STRONG FIRST QUARTER RESULTS FOR COGECO CABLE

PRESS RELEASE

For immediate release

Montréal, January 9, 2008 – Today, Cogeco Cable Inc. (TSX: CCA) announced its financial results

for the first quarter ended November 30, 2007.

First quarter 2008 consolidated results show sustained growth:

• Revenue increased by 13.4% to $251.8 million;

• Operating income before amortization grew by 17.5% to reach $98.3 million;

• Net income amounted to $20.4 million up by 62.4%;

• Free cash flow

(1)

reached $21.6 million;

• Operating margin grew from 37.7% to 39%;

• Revenue-generating units (RGUs)

(2)

reached 2,568,689 with 83,024 net additions.

“Cogeco Cable is in an excellent position to achieve superior growth in 2008. Cogeco Cable

continues to enhance the features of its services, to attract new customers and to sell additional

services to existing customers, thanks to its versatile delivery system,” said Louis Audet, President

and CEO of Cogeco Cable.

Free cash flow does not have standa rd definitions prescribed by Canadian generally accepted accounting principles (GAAP) and should be treated

accordingly. For more details, please consult the “non-GAAP financial measures” section.

Represent the sum of Basic Cable, High Speed internet (HSI), Digital Television and Telephony service customers.

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FINANCIAL HIGHLIGHTS

Quarters ended November 30,

(unaudited)

($000s, except percentages and per share data)

2007 2006

Change

Revenue $

251,833 $ 222,002 13.4

Operating income before amortization

98,337 83,662 17.5

Net income 20,363 12,535 62.4

Cash flow from operations

(1)

79,753 62,060 28.5

Less:

Capital expenditures and increase in deferred charges 58,144 74,383 (21.8)

Free cash flow

(1)

21,609 (12,323) -

Per share data

Basic net income $

0.42 $ 0.31 35.5

(1)

Cash flow from op erations and free cash flow do not have standard def initions prescribed by Canadian generally accepte d accounting principles

(GAAP) and should be treated accordingly. For more details, please consult the “non-GAAP financial measures” section.

FORWARD-LOOKING STATEMENT

Certain statements in this press release may constitute forward-looking information within the meaning of

securities laws. Forward-looking information may relate to our future outlook and anticipated events, our

business, our operations, our financial performance, our financial condition or our 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 our future operating results and economic

performance and our 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 we believe are reasonable as of the current date. While we consider these

assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.

Forward-looking information is also subject to certain factors, including risks and uncertainties (described in

“Uncertainties and main risk factors” of the Corporation’s 2007 annual MD&A that could cause actual results to

differ materially from what we currently expect. These factors include technological changes, changes in

market and competition, governmental or regulatory developments, general economic conditions, the

development of new products and services, the enhancement of existing products and services, and the

introduction of competing products having technological or other advantages, many of which are beyond our

control. Therefore, future events and results may vary significantly from what we currently foresee. You should

not place undue importance on forward-looking information and should not rely upon this information as of any

other date. While we may elect to, we are under no obligation (and expressly disclaim any such obligation) and

do not undertake to update or alter this information before next qua rter.

This analysis should be read in conjunction with the Corporation’s financial statements, and the notes thereto,

prepared in accordance with Canadian GAAP and the MD&A included in the Corporation’s 2007 Annual

Report. Throughout this discussion, all amounts are in Canadian dollars unle ss otherwise indicated.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

CORPORATE STRATEGIES AND OBJECTIVES

Cogeco Cable’s objectives are to improve profitability and create shareholder value. The strategies

for reaching those objectives are constant corporate growth through the diversification and the

improvement of products and services as well as clientele and territories; the continuous

improvement of networks and equipment; and tight cost control over business processes. The

Corporation measures its performance, with regard to these objectives, by monitoring revenue

growth, RGU

growth and free cash flow

. Below are the recent achievements in furtherance of

Cogeco Cable’s objectives.

Continuous improvement of the service offering and expansion of the customer base

Canadian operations

• Digital Television services:

o September 4, launch of the Setanta International Sports Pak in Ontario, a new

premium digital service;

o October 2, launch of RDS HD in Québec, a speciality channel transmitting in High

Definition (“HD”) various sports events, including all Montreal Canadians hockey

games;

o October 11, launch of Leafs TV HD, a Canadian digital specialty sports channel in HD

transmitting all Toronto Maple Leafs hockey team games;

o October 31, launch of Mpix On Demand in Ontario;

o December 5, launch of the Motorola DCT3080, a new digital video recorder (DVR)

model in Quebec.

• Telephony service:

o September 25, new International calling service with a supplier of choice in Québec

and Ontario;

• HSI services:

ο November 7, launch of Wi-Fi into Kingston and Windsor.

Portuguese operations

• Cabovisão

- Televisão por Cabo, S.A. (Cabovisão) continued its Digital Television service

deployment;

• New image and communication concept: Cabovisão, infinite possibilities.

Continuous improvement of networks and equipment

• During the first quarter of 2008, the Corporation has invested approximately $21.7 million in

its infrastructure including headends and network upgrade / rebuild.

Tight control over costs, business processes

• On September 5

, a new management structure was implemented that will enable Canadian

operations to develop better synergies and therefore have a positive impact on the way

Cogeco Cable delivers its services.

• For the first quarter 2008, operating costs, excluding management fees, increased by 10.9%,

compared to a revenue growth of 13.4% during this period;

See the “Customer statistics” section for detailed explanations.

See the “non-GAAP financial measures” section for explanations.

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• The design of internal controls over financial reporting as per National Instrument 52-109 is

still underway. As discussed in the 2007 annual MD&A, the Corporation had identified certain

material weaknesses in the design of internal controls over financial reporting and there have

been improvements in the design of internal controls on some significant processes during

the quarter. The documentation and remediation of internal controls weaknesses are

progressing normally.

RGU growth

During the first quarter 2008, the consolidated number of RGUs increased by 3.3% to reach over

2.5 million units. The Corporation is expecting an annual RGU growth of approximately 10% and is

maintaining its guidelines.

Revenue growth

During the first quarter 2008, revenue increased by $29.8 million, or 13.4%, to reach $251.8 million,

mainly due to RGU growth and rate increases implemented in Canada in fiscal 2007. In its 2008

financial guidelines, the Corporation has anticipated a revenue growth of approximately 12% and is

on the way to achieving its objectives.

Free cash flow

In the first quarter of fiscal 2008, Cogeco Cable generated free cash flow of $21.6 million, compared

to a negative free cash flow of $12.3 million for the same period last year. This increase results from

several factors: an increase in operating income before amortization, a decrease in capital

expenditures and deferred charges and a reduction in financial expense. The Corporation reduced its

capital expenditures compared to last year by $16.5 million from $67.2 million to $50.7 million, mainly

due to a $12 million expenditure in the first quarter of fiscal 2007 for the purchase of home terminal

devices for the Canadian operations to build an inventory to sustain last year RGU growth.

OPERATING RESULTS – CONSOLIDATED OVERVIEW

Quarters ended November 30,

(unaudited)

($000s, except percentages)

2007

2006

Change

Revenue $

251,833 $

222,002 13.4

Operating costs 148,461 133,900 10.9

Management fees - COGECO Inc.

5,035

4,440

13.4

Operating income before amortization

98,337

83,662

17.5

Operating margin 39.0 %

37.7 %

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Revenue

In the first quarter of fiscal 2008, consolidated revenue grew by $29.8 million, or 13.4%, to reach

$251.8 million. Canadian operations revenue, driven by an increased number of RGUs combined

with rate increases, went up by $28.3 million, or 16.9%, in the first quarter 2008. Portuguese

operations revenue amounted to $55.6 million, an increase of $1.5 million, or 2.8% compared to the

same period last year due to RGU growth and rate increases which was partly offset by the streng th

of the Canadian dollar against the euro.

Operating costs

In the first quarter of fiscal 2008, operating costs excluding management fees payable to COGECO

Inc., increased by $14.6 million, or 10.9%, to reach $148.5 million. The increase in operating costs for

the first quarter 2008 was mainly attributable to servicing additional RGUs in Canada, including the

increased penetration of Telephony service, and in Portugal, to the timing of certain marketing

initiatives, including a major campaign to increase brand awareness, to costs to better service

additional RGUs and to costs related to the design of internal controls and review of business

processes to comply with National Instrument 52-109.

Operating income before amortization

First quarter 2008 operating income before amortization increased by $14.7 million, or 17.5%, to

reach $98.3 million, due to RGU growth and various rate increases outpacing operating cost

increases. As a result, first quarter 2008 operating margin increased to 39% from 37.7%.

