarily Peer 1, but there is a portion if it that comes from the other businesses.

Great, thanks. Second on datacenters is, how the industry typically works, from what we understand it needs to sustain double digit say 10% to 15% growth, you have to keep building new datacenters and new capacity, it sounds like you are stopping building out new datacenters after this year with your CapEx coming way down which will obviously lead to better free cash flow and who knows maybe that's the right thing to do. But just so we leverage [ph] that expectation, does that mean that you mid-single digits type revenue growth is longer term objective now and you would really never be able to get up to double-digits unless you start wrapping up CapEx again?

You see, we currently operate in excess of 400,000 gross square feet of data hosting capacity and we use about half of it. So, we have a long runway with as good sales as we can possibly generate before this question becomes an issue.

So, you do thing double-digit growth -- with proper execution of course, double-digit growth is possible with the new CapEx for several years?

Well, this is where the accountant and the managers diverge. The accountants have made their model and people come to agree on what the model will be. And the managers say well that's very nice but we want to beat that, so that's why we bought into this industry and that's what we are trying to do.

Okay. Fair enough. And last one just circle back to the Canadian cable business and the question on competition from Bell, has there been any change in the footprints, I think 43% overlap with Bell's fiber services was your number, you've given out as. Did the [indiscernible] suggest that that may be have crept up to the high 40s now?

Our estimate right now is at 45%.

Great, thank you.

Thank you. The next question comes from Drew McReynolds of RBC Capital Markets. Please go ahead.

Three questions for me if I may. First, just back to enterprise, you talk about an evolving competitive dynamics just wondering if you could comment on how that evolving competitive dynamic is different within the different geographic regions, particularly interested in the U.S. And secondly, there is, what you see in terms of that competitive dynamic change or commitment to any of these geographic kind of locations? And then the last question I have just on American Cable, just wondering if you can comment on just your expectations for margins as we look out into fiscal 2017, obviously with the acquisition flowing through, there is a little bit of bumpiness here, just wondering what your overall expectation would be. Thanks.

With respect to the competitive dynamics and thank you for asking that question because it provides an opportunity to clarify the situation. You have seen Microsoft, you have seen Google and you have seen Amazon come forth with cloud services. These are fairly bland uni-dimensional services and they have caused us to have to reassess the kinds of customers we're looking for. So we had in the past looked after some customers that are directly attracted by that kind of offering, but that's not our strong point, our strong point is when we have that and we can bundle other services on top of that. So, what it has caused us to have to do is reassess our marketing and targeting approach in order to get through to the right customers and that has taken the time that it has taken, but I think we're just about there. So, these are the competitive dynamics, the major competitive dynamics, they affect managed hosting and I think we've taken the requisite measures to correct that weakness as I tried to indicate earlier. So, I think there we're in a good position. In terms of colocation and transport we continue to win our fair share of business, it's been perturbed [ph] by the fact that we brought the two organizations together, so to some extent we've inflicted ourselves a bit of that pain. But now that we’ve got that sorted out I think that's okay. So, that would be the first answer to the question and I will ask Patrice to talk about U.S. Cable.

Okay. So, on U.S. Cable, yeah you can see our margins came down a little bit in this quarter, a portion of it, about half of the difference between the margin this quarter and the previous quarter and the previous quarter is due to some non-recurring costs. We're not talking initially big numbers here, but it's about half of the difference and the balance is due to some programming cost that were coming in at the beginning of this year. So we had the full impact in the quarter and higher marketing costs. Now, you see that our PSUs are growing fast and actually they are exceeding our plan, especially with the Connecticut acquisition. So that cost some money on the marketing front, but we think that's well invested. In terms of going forward for the Q4 and also for next year, looking at the year-to-date margins is probably a good place to look at, so these are higher than what we've just reported in the last quarter. So nothing special in terms of margins going forward that we’re anticipating versus what we’ve seen so far this year.

Okay, that’s helpful. Patrice, if I could squeeze one more in. Just back to Canadian Cable, I think this quarter lapped the full rollout of TiVo. So just, if you can provide an update on, just what the trajectory is with TiVo and whether it’s hitting what you originally expected in terms of loading, et cetera?

Yes. As you know, we’re not disclosing numbers on that, but TiVo continues to be a very sticky, attractive product that people love and that helps us generate generally better subscriber numbers than the rest of the industry.

Okay. Thank you.

Thank you.

Thank you. The next question comes from Rob Goff of Echelon Wealth Partners. Please go ahead.

Louis, my question would be on the write-down provision. The write-down would reflect A, revised forecast; B, revised evaluation parameters. Could you give us some sort of sense for the mix contributing to that write-down between forecast revisions and valuation revisions?

Yes. I’ll take this one, so the test actually is the higher of, I’ll call it in-use values, so it’s sort of a discounted free cash flow analysis and fair market value. So that’s the accounting test. So fair market value, being the value that’s achievable in the market. So we’ve run this test and obviously we have looked at both DCS and the multiples. And both of them actually end up -- we end up in the position where both methods of evaluation provide us with similar numbers. And more specifically on the multiples in the market, the managed hosting business multiples of other players, because that’s something we need to look at when we do evaluation, had significantly decreased over the past year for the reasons we’ve explain before and what’s happening in the market. Whereas the connectivity and the collocation multiples typically are fairly high, some have increased as well. So it’s a wide range of multiples depending on which parts of the business we’re looking at. So hopefully that answer’s your question.

It does and could you perhaps give us a bit more perspective on your win, on the Panorama Towers and whether or not that relationship could extent to other projects currently underway the [indiscernible]?

