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Cogeco Cable Second Quarter Results Bode Well for Fiscal 2013 Projections

- Operating margin(1) increased to 45.6% in second quarter of 2013 from 45.2% and, for the first six months of fiscal 2013 to 45.3% from 43.5% in the corresponding period last year

MONTREAL, QUEBEC -- (Marketwired) -- 04/11/13 -- Today, Cogeco Cable Inc. (TSX:CCA) ("Cogeco Cable" or the "Corporation") announced its financial results for the second quarter of fiscal 2013, ended February 28, 2013, in accordance with International Financial Reporting Standards ("IFRS").

For the second quarter and first six months of fiscal 2013, which include three months operating results of Atlantic Broadband ("ABB") and one month for Peer 1 Network Enterprises, Inc. ("PEER 1"):

--  Revenue increased by 35.2% to reach $429.7 million, and by 19.7% to
    reach $757.6 million ; 
    
--  Operating income before depreciation and amortization increased by 36.2%
    to $195.8 million when compared to the second quarter of fiscal 2012,
    and by 24.4% to $342.9 million when compared to the first half of the
    prior year; 
    
--  Operating margin(1)increased to 45.6% from 45.2% in the quarter and
    increased to 45.3% from 43.5% in the first six months when compared to
    the same periods of the prior year; 
    
--  Profit for the period from continuing operations amounted to $58.5
    million in the second quarter when compared to $31.1 million for the
    same period of the previous fiscal year. Profit progression for the
    quarter is mostly attributable to the operating income before
    depreciation and amortization increase coming primarily from the
    acquisitions of ABB and PEER 1, partly offset by the acquisition costs
    and the financial expense increases both related to ABB and PEER 1. For
    the first half of fiscal 2013, profit for the period from continuing
    operations amounted to $100.6 million when compared to $70.7 million for
    the first half of fiscal 2012. The increase for the six-month period
    ended February 28, 2013 is mostly attributable to the increase in
    operating income before depreciation and amortization coming primarily
    from the acquisition of ABB, partly offset by the acquisition costs and
    the financial expense increases both related to ABB and PEER 1 and the
    income tax expense increase; 
    
--  Profit for the period amounted to $58.5 million in the second quarter
    when compared to $83.1 million for the same period of the previous
    fiscal year. For the first half of fiscal 2013, profit for the period
    amounted to $100.6 million when compared to $126.1 million for the
    comparable period of prior year. The decline for both periods is mostly
    attributable to the last year's profit from the Portuguese subsidiary,
    Cabovisao - Televisao por Cabo, S.A. ("Cabovisao"), reported as
    discontinued operations and disposed of on February 29, 2012, partly
    offset by the increases in operating income before depreciation and
    amortization, financial expense and acquisition costs all related to ABB
    and PEER 1 and the income tax expense increase; 
    
--  Free cash flow(1)reached $36.1 million for the second quarter compared
    to $18.4 million in the comparable quarter of the prior year. For the
    first six months, free cash flow amounted to $53.1 million, compared to
    $38.1 million in the first half of fiscal 2012. The increases in free
    cash flow over the prior year are due to the improvement of operating
    income before depreciation and amortization, partly offset by the
    increase in financial expense, the acquisition costs related to ABB and
    PEER 1 acquisitions as well as the increase in acquisition of property,
    plant and equipment; 

(1)  The indicated terms do not have standard definitions prescribed by    
     IFRS and therefore, may not be comparable to similar measures         
     presented by other companies. For more details, please consult the    
     "Non-IFRS financial measures" section of the Management's discussion  
     and analysis.                                                         

--  A quarterly dividend of $0.26 per share was paid to the holders of
    subordinate and multiple voting shares, an increase of $0.01 per share,
    or 4%, when compared to a dividend of $0.25 per share paid in the second
    quarter of fiscal 2012. Dividend payments in the first six months
    totaled $0.52 per share in fiscal 2013, compared to $0.50 per share in
    fiscal 2012; 
    
--  Fiscal 2013 second-quarter primary service units ("PSU")(1)grew by 7,463
    and by 22,543 in the first six months of fiscal 2013. At February 28,
    2013, consolidated PSU amounted to 2,486,350 of which 1,984,555 comes
    from the Canadian cable services segment and 501,795 from the American
    cable services segment; 
    
--  On January 31, 2013, Cogeco Cable completed the acquisition of 96.57% of
    the issued and outstanding shares of PEER 1 by way of takeover bid (the
    "offer") valued at approximately $649 million. On April 3, 2013, Cogeco
    Cable completed the acquisition of the remaining 3.43% of the issued and
    outstanding shares of PEER 1 for a cash consideration of $17 million
    pursuant to the compulsory acquisition provisions in Section 300 of the
    Business Corporations Act ("British Columbia"). In connection with the
    completion of the offer, Cogeco Cable has entered into secured credit
    facilities in the amount of approximately $650 million and maturing in
    2017, with a syndicate of lenders. PEER 1 is one of the world's leading
    internet infrastructure providers, specializing in managed hosting,
    dedicated servers, cloud services and co-location. This acquisition
    enhances Cogeco Cable's footprint and builds on its strategic
    initiatives by increasing scale in an attractive industry segment with
    significant growth prospects in the state of the art data center
    platforms. The Corporation will also serve additional businesses
    worldwide, in addition to approximately 11,000 customers currently
    served, through 23 data centres and 21 points-of-presence across North
    America and Europe. PEER 1's primary network centre and head office
    remain located in Vancouver. 

"Cogeco Cable delivered great overall results for the second quarter of fiscal 2013," declared Louis Audet, President and Chief Executive Officer of Cogeco Cable. "During this first fiscal quarter with ABB on board, we made progress as we had forecasted, and believe the market opportunities of our combined capabilities to be positive going forward," Louis Audet added.

"The integration of our more recent acquisition of PEER 1 is running smoothly and we are in line with meeting the objectives we had communicated last December," Louis Audet continued. "With increased operating margin, moderate yet steady organic revenue increase and encouraging growth prospects for the Enterprise services segment, I am confident that we will deliver on our updated projections for 2013, which were modified to include PEER 1 operating results. Looking forward to the third quarter, we are focused on continuing our efforts to fully capitalize on our acquisitions and maintaining efficiencies across all of our operations," concluded Louis Audet.

(1)  Represents the sum of Television, High Speed Internet ("HSI") and     
     Telephony service customers.                                          
                                                                           
                                                                           

SHAREHOLDERS' REPORT

Three and six-month periods ended February 28, 2013

FINANCIAL HIGHLIGHTS

                                Quarters ended             Six months ended 
(in thousands of                                                            
 dollars, except                                                            
 PSU growth,                                                                
 percentages and   February  February           February  February          
 per share data)        28,       29,                28,       29,          
                       2013      2012   Change      2013      2012   Change 
                          $         $        %         $         $        % 
----------------------------------------------------------------------------
Operations                                                                  
Revenue             429,672   317,735     35.2   757,583   633,159     19.7 
Operating income                                                            
 before                                                                     
 depreciation and                                                           
 amortization(1)    195,776   143,743     36.2   342,902   275,566     24.4 
Operating                                                                   
 margin(1)             45.6%     45.2%       -      45.3%     43.5%       - 
Operating income    103,721    59,491     74.3   178,881   126,490     41.4 
Profit for the                                                              
 period from                                                                
 continuing                                                                 
 operations          58,458    31,086     88.1   100,618    70,653     42.4 
Profit for the                                                              
 period from                                                                
 discontinued                                                               
 operations               -    52,047        -         -    55,446        - 
Profit for the                                                              
 period              58,458    83,133    (29.7)  100,618   126,099    (20.2)
Profit for the                                                              
 period                                                                     
 attributable to                                                            
 owners of the                                                              
 Corporation         58,660    83,133    (29.4)  100,820   126,099    (20.0)
----------------------------------------------------------------------------
Cash Flow                                                                   
Cash flow from                                                              
 operating                                                                  
 activities         150,084   120,961     24.1   149,804   134,768     11.2 
Cash flow from                                                              
 operations(1)      140,515   104,622     34.3   240,360   201,665     19.2 
Acquisitions of                                                             
 property, plant                                                            
 and equipment,                                                             
 intangible and                                                             
 other assets       104,433    86,234     21.1   187,266   163,517     14.5 
Free cash flow(1)    36,082    18,388     96.2    53,094    38,148     39.2 
----------------------------------------------------------------------------
Financial                                                                   
 Condition(2)                                                               
Property, plant                                                             
 and equipment            -         -        - 1,730,766 1,322,093     30.9 
Total assets              -         -        - 5,207,588 2,908,079     79.1 
Indebtedness(3)           -         -        - 3,019,682 1,069,112        - 
Equity                                                                      
 attributable to                                                            
 owners of the                                                              
 Corporation              -         -        - 1,271,591 1,188,431      7.0 
----------------------------------------------------------------------------
Primary service                                                             
 units ("PSU")                                                              
 growth(4)            7,463    12,280    (39.2)   22,543    58,459    (61.4)
----------------------------------------------------------------------------
Per Share Data(5)                                                           
Earnings per share                                                          
 attributable to                                                            
 owners of the                                                              
 Corporation                                                                
  From continuing                                                           
   and                                                                      
   discontinued                                                             
   operations                                                               
    Basic              1.20      1.71    (29.8)     2.07      2.59    (20.1)
    Diluted            1.19      1.70    (30.0)     2.06      2.57    (19.8)
  From continuing                                                           
   operations                                                               
    Basic              1.20      0.64     87.5      2.07      1.45     42.8 
    Diluted            1.19      0.63     88.9      2.06      1.44     43.1 
  From                                                                      
   discontinued                                                             
   operations                                                               
    Basic                 -      1.07        -         -      1.14        - 
    Diluted               -      1.06        -         -      1.13        - 
                                                                            
(1)  The indicated terms do not have standardized definitions prescribed by
     International Financial Reporting Standards ("IFRS") and therefore,   
     may not be comparable to similar measures presented by other          
     companies. For more details, please consult the "Non-IFRS financial   
     measures" section of the Management's discussion and analysis         
     ("MD&A").                                                             
                                                                           
(2)  At February 28, 2013 and August 31, 2012.                             
                                                                           
(3)  Indebtedness is defined as the total of bank indebtedness, principal  
     on long-term debt, balance due on a business combination and          
     obligations under derivative financial instruments.                   
                                                                           
(4)  Represents the sum of Television, High Speed Internet ("HSI") and     
     Telephony service customers.                                          
                                                                           
 (5) Per multiple and subordinate voting share.                            

MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)

Three and six-month periods ended February 28, 2013

FORWARD-LOOKING STATEMENTS

Certain statements in this Management's Discussion and Analysis ("MD&A") may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to Cogeco Cable's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Corporation's future operating results and economic performance and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Cogeco Cable believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. The Corporation cautions the reader that the economic downturn experienced over the past few years makes forward- looking information and the underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the Corporation's expectations. It is impossible for Cogeco Cable to predict with certainty the impact that the current economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the "Uncertainties and main risk factors" section of the Corporation's 2012 annual MD&A as well as in the present MD&A) that could cause actual results to differ materially from what Cogeco Cable currently expects. These factors include risks pertaining to markets and competition, technology, regulatory developments, operating costs, information systems, disasters or other contingencies, financial risks related to capital requirements, human resources, controlling shareholder and holding structure, many of which are beyond the Corporation's control. Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may required by law.