RELATED PARTY TRANSACTIONS

Cogeco Cable is a subsidiary of COGECO Inc., which holds 32.4% of the Corporation’s equity

shares, representing 82.7% of the votes attached to the Corporation’s voting shares. Under a

management agreement, the Corporation pays COGECO Inc. monthly management fees equal to

2% of its total revenue for certain executive, administrative, legal, regulatory, strategic and financial

planning, and additional services. In 1997, management fees were capped at $7 million per year,

subject to annual upward adjustments based on increases in the Consumer Price Index in Canada.

Accordingly, for fiscal 2008, management fees have been set at a maximum of $8.7 million.

Management fees for the first quarter of fiscal 2008 stood at $5 million compared to $4.4 million for

the same period last year. Furthermore, Cogeco Cable granted 22,683 stock options to COGECO’s

employees during the first quarter 2008, compared to 318,735 for the same period last year. Of t hese

318,735 stock options granted in the first quarter of fiscal 2007, 262,400 were conditional on the

achievement of certain yearly financial objectives by the Portuguese subsidiary over a period of three

years. During the first quarter of fiscal 2008, Cogeco Cable charged COGECO Inc. an amount of

$0.1 million with regards to Cogeco Cable’s options granted to COGECO’s employees. Details

regarding the management agreement and stock options granted to COGECO Inc.’s employees are

provided in the MD&A of the Corporation’s 2007 Annual Report. There were no other material related

party transactions during the first quarter 2008.

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FIXED CHARGES

Quarters ended November 30,

(unaudited)

($000s, except percentages)

2007

2006 %

Change

Amortization $

52,687 $

44,309 18.9

Financial expense 16,912 21,221 (20.3)

First quarter 2008 amortization expense amounted to $52.7 million, compared to $44.3 million for the

same period last year. The increase in amortization expense is mainly due to the completion in the

fourth quarter of fiscal 2007 of the purchase price allocation of the Cabovisão acquisition, which

includes the valuation of tangible and intangible assets for an additional amortization expense of

approximately $4.4 million and from additional capital expenditures arising from the required

customer premise equipment to sustain RGU growth.

First quarter 2008 financial expense decreased by $4.3 million, compared to the same period last

year. The Corporation reduced its level of Indebtedness (defined as bank indebtedness and long-

term debt) from the net proceeds of subordinate voting shares issued during fiscal 2007.

INCOME TAXES

First quarter 2008 income tax expense amounted to $8.4 million compared to $5.6 million for the

same period last year. The increase is mainly due to higher operating income before amortization

and lower financial expense that have outpaced the increase in amortization expense.

On October 16, 2007, the Canadian federal government announced in its Economic Statement

reduction in corporate income tax rates. According to the new legislation, corporate income tax rates

will be further reduced from 20.5% to 19.5% effective January 1, 2008, from 20% to 19% effective

January 1, 2009, from 19% to 18% effective January 1, 2010, from 18.5% to 16.5% effective January

1, 2011, and to 15% effective January 1, 2012. These corporate income tax rates were considered

substantively enacted on December 14, 2007. The reduction of these corporate income tax rates will

reduce future income tax expense by approximately $23 million in the second quarter of fiscal 2008.

NET INCOME

First quarter 2008 net income amounted to $20.4 million, or $0.42 per share, compared to

$12.5 million, or $0.31 per share, for the same period last year. Net income progression has been

essentially the result of the growth in operating income before amortization exceeding those of the

fixed charges.

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CASH FLOW AND LIQUIDITY

Quarters ended November 30,

(unaudited)

($000s)

2007

2006

Operating Activities

Cash flow from operations $

79,753 $ 62,060

Changes in non-cash operating items (34,408) (71,909)

45,345 $ (9,849)

Investing Activities

(1)

(58,070) $ (74,070)

Financing Activities

(1)

(34,401) $ 29,695

Net change in cash and cash equivalents $

(47,126) $ (54,224)

Effect of exchange rate changes on cash and cash equivalents

denominated in foreign currencies

(153) 1,616

Cash and cash equivalents at beginning

64,208 71,516

Cash and cash equivalents at end

16,929 $

18,908

(1)

Excludes assets acquired under capital leases.

First quarter 2008 cash flow from operations reached $79.8 million, 28.5% higher than for the

comparable period last year, primarily due to the increase in operating income before amortization

and to a reduction in financial expense. Changes in non-cash operating items generated lower cash

outflows compared to the same period last year, mainly as a result of certain non-recurring payments

executed by the Portuguese subsidiary in accordance with the terms of the acquisition in the first

quarter of fiscal 2007.

Investing activities, including capital expenditures are segmented according to the National Cable

Television Association (NCTA) standard reporting categories as follows:

Quarters ended November 30,

(unaudited)

($000s)

2007

2006

Customer Premise Equipment

(1)

$ 23,796 $ 39,417

Scalable Infrastructure

9,823

11,986

Line Extensions

2,589

2,551

Upgrade / Rebuild

11,862

10,856

Support Capital

2,657

2,361

Total Capital Expenditures

(2)

50,727

67,171

Deferred charges and other

7,416

7,195

Decrease (increase) in restricted

cash

- (91)

Total other investing activities

58,143

74,275

(1)

Includes mainly new and replacement drops as well as home terminal devices.

(2)

Includes capital leases, which are excluded from the statements of cash flow.

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First quarter 2008 capital expenditures decreased compared to the same period last year mainly due

to lower RGU growth and to the timing of customer premise equipment acquired in the first quarter of

fiscal 2007 to build an inventory for the Canadian operations. The Portuguese operations’ capital

expenditures increased compared to the same period last year as a result of the Digital Television

deployment and the network extensions to serve additional homes passed.

First quarter 2008 deferred charges remained essentially the same and are mainly attributable to

reconnect costs.

First quarter 2008 free cash flow amounted to $21.6 million compared to a deficit of $12.3 million for

the same period of the preceding year. The first quarter free cash flow increase over the same period

last year is due to the following factors: a growth in operating income before amortization, a lower

level of capital expenditures required to serve RGU growth and to support Telephony growth, a build-

up of home terminal devices for an amount of $12 million during the first quarter of fiscal 2007 and a

reduction in financial expense.

During the first quarter of fiscal 2008, debt repayment amounted to $32.6 million. This repayment

came from the following factors: the generated free cash flow of $21.6 million, the reduction of

$47.1 million in cash and cash equivalents partly used to offset the $34.4 million reduction in changes

in non-cash operating items and, the increase of $3.1 million in capital stock from the exercise of

stock options. These factors have been partly offset by a dividend payment of $4.8 million described

below. For the same period last year, the increase in long-term debt and bank indebtedness

amounted to $31.1 million due to a decrease of $71.9 million in non-cash operating items explained

by the repayment of certain suppliers subsequent to the Cabovisão acquisition and by the free cash

flow deficit of $12.3 million, partly offset by a $54.2 million decrease in cash and cash equivalents. In

addition, a dividend of $0.10 per share for subordinate and multiple voting shares, totalling

$4.8 million, was paid during the first quarter of fiscal 2008 compared to a dividend of $0.04 per

share or $1.6 million for the first quarter of fiscal 2007.

As at November 30, 2007, the Corporation had a working capital deficiency of $378.7 million

compared to $120.7 million as at August 31, 2007. The greater deficiency is mainly attributable to the

US$150 million Senior Secured Notes Series A and the related derivative financial instruments due in

October 2008. Cogeco Cable maintains a working capital deficiency due to a low level of accounts

receivable since the majority of the Corporation’s customers pay before their services are rendered,

contrary to accounts payable and accrued liabilities, which are paid after products or services are

rendered. In addition, the Corporation generally uses cash and cash equivalents to reduce

Indebtedness.

As at November 30, 2007, the Corporation had used $432.9 million of its $900 million Term Facility.

FINANCIAL POSITION

Since August 31, 2007, there have been major changes to “Fixed assets”, “Cash and cash

equivalents”, “Accounts payable and accrued liabilities”, “Derivative financial instruments and

“Indebtedness”.

The $10.6 million rise in fixed assets is mainly related to increased capital expenditures to sustain

RGU growth and by the appreciation of the euro currency over the Canadian dollar. The $47.3 million

and $37.8 million reductions in cash and cash equivalents and accounts payable and accrued

liabilities respectively, are related to suppliers’ payments. Finally, derivative financial instruments

have increased by $91.3 million and Indebtedness has decreased by $117.6 million as a result of

accounting changes and factors previously discussed in the “Cash Flow and Liquidity” section.

Please consult “Accounting policies and estimates” section for further details.