Sure. This is an opportunity that gives us access to couple of thousand dwellings in that tower. What’s happening in Miami now is that there is an explosion of building of new towers everywhere, it’s a very dynamic marketplace. So you can count that this is sort of a more, first a more spectacular win and I would expect that as time goes by we’ll win others.

Sure. Thank you very much. Good luck.

Thank you.

Thank you. The next question comes from Maher Yaghi of Desjardins. Please go ahead.

Yes. Thank you for taking my question. So, on the Canadian Broadband Services, you mentioned in your press release that the results for negatively affected by the implementation of small basic service and flexible packaging requirements. One of the -- you are I think the first company to speak that this change has affected actual results materially to be included in your comment. Can you talk about what you’ve experienced so far and how much more this -- can basic, could impact results? And the second question I had on the business side and I was looking at your financial statements and it looks like 65% of the goodwill impairment charge was in the U.S. market. You mentioned that you wanted to have exposure to the business side and a different part of the telecommunication market of applied [ph] on just cable, but do we -- when you look at the business in general having exposure to Europe or to the U.S. in general, is that also something that you require? What I’m trying to get to is, I understand you’re wanting to have exposure to the business side in Canada, but could we look to see maybe -- is there any thought about divesting of your European and U.S. business in Peer 1 and keeping just the Canadian part?

I think your question and I'll start with the last question, I think your question is intellectually a fine question. The problem with it that we're not there yet, you're ready to conclude that these businesses are not good and should be disposed of, and that's not where we are now. We're in a build mode, we acknowledge the challenges that we have had, we acknowledge that the performance we have delivered today is not as high as what we're thinking, but we had not reached the point of concluding that something should be disposed of. But we also recognize that that's a fair question in theory, and it's one that we will keep in the back of mind. Now with respect to the skinny services, we don't want to make this a big story and we don't want to make it bigger than it is. We have gone into this in good faith, done as best as we could, having a slight negative impact on the results in Canada -- Cable Canada, but we're not standing still. So as we move ahead we make adjustments, as we stated earlier, our primary focus is to keep that EBITDA line growing, so that's where the focus is. So the ARPU might come down and cost of programming has to come down commensurately so that we can protect and grow our EBITDA. So we may have to make slight adjustments, but I would not turn this into a burning issue.

Louis, I am just trying to back to my initial question on the business part, when I look at your goodwill impairment charge, it looks that -- when I look at the split and looking through the financials you have, you can see clearly that the good will that you have Canada in that business still about 66% of what you thought it was last year, but it's 11% where it was last year in the U.S. and 28% of what it was in Europe. So obviously the U.S. and the European businesses are underperforming significantly more than your Canadian business, so this is where I am thinking that -- that's why I was asking the question, could you split the business and still keep the Canadian part or they’re all now integrated so much that you can't think about splitting the business in three and selling two pieces and keeping one?

I think that is what I want to add to what I will just say. I think this is water under the bridge now. The question is you have a business in the state where it is in each country and you want to make it work, so you do the appropriate work to make it work. When you make the comment you make, you're implicitly assuming or passing judgment that it won't get any better. You may be right in the absolute, but that’s not the conclusion we’ve reached. So it’s okay, it's a fair question, but the answer is it's premature to answer your question and that's the answer.

Thank you. [Operator Instructions] Our next question comes from Adam Shine, National Bank Financial. Please go ahead.

Thanks a lot, obviously most of my questions have been asked already, but there are just a few more. Going back to Patrice and the non-recurring cost side, did you actually elaborate on what exactly those were? And then maybe you and/or Louis could provide just maybe a bit more color on just the performances in U.S. Cable in terms of specifically what you're seeing in MetroCast or what you're seeing at ABB?

Sure I wouldn't want to get into too much of the nitty-gritty on those non-recurring, we're talking about smaller now, but just there were two elements, but the main one related to some construction activities where we have an issue with a contractor that is not solvent anymore so we had to take a write-off on it. So that unfortunately sometime happens and there was another small amount. So that's why we said it that nonrecurring, normally this is something that would have been built and gone to CapEx. In terms of performance we're actually very pleased with our performance in the U.S. The Connecticut acquisition is actually performing better than what we have estimated initially in terms of PSU growth. In terms of overall ABB we're on par with what we were planning. They said I touched on the margin before, but we're planning for the balance of the year and especially next year when you take a full year as opposed to just one quarter to be in line basically with where we were in so far. So, we're very happy with the performance. We can basically leverage our superior speeds on internet which is the key selling product and a great platform with TiVo, maybe my last comment on this is we brought TiVo to Connecticut because the acquisition we made did not support that before and that's very successful so far as well, very appreciated by our customers.

Maybe just one more, going back to Vince's question on Bell and the fight [ph] footprint, it looks like it's picked up maybe about two points, so can you speak at all to any changes in the competitive dynamic, pricing or otherwise?

Well, it's always been a very competitive marketplace in Canada, much more so than say in the United States. Practically speaking, there is a sort of a price war between Rogers and Bell and it is having -- it is spilling over to some extent in our territory. So that is not pleasant. But we're managing despite that.

Okay I’ll leave it at that, thanks you very much.

So operator we'll take another question and then we'll probably wrap up and we'll be available for further questions afterwards if people want to call us obviously.

There are no further questions in the queue at this time. Please continue.

Okay, great. Well thank you everyone for participating. So, we're going to be back in November. We'll specify the exact date with our fourth quarter results. So, until then again feel free to call us if you have any questions. Thank you.

Thank you. Have a great summer.

Ladies and gentlemen, this does conclude the conference call for today. You may now disconnect your line and have a great day.