All amounts are stated in Canadian dollars unless otherwise indicated. This report should be read in conjunction with the Corporation's condensed interim consolidated financial statements and the notes thereto, prepared in accordance with the International Financial Reporting Standards ("IFRS") and the MD&A included in the Corporation's 2012 Annual Report.

CORPORATE OBJECTIVES AND STRATEGIES

Cogeco Cable Inc.'s ("Cogeco Cable" or the "Corporation") objectives are to provide outstanding service to its customers, improve profitability and create shareholder value. To achieve these objectives, the Corporation has developed strategies that focus on expanding its service offering, enhancing its existing services and bundles, The Corporation measures its performance, with regard to these objectives by monitoring operating income before depreciation and amortization(1), operating margin(1), PSU(2) growth and free cash flow(1).

KEY PERFORMANCE INDICATORS

OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING MARGIN

For the six-month period ended February 28, 2013, operating income before depreciation and amortization increased by 24.4% when compared to the same period of fiscal 2012 to reach $342.9 million and operating margin increased to 45.3% from 43.5%. As a result of the acquisition of Peer 1 Network Enterprises, Inc. ("PEER 1"), management revised its January 14, 2013 projections for fiscal 2013. Operating income before depreciation and amortization is now expected to reach $767 million from $735 million and operating margin should decrease to 45.2% from 46.2%. For further details, please consult the fiscal 2013 revised projections in the "Fiscal 2013 financial guidelines" section.

FREE CASH FLOW

For the six-month period ended February 28, 2013, Cogeco Cable reports free cash flow of $53.1 million, compared to $38.1 million for the same period of the previous fiscal year, an increase of $14.9 million. This variance is mostly attributable to the improvement of operating income before depreciation and amortization, partly offset by the increase in financial expense, the acquisition costs related to Atlantic Broadband ("ABB") and PEER 1 acquisitions as well as the increase in acquisition of property, plant and equipment. Giving effect to the acquisition of PEER 1, management also revised its free cash flow projections from $170 million to $145 million as a result of acquisitions of property, plant and equipment, intangible and other assets exceeding cash flow generated by PEER 1, additional integration, restructuring and acquisition costs of $9 million as well as additional financial expense of $17 million both related to this acquisition. For further details, please consult the fiscal 2013 revised projections in the "Fiscal 2013 financial guidelines" section.

PSU GROWTH AND PENETRATION OF SERVICE OFFERINGS

During the six-month period ended February 28, 2013, PSU reach 2,486,350 of which 1,984,555 comes from the Canadian cable services segment and 501,795 from the American cable services segment. In the American cable services segment, PSU increased by 7,121 in the quarter, stemming primarily from the Television and HSI services. In the Canadian cable services segment, PSU increased at a lower pace to 342 when compared to 12,280 PSU for the comparable period of the prior year, mainly as a result of service category maturity and a more competitive environment in the Television services. Cogeco Cable maintains targeted marketing initiatives to increase the penetration level of its services.

BUSINESS DEVELOPMENTS

On January 31, 2013, Cogeco Cable completed the acquisition of 96.57% of the issued and outstanding shares of PEER 1 by way of takeover bid (the "offer") valued at approximately $649 million. On April 3, 2013, Cogeco Cable completed the acquisition of the remaining 3.43% of the issued and outstanding shares of PEER 1 for a cash consideration of $17 million pursuant to the compulsory acquisition provisions in Section 300 of the Business Corporations Act ("British Columbia"). In connection with the completion of the offer, Cogeco Cable has entered into secured credit facilities in the amount of approximately $650 million and maturing in 2017, with a syndicate of lenders. PEER 1 is one of the world's leading internet infrastructure providers, specializing in managed hosting, dedicated servers, cloud services and co-location. This acquisition enhances Cogeco Cable's footprint and builds on its strategic initiatives by increasing scale in an attractive industry segment with significant growth prospects in the state of the art data center platforms. The Corporation will also serve additional businesses worldwide, in addition to approximately 11,000 customers currently served, through 23 data centres and 21 points-of-presence across North America and Europe. PEER 1's primary network centre and head office remain located in Vancouver. For the purpose of segmented operating results, operating results from PEER 1 acquisition are incorporated in the Enterprise services segment. For further details on PEER 1 operating results, please refer to the "Enterprise services" section.

On November 30, 2012, the Corporation completed the acquisition of ABB, an independent cable system operator formed in 2003, serving about 495,000 PSU's and providing Analogue and Digital Television, as well as HSI and Telephony services. The acquisition is an attractive entry point into the United States of America ("US") market, providing a significant increase in PSU base with further growth potential, a high quality network infrastructure and the ability for the Corporation's management to leverage its core knowledge and operational experience. The transaction, valued at US$1.36 billion, was financed through a combination of cash on hand, a draw-down on the existing Term Revolving Facility of approximately US$588 million and US$660 million of borrowings under a new committed non-recourse debt financing at ABB. Ranked the 12th- largest cable television system operator in the US, ABB operates cable systems in Western Pennsylvania, Southern Florida, Maryland, Delaware and South Carolina. For the purpose of segmented operating results, operating results from ABB acquisition are presented in the American cable services operations. For further details on ABB's operating results, please refer to the "American cables services" section.

(1)  The indicated terms do not have standardized definitions prescribed by
     IFRS and therefore, may not be comparable to similar measures         
     presented by other companies. For more details, please consult the    
     "Non-IFRS financial measures" section.                                
                                                                           
 (2) Represents the sum of Television, High Speed Internet ("HSI") and     
     Telephony service customers.                                          

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                       Quarters ended              Six months ended         
                  February   February           February   February         
                       28,        29,                28,        29,         
                      2013       2012   Change      2013       2012   Change
(in thousands of                                                            
 dollars, except                                                            
 percentages)            $          $        %         $          $        %
----------------------------------------------------------------------------
Revenue            429,672    317,735     35.2   757,583    633,159     19.7
Operating                                                                   
 expenses          230,908    171,649     34.5   405,112    348,108     16.4
Management fees                                                             
 - COGECO Inc.       2,988      2,343     27.5     9,569      9,485      0.9
--------------------------------------        ----------------------        
Operating income                                                            
 before                                                                     
 depreciation                                                               
 and                                                                        
 amortization      195,776    143,743     36.2   342,902    275,566     24.4
--------------------------------------        ----------------------        
Operating margin      45.6%      45.2%              45.3%      43.5%        
----------------------------------------------------------------------------
----------------------------------------------------------------------------

REVENUE

Fiscal 2013 second-quarter revenue increased by $111.9 million, or 35.2%, to reach $429.7 million, when compared to the same period last year. For the first six months, revenue amounted to $757.6 million, an increase of $124.4 million, or 19.7% when compared to the same period of fiscal 2012. Revenue increases for both periods is mainly attributable to the operating results of the recent acquisitions, ABB and PEER 1, ("recent acquisitions"). For further details on the Corporation's revenue, please refer to the "Canadian cable services", "American cable services" and "Enterprise services" sections.

OPERATING EXPENSES

For the second quarter of fiscal 2013, operating expenses increased by $59.3 million, to reach $230.9 million, an increase of 34.5% compared to the prior year. For the first half of the fiscal year, operating expenses amounted to $405.1 million, an increase of $57 million, or 16.4%, when compared to the same period of fiscal 2012. Operating expenses increase is mostly attributable to the recent acquisitions, partly offset by cost reduction initiatives and the reduction in operating expenses in the Canadian cable services related to the deployment and support costs incurred in fiscal 2012 for the migration of Television service customers from analogue to digital. For further details on the Corporation's operating expenses, please refer to the "Canadian cable services", "American cable services" and "Enterprise services" sections.

OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING MARGIN

Fiscal 2013 second-quarter operating income before depreciation and amortization increased by $52.0 million, or 36.2%, to reach $195.8 million, and by $67.3 million, or 24.4%, to reach $342.9 million in the first six-month as a result of the recent acquisitions and the improvement in the Canadian cable services segment. Cogeco Cable's second-quarter operating margin increased to 45.6% from 45.2% and to 45.3% from 43.5% for the first six months of fiscal 2013 when compared to the comparable periods of the prior year. For further details on the Corporation's operating income before depreciation and amortization and operating margin, please refer to the "Canadian cable services", "American cable services" and "Enterprise services" sections.

CUSTOMER STATISTICS

----------------------------------------------------------------------
----------------------------------------------------------------------
                                                                      
                                                                      
                                                                      
                       Consolidated                    US       CANADA
                                                                      
                                        February 28, 2013             
----------------------------------------------------------------------
PSU                       2,486,350               501,795(1) 1,984,555
Television service                                                    
 customers                1,100,547               247,840      852,707
HSI service customers       824,144               174,979      649,165
Telephony service                                                     
 customers                  561,659                78,976      482,683
----------------------------------------------------------------------
----------------------------------------------------------------------
                                                                      

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                  Consolidated              
                                   ----------------------------             
                           Net additions (losses)    Net additions (losses) 
                                   Quarters ended          Six months ended 
                      February 28,   February 29, February 28, February 29, 
                              2013           2012         2013         2012 
----------------------------------------------------------------------------
PSU                          7,463         12,280       22,543       58,459 
Television service                                                          
 customers                  (4,896)        (9,111)      (6,972)      (4,659)
HSI service customers        7,125          7,518       17,970       24,803 
Telephony service                                                           
 customers                   5,234         13,873       11,545       38,315 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1)  Include 494,674 PSU (244,404 Television service, 171,640 HSI service  
     and 78,630 Telephony service customers) from the acquisition of ABB on
     November 30, 2012.                                                    

Fiscal 2013 second-quarter and first six months, PSU net additions were lower than in the comparable period of the prior year mainly as a result of service category maturity, competitive offers and tightening of our customer credit controls and processes. PSU progression comes mainly from the American cable services. For the second quarter net customer losses for Television service customers stood at 4,896 compared to 9,111 for fiscal 2012 second-quarter. Television service customer net losses are mainly due to the promotional offers of competitors for the video service combined with the tightening of our customer credit controls. Fiscal 2013 second-quarter HSI service customers grew by 7,125 compared to 7,518 in the second quarter of the prior year, and the number of net additions to the Telephony service stood at 5,234 customers compared to 13,873 customers for the same period of the prior year. For the first six months of fiscal 2013, PSU net additions are the results of the recent acquisition of ABB at the end of the first quarter of fiscal 2013. For further details on the Corporation's customer statistics, please refer to the "Canadian cable services" and "American cable services" sections.