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A description of Cogeco Cable’s share data as of December 31, 2007 is presented in the table below:

Number of

shares/options

Amount

($ 000s)

Common Shares

Multiple voting shares

Subordinate voting shares

15,691,100

32,809,659

98,346

890,125

Options to Purchase Subordinate Voting Shares

Outstanding options

Exercisable options

851,949

348,804

In the normal course of business, Cogeco Cable has incurred financial obligations, primarily in

the form of long-term debt, operating and capital leases and guarantees. Cogeco Cable’s

obligations, discussed in the 2007 annual MD&A, have not materially changed since August 31,

2007, except that on January 8, 2008, the Corporation and the Solidarity Fund QFL entered into

an agreement to issue senior unsecured debenture with par value of $100 million by way of

private placement, subject to usual market conditions. The debenture which must be issued by no

later than May 9, 2008, will bear interest at a fixed rate determined at the then prevailing rate of

the ten-year Government of Canada bond plus a spread of 220 basis points, and will mature ten

years after issuance. The debenture will be callable under certain conditions.

DIVIDEND DECLARATION

At its January 9, 2008 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible

dividend of $0.10 per share for subordinate and multiple voting shares, payable on February 6, 2008,

to shareholders of record on January 23, 2008.

FOREIGN EXCHANGE MANAGEMENT

Cogeco Cable has entered into cross-currency swap agreements to set the liability for interest and

principal payments on its US$150 million Senior Secured Notes. These agreements have the effect

of converting the U.S. interest coupon rate of 6.83% per annum to an average Can adian dollar ﬁxed

interest rate of 7.254% per annum. The exchange rate applicable to the principal portion of the debt

has been ﬁxed at CAN$1.5910. Amounts due under the US$150 million Senior Secured Notes

Series A decreased by CAN$8.4 million at the end of the first quarter compared to August 31, 2007

due to the Canadian dollar’s appreciation. The fair value of cross-currency swaps increased by

$7.8 million of which $8.4 million offset the foreign exchange gain on the $US debt. The difference of

$0.6 million was recorded as a reduction of comprehensive income.

As noted in the MD&A of the 2007 Annual Report, the Corporation’s investment in the Portuguese

subsidiary, Cabovisão, is exposed to market risk attributable to fluctuations in foreign currency

exchange rates, primarily changes in the values of the Canadian dollar versus the euro. This risk is

mitigated since the major part of the purchase price for Cabovisão was borrowed directly in euros.

This debt is designated as a hedge of net investments in self-sustaining foreign subsidiaries and,

accordingly, the Corporation realized a foreign exchange gain of CAN$4 million in the first quarter

2008, which is presented in other comprehensive income. The exchange rate used to convert the

euro currency into Canadian dollars for the balance sheet accounts as at November 30, 2007 was

$1.4630 per euro compared to $1.4390 per euro as at August 31, 2007. The average exchange rate

prevailing during the first quarter 2008 used to convert the operating results of the Portuguese

operations was $1.4119 per euro compared to $1.4363 per euro for the same period last year.

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CANADIAN OPERATIONS

CUSTOMER STATISTICS

Net additions % of Penetration

(1)(4)

Quarters ended

November 30,

2007

2007 2006 2007 2006

RGUs

(2)

1,861,334 72,826 93,015

Basic Cable service customers

857,221 8,064 16,240

HSI service customers

(3)

441,130 25,294 28,935 54.8 47.0

Digital Television service customers

396,132 16,253 21,224 47.3 42.0

Telephony service customers

166,851 23,215 26,616 24.9 12.9

(1)

As a percentage of Basic Cable service customers in areas served.

(2)

Represent the sum of Basic Cable, HSI, Digital Television and Telephony service customers.

(3)

Customers subscribing only to HSI or Telephony totalled 83,267 as at November 30, 2007 compared to 61,336 as at November 30, 2006.

(4)

An audit of homes passed in Ontario was completed during the first quarter of fiscal 2007 and, as a result, the number of homes passed was

reduced by 42,386.

In the first quarter of 2008, RGUs’ net additions were lower than for the same period last year and

reflect early sign of maturation in most services. The number of net additions in Basic Cable stood at

8,064 customers compared to a growth of 16,240 customers for the same period last year due to the

expiration of certain promotional offers. Telephony customers grew by 23,215 to reach 166,851

compared to a growth of 26,616 for the same period last year. This growth is mostly attributable to

the launch of the service in new markets and increased penetration in areas where the service is

already offered. Coverage of homes passed has now reached 78% compared to 72% last year.

The number of net additions to HSI service stood at 25,294 customers compared to 28,935

customers for the same period last year. During the first quarter 2008, the HSI customer net additions

is mostly due to the enhancement of the product offering, the impact of the bundled offer of

Television, HSI and Telephony services (Cogeco Complete Connection), and promotional activities.

The net additions of Digital Television service stood at 16,253 customers compared to 21,224

customers for the same period last year. The decrease in net additions this quarter compared to the

same quarter last year reflects greater maturity of the digital TV segment following a period of robust

growth, especially in fiscal 2006. Since then, the Corporation also adjusted the service offering and

price gap differential between Analogue Television services and Digital Television, which has also

contributed to a moderation of the strong growth experienced in the past years. Nevertheless,

customers continue to demonstrate strong interest in HD technology.

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OPERATING RESULTS

Quarters ended November 30,

(unaudited)

($000s, except percentages)

2007 2006

Change

Revenue $

196,241 $

167,931 16.9

Operating costs 110,425 98,160 12.5

Management fees - COGECO Inc.

5,035 4,440 13.4

Operating income before amortization

80,781 65,331 23.6

Operating margin 41.2 %

38.9 %

Revenue

First quarter 2008 revenue grew by $28.3 million to reach $196.2 million, an increase of 16.9%

compared to the same period last year. This growth is explained mainly by an increase in the number

of Basic Cable, HSI, Telephony and Digital Television service customers as mentioned in the

“Customer Statistics” section, combined with the following rate increases implemented in the second

half of fiscal 2007: a monthly rate increase of $3 per Digital Television customer effective in March

2007 in Ontario and in April 2007 in Québec and a rate increase of $1.50 per Analogue Value Pak

customer effective in April 2007 in Ontario. These rate increases represent approximately $1.25 per

Basic Cable service customer.

Operating costs

First quarter 2008 operating costs, excluding management fees payable to COGECO Inc., increased

by $12.3 million to reach $110.4 million, an increase of 12.5% compared to the same period last

year. The increase in operating costs is mainly attributable to the increased penetration of Telephony

service and to servicing additional RGUs.

Operating income before amortization

First quarter 2008 operating income before amortization rose from $65.3 million to $80.8 million,

representing an increase of 23.6%, compared to the same period last year. The rise in operating

income before amortization is the result of increased revenue outpacing the rise in operating costs. In

addition, Cogeco Cable’s operating margin for the Canadian operations increased from 38.9% to

41.2% in the first quarter of fiscal 2008 due to new rate increases implemented during the second

half of fiscal 2007.

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PORTUGUESE OPERATIONS

CUSTOMER STATISTICS

Net additions % of Penetration

(1)

Quarters ended

November 30,

2007 2007

2006 2007 2006

RGUs

(2)

707,355

10,198

21,264

Basic Cable service customers

298,936

4,933

7,253

HSI service customers

163,829

3,806

8,077

54.8 52.1

Telephony service customers 244,590 1,459 5,934 81.8 82.7

(1) As a percentage of Basic Cable service customers in areas served.

(2) Represent the sum of Basic Cable, HSI and Telephony service customers.

The first quarter 2008 was driven by fierce price competition in the Portuguese market and as a result

all services generated lower customer growth compared to the same period last year. Basic Cable

service grew by 4,933 customers compared to 7,253 customers, HSI service customers increased by

3,806 compared to 8,077 in 2007 and Telephony service grew by 1,459 customers compared to

5,934 customers for the same period of the preceding year. RGU’s grew at a slower pace since

competition offered deep discounts to attract customers during the first half of the quarter. Cabovisão

did not match the competition high discounting offering. However, since then, pricing has become

more rational. The performance of Cabovisão since its acquisition by Cogeco Cable has been well

above management’s original expectations and growth prospects for the future remain excellent.

OPERATING RESULTS

Quarters ended November 30,

(unaudited)

($000s, except percentages)

2007 2006

Change

Revenue $

55,592 $

54,071 2.8

Operating costs 38,036 35,740 6.4

Operating income before amortization

17,556 18,331 (4.2)

Operating margin 31.6 %

33.9 %

Revenue

First quarter 2008 revenue reached $55.6 million, an increase of $1.5 million, or 2.8% compared to

the same period last year. This increase is mainly due to the growth of Basic Cable, HSI and

Telephony service customers together with a monthly rate increase of $1 (€0.65) per Basic Cable

service customer effective in March 2007. First quarter 2008 average exchange rates to convert the

operating results was $1.4119 per euro compared to $1.4363 per euro for the same period last year,

thus adversely impacting revenue growth year over year.

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Operating costs

First quarter 2008 operating costs increased by $2.3 million to reach $38 million, an increase of 6.4%

compared to last year. The increase in operating costs is mainly attributable to servicing additional

RGUs, to timing of certain marketing initiatives, including a major campaign to increase brand

awareness, and to costs related to the design of internal controls and review of business processes

to comply with National Instrument 52-109.

Operating income before amortization

For the first quarter of 2008, operating income before amortization decreased from $18.3 million to

$17.6 million, or 4.2%, compared to the same period last year. The decrease in operating income

before amortization is the result of increased operating costs outpacing the rise in revenue and

foreign exchange rate fluctuation.

FISCAL 2008 FINANCIAL GUIDELINES

The Corporation is maintaining its consolidated guidelines for the 2008 fiscal year, except for the

reduction of income tax rates announced by the Canadian federal government on October 16, 2007

that will have a favourable impact of approximately $23 million on net income in the second quarter of

fiscal 2008.

Consolidated

(in millions of $, except customer data)

Projections

Fiscal 2008

Financial Guidelines

Revenue

1,050

Operating income before amortization

425

Operating margin

40% to 41%

Financial expense

Amortization

215

Net income

118

Capital expenditures and deferred charges

260

Free cash flow

Customer Addition Guidelines

Basic Cable service

30,000

HSI services

75,000

Digital Television service

54,000

Telephony service

100,000

RGUs

259,000

UNCERTAINTIES AND MAIN RISK FACTORS

There has been no significant change in the risk factors and uncertainties facing Cogeco Cable as

described in the Corporation’s MD&A of the 2007 annual report, except for the Part II Licence Fees

payable to the Canadian Radio-television and Telecommunications Commission (CRTC). On

December 14, 2006, the Federal Court of Canada ruled that the Part II Licence Fees payable to the

CRTC are an unlawful tax. Both the Plaintiffs (the members of the Canadian Association of

Broadcasters, Videotron Ltee and CF Cable TV Inc.) and the Defendant (the Crown) have appealed

this decision to the Federal Court of Appeal. The Defendant is seeking to reverse the Court decision

that Part II Licence Fees are unlawful and the Plaintiffs are seeking a Court order requiring a refund

- 14 -

of past fees paid. The Appeal hearing was held on December 4

and 5

in Ottawa. During the

hearing, questions were raised by the hearing panel concerning the appropriateness of considering

Part II Licence Fees as a tax rather than a fee under the relevant portion of the Broadcasting Act.

The decision of the Federal Court of Appeal is not expected before several months. The Corporation

believes that there is a reasonable likelihood that the Federal Court’s decision will be reversed.

Cogeco Cable has accrued $7.8 million with respect to these fees for fiscal year 2007 and the first

quarter of fiscal 2008. In the unlikely event that the Federal Court of Appeal or the Supreme Court of

Canada, should this case be appealed to that level, maintains the decision from the Federal Court,

this would have a beneficial impact on the future financial results of the Corporation.

ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in Cogeco Cable’s accounting policies and estimates and

future accounting pronouncements since August 31, 2007, except as described below. A description

of the Corporation’s policies and estimates can be found in the 2007 annual MD&A.

Financial instruments

Effective September 1, 2007, the Corporation adopted the Canadian Institute of Chartered

Accountants (“CICA”) Handbook Section 1530, Comprehensive Income, Section 3855, Financial

Instruments – Recognition and Measurement, Section 3861, Financial Instruments – Disclosure and

Presentation and Section 3865, Hedges.

Statement of Comprehensive Income

A new statement entitled consolidated statements of comprehensive income was added to the

Corporation’s consolidated financial statements and includes net income as well as other

comprehensive income. Other comprehensive income represents changes in shareholders’ equity

arising from transactions and events from non-owner sources, such as changes in foreign currency

translation adjustments of net investments in self-sustaining foreign subsidiaries and long-term debt

designated as hedge of net investments in self-sustaining foreign subsidiaries and changes in the fair

value of effective cash flow hedging instruments.

Recognition and Measurement of Financial Instruments

Under these new standards, all financial assets, including derivatives, must be classified as available

for sale, held for trading, held to maturity, or loans and receivables. All financial liabilities, including

derivatives, must be classified as held for trading or other liabilities. All financial instruments classified

as available for sale or held for trading are recognized at fair value on the consolidated balance sheet

while financial instruments classified as loans and receivables or other liabilities will continue to be

measured at amortized cost using the effective interest rate method. The standards allow the

Corporation to designate certain financial instruments, on initial recognition, as held for trading.

- 15 -

All of the Corporation's financial assets are classified as held for trading or loans and receivables.

The Corporation has classified its cash and cash equivalents as held for trading. Accounts receivable

have been classified as loans and receivables. All of the Corporation financial liabilities were

classified as other liabilities, except for the cross-currency swaps which were classified as held for

trading. Held for trading assets and liabilities are carried at fair value on the balance sheet, with

changes in fair value recorded in the consolidated statements of income, except for the changes in

fair value of the cross-currency swaps which are designated as cash flow hedges of the Senior

Secured Notes Series A and are recorded in other comprehensive income. Loans and receivables

and all financial liabilities are carried at amortized cost using the effective interest method. Upon

adoption, the Corporation determined that none of its financial assets are classified as available for

sale or held to maturity. Except for the treatment of transaction costs and derivative financial

instruments mentioned below, the provisions of the new accounting standards had no impact on the

consolidated financial statement on September 1, 2007 and November 30, 2007.

Transaction costs

Effective September 1, 2007, transaction costs are capitalized on initial recognition and presented as

a reduction of the related financing, except for transaction costs on the revolving loan and the

swingline line facility which are presented as deferred charges. These costs are amortized over the

term of the related financing using the effective interest rate method, except for transaction costs on

the revolving loan and the swingline facility which are amortized over the term of the related financing

on a straight-line basis. Previously, all transaction costs were capitalized and amortized on a straight-

line basis over the term of the related financing, over a period not exceeding five years. The impact of

these adjustments reduced deferred charges by $1.2 million, reduced long-term debt by $3.1 million,

increased future income tax liabilities by $0.6 million and increased retained earnings by $1.3 million.

Cash flow hedge

All derivatives are measured at fair value with changes in fair value recorded in the consolidated

statements of income unless they are effective cash flow hedging instruments. The changes in fair

value of cash flow hedging derivatives are recorded in other comprehensive income, to the extent

effective, until the variability of cash flows relating to the hedged asset or liability is recognized in the

consolidated statements of income. Any hedge ineffectiveness is recognized in the consolidated

statements of income immediately. Accordingly, the Corporation’s cross-currency swaps must be

measured at fair value in the consolidated financial statements. Since these cross-currency swaps

are used to hedge cash flows on Senior Secured Notes Series A denominated in U.S. dollars, the

changes in fair value are recorded in other comprehensive income. The impact of measuring the

cross-currency swaps at fair value on the interim consolidated financial statements on September 1,

2007, increased derivative financial instrument liabilities by $83.5 million, decreased deferred credit

presented in long-term debt by $80.2 million, decreased future income tax liabilities by $1.1 million

and decreased opening accumulated other comprehensive income by $2.2 million. The impact of

measuring the cross-currency swaps at fair value on the interim consolidated financial statements for

the three month period ended November 30, 2007 increased derivative financial instruments liabilities

by $7.8 million, increased future income tax liabilities by $0.2 million and increased accumulated

other comprehensive income by $0.4 million.

- 16 -

Net investment hedge

Financial statements of self-sustaining foreign subsidiaries are translated using the rate in effect at

the balance sheet date for asset and liability items, and using the average exchange rates during the

period for revenue and expenses. Adjustments arising from this translation are deferred and recorded

as foreign currency translation adjustment in accumulated other comprehensive income and are

included in income only when a reduction in the investment in these foreign subsidiaries is realized.

Unrealized foreign exchange gains and losses on long-term debt denominated in foreign currency,

that is designated as a hedge of net investments in self-sustaining foreign subsidiaries are recorded

as foreign currency translation adjustment in accumulated other comprehensive income, net of

income taxes. As a result, an amount of $3.1 million was reclassified as at August 31, 2007 from the

foreign currency translation adjustment to the accumulated other comprehensive income and the

Corporation’s comparative financial statements were restated in accordance with transitional

provisions.

Embedded derivatives

All embedded derivatives that are not closely related to the host contracts, are measured at fair

value, with changes in fair value recorded in the consolidated statements of income. On September

1, 2007, and at November 30, 2007, there are no significant embedded derivatives or non-financial

derivatives that require separate fair value recognition on the consolidated balance sheet. In

accordance with the new standards, the Corporation selected September 1, 2002, as its transition

date for adopting the standard related to embedded derivatives.