RELATED PARTY TRANSACTIONS

Cogeco Cable Inc. is a subsidiary of COGECO Inc., which holds 32.1% of the Corporation's equity shares, representing 82.6% of the Corporation's voting shares. On September 1, 1992, Cogeco Cable Inc. executed a management agreement with COGECO Inc. under which the parent company agreed to provide certain executive, administrative, legal, regulatory, strategic and financial planning services and additional services to the Corporation and its subsidiaries (the "Management Agreement"). These services are provided by COGECO Inc.'s senior executives, including the President and Chief Executive Officer, the Senior Vice President and Chief Financial Officer, the Vice President Corporate Affairs, the Vice President Chief Legal Officer and Secretary, the Vice President Corporate Development, the Vice President and Treasurer, the Vice President Public Affairs and Communications and the Vice President Internal Audit. No direct remuneration is payable to such senior executives by the Corporation. However, the Corporation granted 71,233 stock options (47,729 in 2012) to these senior executives as executives of Cogeco Cable during the first six months of fiscal year 2013. During the second quarter and first six months of fiscal 2013, the Corporation charged COGECO Inc. an amount of $86,000 and $176,000 ($75,000 and $149,000 in 2012) with regards to the Corporation's stock options to these employees.

During the first six months of fiscal 2013, the Corporation also granted 12,280 (11,006 in 2012) Incentive Share Units ("ISUs") to these senior executives as executives of Cogeco Cable. During the second quarter and first six months of fiscal 2013, the Corporation charged COGECO Inc. an amount of $112,000 and $219,000 ($104,000 and $180,000 in 2012) with regards to the Corporation's ISUs granted to these employees.

Under the Management Agreement, the Corporation pays monthly fees equal to 2% of its total revenue to COGECO Inc. for the above-mentioned services. In 1997, the management fee was capped at $7 million per year, subject to annual upward adjustment based on increases in the Consumer Price Index in Canada. This limit can be increased under certain circumstances upon request to that effect by COGECO Inc. For fiscal year 2013, management fees have been set at a maximum of $9.6 million ($9.5 million in 2012), which was paid within the first six months of the fiscal year. For fiscal year 2012, management fees were also fully paid in the first half of the year. In addition, the Corporation reimburses COGECO Inc.'s out-of-pocket expenses incurred with respect to services provided to the Corporation under the Management Agreement.

Details regarding the Management Agreement and stock options and ISUs granted to COGECO Inc.'s employees are provided in the Corporation's 2012 Annual Report.

There were no other material related party transactions during the periods covered.

FIXED CHARGES

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                        Quarters ended              Six months ended        
                   February   February           February   February        
                        28,        29,                28,        29,        
                       2013       2012  Change       2013       2012  Change
(in thousands of                                                            
 dollars, except                                                            
 percentages)             $          $       %          $          $       %
----------------------------------------------------------------------------
Depreciation and                                                            
 amortization        84,591     84,252     0.4    149,257    149,076     0.1
Financial                                                                   
 expense             29,094     14,788    96.7     44,694     31,617    41.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------

For the three and six-month periods ended February 28, 2013, depreciation and amortization expense remained essentially the same at $85 million and $149.3 million, respectively compared to $84.3 million and $149.1 million for the same periods of the prior year, respectively, resulting mainly from the recent acquisitions and from additional acquisition of property, plant and equipment offset by higher fiscal 2012 depreciation expense related to the reduction of useful lives for certain home terminal devices.

Fiscal 2013 second-quarter financial expense increased by $14.3 million, or 96.7%, at $29.1 million when compared to $14.8 million in fiscal 2012 second-quarter. For the first six months of fiscal 2013, financial expense increased by $13.1 million, or 41.4%, at $44.7 million, compared to $31.6 million in the prior year. Financial expense increased in both periods as a result of the cost of financing related to the recent acquisitions.

INCOME TAXES

For the three and six-month periods ended February 28, 2013, income tax expense amounted to $16.2 million and $33.6 million, respectively, compared to $13.6 million and $24.2 million, respectively, for the comparable periods in the prior year. These increases are mostly attributable to the improvement in operating income before depreciation and amortization and by income taxes reductions, in fiscal 2012, from the implementation of certain tax measures of the 2011 federal budget limiting the tax deferrals for corporations with a significant interest in a partnership, partly offset by the increase in the financial expense and by the efficient tax structure resulting from the recent acquisitions.

PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS

For the three-month period ended February 28, 2013, profit for the period from continuing operations amounted to $58.5 million of which $58.7 million, or $1.20 per share is attributable to owners of the Corporation, compared to a profit for the period from continuing operations of $31.1 million, or $0.64 per share, all of which is attributable to owners of the Corporation for the comparable period. For the six-month period ended February 28, 2013, profit for the period from continuing operations amounted to $100.6 million of which $100.8 million, or $2.07 per share is attributable to owners of the Corporation, compared to a profit for the period from continuing operations of $70.7 million, or $1.45 per share, all of which is attributable to owners of the Corporation for the comparable period. Profit for the period from continuing operations progression for the quarter and the first half of fiscal 2013 is mostly attributable to the increase in operating income before depreciation and amortization, partly offset by the acquisition costs related to the recent acquisitions and the financial expense and income tax expenses increases explained above.

PROFIT FOR THE PERIOD

For the three and six-month periods ended February 28, 2013, profit for the period amounted to $58.5 million and $100.6 million, respectively, compared to $83.1 million and $126.1 million for the comparable periods. Fiscal 2013 second-quarter profit for the period attributable to owners of the Corporation amounted to $58.7 million, or $1.20 per share, compared to $83.1 million, or $1.71 per share, in the second quarter of fiscal 2012. For the six-month period ended February 28, 2013, profit for the period attributable to owners of the Corporation amounted to $100.8 million or $2.07 per share, compared to $126.1 million, or $2.59 per share for the comparable period of fiscal 2012. The decline for both periods is mostly attributable to last year's profit from the Portuguese subsidiary, Cabovisao - Televisao por Cabo, S.A. ("Cabovisao"), reported as discontinued operations and disposed of on February 29, 2012, partly offset by the increases of operating income before depreciation and amortization, financial expense and acquisition costs all related to the recent acquisitions.

The non-controlling interest resulting from the acquisition of PEER 1 represents a participation of approximately 3.43% and amounted to a loss for the period of $0.2 million in the second quarter and for the first six months of fiscal 2013.

CASH FLOW ANALYSIS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Quarters ended          Six months ended 
                        February 28, February 29, February 28, February 29, 
                                2013         2012         2013         2012 
(in thousands of                                                            
 dollars)                          $            $            $            $ 
----------------------------------------------------------------------------
Operating activities                                                        
Cash flow from                                                              
 operations                  140,515      104,622      240,360      201,665 
Changes in non-cash                                                         
 operating activities          4,931        3,179      (76,182)     (59,489)
Amortization of deferred                                                    
 transaction costs and                                                      
 discounts on long-term                                                     
 debt                         (2,723)        (682)      (3,463)      (1,357)
Income taxes paid            (17,475)     (17,635)     (60,008)     (53,817)
Current income tax                                                          
 expense                      23,027       26,206       48,118       45,696 
Financial expense paid       (27,285)      (9,517)     (43,715)     (29,547)
Financial expense             29,094       14,788       44,694       31,617 
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                             150,084      120,961      149,804      134,768 
Investing activities        (733,414)     (86,292)  (2,170,308)    (163,370)
Financing activities         610,025       34,111    1,841,086       59,510 
----------------------------------------------------------------------------
Effect of exchange rate                                                     
 changes on cash and                                                        
 cash equivalents                                                           
 denominated in foreign                                                     
 currencies                      705            -          705            - 
----------------------------------------------------------------------------
Net change in cash and                                                      
 cash equivalents from                                                      
 continuing operations        27,400       68,780     (178,713)      30,908 
Net change in cash and                                                      
 cash equivalents from                                                      
 discontinued operations                                                    
 (1)                               -       47,237            -       49,597 
Cash and cash                                                               
 equivalents from                                                           
 continuing and                                                             
 discontinued                                                               
 operations, beginning                                                      
 of year                       9,278       19,935      215,391       55,447 
----------------------------------------------------------------------------
Cash and cash                                                               
 equivalents from                                                           
 continuing and                                                             
 discontinued                                                               
 operations, end of year      36,678      135,952       36,678      135,952 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1)  For further details on the Corporation's cash flows attributable to   
     discontinued operations, please refer to the "Disposal of subsidiary  
     and discontinued operations" in note 14 of the condensed interim      
     consolidated financial statements.                                    

OPERATING ACTIVITIES

Fiscal 2013 second-quarter cash flow from operations reached $140.5 million compared to $104.6 million, an increase of $35.9 million, or 34.3%, compared to the same period of prior year. For the first six months, cash flow from operations reached $240.4 million compared to $201.7 million for the same period last year, an increase of $38.7 million, or 19.2%. Increases for both periods are primarily due to the improvement of operating income before depreciation and amortization, partly offset by financial expense increase and by the acquisition costs related to ABB and PEER 1 acquisitions. For the second quarter, changes in non-cash operating activities generated cash inflows of $4.9 million compared to $3.2 million in the second quarter of fiscal 2012, mainly as a result of a higher increase in trade and other payables, partly offset by a higher increase in trade and other receivables. For the first six months, changes in non-cash operating activities generated cash outflows of $76.2 million compared to $59.5 million for the same period in fiscal 2012, mainly as a result of a higher decrease in trade and other payables and by a decrease in provisions compared to an increase in the prior year, partly offset by an increase in deferred and prepaid revenue and other liabilities compared to a decrease in the prior year.

INVESTING ACTIVITIES

BUSINESS COMBINATIONS IN FISCAL 2013

On January 31, 2013, the Corporation completed the acquisition of PEER 1 and on November 30, 2012, the acquisition of ABB. These acquisitions were accounted for using the purchase method. The preliminary purchase price allocation of these acquisitions, pending the completion of the valuation of the net assets acquired, is as follows:

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----------------------------------------------------------------------------
                                           PEER 1          ABB        TOTAL 
                                                $            $            $ 
----------------------------------------------------------------------------
Consideration                                                               
Paid                                                                        
  Purchase of shares                      477,834      337,779      815,613 
  Repayment of secured debts and                                            
   settlement of options outstanding      170,872    1,021,854    1,192,726 
----------------------------------------------------------------------------
                                          648,706    1,359,633    2,008,339 
----------------------------------------------------------------------------
Net assets acquired                                                         
Cash and cash equivalents                  10,840        5,480       16,320 
Restricted cash                             8,729            -        8,729 
Trade and other receivables                12,772        9,569       22,341 
Prepaid expenses and other                  3,855        1,370        5,225 
Income tax receivable                         672            -          672 
Other assets                                3,328            -        3,328 
Property, plant and equipment             150,206      205,353      355,559 
Intangible assets                         139,703      763,084      902,787 
Goodwill                                  421,986      602,690    1,024,676 
Deferred tax assets                         8,355       33,835       42,190 
Trade and other payables assumed          (26,330)     (27,620)     (53,950)
Provisions                                      -         (721)        (721)
Income tax liabilities assumed             (4,716)           -       (4,716)
Deferred and prepaid revenue and                                            
 other liabilities assumed                 (3,315)      (5,254)      (8,569)
Long-term debt assumed                     (1,735)           -       (1,735)
Deferred tax liabilities                  (58,682)    (228,153)    (286,835)
Non-controlling interest                  (16,962)           -      (16,962)
----------------------------------------------------------------------------
                                          648,706    1,359,633    2,008,339 
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----------------------------------------------------------------------------

ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS

Investing activities, including acquisition of property, plant and equipment segmented according to the National Cable Television Association ("NCTA") standard reporting categories, are as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Quarters ended           Six months ended
                        February 28, February 29,  February 28, February 29,
                                2013         2012          2013         2012
(in thousands of                                                            
 dollars)                                                     $            $
----------------------------------------------------------------------------
Customer premise                                                            
 equipment(1)                 18,174       24,445        37,874       57,071
Scalable                                                                    
 infrastructure(2)            24,302       35,024        56,916       51,350
Line extensions                5,191        4,319         8,120        7,921
Upgrade / Rebuild             12,139        5,470        15,650       11,654
Support capital                4,771        6,534        10,383       11,803
----------------------------------------------------------------------------
Acquisition of                                                              
 property, plant and                                                        
 equipment - Canadian                                                       
 and American cable                                                         
 services                     64,577       75,792       128,943      139,799
Acquisition of                                                              
 property, plant and                                                        
 equipment - Enterprise                                                     
 services                     35,363        7,796        49,189       17,128
----------------------------------------------------------------------------
Acquisitions of                                                             
 property, plant and                                                        
 equipment                    99,940       83,588       178,132      156,927
----------------------------------------------------------------------------
Acquisition of                                                              
 intangible and other                                                       
 assets - Canadian and                                                      
 American cable                                                             
 services                      4,214        2,957         8,115        6,253
Acquisition of                                                              
 intangible and other                                                       
 assets - Enterprise                                                        
 services                        279         (311)        1,019          337
----------------------------------------------------------------------------
Acquisitions of                                                             
 intangible and other                                                       
 assets                        4,493        2,646         9,134        6,590
----------------------------------------------------------------------------
                             104,433       86,234       187,266      163,517
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1)  Includes mainly home terminal devices as well as new and replacement  
     drops.                                                                
                                                                           
(2)  Includes mainly head-end equipment, digital video and telephony       
     transport as well as HSI equipment.                                   

For the three and six-month periods ended February 28, 2013, acquisition of property, plant and equipment amounted to $99.9 million and $178.1 million, respectively, compared to $83.6 million and $156.9 million for the comparable periods of fiscal 2012. In the Canadian cable services, fiscal 2013 second-quarter acquisition of property, plant and equipment amounted to $51.4 million, a decrease of 32.2% when compared to $75.8 million in the second quarter of the prior year. For the six-month period ended February 28, 2013, acquisition of property, plant and equipment amounted to $115.7 million, a decrease of 17.2% when compared to the prior year. For the three and six-month periods ended February 28, 2013, acquisition of property, plant and equipment in the American cable services segment amounted $13.2 million. The decreases in the Canadian cable services segment are mainly attributable to the following factors:

--  A decrease in the quarter and an increase for the six-month period ended
    February 28, 2013 in scalable infrastructure and network upgrade and
    rebuild to extend and improve network capacity and to deploy advanced
    technologies such as DOCSIS 3.0 and Switched Digital Video in existing
    areas served; and 
--  A decrease in customer premise equipment, mainly due to the achievement
    in fiscal 2012 of the first phase in the conversion of Television
    service customers from analogue to digital and the lower PSU growth as a
    result of service maturity. 

Fiscal 2013 second-quarter and first six months acquisition of property, plant and equipment in the Enterprise services segment, including the capital expenditures of the recent acquisition of PEER 1, amounted to $35.4 million and $49.2 million compared to $7.8 million and $17.1 million in the comparable periods of fiscal 2012, respectively. The increases included capital expenditures in data centre facilities in the Montreal and Toronto areas in Canada and Portsmouth in England as well as expansion of the fibre in the Toronto area in order to fulfill orders from new customers.

Acquisition of intangible and other assets are mainly attributable to reconnect and additional service activation costs as well as other customer acquisition costs. For the second quarter and the first six months of fiscal 2013, the acquisition of intangible and other assets amounted to $4.5 million and $9.1 million, compared to $2.6 million and $6.6 million for the same periods last year, respectively.

FREE CASH FLOW AND FINANCING ACTIVITIES

In the second quarter of fiscal 2013, free cash flow amounted to $36.1 million, $17.7 million higher than in the comparable period of fiscal 2012. For the six-month period, free cash flow amounted to $53.1 million, $14.9 million, or 39.2%, higher than the same period of last year. Free cash flow increase for both periods over the prior year are due to the improvement of operating income before depreciation and amortization, partly offset by the increase in financial expense, the acquisition costs related to ABB and PEER 1 acquisitions as well as the increase in acquisition of property, plant and equipment.

In the second quarter of fiscal 2013, higher Indebtedness level provided for a cash increase of $636.4 million, mainly due to drawings of $640.3 million (net of transaction costs of $2.8 million) under new credit facilities amounting approximately to $650 million incurred to finance the acquisition of PEER 1. In the second quarter of fiscal 2012, higher Indebtedness level provided a cash increase of $46.5 million mainly due to the issuance, on February 14, 2012, of $200 million Senior Secured Debentures Series 3 ("Fiscal 2012 debentures") for net proceed of $198.1 million which was used to repay the $130 million Term Revolving Facility and $21 million of bank indebtedness.

For the six-month period of fiscal 2013, higher Indebtedness level provided for a cash increase of $1.9 billion, mainly due to the draw-down on the existing Term Revolving Facility of $584.2 million (US$588 million) and the new Term Loan Facilities of $637.4 million (US$660 million for a net proceed of US$641.5 million, net of transaction costs of US$18.5 million) to finance the acquisition of ABB as well to drawings of $640.3 million (net of transaction costs of $2.8 million) under new credit facilities amounting approximately to $650 million incurred to finance the acquisition of PEER 1. In the first six months of fiscal 2012, Indebtedness affecting cash increased by $86.9 million mainly due to the issuance of Fiscal 2012 debentures previously described, which was used to repay the $110 million Term Revolving Facility.

During the second quarter of fiscal 2013, a quarterly dividend of $0.26 per share was paid to the holders of subordinate and multiple voting shares, totaling $12.6 million, when compared to a dividend paid of $0.25 per share, or $12.2 million in the second quarter of fiscal 2012. Dividend payments in the first six months totaled $0.52 per share, or $25.3 million, compared to $0.50 per share, or $24.3 million the year before.

As at February 28, 2013, the Corporation had a working capital deficiency of $152.8 million compared to $17.2 million at August 31, 2012. The increase of $135.6 million in the deficiency is mainly due to the decrease of $178.7 million in cash and cash equivalents, primarily used for the acquisition of ABB. The deficiency was also impacted by an increase of $28.4 million in trade and other receivables and by a decrease of $23.6 million in trade and other payables. As part of the usual conduct of its business, Cogeco Cable maintains a working capital deficiency due to a low level of accounts receivable as a large portion of the Corporation's customers pay before their services are rendered, unlike trade and other payables, which are paid after products are delivered or services are rendered, thus enabling the Corporation to use cash and cash equivalents to reduce Indebtedness.

At February 28, 2013, the Corporation had used $626.5 million of its $750 million Term Revolving Facility for a remaining availability of $123.5 million. The Corporation's subsidiary, ABB, also benefits from a Revolving Credit Facility of $51.6 million (US$50 million), of which $3.6 million (US$3.5 million) was used at February 28, 2013 for a remaining availability of $48 million. At February 28, 2013, the Corporation also benefits from additional Revolving Credit Facilities of $250.9 million incurred as a result of the acquisition of PEER 1, of which $243.6 million was used at February 28, 2013 for a remaining availability of $7.3 million.

FINANCIAL POSITION

As a result of the acquisition of ABB and PEER 1, most financial position balances have changed significantly since August 31, 2012. For further details on the preliminary allocation of the purchase price of the acquisitions, please refer to the investing activities under the "Cash flow analysis" section.

OUTSTANDING SHARE DATA

A description of Cogeco Cable's share data at March 31, 2013 is presented in the table below. Additional details are provided in note 10 of the condensed interim consolidated financial statements.

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                                                                      Amount
                                             Number of         (in thousands
                                        shares/options           of dollars)
----------------------------------------------------------------------------
Common shares                                                               
Multiple voting shares                      15,691,100                98,346
Subordinate voting shares                   33,146,196               900,795
Options to purchase subordinate                                             
 voting shares                                                              
Outstanding options                            782,440                      
Exercisable options                            443,063                      
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----------------------------------------------------------------------------

In the normal course of business, Cogeco Cable has incurred financial obligations, primarily in the form of long-term debt, operating and finance leases and guarantees. Cogeco Cable's obligations, as discussed in the 2012 Annual Report, have not materially changed since August 31, 2012, except as mentioned below.

In connection with the acquisition of PEER 1 on January 31, 2013, the Corporation concluded Secured Credit Facilities totaling approximately $650 million with a syndicate of lenders in four tranches for a net proceed of $640.3 million net of transaction costs of $2.8 million. The first tranche, a Canadian Term Facility amounting to $175 million, the second tranche, a US Term Facility amounting to US$225 million, the third tranche, a Revolving Facility of $240 million and the fourth tranche, a UK Revolving Facility of GBP 7 million. The Canadian and US Term Facilities are available in Canadian and US dollars and interest rates are based on Bankers' Acceptance, LIBOR Loans, Prime Rate Loans or US Base Rate Loans, plus the applicable margin. The Revolving Facility is available in Canadian dollars, US dollars, British Pounds and Euros and interest rates are based on Bankers' Acceptance, LIBOR Loans in US dollars, British Pounds or Euros, Prime Rate Loans or US and British Pounds Base Rate Loans, plus the applicable margin. The UK Revolving Facility is available in British Pounds and interest rates are based on British Pounds Base Rate Loans or British Pounds LIBOR Loans. Starting on August 31, 2013, the Canadian and US Term Facilities are subject to quarterly amortization of 1.25% in the first year, 1.875% in the second year, 3.125% in the third year and 3.75% in the fourth year, payable on the last business day of each fiscal quarter. The Secured Credit Facilities will mature on January 31, 2017. The Secured Credit Facilities are indirectly secured by a first priority fixed and floating charge on substantially all present and future real and personal property and undertaking of every nature and kind of the Corporation and most of its subsidiaries except for ABB and its subsidiaries, and provides for certain permitted encumbrances, including purchased money obligations, existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary, subject to a maximum amount. The provisions under this facility provides for restrictions on the operations and activities of the Corporation but does not cover ABB. Generally, the most significant restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as well as incurrence and maintenance of certain financial ratios primarily linked to operating income before amortization, financial expense and total indebtedness.