Upcoming standards

In 2006, the CICA issued Handbook Section 3862, Financial Instruments – Disclosures, and Section

3863, Financial Instruments – Presentation. These Sections are to be applied to interim and annual

financial statements relating to fiscal years beginning on or after October 1, 2007. The Corporation is

currently evaluating the impact of these new standards.

Accounting changes

In July 2006, the CICA issued Section 1506, Accounting Changes, which modifies certain aspects of

the previous standard. A reporting entity may not change its accounting method unless required by

primary source of GAAP or to provide a more reliable and relevant presentation of the financial

statements. In addition, changes in accounting methods must be applied retroactively and additional

information must be disclosed. This section applies to interim and annual financial statements

relating to fiscal years beginning on or after January 1, 2007. During the first quarter, the Corporation

adopted this new standard and concluded that it had no significant impact on these consolidated

financial statements.

NON-GAAP FINANCIAL MEASURES

This section describes non-GAAP financial measures used by Cogeco Cable throughout this MD&A.

It also provides reconciliations between these non-GAAP measures and the most comparable GAAP

financial measures. These financial measures do not have standard definitions prescribed by

Canadian GAAP and may not be comparable with similar measures presented by other companies.

These measures include “cash flow from operations” and “free cash flow”.

- 17 -

Cash flow from operations

Cash flow from operations is used by Cogeco Cable’s management and investors to evaluate cash

flow generated by operating activities, excluding the impact of changes in non-cash operating items.

This allows the Corporation to isolate the cash flow from operating activities from the impact of cash

management decisions. Cash flow from operations is subsequently used in calculating the non-

GAAP measure, “free cash flow”. Cash flow from operations is calculated as follows:

Quarters ended November 30,

(unaudited)

($ 000)

2007

2006

Cash flow from operating activities $ 45,345 $ (9,849)

Changes in non-cash operating items

34,408 71,909

Cash flow from operations $ 79,753 $ 62,060

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. Free cash flow is calculated as

follows:

Quarters ended November 30,

(unaudited)

($ 000)

2007 2006

Cash flow from operations

79,753 $ 62,060

Acquisition of fixed assets

(50,654) (66,966)

Increase in deferred charges

(7,417) (7,212)

Assets acquired under capital leases – as per

Note 11 b)

(73) (205)

Free cash flow

21,609 $ (12,323)

ADDITIONAL INFORMATION

This MD&A was prepared on January 9, 2008. Additional information relating to the Corporation,

including its Annual Information Form, is available on the SEDAR web site at www.sedar.com.

ABOUT COGECO CABLE

Cogeco Cable (www.cogeco.ca), a telecommunications company offering a diverse range of services

to its customers in Canada and in Portugal, is the second largest cable operator in Ontario, Québec

and Portugal, in terms of the number of Basic Cable service customers served. Through its two-way

broadband cable networks, Cogeco Cable provides its residential and commercial customers with

Analogue and Digital Television, High Speed Internet and Telephony services. The Corporation

provides approximately 2,569,000 revenue-generating units (RGUs) to 2,365,000 homes passed in

its Canadian and Portuguese service territories. Cogeco Cable’s subordinate voting shares are listed

on the Toronto Stock Exchange (TSX: CCA).

- 30 -

- 18 -

Source: Cogeco Cable Inc.

Pierre Gagné

Vice President, Finance and Chief Financial Officer

Tel.: 514 874-2600

Information: Media

Marie Carrier

Director, Corporate Communications

Tel.: 514 874-2600

Analyst Conference Call: Thursday, January 10, 2008 at 11:00 A.M. (EST)

Media representatives may attend as listeners only.

Please use the following dial-in number to have access to the

conference call by dialing 5 minutes before the start of the conference:

Canada/USA Access Number: 1 866 321-8231

International Access Number: + 1 416 642-5213

Confirmation Code: 3458791

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until January 16,

by dialing:

Canada and USA access number: 1 888 203-1112

International access number: + 1 647 436-0148

Confirmation code: 3458791

- 19 -

Supplementary Quarterly Financial Information

(unaudited)

Quarters ended November 30, August 31, May 31, February 28,

2007

(1)

2006

(1)

2007

(1)

2006

(1)

2007

(1)

2006 2007

(1)

2006

($000, except

percentages and per

share data)

Revenue $ 251,833 $ 222,002 $ 244,314 $

174,875 $ 240,612 $ 153,956 $ 231,952 $

147,757

Operating income

before amortization

98,337

83,662 102,426 72,864 97,874 63,244 86,791

59,568

Operating margin 39.0 %

37.7 %

41.9 %

41.7 %

40.7 %

41.1 % 37.4 %

40.3

Amortization 52,687 44,309 54,164 34,801 47,278 29,048 43,572 28,656

Financial expense 16,912 21,221 18,524 16,374 21,273 13,634 23,551 13,776

Income taxes

(recovery)

8,375 5,597 (6,630) (12,298) 8,942 8,191 4,261 6,936

Net income 20,363 12,535 36,368 33,987 20,381 12,371 15,407 10,200

Cash flow from

operations

79,753 62,060 83,825 56,714 76,416 49,696 62,264 44,940

Net income per share $ 0.42 $ 0.31 $ 0.79 $

0.85 $ 0.45 $ 0.31 $ 0.37 $

0.26

(1)

Include operating results of the cable subsidiary, Cabovisão, since the date of acquisition of control on August 1, 2006

Cogeco Cable’s operating results are not generally subject to material seasonal ﬂuctuations.

However, the loss of Basic service customers is usually greater, and the addition of HSI service

customers is generally lower in the third quarter, mainly due to students leaving 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-Rivières and Rimouski in Canada.

Furthermore, the third and fourth quarters’ operating margin is usually higher as lower or no

management fees are paid to COGECO Inc. Under a Management Agreement, Cogeco Cable pays

a fee equal to 2% of its total revenue subject to a maximum amount. For more details, please refer to

the ‘’Related Party Transactions’’ section.

COGECO CABLE INC. - 20 -

Customer Statistics

November 30, August 31,

2007 2007

Homes Passe

Ontario

(1)

1,002,971 997,498

Québec 491,788 486,592

Canada 1,494,759 1,484,090

Portugal 869,940 859,376

Total 2,364,699 2,343,466

Revenue Generating Unit

Ontario 1,306,163 1,256,244

Québec 555,171 532,264

Canada 1,861,33

4 1,788,508

Portugal 707,35

5 697,157

Total 2,568,689 2,485,66

Basic Cable Service Customer

Ontario 599,733 594,889

Québec 257,488 254,268

Canada 857,221 849,157

Portugal 298,936 294,003

Total 1,156,157 1,143,160

Discretionnary Service Customer

Ontario 484,611 468,764

Québec 208,976 204,585

Canada 693,587 673,349

Portugal - -

Total 693,587 673,349

Pay TV Service Customer

Ontario 92,036 88,835

Québec 44,355 42,180

Canada 136,391 131,015

Portugal 55,867 54,723

Total 192,258 185,738

High Speed Internet Service Customer

Ontario 335,152 316,363

Québec 105,978 99,473

Canada 441,130 415,836

Portugal 163,829 160,023

Total 604,959 575,859

Digital Television Service Customers

Ontario 255,919 246,267

Québec 140,213 133,612

Canada 396,132 379,879

Portugal - -

Total 396,132 379,879

Telephony Service Customer

Ontario 115,359 98,725

Québec 51,492 44,911

Canada 166,851 143,636

Portugal 244,590 243,131

Total 411,441 386,767

(1) An audit of homes passed in Ontario was completed during the first quarter of fiscal 2007 and, as a result,

the number of homes passed was reduced by 42,386

- 21 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF INCOME

Three months ended August 31, Three months ended November 30,

(In thousands of dollars, except per share data)

2006

2005

2007

2006

(unaudited)

Revenue

Service

$ 250,406

$ 221,114

Equipment

1,427

888

251,833

222,002

Operating costs

148,461

133,900

Management fees – COGECO Inc.

5,035

4,440

Operating income before amortization 98,337

83,662

Amortization (note 3)

52,687

44,309

Operating income 45,650

39,353

Financial expense (note 4)

16,912

21,221

Income before income taxes 28,738

18,132

Income taxes (note 5)

8,375

5,597

Net income $

$ 20,363

$ 12,535

Earnings per share (no t e 6)

Basic

$0.42

$0.31

Diluted

0.42

0.31

- 22 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended November 30,

(In thousands of dollars)

2007

2006

(unaudited)

Net income $ 20,363

$ 12,535

Other comprehensive income

Unrealized gains and losses on derivative financial instruments designated as cash flow

hedges, net of income taxes of $1,143,000

(6,653)

–

Reclassification of realized g ains a nd losses to net income on derivative financial

instruments designated as cash flow hedges, net of income taxes of $1,345,000

7,085

–

Unrealized gain on translation of net investments in self-sustaining foreign subsidiaries

10,340

42,170

Unrealized loss on translati on of long-term debt designated as hedge of net investments in

self-sustaining foreign subsidiaries (net of income taxes of $1,703,000 in 2006)

(6,376)

(30,358)

4,396

11,812

Comprehensive income $ 24,759

$ 24,347

- 23 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Three months ended November 30,

(In thousands of dollars)

2007

2006

(unaudited)

Balance at beginning, as reported $ 181,952

$ 117,760

Changes in accounting p olicy (note 1)

1,307

–

Balance at beginning, as restated 183,259

117,760

Net income

20,363

12,535

Dividends on multiple voting shares

(1,569)

(628)

Dividends on subordinate voting shares

(3,272)

(972)

Balance at end $ 198,781

$ 128,695

- 24 -

COGECO CABLE INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

November 30,

2007

August 31,

2007

(unaudited)

(audited)

Assets

Current

Cash and cash equivalents

$ 16,929

$ 64,208

Accounts receivable

47,634

46,945

Income tax receivable

1,020

1,112

Prepaid expenses

6,283

7,606

Future income tax assets

14,157

17,986

86,023

137,857

Income tax receivable

1,368

1,345

Fixed assets

1,130,081

1,119,498

Deferred charges

55,087

54,645

Intangible assets (note 7)

1,057,027

1,058,410

Goodwill (note 7)

348,298

342,584

$ 2,677,884

$ 2,714,339

Liabilities and Shareholders’ equity

Liabilities

Current

Accounts payable and accrued li abilities

$ 172,722

$ 210,496

Income tax liabilities

3,540

953

Deferred and prepaid income

30,370

29,837

Derivative financial instruments

91,294

–

Current portion of long-term debt (note 8)

166,821

17,292

464,747

258,578

Long-term debt (note 8)

743,480

1,010,634

Deferred and prepaid income

11,939

11,501

Pension plans liabiliti es

2,135

1,918

Future income tax liabilities

267,547

266,042

1,489,848

1,548,673

Shareholders’ equity

Capital stock (note 9)

988,250

984,405

Contributed surplus – stock-based compensation

1,950

2,419

Retained earnings

198,781

181,952

Accumulated other comprehensive income (loss) (note 10)

(945)

(3,110)

1,188,036

1,165,666

$ 2,677,884

$ 2,714,339

- 25 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

Three months ended August 31, Three months ended November 30,

(In thousands of dollars)

2006

2005

2007

2006

(unaudited)

Cash flow from operating activities

Net income

$ 20,363

$ 12,535

Adjustments for:

Amortization (note 3)

52,687

44,309

Amortization of deferred financing costs

722

646

Future income taxes (note 5)

5,186

3,911

Stock-based compensation

236

365

Loss (gain) on disposal of fixed assets

342

(17)

Other

217

311

79,753

62,060

Changes in non-cash oper ating items (note 11a))

(34,408)

(71,909)

45,345

(9,849)

Cash flow from investing activities

Acquisition of fixed assets (not e 11b))

(50,654)

(66,966)

Increase in deferred charges

(7,417)

(7,212)

Decrease in restricted cash

–

Other

(58,070)

(74,070)

Cash flow from financing activities

Increase in bank indebtednes s

–

29,322

Increase in long-term debt

–

10,000

Repayment of long-term debt

(32,616)

(8,255)

Issue of subordinate voting shares

3,056

228

Dividends on multiple voting shares

(1,569)

(628)

Dividends on subordinate voting shares

(3,272)

(972)

(34,401)

29,695

Net change in cash and cas h equivalents (47,126)

(54,224)

Effect of exchange rate changes on cash and cash equ ivalents denominated in foreign

currencies

(153)

1,616

Cash and cash equivalents at beginning

64,208

71,516

Cash and cash equivalents at end $

$ 16,929

$ 18,908

See supplemental cash flow information in note 11.

- 26 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

1. Basis of Presentation

In the opinion of management, the accompanying unaudited interim consolidated financial statements, prepared in

accordance with Canadian generally accepted accounting principles (“GAAP”), contain all adjustments necessary to

present fairly the financial position of Cogeco Cable Inc. as at November 30, 2007 and August 31, 2007 as well as its

results of operations and its ca sh flow for the three month periods ended November 30, 2007 and 2006.

While management believes that the disclosures presented are adequate, these unaudited interim consolidated

financial statements and notes should be read in conjunction with Cogeco Cable Inc.’s annual consolidated financial

statements for the year ended August 31, 2007. These unaudited interim consolidated financial statements follow the

same accounting policies as the most recent annual consolidated financial statements, except for the adoption of new

accounting policy on financial instrum ents described below.

Financial instruments

Effective September 1, 2007, the Corporation adopted the Canadian Institute of Chartered Accountants (“CICA”)

Handbook Section 1530, Comprehensive Income, Section 3855, Financial Instruments – Recognition and

Measurement, Section 3861, Financial Instruments – Disclosure and Presentation and Section 3865, Hedges.

Statement of Compreh ensive Income

A new statement entitled consolidated statements of comprehensive income was added to the Corporation’s

consolidated financial statements and includes net income as well as other comprehensive income. Other

comprehensive income represents changes in shareholders’ equity arising from transactions and events from non-

owner sources, such as changes in foreign currency translation adjustments of net investments in self-sustaining

foreign subsidiaries and long-term debt designated as hedge of net investments in self-sustaining foreign subsidiaries

and changes in the fair value of effective cash flow hedging instruments.

Recognition and Measurement of Financial Instruments

Under these new standards, all financial assets, including derivatives, must be classified as available for sale, held for

trading, held to maturity, or loans and receivables. All financial liabilities, including derivatives, must be classified as

held for trading or other liabilities. All financial instruments classified as available for sale or held for trading are

recognized at fair value on the consolidated balance sheet while financial instruments classified as loans and

receivables or other liabilities will continue to be measured at amortized cost using the effective interest rate method.

The standards allow the Corporation to designate certain financial instruments, on initial recognition, as held for

trading.

All of the Corporation's financial assets are classified as held for trading or loans and receivables. The Corporation

has classified its cash and cash equivalents as held for trading. Accounts receivable have been classified as loans

and receivables. All of the Corporation financial liabilities were classified as other liabilities, except for the cross-

currency swaps which were classified as held for trading. Held for trading assets and liabilities are carried at fair value

on the balance sheet, with changes in fair value recorded in the consolidated statements of income, except for the

changes in fair value of the cross-currency swaps which are designated as cash flow hedges of the Senior Secured

Notes Series A and are recorded in other comprehensive income. Loans and receivables and all financial liabilities

are carried at amortized cost using the effective interest method. Upon adoption, the Corporation determined that

none of its financial assets are classified as available for sale or held to maturity. Except for the treatment of

transaction costs and derivative financial instruments mentioned below, the provisions of the new accounting

standards had no impact on the con soli dated financial statement on September 1, 2007 and November 30, 2007.

- 27 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

1. Basis of Presentation (continued)

Transaction costs

Effective September 1, 2007, transaction costs are capitalized on initial recognition and presented as a reduction of

the related financing, except for transaction costs on the revolving loan and the swingline facility which are presented

as deferred charges. These costs are amortized over the term of the related financing using the effective interest rate

method, except for transaction costs on the revolving loan and the swingline facility which are amortized over the term

of the related financing on a straight-line basis. Previously, all transaction costs were capitalized and amortized on a

straight-line basis over the term of the related financing, over a period not exceeding five years. The impact of these

adjustments reduced deferred charges by $1.2 million, reduced long-term debt by $3.1 million, increased future

income tax liabilities by $0.6 million and increased retained earnings by $1.3 million.

Cash flow hedge

All derivatives are measured at fair value with changes in fair value recorded in the consolid ated statements of income

unless they are effective cash flow hedging instruments. The changes in fair value of cash flow hedging derivatives

are recorded in other comprehensive income, to the extent effective, until the variability of cash flows relating to the

hedged asset or liability is recognized in the consolidated statements of income. Any hedge ineffectiveness is

recognized in the consolidated statements of income immediately. Accordingly, the Corporation’s cross-currency

swaps must be measured at fair value in the consolidated financial statements. Since these cross-currency swaps are

used to hedge cash flows on Senior Secured Notes Series A denominated in U.S. dollars, the changes in fair value

are recorded in other comprehensive income. The impact of measuring the cross-currency swaps at fair value on the

interim consolidated financial statements on September 1, 2007, increased derivative financial instrument liabilities by

$83.5 million, decreased deferred credit presented in long-term debt by $80.2 million, decreased future income tax

liabilities by $1.1 million and decreased opening accumulated other comprehensive income by $2.2 million. The

impact of measuring the cross-currency swaps at fair value on the interim consolidated financial statements for the

three month period ended November 30, 2007 increased derivative financial instrument liabilities by $7.8 million,

increased future income tax liabilities by $0.2 million and increased accumulated other comprehensive income by $0.4

million.