In connection with the acquisition of ABB on November 30, 2012, the Corporation concluded, through two of its US subsidiaries, First Lien Credit Facilities totaling US$710 million with a syndicate of banks and other institutional lenders in three tranche and draw down by an amount of US$660 million of which US$641.5 million was used to repay ABB's prior secured debt and US$18.5 million to pay for some of the transaction costs. The first tranche, a Term Loan A Facility amounting to US$240 million, which will mature on November 30, 2017, the second tranche, a Term Loan B Facility amounting to US$420 million, which will mature on November 30, 2019 and the third tranche, a Revolving Credit Facility of US$50 million, including a swingline of US$15 million, which will mature on November 30, 2017. Interest rates on the First Lien Credit Facilities are based on LIBOR plus the applicable margin, with a LIBOR floor of 1.00% for the Term Loan B Facility. Starting on December 31, 2013, the Term Loan A Facility is subject to quarterly amortization of 1.25% in the first year, 2.5% in the second year and 3.0% in the third and fourth years. Starting on December 31, 2012, the Term Loan B Facility is subject to quarterly amortization of 0.25% until its maturity date. In addition to the fixed amortization schedule and commencing in the first quarter of fiscal 2015, loans under the Term Loan Facilities shall be prepaid according to a Prepayment Percentage of excess cash flow generated during the prior fiscal year. The First Lien Credit Facilities are non-recourse to the Corporation, its Canadian subsidiaries and PEER 1's subsidiaries and are indirectly secured by a first priority fixed and floating charge on substantially all present and future real and personal property and undertaking of every nature and kind of ABB and its subsidiaries. The provisions under these facilities provide for restrictions on the operations and activities of ABB and its subsidiaries. Generally, the most significant restrictions relate to permitted indebtedness and investments, distributions and maintenance of certain financial ratios.

FINANCIAL MANAGEMENT

The Corporation has entered into cross-currency swap agreements to set the liability for interest and principal payments on its US$190 million Senior Secured Notes Series A maturing on October 1, 2015. These agreements have the effect of converting the U.S. interest coupon rate of 7.00% per annum to an average Canadian dollar interest rate of 7.24% per annum. The exchange rate applicable to the principal portion of the debt has been fixed at $1.0625 per US dollar. The Corporation elected to apply cash flow hedge accounting on these derivative financial instruments. During the first half of fiscal 2013, amounts due under the US$190 million Senior Secured Notes Series A increased by $8.7 million due to the US dollar's appreciation relative to the Canadian dollar. The fair value of cross-currency swaps liability decreased by a net amount of $7.9 million, of which a decrease of $8.7 million offsets the foreign exchange loss on the debt denominated in US dollars. The difference of $0.7 million was recorded as a decrease of other comprehensive income. During the first half of fiscal 2012, amounts due under the US$190 million Senior Secured Notes Series A increased by $1.9 million due to the US dollar's appreciation over the Canadian dollar. The fair value of cross-currency swaps liability decreased by a net amount of $1.9 million, of which $1.9 million offsets the foreign exchange loss on the debt denominated in US dollars.

Furthermore, the Corporation's net investment in foreign subsidiaries is exposed to market risk attributable to fluctuations in foreign currency exchange rates, primarily changes in the values of the Canadian dollar versus the US dollar and British Pound. This risk was mitigated since the major part of the purchase prices for ABB and PEER 1 were borrowed directly in US dollars and British Pounds. These debts were designated as hedges of net investments in foreign operations. At February 28, 2013, the net investment for ABB amounted to US$472.6 million while long- term debt was of US$323 million. At February 28, 2013, the net investment for PEER 1 amounted to US$368 million and GBP 69.1 million while long-term debt was of US$245 million and GBP 69.1 million.The exchange rate used to convert the US dollar currency and British Pound currency into Canadian dollars for the statement of financial position accounts at February 28, 2013 was $1.0314 per US dollar and $1.5645 per British Pound. The impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian dollars would change other comprehensive income by approximately $28.1 million.

The Corporation is also impacted by foreign currency exchange rates, primarily changes in the values of the US dollar relative to the Canadian dollar with regards to purchases of certain equipment, as the majority of customer premise equipment is purchased and subsequently paid in US dollars. Please consult the "Foreign Exchange Risk" section in Note 13 of the condensed interim consolidated financial statements for further details.

DIVIDEND DECLARATION

At its April 10, 2013 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of $0.26 per share for multiple voting and subordinate voting shares, payable on May 8, 2013, to shareholders of record on April 24, 2013. The declaration, amount and date of any future dividend will continue to be considered and approved by the Board of Directors of the Corporation based upon the Corporation's financial condition, results of operations, capital requirements and such other factors as the Board of Directors, at its sole discretion, deems relevant. There is therefore no assurance that dividends will be declared, and if declared, the amount and frequency may vary.

SEGMENTED OPERATING RESULTS

The Corporation reports its operating results in three operating segments: Canadian cable services, American cable services and Enterprise services. The reporting structure reflects how the Corporation manages the business activities to make decisions about resources to be allocated to the segment and to assess its performance. For the purpose of segmented operating results, operating results from the ABB acquisition are presented in the American cable services and operating results from the PEER 1 acquisition are included in the Enterprise services segment.

CANADIAN CABLE SERVICES

CUSTOMER STATISTICS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                     Net additions (losses) 
                                     Quarters ended        Six months ended 
                    February   February    February    February    February 
                         28,        28,         29,         28,         29, 
                        2013       2013        2012        2013        2012 
----------------------------------------------------------------------------
PSU                1,984,555        342      12,280      15,422      58,459 
Television                                                                  
 service                                                                    
 customers           852,707     (8,332)     (9,111)    (10,408)     (4,659)
HSI service                                                                 
 customers           649,165      3,786       7,518      14,631      24,803 
Telephony service                                                           
 customers           482,683      4,888      13,873      11,199      38,315 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            

-------------------------------------------------------------
-------------------------------------------------------------
                                          % of penetration(1)
                                                             
                           February 28,          February 29,
                                   2013                  2012
-------------------------------------------------------------
PSU                                                          
Television                                                   
 service                                                     
 customers                         51.4                  53.5
HSI service                                                  
 customers                         39.1                  38.3
Telephony service                                            
 customers                         29.1                  27.9
-------------------------------------------------------------
-------------------------------------------------------------
                                                             
(1)  As a percentage of homes passed.                                      

Fiscal 2013 second-quarter and first six months PSU net additions were lower than in the comparable periods of the prior year mainly as a result of service category maturity, competitive offers and tightening of our customer credit controls and processes. For the second quarter and the first six months net customer losses for Television service customers stood at 8,332 and 10,408, respectively, compared to 9,111 and 4,659 for the same periods of the prior year. Television service customer net losses are mainly due to the promotional offers of competitors for the video service combined with the tightening of our customer credit controls. Fiscal 2013 second-quarter HSI service customers grew by 3,786 compared to 7,518 in the second quarter of the prior year, and the number of net additions to the Telephony service stood at 4,888 customers compared to 13,873 customers for the same period of the prior year. For the first six months of fiscal 2013, net additions for HSI service customers stood at 14,631 and Telephony net additions at 11,199 compared to 24,803 and 38,315, respectively, for the comparable periods of the prior year. HSI and Telephony net additions continue to stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and Telephony services, and promotional activities.

OPERATING RESULTS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         Quarters ended                    Six months ended 
                     February  February          February  February         
                          28,       29,               28,       29,         
                         2013      2012  Change      2013      2012  Change 
(in thousands of                                                            
 dollars, except                                                            
 percentages)               $         $       %         $         $       % 
----------------------------------------------------------------------------
Revenue               306,173   295,451     3.6   610,988   589,130     3.7 
Operating expenses    155,870   156,753    (0.6)  312,080   316,636    (1.4)
----------------------------------------        --------------------        
Operating income                                                            
 before depreciation                                                        
 and amortization     150,303   138,698     8.4   298,908   272,494     9.7 
----------------------------------------        --------------------        
Operating margin         49.1%     46.9%             48.9%     46.3%        
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Revenue

Fiscal 2013 second-quarter revenue increased by $10.7 million, or 3.6%, to reach $306.2 million, when compared to the same period last year. For the first six months, revenue amounted to $611.0 million, an increase of 3.7% when compared to the first six months of fiscal 2012. The increases are primarily due to rate increases implemented in June and July 2012 and PSU growth.

Operating expenses

For the period ended February 28, 2013, operating expenses decreased by $0.9 million at $155.9 million. For the first six months, operating expenses amounted to $312.1 million, a decrease of 1.4% when compared to the same period of prior year. These decreases are mainly attributable to the deployment and support costs incurred in fiscal 2012 related to the migration of Television service customers from analogue to digital, partly offset by PSU growth.

Operating income before depreciation and amortization and operating margin

As a result of revenue growth exceeding operating expenses, fiscal 2013 second-quarter operating income before depreciation and amortization amounted to $150.3 million, or 8.4% higher than in the same period of the prior year. For the first six months of fiscal 2013, operating income before depreciation and amortization amounted to $298.9 million, or 9.7% higher than in the same period of the prior year. Operating margin increased to 49.1% from 46.9% when compared to fiscal 2012 second-quarter and from 46.3% to 48.9% for the first six months of fiscal 2013 when compared to prior year.

AMERICAN CABLE SERVICES

On November 30, 2012, the Corporation completed the acquisition of ABB, an independent cable system operator formed in 2003 and providing Analogue and Digital Television, as well as HSI and Telephony services. ABB operates cable systems in Western Pennsylvania, Southern Florida, Maryland, Delaware and South Carolina. Fiscal 2013 second-quarter included three month of operations of ABB.

CUSTOMER STATISTICS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                               Net additions
                                        Quarters ended      Six months ended
                        February   February   February   February   February
                             28,        28,        29,        28,        29,
                            2013       2013       2012       2013       2012
----------------------------------------------------------------------------
PSU                      501,795      7,121          -      7,121          -
Television service                                                          
 customers               247,840      3,436          -      3,436          -
HSI service customers    174,979      3,339          -      3,339          -
Telephony service                                                           
 customers                78,976        346          -        346          -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            

-------------------------------------------
-------------------------------------------
                        % of penetration(1)
                                           
                        February   February
                             28,        29,
                            2013       2012
-------------------------------------------
PSU                                        
Television service                         
 customers                  48.0          -
HSI service customers       33.9          -
Telephony service                          
 customers                  15.3          -
-------------------------------------------
-------------------------------------------
                                           
(1)  As a percentage of homes passed                                       

Fiscal 2013 second-quarter, PSU net additions stood at 7,121 of which 3,436 comes from the Television service and 3,339 from the HSI service customers. The PSU progression is stemming primarily from increases in residential HSI subscribers through additional marketing focus on bundle package offerings and increased overall demand given the higher speed offerings with the rollout of DOCIS 3.0 capabilities in 2012 to a majority of ABB's markets, as well as increased commercial HSI and Telephony growth driven by improved sales focus and resources.

OPERATING RESULTS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         Quarters ended                     Six months ended
                     February  February          February  February         
                          28,       29,               28,       29,         
                         2013      2012   Change     2013      2012   Change
(in thousands of                                                            
 dollars, except                                                            
 percentages)               $         $        %        $         $        %
----------------------------------------------------------------------------
Revenue                85,850         -        -   85,850         -        -
Operating expenses     46,629         -        -   46,629         -        -
----------------------------------------        --------------------        
Operating income                                                            
 before depreciation                                                        
 and amortization      39,221         -        -   39,221         -        -
----------------------------------------        --------------------        
Operating margin         45.7%        -%             45.7%        -%        
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Fiscal 2013 second-quarter revenue reached $85.9 million mainly as a result of (i) an increase in high-speed data revenue from continued marketing focus for this service offering driving HSI subscriber growth; (ii) an increase in Telephony revenue generated by increases in subscriber levels and an increase in commercial revenue as ABB continues to expand its non-residential customer base through targeted marketing efforts. Fiscal 2013 second-quarter operating expenses amounted to $46.6 million and operating income before depreciation and amortization reached $39.2 million, and consequently, operating margin stood at 45.7%. ABB's operating results are in line with management's expectations.