Net investment hedge

Financial statements of self-sustaining foreign subsidiaries are translated using the rate in effect at the balance sheet

date for asset and liability items, and using the average exchange rates during the period for revenue and expenses.

Adjustments arising from this translation are deferred and recorded as foreign currency translation adjustment in

accumulated other comprehensive income and are included in income only when a reduction in the investment in

these foreign subsidiaries is realized. Unrealized foreign exchange gains and losses on long-term debt denominated

in foreign currency, that is designated as a hedge of net investments in self-sustaining foreign subsidiaries are

recorded as foreign currency translation adjustment in accumulated other comprehensive income, net of income

taxes. As a result, an amount of $3.1 million was reclassified as at August 31, 2007 from the foreign currency

translation adjustment to the accumulated other comprehensive income and the Corporation’s comparative financial

statements were restated in accordance with transitional provisions.

Embedded derivatives

All embedded derivatives that are not closely related to the host contracts, are measured at fair value, with changes in

fair value recorded in the consolidated statements of income. On September 1, 2007, and at November 30, 2007,

there are no significant embedded derivatives or non-financial derivatives that require separate fair value recognition

on the consolidated balance sheet. In accordance with the new standards, the Corporation selected

September 1, 2002, as its transition date for adopting the standard related to embedded derivat ives.

Upcoming standards

In 2006, the CICA issued Handbook Section 3862, Financial Instruments – Disclosures, and Section 3863,

Financial

Instruments – Presentation. These Sections are to be applied to interim and annual financial statements relating to

- 28 -

fiscal years beginning on or after October 1, 2007. The Corporation is currently evaluating the impact of these

new standards.

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

1. Basis of Presentation (continued)

Accounting changes

In July 2006, the CICA issued Section 1506, Accounting Changes, which modifies certain aspects of the previous

standard. A reporting entity may not change its accounting method unless required by primary source of GAAP or to

provide a more reliable and relevant presentation of the financial statements. In addition, changes in accounting

methods must be applied retroactively and additional information must be disclosed. This section applies to interim

and annual financial statements relating to fiscal years beginning on or after January 1, 2007. During the first quarter,

the Corporation adopted this new standard and concluded that it had no significant impact on these consolidated

financial statements.

2. Segmented Information

The Corporation’s activities are comprised of Cable Television, High Speed Internet and Telephony services. The

Corporation considers its Cable Television, High Speed Internet and Telephony activities as a single operating

segment. The Corporation’s activities are carried out in Canada and in Europe.

The principal financi al information per business segment is presented in the tables below:

Canada Europe

Consolidated

Three months ended November 30,

(unaudited)

2007 2006 2007 2006 2007 2006

Revenue $ 196,241 $ 167,931 $ 55,592 $ 54,071 $ 251,833 $ 222,002

Operating costs 110,425 98,160 38,036 35,740 148,461 133,900

Management fees – COGECO Inc. 5,035 4,440 – – 5,035 4,440

Operating income before amortization 80,781 65,331 17,556 18,331 98,337 83,662

Amortization 35,879 31,704 16,808 12,605 52,687 44,309

Operating income 44,902 33,627 748 5,726 45,650 39,353

Financial expense 16,821 21,764 91 (543) 16,912 21,221

Income taxe s 9,314 4,218 (939) 1,379 8,375 5,597

Net income 18,767 7,645 1,596 4,890 20,363 12,535

Net assets employed

(1) (2)

$ 1,783,250 $ 1,744,616 $ 662,674 $ 653,681 $ 2,445,924 $ 2,398,297

Total assets

(2)

1,914,103 1,955,218 763,781 759,121 2,677,884 2,714,339

Fixed assets

(2)

819,666 811,982 310,415 307,516 1,130,081 1,119,498

Goodwill

(2)

– – 348,298 342,584 348,298 342,584

Acquisition of fixed assets 38,293 57,588 12,434 9,583 50,727 67,171

(1)

Total assets less cash and cash equivalents, accounts payable and accrued liabilities, and deferred and prepaid income.

(2)

As at November 30, 2007 and August 31, 2007.

- 6 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

3. Amortization

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Fixed assets $ 29,872 $ 23,985 $ 44,874 $ 39,263

Deferred charges 4,929 5,475 5,370 5,046

Intangibles assets 2,443 –

$ 34,801 $ 29,460 $ 52,687 $ 44,309

4. Financial expense

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Interest on long-term debt $ 1,100 $ 416 $ 16,525 $ 20,246

Amortization of deferred financing costs 407 646

Other (13,398) 5,804 (20) 329

$ (12,298) $ 6,220 $ 16,912 $ 21,221

5. Income Taxes

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Current $ 1,100 $ 416 $ 3,189 $ 1,686

Future (13,398) 5,804 5,186 3,911

$ (12,298) $ 6,220 $ 8,375 $ 5,597

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COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

5. Income Taxes (continued)

The following table provides the reconciliation between Canadian statutory federal and provincial income taxes and

the consolidated income tax expense:

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Income before income taxes $ 28,738 $ 18,132

Combined income tax rate 34.17 % 35.14 %

Income taxes at combined income tax rate

6,033

$ 9,820 $ 6,371

Loss or income subject to lower or higher tax rates (363) (204) (385) (50)

Income taxes arising from non-deductible expenses 101 –

Effect of foreign income tax rate differences 1,430 - (1,164) (824)

Other 507 226 3 100

Income taxes at effective income tax rate $ (12,298) $ 6,220 $ 8,375 $ 5,597

6. Earnings per Share

The following table provides a recon ciliation between basic and dilu ted earnings per share:

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Net income $ 33,987 $ 11,036 $ 20,363 $ 12,535

Weighted average number of multiple voting and subordinate voting shares

outstanding

39,983,975

48,380,353

40,002,441

Effect of dilutive stock options

(1)

129,091 213,087 337,568 224,302

Weighted average number of diluted multiple voting and subordinate voting

shares outstanding

40,197,062

48,717,921

40,226,743

Earnings per share

Basic $ 0.85 $ 0.28 $ 0.42 $ 0.31

Diluted 0.85 0.27 0.42 0.31

(1)

For the three month period ended November 30, 2007, 97,214 stock options (141,740 in 2006) were excluded from the calculation of diluted earnings per share

since the exercise price of the optio ns was greater than the average share price of the subordinate voting shares.

- 8 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

7. Goodwill and Other Intangible Ass ets

November 30,

2007

August 31,

2007

(unaudited) (audited)

Customer relationships $ 67,475 $ 68,858

Customer base

989,552 989,552

1,057,027 1,058,410

Goodwill

348,298 342,584

$ 1,405,325 $ 1,400,994

a) Intangible assets

During the first three months, intangible assets variations were as follows:

Customer

relationships

Customer

base

Total

(unaudited) (unaudited) (unaudited)

Balance as at August 31, 2007 $ 68,858 $ 989,552 $ 1,058,410

Amortization

(2,443) – (2,443)

Foreign currency translation adjustment

1,060 – 1,060

Balance as at November 30, 2007 $ 67,475 $ 989,552 $ 1,057,027

b) Goodwill

During the first three months, goodwill variation was as follows:

(unaudited)

Balance as at August 31, 2007 $ 342,584

Foreign currency translation adjustment

5,714

Balance as at November 30, 2007 $ 348,298

- 9 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

8. Long-Term Debt

Maturity Interest rate

November 30,

2007

August 31,

2007

(unaudited) (audited)

Parent company

Term Facility

Term loan – €104,551,500 2011 5.38 %

(1)

$ 151,862 $ 150,450

Term loan – €17,358,700 2011 5.25

(1)

25,190 24,979

Revolving loan – €174,000,000

(€196,725,000 as at August 31, 2007)

2011

5.38

(1)

254,562 283,087

Senior Secured Debentures Series 1 2009 6.75

149,636 150,000

Senior – Secured Notes

Series A – US$150 million 2008 6.83

(2)

149,638 158,430

Series B 2011 7.73

174,203 175,000

Deferred credit

(3)

2008 –

– 80,220

Subsidiaries

Obligations under capital leases 2011 6.42 – 8.30

5,210 5,760

910,301 1,027,926

Less current portion

166,821 17,292

$ 743,480 $ 1,010,634

(1)

Average interest rate on debt as at November 30, 2007, including stamping fees.

(2)

Cross-currency swap agreements have resulted in an effective interest rate of 7.254% on the Canadian dollar equivalent of the U.S.

denominated debt.

(3)

The deferred credit represents th e amount that was deferred fo r h edge accounting purpose as at August 31, 2007 un der cross-cur rency swaps

entered into by the Corporation to hedge Senior Secured Notes Series A denominated in U.S. dollars. In accordance with the standards on

financial instruments, the Corporation’s cross-currency swaps are now presented as derivative financial instrument liabilities (see note 1).

- 10 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

9. Capital Stock

Authorized, an unlimited number

Class A Preference shares, without voting rights, redeemable by the Corporation and retractable at the option of the

holder at any time at a price of $1 per share, carrying a cumulative preferential cash dividend at a rate of 11% of the

redemption price per year.

Class B Preference shares, without voting rights, could be issued in series.

Multiple voting shares, 10 votes per share.

Subordinate voting shares, 1 vote per share.

November 30,

2007

August 31,

2007

(unaudited) (audited)

Issued

15,691,100 multiple voting shares $ 98,346 $ 98,346

32,804,116 subordinate voting shares (32,663,587 as at August 31, 2007) 889,904 886,059

$ 988,250 $ 984,405

During the period, subordinate voting share transactions were as fo llows:

Three months ended Twelve months ended

November 30, 2007 August 31, 2007

(unaudited) (audited)

Number of

Amount

Number of

Amount

Balance at beginning 32,663,587 $ 886,059 24,308,112 $ 532,112

Shares issued for cash consideration – – 8,000,000 345,950

Shares issued for cash under the Employee Stock Purchase Plan

and the Stock Option Plan

140,529

3,056

355,475

7,014

Compensation expense previously recorded in contributed

surplus for options exercised

–

789

–

983

Balance at end 32,804,116 $ 889,904 32,663,587 $ 886,059

- 11 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

9. Capital Stock (continued)

Stock-based plans

The Corporation offers for the benefit of its employees and those of its subsidiaries, an Employee Stock Purchase

Plan and a Stock Option Plan for certain executives which are described in the Corporation’s annual consolidated

financial statements. During the first quarter, the Corporation granted 97,214 stock options (197,407 in 2006) with an

exercise price of $49.82 ($26.63 in 2006) of which 22,683 stock options (56,335 in 2006) were granted to

COGECO Inc.’s employees. In 2006, the Corporation also granted 376,000 conditional stock options with an exercise

price of $26.63 of which 262,400 stock options were granted to COGECO Inc.’s employees. These conditional options

vest over a period of three years beginning one year after the day such options are granted and are exercisable over

ten years. The vesting of these options is conditional to the achievement of certain yearly financial objectives by the

Portuguese subsidiary, Cabovisão — Televisão por Cabo, S.A., over a period of three years. During the first quarter

of 2007, the Corporation charged an amount of $84,000 with regards to the Corporation’s options granted to Cogeco

Inc.’s employees. The Corporation records compensation expense for options granted on or after September 1, 2003.

As a result, a compensation expense of $236,000 ($261,000 in 2006) was recorded for the three month period ended

November 30, 2007.

The fair value of stock options granted for the three month period ended November 30, 2007 was $12.88 ($7.37 in

2006) per option. The fair value of each option granted was estimated at the grant date for purposes of determining

stock-based compensation expense using the binomial option prici ng model based on the following assumptions:

2007 2006

Expected dividend yield

0.90 % 1.27 %

Expected volatility

27 % 32 %

Risk-free interest rate

4.25 % 4.05 %

Expected life in years

4.0 4.0

As at November 30, 2007, the Corporation had outstanding stock options providing for the subscription of 850,079

subordinate voting shares. These stock options, which include 250,667 conditional stock options, can be exercised at

various prices ranging from $7.05 to $4 9.82 and at various dates up to October 26, 2017.

The Corporation had also a Performance Unit Plan for key employees, which was terminated in June 2007. A

compensation expense of $104,000 was recorded for the three month period ended November 30, 2006 related to

this plan.

- 12 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

10. Accumulated Other Com prehensive Income (Loss)

Translation of net

investments in self-

sustaining foreign

subsidiaries

Cash flow hedges

Total

(unaudited) (unaudited) (unaudited)

Balance as at August 31, 2007 $ (3,110) $ – $ (3,110)

Cumulative effect of changes in accounting policy (note 1)

– (2,231) (2,231)

Other comprehensive income

3,964 432 4,396

Balance as at November 30, 2007 $ 854 $ (1,799) $ (945)

11. Statem ents of Cash Flow

a) Changes in non-cash operating items

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Accounts receivable $ 1,023 $ 1,159 $ (443) $ (3,253)

Income tax receivable 178 - 101 (1,593)

Prepaid expenses 244 (1,177) 1,335 (360)

Accounts payable and accrued liabilities 48,788 46,846 (38,992) (73,915)

Income tax liabilities 450 (501) 2,616 3,280

Deferred and prepaid income (188) (231) 975 3,932

$ 50,495 $ 46,096 $ (34,408) $ (71,909)

b) Other information

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Fixed asset acquisitions through capital leases $ $ $ 73 $ 205

Financial expenses paid 20,922 24,132

Income taxes paid – 889

- 13 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

12. Employee Future Benefits

The Corporation and its Canadian subsidiaries offer their employees contributory defined benefit pension plans, a

defined contribution pension plan or a collective registered retirement savings plan which are described in the

Corporation’s annual consolidated financial statements. The total expenses rel ated to these plans are as follows:

Three months ended August 31, Three months ended November 30,

2006 2005 2007 2006

(unaudited) (unaudited)

Contributory defined benefit pension plans $ $ $ 282 $ 230

Defined contribution pension plan and collective registered retirement savings plan 690 528

$ $ $ 972 $ 758

13. Contingent liability

The Canadian Radio-television and Telecommunications Commission (“CRTC”) collects two different types of fees

from broadcast licensees. These are known as Part I and Part II fees. In 2003 and 2004, lawsuits were commenced in

the Federal Court, alleging that the Part II licence fees are taxes rather than fees and that the regulations authorizing

them are unlawful. On December 14, 2006, the Federal Court ruled that the CRTC did not have the jurisdiction to

charge Part II fees. The Court ruled that licensees were not entitled to a refund of past fees paid. Both the Crown and

the applicants have appealed this case to the Federal Court of Appeal. The applicants are seeking an order requiring

a refund of past fees paid. The Crown is seeking to reverse the finding that Part II fees are unlawful. On October 1

2007, the CRTC sent a letter to all broadcast licensees, including Cogeco Cable Inc. The letter stated that the CRTC

will not collect Part II license fees due on November 30, 2007 and subsequent years unless the Federal Court of

appeal or the Supreme Court of Canada (should the case be appealed to that level) reverses the Federal Court's

decision. The Appeal hearing was held on December 4

and 5

, 2007 in Ottawa. During the hearing, questions were

raised by the hearing panel concerning the appropriateness of considering Part II Licence Fees as a tax rather than a

fee under the relevant portion of the Broadcasting Act. The decision is not expected before several months. The

Corporation believes that there is a reasonable likelihood that the Federal Court's decision will be reversed. The

Corporation has accrued $7.8 million with respect to these fees for fiscal year 2007 and the first quarter of fiscal 2008.

In the unlikely event that the Federal Court of Appeal or the Supreme Court of Canada, should this case be appealed

to that level, maintains the decision from the Federal Court, this would have a beneficial impact on the future financial

results of the Corporation.

- 14 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2007

(amounts in tables are in thousands of dollars, except per share data)

14. Subsequent events

a) Corporate income tax rate s

On October 16, 2007, the Canadian federal government announced in its Economic Statement reduction in corporate

income tax rates. According to the new legislation, corporate income tax rates will be further reduced from 20.5% to

19.5% effective January 1, 2008, from 20% to 19% effective January 1, 2009, from 19% to 18% effective January 1,

2010, from 18.5% to 16.5% effective January 1, 2011, and to 15% effective January 1, 2012. These corporate income

tax rates were considered substantively enacted on December 14, 2007. The reduction of these corporate income tax

rates will reduce future income tax expense by ap proximately $23 million in the second quarter of fiscal 2008.

b) Senior unsecured debenture

On January 8, 2008, the Corporation and the Solidarity Fund QFL entered into an agreement to issue senior

unsecured debenture with par value of $100 million by way of private placement, subject to usual market conditions.

The debenture which must be issued by no later than May 9, 2008, will bear interest at a fixed rate determined at the

then prevailing rate of the ten-year Government of Canada bond plus a spread of 220 basis points, and will mature

ten years after issuance. The debenture will be callable under ce rtain conditions.

15. Comparative figures

Certain comparative figures have be en reclassified in order to conform to the presentation ad opted in 2007.

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STRONG FIRST QUARTER RESULTS FOR COGECO CABLE

SUSTAINABILITY

Cogeco Fund

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