ENTERPRISE SERVICES

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         Quarters ended                     Six months ended
                     February  February          February  February         
                          28,       29,               28,       29,         
                         2013      2012   Change     2013      2012   Change
(in thousands of                                                            
 dollars, except                                                            
 percentages)               $         $        %        $         $        %
----------------------------------------------------------------------------
Revenue                37,980    22,284     70.4   61,480    44,029     39.6
Operating expenses     23,671    13,345     77.4   37,353    26,525     40.8
----------------------------------------        --------------------        
Operating income                                                            
 before depreciation                                                        
 and amortization      14,309     8,939     60.1   24,127    17,504     37.8
----------------------------------------        --------------------        
Operating margin         37.7%     40.1%             39.2%     39.8%        
----------------------------------------------------------------------------
----------------------------------------------------------------------------

OPERATING RESULTS

Revenue

Fiscal 2013 second-quarter revenue increased by $15.7 million, or 70.4%, to reach $38.0 million, when compared to the same period last year. For the first six months, revenue amounted to $61.5 million, an increase of 39.6% when compared to the first six months of fiscal 2012. The increases in revenue for both periods are primarily due to the recent acquisition of PEER 1 for one month and the organic growth of its original operations.

Operating expenses

For the second quarter of fiscal 2013, operating expenses increased by $10.3 million, or 77.4%, to $23.7 million. For the first six months, operating expenses amounted to $37.4 million, an increase of 40.8% when compared to the first six months of fiscal 2012. The increases in operating expenses for both periods are primarily due to the recent acquisition of PEER 1 and the organic growth of its original operations.

Operating income before depreciation and amortization and operating margin

As a result of revenue growth exceeding the increase in operating expenses, fiscal 2013 second-quarter operating income before depreciation and amortization increased by $5.4 million, or 60.1%, to reach $14.3 million and by $6.6 million, or 37.8%, in the first six months to reach $24.1 million, when compared to the same periods of the prior year. Operating margin decreased to 37.7% from 40.1% in the second quarter and to 39.2% from 39.8% for first six months compared to the comparable periods of fiscal 2012 as a result of lower margins business activities from PEER 1.

FISCAL 2013 FINANCIAL GUIDELINES

Giving effect to the recent acquisition of PEER 1 on January 31, 2012, the Corporation revised its financial guidelines for the 2013 fiscal year issued on January 14, 2013 to include a seven-month period of PEER 1's financial projections. Management expects revenue to reach $1.70 billion, representing a growth of $105 million, or 6.6%, when compared to those issued on January 14, 2013. Operating income before depreciation and amortization should increase by $32 million to reach $767 million reflecting the PEER 1 acquisition. However, operating margin should decrease from 46.2% to 45.2% as a result of lower margins business activities from PEER 1. Depreciation and amortization of property, plant and equipment and intangible assets should increase from $330 million to $368 million and acquisition of property, plant and equipment, intangible and other assets should increase by $31 million to take into consideration the PEER 1 seven-month operations. Financial expense should amount to $113 million, an increase of $17 million, as a result of the cost of financing related to the PEER 1 acquisition. Fiscal 2013 free cash flow is expected to amount to $145 million, a decrease of $25 million, or 14.7%, when compared to the free cash flow projection issued on January 14, 2013 as a result of acquisitions of property, plant and equipment, intangible and other assets exceeding cash flow generated by PEER 1, additional integration, restructuring and acquisition costs of $9 million as well as additional financial expense of $17 million both related to PEER 1. Profit for the year is expected to amount to $205 million, $20 million lower than the January 14, 2013 projections, mainly as a result of the PEER 1's expected financial results for the seven-month operations.

Fiscal 2013 revised financial guidelines are as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                             Revised                Revised 
                                         projections            projections 
(in millions of dollars,              April 10, 2013       January 14, 2013 
 except net customer additions           Fiscal 2013            Fiscal 2013 
 and operating margin)                             $                      $ 
----------------------------------------------------------------------------
Financial guidelines                                                        
  Revenue                                      1,695                  1,590 
  Operating income before                                                   
   depreciation and                                                         
   amortization                                  767                    735 
  Operating margin                              45.2%                  46.2%
  Integration, restructuring                                                
   and acquisition costs                          16                      7 
  Depreciation and                                                          
   amortization                                  368                    330 
  Financial expense                              113                     96 
  Current income tax expense                      92                     92 
  Profit for the year                            205                    225 
  Acquisitions of property,                                                 
   plant and equipment,                                                     
   intangible and other assets                   401                    370 
  Free cash flow(1)                              145                    170 
Net customer addition                                                       
 guidelines                                                                 
  PSU growth                                  35,000                 35,000 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
 (1) Free cash flow is calculated as operating income before depreciation  
     and amortization less integration, restructuring and acquisition      
     costs, financial expense, current income tax expense and acquisitions 
     of property, plant and equipment, intangible and other assets.        

CONTROLS AND PROCEDURES

The President and Chief Executive Officer ("CEO") and the Senior Vice President and Chief Financial Officer ("CFO"), together with Management, are responsible for establishing and maintaining adequate disclosure controls and procedures and internal controls over financial reporting, as defined in National Instrument 52-109. Cogeco Cable's internal control framework is based on the criteria published in the report Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

The CEO and CFO, supported by Management, evaluated the design of the Corporation's disclosure controls and procedures and internal controls over financial reporting as of February 28, 2013, and have concluded that they are adequate. Furthermore, no significant changes to the internal controls over financial reporting occurred during the quarter ended February 28, 2013, except as described below with respect to ABB and PEER 1.

On November 30, 2012, the Corporation completed the acquisition of ABB and, subsequently on January 31, 2013 and on April 3, 2013, the Corporation acquired 100% of the issued and outstanding shares of PEER 1. Due to the short period of time between those acquisition dates and the certification date on April 10, 2013, management was unable to complete its review of the design of Internal Controls Over Financial Reporting ("ICFR") for the newly acquired corporations. At February 28, 2013, risks were however mitigated as management was fully apprised of any material events affecting these recent acquisitions. In addition, all the assets and liabilities acquired were valued and recorded in the condensed interim consolidated financial statements as part of the preliminary purchase price allocation process and both ABB and PEER 1 results of operations were also included in the Corporation's consolidated results. ABB constitutes 11% of revenue, 7% of profit of the period, 33% of the total assets, 19% of the current assets, 33% of the non current assets, 12% of the current liabilities and 25% of the non current liabilities of the consolidated condensed interim financial statements for the six-month period ended February 28, 2013. PEER 1 constitutes 2% of revenue, -6% of profit of the period, 15% of the total assets, 20% of the current assets, 15% of the non current assets, 10% of the current liabilities and 2% of the non current liabilities of the consolidated condensed interim financial statements for the six-month period ended February 28, 2013. In the upcoming quarters, management will complete its review of the design of ICFR for ABB and PEER 1 and assess its effectiveness. The business combinations of fiscal 2013 under the "Cash flow analysis" section of this MD&A presents summary financial information about the preliminary purchase price allocation, assets acquired and liabilities assumed as well as other financial information about ABB and PEER 1 business impact on the consolidated results of the Corporation. Other financial information can be found in the Business Acquisition Report filed by the Corporation on www.sedar.com, on February 13, 2013.

UNCERTAINTIES AND MAIN RISK FACTORS

The uncertainties and main risk factors faced by the Corporation have not changed significantly for its Canadian cable services since August 31, 2012, except for the proposed Astral/Bell amended Arrangement Agreement described below. In addition, risks and uncertainties have been updated to reflect the recent acquisitions of ABB and PEER 1. A detailed description of the uncertainties and main risk factors faced by Cogeco Cable can be found in the 2012 Annual Report filed on SEDAR, available at www.sedar.com.

In Canada, following the denial by the CRTC on October 18, 2012 of an application by BCE Inc. ("Bell") to acquire Astral Media Inc. ("Astral"), Astral and Bell amended their Arrangement Agreement with a view to submitting a revised proposal to the CRTC for approval of Bell's acquisition of Astral. The closing date of the proposed transaction was extended to June 1, 2013, with Astral and Bell having a further right to postpone the closing date to July 31, 2013. On March 4, 2013, the Commissioner of Competition and Bell announced the signing of a consent agreement and the filing thereof with the Competition Tribunal. The consent agreement provides conditional clearance for the proposed transaction under the Competition Act subject to, inter alia, the divestiture by Bell of Astral's joint venture ownership interests in certain television services and its ownership interest in certain additional French-language television services. Also on March 4, 2013, Bell announced that it had concluded an agreement to sell the Astral joint venture ownership interests as well as two Ottawa FM radio stations to Corus Entertainment Inc. ("Corus"), and that it was putting up for sale the remaining properties to be divested and 8 additional English-language radio stations through an auction process. The sale of the joint venture properties to Corus was approved by the Commissioner of Competition on March 15, 2013. In Management's view, if it is ultimately approved by the CRTC, the proposed transaction, as revised, would still significantly increase the level of vertical integration in the Canadian broadcasting and communications industries and leave the opportunity as well as an incentive for Bell to abuse its dominant position in the supply of programming for distribution in the downstream broadcasting distribution market in Canada by non-vertically integrated distributors such as Cogeco Cable. Bell would end up controlling over forty percent (40 %) of Cogeco Cable's programming service affiliation payments at current wholesale rates. The Corporation's businesses and results of operations could thus be adversely affected in the future as affiliation agreements need to be renewed with Bell. In the event of future disputes concerning the terms of affiliation between Cogeco Cable and Bell for services controlled by Bell, the CRTC may however set such terms at either party's request following a dispute resolution process, and the services may not be interrupted by either party while such dispute resolution process is pending.

Uncertainties and risks subsequent to the acquisitions of PEER 1 or ABB

The Corporation acquired PEER 1 and ABB with the expectation that the combination of its businesses and each of PEER 1 and ABB would result in greater long-term potential and value creation than the individual corporations could achieve on their own. These anticipated benefits will depend in part on whether the operations, systems, management and cultures of each of the Corporation's other businesses and those of PEER 1 and ABB can be combined in an effective manner and in part on whether the presumed bases for the combination produce the benefits anticipated. Most operational and strategic decisions, and certain staffing decisions, with respect to the combined entity have not yet been made and may not have been fully identified at this time.

There can be no assurance that the integration of the Corporation's capital investment optimization and equipment purchases with those of PEER 1 and ABB will be timely or effectively accomplished, or ultimately will be successful in achieving the anticipated benefits. The integration process may lead to greater than expected operating costs, customer loss and business disruption for Cogeco Cable's other businesses, PEER 1, ABB or the combined businesses. Similarly, the integration process that may adversely affect the ability of the combined businesses to realize the anticipated benefits of the combination or may materially and adversely affect the Corporation's, PEER 1's, ABB's or the combined entity's businesses, results of operations and/or financial condition.

There may be liabilities and contingencies that Cogeco Cable did not discover in its due diligence review prior to consummation of the PEER 1 and ABB acquisitions and the Corporation may not be indemnified for these liabilities and contingencies. The discovery of any material liabilities or contingencies relating to the business of PEER 1 or ABB following the acquisitions could have a material adverse effect on the Corporation's businesses, financial condition and results of operations.

The Corporation currently intends to retain key personnel of PEER 1 and ABB to continue to manage and operate each of PEER 1 and ABB. Cogeco Cable will compete with other potential employers for employees, and may not be successful in keeping the services of executives and other employees that PEER 1 or ABB need. The failure of key personnel to remain as part of the management team of PEER 1 and ABB in the period following the PEER 1 and ABB acquisitions could have a material adverse effect on the Corporation's businesses, financial condition and results of operations.

Risks pertaining to markets and competition

In the US, the competition is fragmented and varies by geographical area. ABB's principal competitor for video services is Direct Broadcast Satellite ("DBS") and its principal competitor for High Speed Data ("HSD") services is Direct Subscriber Line ("DSL"). Intensive marketing efforts and aggressive pricing from its competitors and an increase in the presence of local telephone companies and electric utilities competing in its market may have an adverse impact on the Corporation's ability to retain customers. Cogeco Cable's phone service faces competition from the local incumbent local exchange carriers ("ILEC"), as well as other providers such as cellular and Voice over Internet Protocol ("VoIP") providers such as Vonage.

In the US, ABB also currently faces competition from over-the-top services such as Netflix, Google TV, and Apple TV, Hulu and Samsung, which are gaining increased interest by consumers. The availability of these services could cause customers to view television content through their broadband connection rather than through their traditional cable television subscription services, and view less on-demand television content on the video-on-demand ("VOD") or subscription-video-on-demand ("SVOD") platforms of cable television service providers. We may not be able to make up for the loss of revenue associated with this migration.

PEER 1's risks pertaining to markets and competition are similar to Cogeco Data Services risks which can be found in the 2012 Annual Report.

Risk pertaining to Third-Party Service Suppliers

In the US, ABB also depends on third-party suppliers and providers, such as Motorola and Cisco for certain specialized services, hardware and equipment that are critical to their operations. These materials and services include set-top boxes, telephony, cable and telephony modems, servers and routers, fiber-optic cable, telephony switches, inter-city links, support structures, software, the "backbone" telecommunications network for the Internet access and telephony services, and construction services for expansion and upgrades of the cable and telephony networks. These services and equipment are available from a limited number of suppliers.

In addition, ABB depends on third-party plant construction contractors in areas of new homes growth. If no supplier can provide ABB with the equipment or services that it require or that comply with evolving internet and telecommunications standards or that are compatible with ABB's other equipment and software, ABB's cable services businesses, financial condition and results of operations could be materially adversely affected. In addition, if ABB is unable to obtain critical equipment, software, services or other items on a timely basis and at an acceptable cost, its ability to offer its products and services and roll out its advanced services may be delayed, and ABB's businesses, financial condition and results of operations could be materially adversely affected.

In recent years, the US cable industry has experienced a rapid escalation in the cost of programming, particularly sports programming and retransmission of broadcast programming. This escalation may continue, and ABB may not be able to pass programming cost increases on to its customers. The inability to pass these programming cost increases on to its customers would have an adverse impact on ABB's cash flow and operating margins. As ABB upgrades the channel capacity of its systems and adds programming to its basic, expanded basic and digital service offerings, ABB may face additional market constraints on its ability to pass programming costs on to its customers. The inability to pass these costs increases on to its customers could materially adversely affect ABB's profitability. ABB is also subject to increasing financial and other demands by broadcasters to obtain the required consent for the transmission of broadcast programming to its subscribers.

Financial risks - currency

Most of the Corporation's financial results are reported in Canadian dollars and a significant portion of its sales and operating costs are realized in currencies other than Canadian dollars, most often US dollars, Euros and pounds sterling. For the purposes of financial reporting, any change in the value of the Canadian dollar against the US dollar or pounds sterling during a given financial reporting period would result in a foreign exchange gain or loss on the translation of any unhedged foreign currency denominated debt into Canadian dollars. Consequently, Cogeco Cable reported earnings and indebtedness could fluctuate materially as a result of foreign-exchange gains or losses. Significant fluctuations in relative currency values against the Canadian dollar could therefore have a significant impact on the Corporation's future profitability.

Risk pertaining to leased facilities

Most of PEER 1's data centers are located in leased premises, and there can be no assurance that PEER 1 will remain in compliance with its leases and that they will not be terminated or can be renewed at commercially reasonable terms. Termination of a lease could have a material impact on its businesses, results of operations and financial condition.

Regulatory risks - US

US federal, state and local governments extensively regulate the video services industry and may increase the regulation of the Internet services and VoIP phone industries. Current regulation of the cable industry imposes administrative and operational expenses and may limit the revenues of cable systems. Cable operators are subject to, among other things:

--  subscriber privacy regulations; 
--  limited rate regulation; 
--  requirements that, under specified circumstances, a cable system carry a
    local broadcast station or obtain consent to carry a local or distant
    broadcast station; 
--  rules for franchise renewals and transfers; 
--  regulations concerning the content of programming offered to
    subscribers; 
--  the manner in which program packages are marketed to subscribers; 
--  the use of cable system facilities by local franchising authorities, the
    public and unrelated entities; 
--  cable system ownership limitations and program access requirements; 
--  payment of franchise fees to local franchising authorities; 
--  payment of federal universal service assessments for any end user
    revenues from interstate and international telecommunications services
    and telecommunications provided to a third party for a fee, and other
    state and federal telecommunications fees; and 
--  regulations governing other requirements covering a variety of
    operational areas such as equal employment opportunity, technical
    standards and customer service requirements. 

Further US regulation could give rise to increases in cable rates. The Federal Communications Commission ("FCC") and the US Congress continue to be concerned that cable rate increases are exceeding inflation and as a result it is possible that either the FCC or the US Congress will restrict the ability of cable system operators to implement rate increases. If ABB is unable to raise its rates in response to increasing costs, its financial condition and results of operations could be materially adversely affected.

In addition, ABB could be materially disadvantaged if it remains subject to legal and regulatory constraints that do not apply equally to its competitors. The FCC recently adopted rules to ensure that the local franchising process does not unreasonably interfere with competitive entry, and several states have enacted legislation to ease the franchising obligations of new entrants. These changes in regulation by the FCC and several states will benefit ABB's competitors. In addition, both the Congress and the FCC are considering various forms of "network neutrality" regulation which may have the impact of restricting ABB's ability to manage its network efficiently.

Human Resources

As of February 28, 2013, approximately 26.8% of ABB's employees are represented by several unions under collective bargaining agreements. ABB can neither predict the outcome of current or future negotiations relating to labor disputes, union representation or renewal of collective bargaining agreements, nor be able to avoid future work stoppages, strikes or other forms of labor protests pending the outcome of any current or future negotiations. A prolonged work stoppage, strike or other form of labor protest could have a material adverse effect on its businesses, operations and reputation. Even if ABB does not experience strikes or other forms of labor protests, the outcome of labor negotiations could adversely affect its businesses and results of operations. In addition, its ability to make short-term adjustments to control compensation and benefits costs is limited by the terms of its collective bargaining agreements.

ABB's and PEER 1's success are substantially dependent upon the retention and the continued performance of their executive officers. Many of these executive officers are uniquely qualified in their areas of expertise, making it difficult to replace their services. The loss of the services of any of these officers could adversely affect Cogeco Cable's growth, financial condition and results of operations. In addition, to implement and manage its businesses and operating strategies effectively, ABB and PEER 1 must maintain a high level of efficiency, performance and content quality, continue to enhance its operational and management systems, and continue to effectively attract, train, motivate and manage its employees. If ABB and PEER 1 are not successful in their efforts, it may have a material adverse effect on the Corporation's businesses, prospects, results of operations and financial condition.

FUTURE ACCOUNTING DEVELOPMENTS IN CANADA

A number of new standards, interpretations and amendments to existing standards were issued by the International Accounting Standard Board ("IASB") that are mandatory but not yet effective for the period ended February 28, 2013 and have not been applied in preparing the condensed interim consolidated financial statements. These standards are described under "Future accounting developments in Canada" in the Corporation's 2012 annual MD&A, available at www.sedar.com and www.cogeco.ca.

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in Cogeco Cable's accounting policies, estimates and future accounting pronouncements since August 31, 2012. A description of the Corporation's policies and estimates can be found in the 2012 Annual Report, available at www.sedar.com and www.cogeco.ca.

NON-IFRS FINANCIAL MEASURES

This section describes non-IFRS financial measures used by Cogeco Cable throughout this MD&A. It also provides reconciliations between these non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. These measures include "cash flow from operations", "free cash flow", "operating income before depreciation and amortization" and "operating margin".

CASH FLOW FROM OPERATIONS AND FREE CASH FLOW

Cash flow from operations is used by Cogeco Cable's management and investors to evaluate cash flows generated by operating activities, excluding the impact of changes in non-cash operating activities, amortization of deferred transaction costs and discounts on long-term debt, income taxes paid, current income tax expense, financial expense paid and financial expense. This allows the Corporation to isolate the cash flows from operating activities from the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the non-IFRS measure, "free cash flow". Free cash flow is used, by Cogeco Cable's management and investors, to measure its ability to repay debt, distribute capital to its shareholders and finance its growth.

The most comparable IFRS measure is cash flow from operating activities. Cash flow from operations is calculated as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Quarters ended          Six months ended 
                        February 28, February 29, February 28, February 29, 
                                2013         2012         2013         2012 
(in thousands of                                                            
 dollars)                          $            $            $            $ 
----------------------------------------------------------------------------
Cash flow from operating                                                    
 activities                  150,084      120,961      149,804      134,768 
Changes in non-cash                                                         
 operating activities         (4,931)      (3,179)      76,182       59,489 
Amortization of deferred                                                    
 transaction costs and                                                      
 discounts on long-term                                                     
 debt                          2,723          682        3,463        1,357 
Income taxes paid             17,475       17,635       60,008       53,817 
Current income tax                                                          
 expense                     (23,027)     (26,206)     (48,118)     (45,696)
Financial expense paid        27,285        9,517       43,715       29,547 
Financial expense            (29,094)     (14,788)     (44,694)     (31,617)
----------------------------------------------------------------------------
Cash flow from                                                              
 operations                  140,515      104,622      240,360      201,665 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Free cash flow is calculated as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Quarters ended          Six months ended 
                        February 28, February 29, February 28, February 29, 
                                2013         2012         2013         2012 
(in thousands of                                                            
 dollars)                          $            $            $            $ 
----------------------------------------------------------------------------
Cash flow from                                                              
 operations                  140,515      104,622      240,360      201,665 
Acquisition of property,                                                    
 plant and equipment         (99,940)     (83,588)    (178,132)    (156,927)
Acquisition of                                                              
 intangible and other                                                       
 assets                       (4,493)      (2,646)      (9,134)      (6,590)
----------------------------------------------------------------------------
Free cash flow                36,082       18,388       53,094       38,148 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING MARGIN

Operating income before depreciation and amortization is used by Cogeco Cable's management and investors to assess the Corporation's ability to seize growth opportunities in a cost effective manner, to finance its ongoing operations and to service its debt. Operating income before depreciation and amortization is a proxy for cash flows from operations excluding the impact of the capital structure chosen, and is one of the key metrics used by the financial community to value the business and its financial strength. Operating margin is a measure of the proportion of the Corporation's revenue which is available, before income taxes, to pay for its fixed costs, such as interest on Indebtedness. Operating margin is calculated by dividing operating income before depreciation and amortization by revenue.

The most comparable IFRS financial measure is operating income. Operating income before depreciation and amortization and operating margin are calculated as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Quarters ended          Six months ended 
                        February 28, February 29, February 28, February 29, 
                                2013         2012         2013         2012 
(in thousands of                                                            
 dollars, except                                                            
 percentages)                      $            $            $            $ 
----------------------------------------------------------------------------
Operating income             103,721       59,491      178,881      126,490 
Depreciation and                                                            
 amortization                 84,591       84,252      149,257      149,076 
Integration,                                                                
 restructuring and                                                          
 acquisitions costs            7,464            -       14,764            - 
----------------------------------------------------------------------------
Operating income before                                                     
 depreciation and                                                           
 amortization                195,776      143,743      342,902      275,566 
----------------------------------------------------------------------------
Revenue                      429,672      317,735      757,583      633,159 
----------------------------------------------------------------------------
Operating margin                45.6%        45.2%        45.3%        43.5%
----------------------------------------------------------------------------
----------------------------------------------------------------------------

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended             February 28,  February 29,          November 30, 
(in thousands of dollars,                                                   
 except percentages and per                                                 
 share data)                       2013          2012       2012       2011 
                                      $             $          $          $ 
----------------------------------------------------------------------------
Revenue                         429,672       317,735    327,911    315,424 
Operating income before                                                     
 depreciation and                                                           
 amortization                   195,776       143,743    147,126    131,823 
Operating margin                   45.6%         45.2%      44.9%      41.8%
Operating income                103,721        59,491     75,160     66,999 
Income taxes                     16,169        13,617     17,400     10,603 
Profit for the period from                                                  
 continuing operations           58,458        31,086     42,160     39,567 
Profit (loss) for the                                                       
 period from discontinued                                                   
 operations                           -        52,047          -      3,399 
Profit (loss) for the                                                       
 period                          58,458        83,133     42,160     42,966 
Profit (loss) for the                                                       
 period attributable to                                                     
 owners of the Corporation       58,660        83,133     42,160     42,966 
Cash flow from operating                                                    
 activities                     150,084       120,961       (280)    13,807 
Cash flow from operations       140,515       104,622     99,845     97,043 
Acquisitions of property,                                                   
 plant and equipment,                                                       
 intangible and other                                                       
 assets                         104,433        86,234     82,833     77,283 
Free cash flow                   36,082        18,388     17,012     19,760 
Earnings (loss) per                                                         
 share(1)                                                                   
  From continuing and                                                       
   discontinued operations                                                  
    Basic                          1.20          1.71       0.87       0.88 
    Diluted                        1.19          1.70       0.86       0.88 
  From continuing                                                           
   operations                                                               
    Basic                          1.20          0.64       0.87       0.81 
    Diluted                        1.19          0.63       0.86       0.81 
  From discontinued                                                         
   operations                                                               
    Basic                             -          1.07          -       0.07 
    Diluted                           -          1.06          -       0.07 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            

------------------------------------------------------------------------
------------------------------------------------------------------------
Quarters ended                        August 31,                May 31, 
(in thousands of dollars,                                               
 except percentages and per                                             
 share data)                     2012       2011       2012        2011 
                                    $          $          $           $ 
------------------------------------------------------------------------
Revenue                       324,768    305,811    319,771     298,211 
Operating income before                                                 
 depreciation and                                                       
 amortization                 160,825    151,579    152,661     138,147 
Operating margin                 49.5%      49.6%      47.7%       46.3%
Operating income               94,709     97,941     90,981      86,995 
Income taxes                   32,987     20,713     21,449      18,747 
Profit for the period from                                              
 continuing operations         45,705     62,745     53,159      52,352 
Profit (loss) for the                                                   
 period from discontinued                                               
 operations                         -      6,219          -    (233,573)
Profit (loss) for the                                                   
 period                        45,705     68,964     53,159    (181,221)
Profit (loss) for the                                                   
 period attributable to                                                 
 owners of the Corporation     45,705     68,964     53,159    (181,221)
Cash flow from operating                                                
 activities                   203,343    211,847    112,275     142,009 
Cash flow from operations     126,946    144,699    113,075     125,923 
Acquisitions of property,                                               
 plant and equipment,                                                   
 intangible and other                                                   
 assets                       124,392    120,663     87,459      62,782 
Free cash flow                  2,554     24,036     25,616      63,141 
Earnings (loss) per                                                     
 share(1)                                                               
  From continuing and                                                   
   discontinued operations                                              
    Basic                        0.94       1.42       1.09       (3.73)
    Diluted                      0.93       1.42       1.09       (3.73)
  From continuing                                                       
   operations                                                           
    Basic                        0.94       1.29       1.09        1.08 
    Diluted                      0.93       1.29       1.09        1.08 
  From discontinued                                                     
   operations                                                           
    Basic                           -       0.13          -       (4.80)
    Diluted                         -       0.13          -       (4.80)
------------------------------------------------------------------------
------------------------------------------------------------------------
                                                                        
(1)  Per multiple and subordinate voting share.                            

SEASONAL VARIATIONS

Cogeco Cable's operating results are not generally subject to material seasonal fluctuations except as follows. The customer growth in the Television service customers and HSI service are generally lower in the second half of the fiscal year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of the television season, and students leaving their campuses at the end of the school year. Cogeco Cable offers its services in several university and college towns such as Kingston, Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivieres and Rimouski in Canada. Furthermore, the third and fourth quarter's operating margin is usually higher as no management fees are paid to COGECO Inc. Under the Management Agreement, Cogeco Cable pays a fee equal to 2% of its total revenue subject to a maximum amount. As the maximum amount has been reached in the second quarter of fiscal 2013, Cogeco Cable will not pay management fees in the second half of fiscal 2013. Similarly, as the maximum amount was paid in the first six months of fiscal 2012, Cogeco Cable paid no management fees in the second half of the previous fiscal year.

ADDITIONAL INFORMATION

This MD&A was prepared on April 10, 2013. Additional information relating to the Corporation, including its Annual Information Form, is available on the SEDAR website at www.sedar.com.

/s/ Jan Peeters                 /s/ Louis Audet                             
------------------------------  --------------------------------------------
Jan Peeters                     Louis Audet                                 
Chairman of the Board           President and Chief Executive Officer       
                                                                            
Cogeco Cable Inc.                                                           
Montreal, Quebec                                                            
April 10, 2013                                                              

CUSTOMER STATISTICS

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                      February   November                          February 
                           28,        30, August 31,    May 31,         29, 
                          2013       2012       2012       2012        2012 
----------------------------------------------------------------------------
Primary service                                                             
 units(1)            2,486,350  2,478,887  1,969,133  1,962,174   1,955,928 
CANADA               1,984,555  1,984,213  1,969,133  1,962,174   1,955,928 
US                     501,795    494,674          -          -           - 
----------------------------------------------------------------------------
Television service                                                          
 customers           1,100,547  1,105,443    863,115    868,873     873,326 
CANADA                 852,707    861,039    863,115    868,873     873,326 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   51.4%      52.1%      52.4%      52.9%       53.5%
US                     247,840    244,404          -          -           - 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   48.0%      47.4%         -          -           - 
----------------------------------------------------------------------------
Digital Television                                                          
 service customers     922,703    922,623    771,503    765,585     752,642 
CANADA                 778,728    780,724    771,503    765,585     752,642 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   46.9%      47.2%      46.8%      46.6%       46.1%
US                     143,975    141,899          -          -           - 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   27.9%      27.5%         -          -           - 
----------------------------------------------------------------------------
Analogue Television                                                         
 service customers     177,844    182,820     91,612    103,288     120,684 
CANADA                  73,979     80,315     91,612    103,288     120,684 
Penetration as a                                                            
 percentage of homes                                                        
 passed                    4.5%       4.9%       5.6%       6.3%        7.4%
US                     103,865    102,505          -          -           - 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   20.1%      19.9%         -          -           - 
----------------------------------------------------------------------------
High Speed Internet                                                         
 service customers     824,144    817,019    634,534    628,852     626,017 
CANADA                 649,165    645,379    634,534    628,852     626,017 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   39.1%      39.0%      38.5%      38.3%       38.3%
US                     174,979    171,640          -          -           - 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   33.9%      33.3%         -          -           - 
----------------------------------------------------------------------------
Telephony service                                                           
 customers             561,659    556,425    471,484    464,449     456,585 
CANADA                 482,683    477,795    471,484    464,449     456,585 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   29.1%      28.9%      28.6%      28.3%       27.9%
US                      78,976     78,630          -          -           - 
Penetration as a                                                            
 percentage of homes                                                        
 passed                   15.3%      15.2%         -          -           - 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1)  Represents the sum of Television, High Speed Internet ("HSI") and     
     Telephony service customer.                                           

ABOUT COGECO CABLE

Cogeco Cable (www.cogeco.ca) is a telecommunications corporation and is the11th largest hybrid fibre coaxial cable operator in North America operating in Canada under the Cogeco Cable brand name in Quebec and Ontario, and in the United States through its subsidiary Atlantic Broadband in Western Pennsylvania, South Florida, Maryland, Delaware and South Carolina. Its two-way broadband cable networks provide to its residential and small business customers Analogue and Digital Television, High Speed Internet ("HSI") and Telephony services. Through its subsidiaries Cogeco Data Services and PEER 1 Hosting, Cogeco Cable provides its commercial customers a suite of IT hosting, information and communications technology services (Data Centre, Co-location, Managed Hosting, Cloud Infrastructure and Connectivity), with 23 data centres, extensive fibre networks in Montreal and Toronto as well as points-of-presence in North America and Europe. Cogeco Cable's subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CCA). For more information about Cogeco Cable and its subsidiaries visit www.cogeco.ca, cogecodata.com, peer1.com and peer1hosting.co.uk.

                                                                           
Analyst Conference Call: Thursday, April 11, 2013 at 11:00 a.m. (Eastern   
                         Daylight Time)                                    
                         Media representatives may attend as listeners     
                         only.                                             
                                                                           
                         Please use the following dial-in number to have   
                         access to the conference call by dialing five     
                         minutes before the start of the conference:       
                                                                           
                         Canada/USA Access Number: 1 866-322-8032          
                         International Access Number: + 1 416-640-3406     
                         Confirmation Code: 4371097                        
                         By Internet at www.cogeco.ca/investors            
                                                                           
                         A rebroadcast of the conference call will be      
                         available until July 11, 2013, by dialing:        
                                                                           
                         Canada and US access number: 1 888-203-1112       
                         International access number: + 1 647-436-0148     
                         Confirmation code: 4371097                        

Contacts:
Source:
Cogeco Cable Inc.
Pierre Gagne
Senior Vice President and Chief Financial Officer
514-764-4700

Information:
Media
Rene Guimond
Vice-President, Public Affairs and Communications
514-764-4700

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